Chevron Holdings, Inc. vs. Commissoner of Internal Revenue

AMENDED DECISION

DEL ROSARIO, P.J.:

For resolution are the following:

1. Petitioner's Supplemental Formal Offer of Evidence filed on November 4, 2021 ,1 with respondent's

Comment (Re: Supplemental Formal Offer of

Evidence) filed on November 15, 2021 ; and,

2. Petitioner's

Motion

for

Reconsideration

(Re:

Decision dated October 7, 2020) filed through registered mail on October 28, 2020,2 with respondent's

Opposition (Re: Omnibus Motion (1) Motion for

Reconsideration of the Decision dated 7 October 2020; and (2) Urgent Motion to Reopen Case) filed on January 11 , 2021 .

To recall, petitioner fi led on October 28, 2020 throug h registered mail its Omnibus Motion (1) Motion for Reconsideration (Re: Decision dated October 7, 2020) (2) Urgent Motion to Reopen Case, with respondent's Opposition (Re: Omnibus Motion (1) Motion for Reconsideration of the Decision dated 7 October 2020; and (2) Urgent Motion to Reopen Case) filed on January 11, 2021 . 1 Through reg1stered mall and electroniC mall 2 One of the mot1ons stated in pet1t1oner's Omn1bus Mot1on f1led on October 28. 202~

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue

In the Resolution dated May 31, 2021, petitioner's Motion to Reopen Case was granted in the interest of truth and justice, and the resolution of its Motion for Reconsideration was held in abeyance pending the presentation of petitioner's supplemental evidence, and the clearer/legible copies of certain exhibits, as specified in its Omnibus Motion. Accordingly, a Commissioner's Hearing was held on October 19, 2021 and the presentation of petitioner's evidence proceeded on October 26, 2021. Pursuant to the Court's Order dated October 26, 2021, petitioner's Supplemental Formal Offer of Evidence was filed on November 4, 2021, 3 with respondent's Comment (Re: Supplemental Formal Offer of Evidence) filed on November 15, 2021. On December 16, 2021, petitioner's Supplemental Formal Offer of Evidence filed on November 4, 2021, with respondent's Comment (Re: Supplemental Formal Offer of Evidence) filed on November 15, 2021, and petitioner's Motion for Reconsideration, were submitted for resolution. The Court shall now resolve the aforesaid pending incidents.

Supplemental

Formal

Offer of Evidence

Acting on petitioner's Supplemental Formal Offer of Evidence filed on November 4, 2021, 4 with respondent's Comment (Re: Supplemental Formal Offer of Evidence) filed on November 15, 2021, this Court resolves to ADMIT Exhibits "P-55.1 ", "P-55.2", "P- 55.3", "P-55.4", "P-55.5", "P-55.6", "P-55. 7", "P-55.8", "P-55.9", "P-55.10", "P-55.11", "P-55.12", "P-55.13", "P-55.14", "P-55.15", "P-56.1", "P-56.2", "P-56.3", "P-56.4", "P-56.5", "P-57'', "P-57.1", "P-31-458", "P-31-666", "P-31-1 037", "P-31-2428", "P-31.2448", "P-31.2452", "P-31.2584", "P-31.2590", "P-31.2602", "P-31.2604", "P-31.2762", "P-31.2766", "P-32.7", "P-32.9", "P-32.19", "P-32.25", "P-32.27", "P-32.49", "P-32.53", "P-32.59", "P-32.61 ", "P-32.63", "P-32.67", "P-32.69", "P-32.204", "P-32.230", "P-32.252", and "P- 32.254", subject to this Court's final evaluation and/or appreciation of their purposes, materiality, relevancy, and probative value to the issues involved in this case.

3 Through registered mail and electronic mail. 'Through registered mail and electronic mail.l'11

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue

The Court notes certain discrepancies in the description of exhibits in the Supplemental Formal Offer of Evidence and the actual documents marked, viz.:

Exhibit

Description

Actual Document

P-55.3

Articles

of

Approval for Certificate

of

Approval

for

Establishment of Enterprises with

Establishment

of

Enterprises

with

Foreign Investment in the People's

Investment of Taiwan, Hongkong,

Republic

of

China of Caltex

Macao and Overseas Chinese in the

(China) Investment Co , Ltd. (Now

People's Republic of China of Chevron

Chevron (China) Investment Co , (China) Investment Co., Ltd. Ltd.)

P-55.15 Business License Certification of Business License (Duplicate) issued to

Chevron

(China)

Investment -

Chevron (China) Investment Co., Inc.

Services

P-56.2 Email request dated August 12, Email dated August 12, 2015 merely 2015 requesting the Certificate requesting for authenticated/

Confirming

Incorporation

of consularized incorporation documents Company under the New Name of of Chevron International Pte. Ltd.

Chevron International Pte. Ltd. There is no indication in the email (Exhibit P-55) and Certificate of regarding the request for the Certificate

Continuance of Chevron

Asia of Continuance of Chevron Asia Pacific

Pacific

Holdings

Limited

with

Holdings

Limited

with attached attached

Memorandum of Memorandum

of

Continuance

of

Continuance of Company Limited

Company Limited By Shares.

B~ Shares

------~~---- P-56.3 Email dated January 6, 2015

Email

dated

January

6, 2015 requesting the

Articles

of requesting the Articles of Incorporation

Incorporation

of

Chevron

ofCCNs.

(Cambodia) Limited (Exhibit P-

There is no indication in the email 55.2) and

Certificate

of regarding the request for

Amendment

of

Certificate of Certificate of Amendment of Certificate

Incorporation

of

Chevron of Incorporation of Chevron Overseas

UOverseas Services Corporation ___

Services Corporation.

···~------ P-56.4 Email dated November 22, 2009

Email

dated November 22, 2009 requesting the

Articles

of requesting the Articles of Incorporation

Association of Caltex

(China)

of the entities listed in the excel file.

Investment

Co, Ltd.

(Now

Chevron (China) Investment Co.,

Ltd)

(Exhibit

P-55 3),

Memorandum of Incorporation of

Chevron South Africa (Pty) Ltd. (Exhibit P-55.11 ), Business Profile

of Chevron Trading

Pte.

Ltd.

(Exhibit P-55.12), and Restated

Certificate

of

Incorporation

of

Chevron

Global

Energy

Inc.

J.l:;xhibit P-55.14) P-56.5 Email request dated April 7, 2014 Email dated April 7, 2014 requesting requesting the

Articles

of information if there has been a Association of Chevron Lubricants directive addressed to all Chevron

Lanka PLC

entities to change name from Caltex to Chevron.

There

is no indication regarding a request for the Articles of

Association of Chevron

Lubricants

Lanka PLC.

' tn Chevron Holdings, Inc. vs. Commissioner of Internal Revenue P-32.53

I Sales

Invoice

No.

310173843 Sales Invoice No. 310173843 issued issued by Integrated Computer by Integrated Computer Systems, Inc. Systems, Inc. on February 15, on February 5, 2014 2014 -~-~-... L With the admission of the foregoing exhibits in evidence, the Court shall proceed to resolve petitioner's Motion for Reconsideration (re: Decision dated October 7, 2020), which prays for the partial reconsideration of the Decision dated October 7, 2020.

Petitioner's

Motion

for

Reconsideration

Petitioner prays for the reconsideration of the Decision dated October 7, 2020 which granted its claim in the reduced amount of P6,443,989.88. Petitioner insists that it is entitled to the refund or the issuance of a tax credit certificate in the amount of P84,228,009.20, representing its alleged excess and unutilized input VAT attributable to zero-rated sales for calendar year 2014. Taking into consideration the records of this case, including the aforesaid admitted additional evidence, the Court finds petitioner's Motion for Reconsideration partly meritorious. Petitioner proved that it had zero-rated sales during the subject period but only in the amount of P3,017,038,914.02 As stated in the assailed Decision, to be considered as a non- resident foreign corporation doing business outside the Philippines, each entity must be supported, at the very least, by both the Certificate of Non-Registration of Corporation/Partnership issued by the Securities and Exchange Commission (SEC) AND proof of foreign incorporation/registration (i.e.,

Certificate/Articles

of

Foreign

Incorporation/Association or printed screenshots of the US SEC Website showing the state/province/country where the entity was organized, or Tax Residence Certificate). The assailed Decision noted that petitioner made a valid zero- rated sales to only seven (7) clients which were considered as non- resident foreign corporations (NRFCs), viz.: cl/

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue

-~-~- ·----

SEC

Proof of foreign

Client

Certificate

incorporation/registration

of Non-

Registration

Exhibit No.

Document

Letter of Certification of the

Text that the Register

Keeps Under the Foreign

"P-16.27";

Business Act B.E. 2542 "P-19.5" to (1999); Screens hot of US

Chevron (Thailand) Limited

"P-15.4" "P-19.5.1" SEC website -

Certificate of Registration of

"P-16.5"; "P- Change of Name;

19.1"to"P- Screen shot of US SEC

Chevron Australia Pty Ltd

"P-15.10" 19.1.1" website "P-19.3" to Screens hot of US SEC Chevron Global Energy Inc. "P-15.16" "P-19.3.1" website

Certificate of Incorporation

with attached Constitution of Caltex Oil (N.Z.) Limited;

Certificate of Status of

Enterprise stating that the "P-16.25" company is registered in New Zealand and is a

Chevron New Zealand

"P-15.25"

"P-17-3"

resident for tax purposes -· -----~~-~

Certificate Confirming

Incorporation of Company

with attached Certificate of Chevron Singapore Pte. Ltd. "P-15.30" "P-16.19"

Incorporation

Chevron U.S.A. Inc.

Certificate of Registration of

(Singapore Branch)

"P-15.34" "P-16.8"

Foreign Company

·- --- Certif1cate of Incorporation of Change of Name.

"P-16.9"; "P- Screens hot of US SEC 19.4" to "P- webs1te; Certificate of

Chevron North Sea Limited

"P-15.38" 19.4.1"

Residence

The assailed Decision likewise held that the sales to one of petitioner's alleged clients, "Chevron Corporation", in the total amount of P212, 7 44,285.44 cannot qualify for VAT zero-rating since no service agreement or any contract was submitted to prove that the services rendered by petitioner to "Chevron Corporation" are services other than processing, manufacturing or repacking goods in accordance with Section 1 08(8)(2) of the National Internal Revenue Code (NIRC) of 1997, as amended.~

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue

1. Service agreements and screenshots of petitioner's Subqovern Website do not, bv themselves, prove the NRFC status of petitioner's clients In its Omnibus Motion, petitioner submits that it has sufficiently proved that the rest of its clients are NRFCs doing business outside the Philippines. Petitioner contends that the Service Agreements, which show the addresses of said clients, clearly prove that the entities are conducting business outside the Philippines. Petitioner likewise argues that the screenshots of its own Subgovern Website are not self- serving pieces of evidence because such exhibits were properly presented in Court, and respondent was given every opportunity to cross-examine and test the truthfulness thereof during trial. Petitioner also contends that the Court should have considered the printed screenshots of the US SEC Website which indicates the state, province or country in which petitioner's affiliates were organized. In the case of Commissioner of Internal Revenue vs. Deutsche Knowledge Services Pte. Ltd., 5 the Supreme Court ruled that: "For purposes of VAT zero-rating under Section 108(8)(2) of the Tax Code, the claimant must establish the two components of a client's NRFC status, viz.: (1) that their client was established under the laws of a country not the Philippines or, simply, is not a domestic corporation; and (2) that it is not engaged in trade or business in the Philippines. To be sure, there must be proof of both of these components: showing that the clients are not only foreign corporations, but also are not doing business in the Philippines. x x x To the Court's mind, the SEC Certifications of Non- Registration show that their affiliates are foreign corporations. On the other hand, the articles of association/certificates of incorporation stating that these affiliates are registered to operate in their respective home countries, outside the Philippines are prima facie evidence that their clients are not engaged in trade or business in the Philippines.

Proof of the above-mentioned second component sets the present case apart from Accenture, Inc. v. Commissioner of Internal Revenue and Site/ Philippines Corp. v. Commissioner of Internal Revenue. In these cases, the claimants similarly presented SEC Certifications and client service agreements. However, the Court consistently ruled that documents of this nature only establish the first component (i.e., that the affiliate is foreign). The absence of any other competent evidence (e.g., articles of

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue association/certificates of incorporation) proving the second component (i.e., that the affiliate is not doing business here in the Philippines) shall be fatal to the claim for credit or refund of excess input VAT attributable to zero-rated sales." (Boldfacing supplied) Indeed, the rule is trite that service agreements, even taken together with an SEC Certificate of Non-Registration, do not prove that the foreign clients were doing business outside the Philippines or have a continuity of commercial dealings outside the Philippines. Simply put, the service agreements cannot substitute the required foreign incorporation/registration documents required by law. Anent the screens hots of petitioner's Subgovern Website, it must be noted that the same were admitted as electronic evidence by the Court. 6 Even though the screenshots of the Subgovern Website were admitted in evidence, such admission should not be confounded with the determination of their probative value. A particular item of evidence may be admissible, but its evidentiary weight depends on judicial evaluation within the guidelines provided by the rules of evidence 7 With this in mind, the Court concluded that the computer- generated data contained in the printouts of the Subgovern Website are sourced from a website maintained by petitioner's affiliated companies, and access to such website is likewise limited to such companies. Said documents can easily be manipulated to favor petitioner in view of its affinity with the entity that maintains or keeps the databasee As such, the information contained therein may not be given full faith and credit. It is further erroneous for petitioner to claim that the Court did not consider the printed screenshots of the US SEC Website in proving that a client is not doing business in the Philippines. As can be found in the Decision, certain clients were considered as NRFCs in consideration of the printed screenshots of the US SEC Website, namely: (1) Chevron Australia Pty. Ltd; and (2) Chevron North Sea Limited.

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue

2.

Sales

to

Chevron

Corporation are considered as zero-rated sales With regard to alleged VAT zero-rated sales to "Chevron Corporation", the

Court

disallowed the total amount of P212, 7 44,285.44 for petitioner's failure to submit its service agreement with said corporation, which would prove that the services rendered were other than processing, manufacturing or repacking of goods, as provided under Section 1 08(B)(2) of the NIRC of 1997, as amended. Petitioner contends that even if there is no service agreement to show that the services rendered to said client were "other than processing, manufacturing or repacking of goods," the SEC Certificate of Registration would be sufficient to show that the type of service rendered falls within the scope of "services other than processing, manufacturing or repacking of goods ... Upon review of its Certificate of Registration and License duly issued by the SEC, 9 petitioner is licensed to do business as a Regional Operating Headquarters (ROHQ) in the Philippines. Petitioner is authorized to engage in the following services or functions: general administration and planning; business planning and coordination; sourcing and 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 Moreover, petitioner's witness, Mr. Benedicta A.

Santos, petitioner's Manager-Business Analysis and Support, testified that petitioner is a "shared services center" offering finance, human resource, information technology, and procurement services to its affiliates; and that a service agreement is not executed when petitioner provides only ad hoc, one-time or occasional services, to its foreign affiliates. In the words of Mr. Santos, there are approximately 1,800 entities embraced and operating under the Chevron Group of Companies worldwide. Given the enormity of petitioner's organization, it would be impractical and operationally unfeasible to request each and every Chevron affiliate to execute a written contract with the petitioner before providing the said services, viz:

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue

"Q6: You mentioned that Petitioner acts as a shared services center. What does it mean to be a "shared services center"?

A:

As a shared services center, Petitioner offers finance, human resources, information technology, and procurement services to its affiliates.

XXX

XXX

XXX

XXX

Q30: Mr. Witness, you also mentioned Service Agreements as proof that Petitioner's services were provided to entities engaged in business conducted outside the Philippines. What are these Service Agreements?

A:

For customers that the Petitioner regularly renders services to, Petitioner executes Service Agreements which contain the terms and conditions regarding the scope of work, nature of relationship, the service fee, billings and payments, among others. On the other hand, if the Petitioner only provides ad hoc, one-time or occasional services for its foreign affiliates, then the services are billed and paid on a per transaction basis without need to execute a Service Agreement.

XXX

XXX

XXX

Q35: You mentioned that the Petitioner also provides ad hoc services to foreign affiliates that are not covered by Service Agreements. Does this mean that Petitioner renders services to foreign affiliates even without executing a written contract?

A:

Yes.

There

are approximately 1,800 entities embraced and operating under the Chevron

Group of

Companies worldwide. Given the enormity of Petitioner's organization, it would be impractical and operationally unfeasible to request each and every Chevron affiliate to execute a written contract with the Petitioner before providing the said services. To do so would be counterproductive and negates the very purpose for which our company was organized, which is to provide immediate, efficient, and effective line functions to Chevron companies around the globe.

XXX

XXX

XXX

Q37 You mentioned earlier that Petitioner is paid for the services rendered in the Philippines. Do all the Chevron affiliates pay the Petitioner consideration to perform the finance, human resources, information technology, and procurement functions, whether regular or ad hoc? A: Yes. The Petitioner generally charges all its Chevron affiliates the total cost of the services plus an agreed mark-up cost regardless of whether the services performed are regular or ad hoc, which services are paid for in U S. dollars and accounted for in ~

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue accordance with the rules and regulations of the Bangko Sentral ng Pilipinas. 10 Petitioner's SEC Certificate of Registration and License, and the unrebutted testimony of Mr. Santos, taken together convinces the Court that the services rendered by petitioner to Chevron Corporation fall within the scope of "services other than processing, manufacturing or repacking of goods". Accordingly, the Court reconsiders the previously disallowed zero-rated sales to Chevron Corporation amounting to P212, 7 44,285.44. 3.

Petitioner proved its additional zero-rated sales Upon review of the admitted evidence, the Court finds that the following clients shall additionally be considered as NRFCs:

SEC

Proof of foreign incorporation/registration

Certificate of

Client

Non-

Exhibit No.

Document

Registration

Chevron (Cambodia)

"P-15.2" "P-55.2"

Articles of Incorporation of

Limited

Chevron (Cambodia) Limited

Chevron (TianJin)

"P-15.5" "P-554"; "P-

Certificate of Approval for

Lubricants Co., Ltd.

555"

Establishment of Enterprises with

Foreign Investment in the

People's Republic of China;

Business License of Chevron

(Tianjin) Lubricants Co , Ltd.

Chevron Afnca and

"P-55.13" "P-16.1"; "P-

Amended and Restated Articles of

Latin America

16.2" Incorporation, By-Laws

Exploration and

Production Company (a

Chevron U.S.A Inc.

diVISIOn)- FEABU HQ

Branch

Chevron Asia Pacific

"P-15.9" "P-55.6"

Certificate of Continuance of

Holdings Limited

Chevron Asia Pacific Holdings

Limited with attached

Memorandum of Continuance of

Company Limited By Shares

Chevron Energy

"P-55.13" "P-161"; "P-

Amended and Restated Articles of

Technology Company

16.2" Incorporation; By-Laws Chevron Global Energy, "P-15.16" "P-55.14"

Restated Certificate of

Inc.

Incorporation of Chevron Global

Energy Inc.

-------

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue

Chevron Information

"P-55.13" ··- "P-16.1"; "P-

Amended and Restated Articles of

Technology Company

16.2" Incorporation; By-Laws

Chevron International

"P-15.19" "P-55.7"

Certificate Confirming

Pte. ltd.

Incorporation of Company under

the New Name of Chevron

International Pte. ltd

Chevron Iraq (Sarta)

"P-15.20" "P-55.8"

Certificate of Incorporation with-

Limited

attached Memorandum of

Association of Company Limited by Shares

Chevron Lubricants

"P-15.21" "P-55.9"

Articles of Association of Chevron

Lanka PLC

Lubricants Lanka PLC

-------- -----

Chevron Products

"P-55.13" "P-16.1", "P-

Amended and Restated Articles of

Company (a Chevron

16.2" Incorporation, By-Laws U.SA Inc. Division) ·--

Chevron Products UK

"P-15.27" "P-55.1"

Certificate of Incorporation on

Limited

Change of Name of Chevron

Products UK Limited with

Attached Articles of Association and Memorandum of Association

-_o- ...

Chevron Services

"P-55.13" "P-16.1"; "P-

Amended and Restated Articles of

Company

16.2" Incorporation; By-Laws Chevron Trading Pte.

"P-15.32" "P-55.12"

Business Profiled (Company) of

ltd.

Chevron Trading Pte. Ltd. Issued

by Singapore Accounting and

Corporate Regulatory Authority

(ACRA)

Chevron Upstream

"P-55.13" "P-16.1"; "P-

Amended and Restated Articles of

16.2" Incorporation; By-Laws ------- -

Chevron Overseas

"P-15.39"

"P-55 10"

Certificate of Amendment of

Services Corporation

Certificate of Incorporation of

Chevron Overseas Services

Corporation

Chevron Power and

"P-55.13" "P-16.1"; "P- Amended and Restated Art1cles of

Energy Management

16.2" Incorporation; By-Laws

Company (a Chevron

U.SA Inc. division) -· -· -- On the other hand, with respect to the following recipients of the services, petitioner failed to prove that they are NRFCs doing business outside the Philippines. As a result, the disallowed zero-rated sales should only amount to P224, 168,876.88, to wit: (}.iJ

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue

Zero-rated Sale

Exhibit .

O.R. No : Payor oe Ref No. Date in USD in PHP

First Quarter of CY 2014 7 ~

Chevron Australia Pty Ltd -

“P-39.3" 5138 1/24/14 | — Other 261,699.32 11,852,324 .28 P-39.7 5143 1/24/14 | Chevron Malaysia Limited | 142,119.06 6,436,551.63 "p- Refinaria Panama S. de 39.12 5149 27/14 | RL. 1,489.95 67,479.62

a Chevron (China) -_

39.13" 5151 1/30/14 | Investment - Services 12,821.81 579 647.83 “P- Chevron Australia Pty Ltd 39.19 5158 2/25/14 | — Other 284,642.75 12,684,614.53 "P- —_ Chevron Hong Kong 39.23 5162 2/25/14 Limited 126,815.85 5,651,330.22 Chevron U.S.A. Inc. - "Pp. Chevron Giobal 39.25" 5164 2/25/14 | Downstream 13,854.21 617,389.04 89.27" | 5166 2/25/14 | Chevron Neftegaz Inc. 11,134.35 496,183.16

_ “Chevron Products UK - a

“P- Limited - Trading and 39.28" 5167 2/26/14 | Marine Lubricants Branch | 179,591.71 8,006,747 66 "p_ a CGEI-Global Dnstrm Cost ~ —_ 39.33 5172 3/25/14 | Allocation 110,292.97 4,983, 866.70 ee es ee a | “P- Chevron Australia Pty Ltd 39.35" 5175 3/25/14 | - Other 284 642.75 12,862,302.31 39.44" 5185 3/25/14 | Chevron Neftegaz Inc. 12,493.33 564,542.70

_—_ Chevron Products UK “|

“P- Limited - Trading and 39.45" 5186 3/26/14 | Marine Lubricants Branch 98,411.09 4,438,930 54

Chevron (China)

39.47 5188 3/27/14 Investment - Services 22,539.99 1,015,772.42 a Chevron Munaigas Inc. - P-47.3 N/A 3/31/14 Home Office N/A 544,518.17 7 Chevron Denmark Inc. - 7 —— P-47.3 N/A 3/31/14 | Denmark Branch N/A 511,786.10 Chevron Munaigas Inc. - "P-47 3" N/A 3/31/14 Home Office N/A 559,617.65 - a Chevron Denmark Inc. - OS | “P-47 3" N/A 3/31/14 | Denmark Branch N/A 551,370.32 Chevron Munaigas Inc. - ~ | "P-47 3" N/A 3/31/14 | Home Office N/A 565,922.49 Chevron Holdings, Inc. vs. Commissioner of internal Revenue a Chevron Denmark Inc. -

N/A 3/31/14 | Denmark Branch

“P-47.3”" N/A 557,582.24 Subtotal -- First Quarter 73,548,479.61 “Second Quarter of CY 2014 “pL 39.52" 5193 4/25/14 | Chevron Mataysia Limited | 205,071.84 9,171,370.31 "P- Chevron Australia Pty Ltd 39.53" 5194 4/25/14 | - Other 202,935.02 9,075,805.90 "P- Chevron Hong Kong 39.54" 5195 4/25/14 Limited 172,301.41 7,705,787 57 "Pp. Chevron Canada Limited- 39.60” 5201 4/25/14 Downstream 101,118.66 4 522 301.43 Chevron U.S.A. Inc. - "Pp. Chevron Global 39.66" 5207 4/25/14 | Downstream 4,912.68 219,708.41 39.67" 5208 4/25/14 | Chevron Neftegaz Inc. 8,963.59 400,876.12 "Pp.

39.72” 5223 4/30/14 | Chevron Al Khaiij 53,286.34 2,370, 388.79

Chevron Products UK

"P- Limited - Trading and 39.73" 5224 4/30/14 | Marine Lubricants Branch 74,731.16 3,324 339.86 ‘Pp | Chevron South Africa | 7 39.74" 5225 4/30/14 | (Pty) Limited 156,689.39 6,970,168.59

PPL | Le Chevron (China) BT

39.76" 5227 4/30/14 | Investment - Services 12,997.02 578,159.25 "P- CGE!-Global Dnstrm Cost 39.77" 5228 4/25/14 | Allocation 15,016.79 671,591.68 "Pp. Chevron Pakistan Limited- —_ 39.92" 5242 5/16/14 | Branch sore? | 1,529 664.46

Chevron Products UK

"P- Limited - Trading and 39.93" §243 5/20/14 | Marine Lubricants Branch 90,517.78 3,973,567.61 39,94" 5244 5/27/14 | Chevron Neftegaz Inc. 11,316.75 496,784.95 "p- Chevron (China) —_ 39.96” 5246 5/29/14 | Investment - Services 11,848.65 520,143.19 "pL ee een © ~ 39.98" 5248 6/25/14 | Chevron Neftegaz Inc. 11,316.75 495,479.42 “P- Chevron (China} 39.99" 5249 6/25/14 | Investment - Services 11,857.01 519,133.54 "Pp a Chevron Hong Kong oe 39.105" l 5255 6/25/14 | Limited 155,183.79 6,794, 386.60 “P- Compania Chevron de 39.112" 5263 6/26/14 | Panama, S.A. 25,852.31 1,133,376.16

Ot

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue

Chevron Munaigas Inc. - 6/30/14 | Home Office N/A 404,123.10 Chevron Denmark Inc. - "P_47 6" N/A 6/30/14 | Denmark Branch N/A 395,837.51 : Chevron Munaigas Inc. - "P-47.6" N/A 6/30/14 | Home Office N/A 498,521.68 Chevron Denmark Inc. - "P-47.6" N/A 6/30/14 | Denmark Branch N/A 490,414.81 Chevron Munaigas Inc. - "P47 .6" N/A 6/30/14 | Home Office N/A 498,958.80 [ Chevron Denmark Inc. - "P-47.6" N/A Denmark Branch 490,844.80

L 6/30/14

Subtotal -- Second Quarter

Third Quarter of CY 2014

63,251,734.54 39.121” 5275 7/25/14 | Chevron Malaysia Limited | 188,315.59 8,134,582 72 "pL 39.129" 5283 7/25/14 | Chevron Neftegaz Inc. 11,316.75 488,844.49

Chevron Products UK OO

"P- Limited - Trading and 39.130" 5284 7/28/14 | Marine Lubricants Branch | 181,035.56 7 847,228.44 "P- Chevron (China) 39.132” 5286 7/30/14 | Investment - Services 11,848.57 513,592.11 Chevron Munaigas Inc. - "P-47.7" N/A 7/31/14 | Home Office N/A 492,908.19 —_ - Chevron Denmark Inc. - "P-47.7" N/A 7/31/14 | Denmark Branch N/A 484 892.59 “P- Chevron Hong Kong 39.139 5294 8/26/14 | Limited 160,649.43 7,042,938.62 e __ 39.145" 5300 8/26/14 | Chevron Neftegaz Inc. 11,316.75 496,131.08 [ Chevron Munaigas Inc. - "P-47.8 N/A 8/31/14 | Home Office N/A 498,958.80 Chevron Denmark Inc. - “P-47.8" N/A 8/31/44 | Denmark Branch N/A 490,844 80

Ppl | Compania Chevron de —_

39.146" 5301 9/26/14 | Panama, S.A. 13,961.95 620,531.12

Chevron (China)

39.148 5303 9/2/14 Investment - Services 11,848.58 517,179.40 "pL as ee memes omer armas oF 0: 39.155 5311 9/25/14 | Chevron Malaysia Limited | 125,640.58 5,593,970.62 "P- Chevron Hong Kong 39.159" 5315 9/25/14 | Limited 78,824 88 3,509 567.23

Y

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue

——

P_

39.161" 5317 9/25/14 | Chevron Neftegaz Inc. 11,316.75 sone "Pp. | | CGEI-Global Dnstrm Cost 39.162" 5318 9/26/14 | Allocation 588,264.50 2,909,402 22

: — 7 Chevron Products UK

"P- Limited - Trading and 39.163” 5319 9/26/14 | Marine Lubricants Branch | 181,035.56 8,046,024.89 "Po ~~~ | Chevron South Africa 7 39.164" 5320 9/26/14 | (Pty) Limited 126,108.57 5,604 825.33 Chevron U.S.A. Inc. - "Pp. Chevron Global 39.166” 5322 9/26/14 | Downstream 34,028.15 | 1,512,362.22 "P- | Chevron (China) 39.172" 5328 9/29/14 | Investment - Services 11,848.57 530,137.36 Chevron Munaigas inc. - : "P-47 9" N/A 9/30/14 | Home Office N/A 506,734.19 | Chevron Denmark Inc. - “P-47,9" N/A 9/30/14 | Denmark Branch 498 493.77

Subtotal -- Third Quarter

56,844,012.61

Fourth Quarter of CY 2014

39.174" | 5331 10/1/14 | Chevron Al Khalij 68,349.20 3,077 406.57 “Dp. __ __ 39.185" 5343 10/24/14 | Chevron Neftegaz Inc. 11,316.75 506,568.93

Chevron (China) 7

5345 10/30/14 | Investment - Services 11,848.58 530,137.81 Chevron Munaigas Inc. - N/A 10/31/14 | Home Office N/A 509,912.64 "Pp. : ~~~} Chevron Denmark Inc. - -_ ~ | 47.10 N/A 10/31/14 | Denmark Branch N/A 501,620.52

i. “P- Chevron Hong Kong 39.195 5354 11/25/14 | Limited 160,587.00 7,210,911.54 "pe 39.196" 5355 11/25/14 | Chevron Malaysia Limited | 125,580.61 | 5,639,003.59 39.199" 5358 11/25/14 | Chevron Neftegaz Inc. 11,316.75 508,161.20

Chevron Products UK

"P- Limited - Trading and 39.203 5362 11/26/14 | Marine Lubricants Branch | 281,438.45 12,648,919.10 “Pp. Chevron Pakistan Limited- 7 39.206 5365 11/28/14 | Branch 8,693.77 390,555.71 “pL Chevron Munaigas Inc.- 7 47.11" N/A 11/30/14 | Home Office N/A 511,287.06 “p. Chevron Denmark Inc. - 47.11" N/A 41/30/14 | Denmark Branch N/A 502,972.60 Chevron Holdings, Inc. vs. Commissioner of Internal Revenue - "P-

Chevron (China)

39.211" 5381 12/29/14

Investment- Services

11,83331 "P- Chevron Muna1gas Inc. - 47.12"

N/A

12/31/14

Home Office

N/A

------1-- --- "P- Chevron Denmark Inc. - 47.12"

N/A

12/31/14

Denmark Branch

N/A

Subtotal-- Fourth Quarter

--- -- -- - -------

Total

528,981.22 (1 ,671 ,886.80) ---~---- (869, 901. 57) 30,524,650.12 -- 224,168,876.88 Of the zero-rated sales to the NRFCs, the total amount of P60,930,491.177 shall be disallowed for petitioner's failure to prove the payment for such sales are in an acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas, i.e., the payments are not supported by proof of inward remittance, as shown below:

Exhibit

Zero-rated Sale

Ref No.

O.R. No.

O.R. Date

Payor

~--- - ··-

in USD in PHP

First Quarter of CY 2014

----·-- --- --- -----

Chevron

Products

Company (a

Chevron

U.SA Inc.

"P-39.34" 5173 3/25/14

Division)

270,372.04 12,217,444.19

Subtotal -- First Quarter

12,217,444.19

Second Quarter of CY 2014

Chevron

Products

Company (a

Chevron

U.SA Inc.

"P-39.50" 5190 4/25/14

Division)

567,294.86 25,370,968.69

Chevron

Asia Pacific

Holdings

"P-39.78" 5229 4/25/14

Branch

2,378.93 106,392.22

Subtotal-- Second Quarter

25,477,360.91

Third Quarter of CY 2014

- (f/

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue

------·--

Chevron

Products

Company (a

Chevron

U.SA Inc.

"P-47.9"

N/A

9/30/14

Division)

N/A

23,235,686.67 -

Subtotal-- Third Quarter

23,235,686.67

Total

,. 60,930,491.77

L_ _____

..

---- Moreover, for petitioner's failure to comply with the invoicing requirements under Section 113 of the NIRC of 1997, as amended, and Section 4.113-1 of Revenue Regulations (RR) No. 16-2005, the following disallowed zero-rated sales are sustained for petitioner's failure to submit valid VAT official receipts (ORs) for sales rendered to the abovementioned NRFC clients:

Zero-rated Sale

Exhibit

O.R. No.

O.R. Date

Payor

Ref No.

in

USD

in PHP

-------- --· ---

First Quarter of CY 2014

-

Chevron Global

"P-47.3"

N/A

3/31/14 Energy Inc.

N/A

I"

1,820,324.25 .

Chevron Global

"P-47.3"

N/A

3/31/14 Energy Inc.

N/A

941,874.78

Chevron Global

"P-47.3"

N/A

3/31/14 Energy Inc.

N/A

953,705.27 --·-

Subtotal-- First Quarter

3,715,904.30 -· ----· --- ----------------- --

Second Quarter of CY 2014

--

Chevron

Lubricants

"P-47.6"

N/A

6/30/14

Lanka PLC

N/A

239,242.00 - ------- ---- ------

Chevron Global

"P-47.6"

N/A

6/30/14

Energy Inc

N/A

1,091,037.60 ----·

Chevron Global

"P-47.6"

N/A

6/30/14 Energy Inc.

N/A

973,720.11 ____ , ___

Chevron Global

"P-47.6"

N/A

6/30/14 Energy Inc.

N/A

975,244.19

Subtotal-- Second Quarter

3,279,243.90

Third Quarter of CY 2014

1,: H"'"""

Information

Technology

"P-47.7"

N/A

31/14

Company

N/A

150,322,123.54

C11

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue

Chevron Global

"P-47.7"

N/A

7/31/14 Energy Inc.

N/A

Chevron Global

"P-47.8"

N/A

8/31/14 Energy Inc.

N/A

~"-- Chevron U.S.A.

Inc. (Singapore "P-47.9"

N/A

9/30/14

Branch)

N/A

. -

Chevron Global

"P-47.9"

N/A

9/30/14 Energy Inc.

N/A

Subtotal-- Third Quarter

Fourth Quarter of CY 2014

Chevron Global

"P-47.10"

N/A

10/31/14 Energy Inc.

N/A

Chevron Africa and Latin

America

Exploration and

Production

Company (a

Chevron U.SA Inc. division)-

FEABU HQ

"P-47.10"

N/A

10/31/14

Branch

N/A

Chevron Power and Energy

Management

Company (a

Chevron U.S.A "P-47.10"

N/A

10/31/14 Inc. division)

N/A

. ------

Chevron Global

"P-4711"

N/A

11/30/14 Energy Inc.

N/A

Chevron Afnca and Latin

America

Exploration and

Production

Company (a

Chevron U S.A Inc. division)-

FEABU HQ

"P-47 11"

N/A

11/30/14

Branch

N/A

Chevron Global

"P-47.12"

N/A

12/31/14 Energy Inc.

N/A

Chevron Africa and Latin

America

Exploration and

Production

Company (a

"P-47 12"

N/A

12/31/14 Chevron U.S.A

N/A

Inc division)- - . - 962,732.78 974,551.07 4,722,142.92 -·-·------ 989,737.31 157,971,287.62 995,945.34 5,906,885.30 32,989.70 ·-- 997,339.62 ' ' 987,134.32 (666,477.85) (1 ,611 ,06040) ~

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue

-

FEABU HQ

Branch

·-··

Subtotal -- Fourth Quarter

- ·- 6,642,756.03

Total

,.

171,609,191.85 In summary, upon review and revalidation of the total amount of valid VAT zero-rated sales of petitioner, out of the P3,473,747,474.52 zero-rated sales declared per VAT returns for CY 2014, only the amount of P3,017,038,914.02 qualifies for VAT zero-rating, as follows: 1st Quarter 2nd Quarter Zero-rated sales declared per VAT returns 1'862.939.005 71 1"909.392.301.24

Less·

Disallowances

Sales to those not considered

as NRFCs

73.548.479 61 63.251.734 54 No proof of

Inward

remittance 12.217.444.19 25.477.360.91 -

Without VAT

Official Receipts

3,715.904 30 3.279,243.90 Valid zero- rated sales P773,457 ,177.61 1"817,383,961.89

Petitioner

incurred/paid input taxes attributable to zero-rated sales and said input taxes were not applied against any output VAT liability 3rd Quarter 4th Quarter

Total

--~ 1"998.331.794.66 F'703.084.372 91 F'3.473.747.474 52 56.844.012 61 30.524.650 12 224.168.876 88 23.235.686 67 - 60,930.491.77 -· 157,971,287.62 6,642.756 03 171.609.19185 P760,280,807.76 P665,916,966.76 P3,017,038,914.02 For the input VAT on domestic purchases disallowed by the Court due to unreadable information on the VAT ORs, petitioner claims that these exhibits with total input VAT of P3,953,719.98 were documents marked, scanned and submitted to the Court by the ICPA. In the interest of justice, petitioner requested leave of court to substitute the copy of the following Exhibits: 11 11 Omnibus Motion, pp. 23-25; granted in Resolution dated May 31, 2021. unpaginated. Docket

Vol VII

~

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue

·---

Exhibit

Description

Official Receipt No. 135063 issued by Hewlett-Packard Phils. Corporation on P-31 .458 January 3, 2014 Official Receipt No. 135920 issued by Hewlett-Packard Phils. Corporation on P-31.666 February 10, 2014 -··-- --- Official Receipt No. 136705 issued by Hewlett-Packard Phils. Corporation on March P-31.1 037 19, 2014 Official Receipt No. 44412 issued by RCBC P-31.2428 Realty Corporation on August 6, 2014 Official Receipt No. 44422 issued by RCBC P-31.2448 Realty Corporation on August 6, 2014 Official Receipt No. 44424 issued by RCBC P-31.2452 Realty Corporation on August 6, 2014 Official Receipt No. 005 issued by CSC Information Technology (Philippines), Inc. on P-31.2584 August 9, 2014 Official Receipt No. 001 issued by CSC Information Technology (Philippines), Inc. on P-31.2590 August 9, 2014 Official Receipt No. 013 issued by CSC Information Technology (Philippines), Inc. on P-31.2602 August 9, 2014 Official Receipt No. 012 issued by CSC Information Technology (Philippines), Inc. on P-31.2604 August 9, 2014 Official Receipt No. 45063 issued by RCBC P-31.2762 Realty Corporation on September 9, 2014 -·-·-· ----- Official Receipt No. 45062 issued by RCBC P-31.2766 Realty Corporation on September 9, 2014 Sales Invoice No. 010172983 issued by Integrated Computer Systems, Inc. on P-32.7 January 21, 2014 -· ···-- ---.--- ····- Sales Invoice No. 010172984 issued by Integrated Computer Systems, Inc. on P-32.9 January 21, 2014

Amount

Disallowed by

Court

1" 35,288.40 I

I

36,655.78 141 ,234.60 !

579,398.67 40,364.42 2,378,208.60 84,668.66 50,693.32 111 ,005.28 16,827.87 129,873.50 ---- 253,454.93 2,524.29 - -- 945.54

Cf1

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue

...

Sales invoice No. 210079039 issued by Integrated Computer Systems, Inc. on P-32.19 February 11, 2014 Sales invoice No. 310174836 issued by Integrated Computer Systems, Inc. on P-32.25 February 20, 2014 Sales invoice No. 310174958 issued by Integrated Computer Systems, Inc. on P-32.27 February 24, 2014 Sales Invoice No. 310176217 issued by Integrated Computer Systems, Inc. on March P-32.49 14, 2014 Sales Invoice No. 310173843 issued by Integrated Computer Systems, Inc. on P-32.53 February 15, 2014 Sales Invoice No. 310176218 issued by Integrated Computer Systems, Inc. on March P-32.59 14,2014 Sales Invoice No. 310176219 issued by Integrated Computer Systems, Inc. on March P-32.61 14, 2014 Sales Invoice No. 210074359 issued by Integrated Computer Systems, Inc. on March P-32.63 24, 2014 Sales Invoice No. 310177136 issued by Integrated Computer Systems, Inc. on March P-32.67 31, 2014 Sales Invoice No. 310177137 issued by Integrated Computer Systems, Inc. on March P-32.69 31,2014 -··· Sales Invoice no. 171073 issued by Jjed P-32.204 Phils. Inc. on July 28, 2014 Sales Invoice No. 310185305 issued by Integrated Computer Systems, Inc. on August P-32.230 27, 2014 -- ---- - Sales Invoice No. 60559 issued by Personal Computer Specialists, Inc. on October 17, P-32.252 2014.

Sales Invoice No. 60599 issued by Personal Computer Specialists, Inc. on November 11, P-32.254 2014

Total

I

16,971.44 2,528.57 6,985.71 9,055.18 1,470.00 120.54 466.08 .

.

29,700.00 1,928.57 1,406.25 - ---- 15,938.64 3,857.14 1,452.00 696.00 p 3,953,719.98 c,t

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue

Upon evaluation of these documents, as substituted, the same were found to be legible and compliant with the invoicing requirements provided under the law and regulations. Thus, the input VAT amounting to ~3,953,719.98 shall be allowed. Anent the disallowance by the Court of input VAT on domestic purchases of services due to alterations on payor details or amounts made without authorized countersignature, petitioner prays that the Court take a closer look at the following exhibits as it can be gleaned that the countersignatures affixed to the erasures are similar to the signature affixed on top of the authorized signatory's portion of the official receipts. Moreover, petitioner claims that the erasures in most of these documents are not material, as follows: 12

Amount

Exhibit

Description

Disallowed by

Court

Official Receipt No. 65856 issued by Facilities P-31.1749 Managers, Inc. on June 13,2014

I"

82,013.18 Official Receipt No. 139875 issued by Hewlett-Packard Phils. Corporation issued on P-31.2416 August 5, 2014 238,376.31 Official Receipt No. 139893 issued by Hewlett-Packard Phils. Corporation issued on P-31.2570 August 22, 2014 57,985.80 Official Receipt No. 0534 issued by JLGT P-31.2992 Marketing on October 20, 2014 235,017.24 Official Receipt No. 0536 issued by JLGT P-31.3016 Marketing on October 20, 2014 57,002.14 --·- .

.

Official Receipt No. 221869 issued by Makati P-31.3076 Shangri-la on october 24, 2014 99,879.90 ..

Official Receipt issued by Trends & P-31.3078 Technologies, Inc. on October 24, 2014 477,600.52 Official Receipt No. 141505 issued by Hewlett-Packard Phils. Corporation on P-31.3108 November 20, 2014 333,674.20 Official Receipt No. 67554 issued by Facilities P-31.3126 Managers, Inc. on October 22, 2014 82,680.34 P-31.3159 Official Receipt No. 67602 issued by Facilities 1 148,215.57 Managers, Inc. on October 31, 2014 .

.

·--- 1' Omnibus Motion. pp 25-27 ~

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue

.

Official Receipt No. 67601 issued by Facilities P-31.3175 Managers, Inc. on October 31,2014 Official Receipt No. 141897 issued by Facilities Managers, Inc. on November 3, P-31.3211 2014 ---- Official Receipt No. 44920 issued by Lane

Archive Technologies Corporation on

P-31.3245 November 10, 2014 Official Receipt No. 67680 issued by Facilities P-31.3316 Managers, Inc. on November 28, 2014 Official Receipt No. 67682 issued by Facilities P-31.3330 Managers, Inc. on November 28, 2014 Official Receipt No. 29608 issued by Trends P-31.3334 & Technologies, Inc. on November 28, 2014 Official Receipt No. 0541 issued by JLGT P-31.3342 Marketing on November 28, 2014 r---- Official Receipt No. 143277 issued by Hewlett-Packard Phils. Corporation on P-31.3354 November 20, 2014 Official Receipt dated November 28, 2014 P-31.3332 issued by Ultra Modular Concept ~- Official Receipt No. 84836 issued by Ascott P-31.3471 Makati, Inc. on December 2, 2014 Invoice No. 103344 issued by Ascott Makati, P-31.3472 Inc. received on September 30, 2014 Official Receipt No. 0546 issued by JLGT P-31.3627 Marketing on December 22, 2014 ..

..

Official Receipt No. 142943 issued by Hewlett-Packard Phils. Corporation on P-31.3631 December 29, 2014 --· Official Receipt No. 7554 issued by Delta P-31.3647 Rent-A-Car Corp. on December 22, 2014 Official Receipt No. 142945 issued by Hewlett-Packard Phils. Corporation on P-31.3661 December 29, 2014 r-·--·- ..

·-------- Official Receipt No. 142941 issued by Hewlett-Packard Phils. Corporation on P-31.3665 December 29, 2014 Official Receipt No. 87488 issued by Ascott P-31.3683 Makati, Inc. on December 23, 2014 ..

139,743.82 238,376.31 - 83,978.40 93,868.98 71,034.70 1,111,216.80 59,066.22 128,283.60 129,085.02 24,480.00 155,761.87 . .

98,372.70 .

--- 60,757.37 62,089.80 .

.

62,089.80 202,278.58 - ..

_______ _L __

..

------

C11

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue

-,---- - . - Official Receipt No. 45387 issued by Lane

Archive Technologies Corporation on

P-31.3696 December 29, 2014 Official Receipt No. 45386 issued by Lane

Archive Technologies Corporation on

P-31.3706 December 29, 2014 Official Receipt No. 142942 issued by Hewlett-Packard Phils. Corporation on P-31.3720 December 29, 2014 -·--- ~--- --·-·- Official Receipt No. 093518 issued by Angara

Abello Concepcion Regala & Cruz on

P-31.3730 December 29, 2014 Official Receipt No. 63545 issued by Ascott P-31.652 Makati, Inc. on February 7, 2014 --- - - Official Receipt No. 68011 issued by Ascott P-31.872 Makati, Inc. on March 7, 2014 Official Receipt No. 65633 issued by Ascott P-31.910 Makati, Inc. on February 27, 2014 Official Receipt No. 70709 issued by Ascott P-31.1204 Makati, Inc. on April15, 2014 --· - -- Official Receipt No. 9646 issued by Delta P-31.1597 Rent-A-Car Corp on May 30, 2014 Official Receipt No. 0543 issued by JLGT P-31.3370 Marketing on November 28, 2014 Official Receipt No. 3168 issued by

Benchmark Par Excellence Tours and

P-31.3384 Transport Inc. November 18, 2014

Total

- 38,823.93 120,869.76 43,110.19 34,938.00 47,736.00 75,182.10 48,960.00 24,480.00 44,701.49 101,607.94 12,795.41 p 5,126,133.99 The counter-signature on the alteration or insertion of any figures appearing on the face of a VAT official receipt/invoice should be similar to or identical with the signature of the payee's authorized representative. If the counter-signature is not similar or identical, it could not be ascertained whether the person who counter-signed the alterations or who made the additions was authorized. While petitioner had the right to request its supplier to issue a compliant VAT official receipt/invoice, it had the corresponding obligation to check whether the insertions or alterations were properly validated or countersigned by the authorized signatory. 13

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue

Upon re-evaluation of the foregoing exhibits, the Court maintains that said exhibits, except for the following ORs in the total amount of P873,842.53, show alterations which were made without authorized countersignatures:

Exhibit

Description

Allowed

Official Receipt No. 139875 issued by Hewlett-Packard Phils. Corporation issued P-31.2416 on August 5, 2014 p 238,376.31 Official Receipt No. 139893 issued by Hewlett-Packard Phils. Corporation issued P-31.2570 on August 22, 2014 57,985.80 -~-·--··-- ___ , ____ --- ------------ Official Receipt No. 221869 issued by P-31.3076 Makati Shangri-la on October 24, 2014 99,879.90 Official Receipt issued by Trends & P-31.3078 Technologies, Inc. on October 24, 2014 477,600.52

Total

p 873,842.53 Thus, the Court reiterates that the following VAT ORs shall be disallowed for the following specific reasons:

Reason for

Exhibit

Description

Input VAT

Sustained

Disallowance

Not authorized Official Receipt No. 65856 issued countersignature by Facilities Managers, Inc. on for change in P-31.1749 June 13, 2014 p 82,013.18 VAT amount - Not authorized countersignature Official Receipt No. 0534 issued by for erasure of JLGT Marketing on October 20,

VAT Exempt

P-31.2992 2014 235,017.24 Sales amount - -·- Not authorized countersignature Official Receipt No. 0536 issued by for erasure of JLGT Marketing on October 20,

VAT Exempt

P-31.3016 2014 57,002.14 Sales amount Not authorized Official Receipt No. 141505 issued countersignature by Hewlett-Packard Phils. for erasure of Corporation on November 20,

VAT Exempt

P-31.3108 2014 333,674.20 Sales amount

I

~

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue

Official Receipt No. 67554 issued by Facilities Managers, Inc. on P-31.3126 October 22, 2014 82,680.34 Official Receipt No. 67602 issued by Facilities Managers, Inc. on P-31.3159 October 31, 2014 148,215.57 Official Receipt No. 67601 issued by Facilities Managers, Inc. on P-31.3175 October 31, 2014 139,743.82 Official Receipt No. 141897 issued by Facilities Managers, Inc. on P-31.3211 November 3, 2014 238,376.31 Official Receipt No. 44920 issued

by Lane Archive Technologies

Corporation on November 10, P-31.3245 2014 83,978.40 --· ··- -- Official Receipt No. 67680 issued by Facilities Managers, Inc. on P-31.3316 November 28, 2014 93,868.98 Official Receipt No. 67682 issued by Facilities Managers, Inc. on P-31.3330 November 28, 2014 71,034.70 Official Receipt No. 29608 issued by Trends & Technologies, Inc. on P-31.3334 November 28, 2014 1,111,216.80 Official Receipt No. 0541 issued by JLGT Marketing on November 28, P-31.3342 2014 59,066.22 Official Receipt No. 143277 issued by Hewlett-Packard Phils. I P-31.3354 Corporation on November 20, 2014 128,283.60 Not authorized countersignature for erasure of

VAT Exempt

Sales amount Not authorized countersignature for erasure of

VAT Exempt

Sales amount Not authorized countersignature for erasure of

VAT Exempt

Sales amount Not authorized countersignature for erasure of

VAT Exempt

Sales amount Not authorized countersignature for change in VA Table sale Not authorized countersignature for erasure of

VAT Exempt

Sales amount Not authorized countersignature for erasure of

VAT Exempt

Sales amount Not authorized countersignature for change in VA Table sale

and VAT

amount Not authorized countersignature for erasure of

VAT Exempt

Sales amount Not authorized countersignature for erasure of 01

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue

Official Receipt dated November 28, 2014 issued by Ultra Modular P-31.3332

Concept

129,085.02 Official Receipt No. 84836 issued by Ascott Makati, Inc. on P-31.3471 December 2, 2014 Invoice No. 103344 issued by Ascott Makati, Inc. received on P-31.3472 September 30, 2014 24,480.00 Official Receipt No. 0546 issued by JLGT Marketing on December 22, P-31.3627 2014 155,761.87 Official Receipt No. 142943 issued by Hewlett-Packard Phils. Corporation on December 29, P-31.3631 2014 98,372.70 f--- Official Receipt No. 7554 issued by Delta Rent-A-Car Corp. on P-31.3647 December 22, 2014 60,757.37 ._ ___

VAT Exempt

Sales amount Exhibit not submitted No authorized countersignature for strikethrough

of VAT Exempt

sale Not authorized countersignature for erasure of

VAT Exempt

Sales amount Not authorized countersignature for erasure of

VAT Exempt

Sales amount No authorized countersignature for erasure of

VAT Exempt

Sales amount -··- ··- --· Not authorized Official Receipt No. 142945 issued countersignature by Hewlett-Packard Phils. for erasure of Corporation on December 29,

VAT Exempt

P-31.3661 2014 62,089.80 Sales amount Not authorized Official Receipt No. 142941 issued countersignature by Hewlett-Packard Phils. for erasure of Corporation on December 29,

VAT Exempt

P-31.3665 2014 62,089.80 Sales amount Not authorized countersignature Official Receipt No. 87488 issued for change of by Ascott Makati, Inc. on

VAT Exempt

P-31.3683 December 23, 2014 202,278.58 Sales amount Not authorized Official Receipt No. 45387 issued countersignature

by Lane Archive Technologies

for erasure of Corporation on December 29,

VAT Exempt

P-31.3696 2014 38,823.93 Sales amount ---- --- -- ·- ------- -- ----- P-31.3706 Official Receipt No. 45386 issued 120,869.76 Not authorized

by Lane Archive Technologies

countersignature ~

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue

- ---~-·- -- '.

Corporation on December 29, 2014 Official Receipt No. 142942 issued by Hewlett-Packard Phils. Corporation on December 29, P-31.3720 2014 Official Receipt No. 093518 issued

by Angara Abello Concepcion

Regala & Cruz on December 29, P-31.3730 2014 Official Receipt No. 63545 issued by Ascott Makati, Inc. on February P-31.652 7, 2014 Official Receipt No. 68011 issued by Ascott Makati, Inc. on March 7, P-31.872 2014 Official Receipt No. 65633 issued by Ascott Makati, Inc. on February P-31.910 27, 2014 Official Receipt No. 70709 issued by Ascott Makati, Inc. on April 15, P-31.1204 2014 Official Receipt No. 9646 issued by Delta Rent-A-Car Corp on May 30, P-31.1597 2014 Official Receipt No. 0543 issued by JLGT Marketing on November 28, P-31.3370 2014 Official Receipt No. 3168 issued by

Benchmark Par Excellence Tours

and Transport Inc. November 18, P-31.3384 2014 -- r---·~·---

Total

Petitioner

failed to substantiate its alleged input VAT carried over from previous periods 43,110.19 34,938.00 47,736.00 75,182.10 48,960.00 24,480.00 44,701.49 101,607.94 12,795.41 p 4,252,291.46 for change of VA Table sale Not authorized countersignature for erasure of

VAT Exempt

Sales amount Not authorized countersignature for strikethrough

of VAT Exempt

Sales amount Exhibit not submitted Exhibit not submitted Exhibit not submitted Exhibit not submitted Exhibit not submitted Not authorized countersignature for erasure of

VAT Exempt

Sales amount Not authorized countersignature for strikethrough

of VAT Exempt

Sales amount ---------~---- As regards the disallowance of input VAT carry-over, petitioner submits that the existence of its reported input VAT carry-over from the

&I

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue previous quarters are shown by petitioner's Amended Quarterly VAT returns for the four quarters of TY 2014 which were formally offered in evidence. 14 Hence, petitioner contends that it was erroneous for the Court to conclude that the documents submitted by petitioner are insufficient to prove the existence of its reported input VAT carry-over from the previous quarter. Moreover, petitioner maintains that submission of VAT invoices/receipts to prove the existence of reported input VAT carry-over from the previous year is not among the requirements to prove entitlement to a claim for refund. 15 The Court does not agree. It bears stressing that a claimant has the burden of proof to establish the factual basis of his or her claim for tax credit or refund. 16 Tax refunds are in the nature of tax exemptions. As such, they are regarded as in derogation of sovereign authority and to be construed strictissimi juris against the person or entity claiming the refund. 17 The pieces of evidence presented entitling a taxpayer to an exemption are also strictissimi scrutinized and must be duly proven. 18 Sections 11 O(A)(1) and (B) of the NIRC of 1997, as amended, requires that any input VAT shall be creditable against the output VAT only if the same is evidenced by a VAT official receipt/invoice issued in accordance with Section 113 of the NIRC of 1997, as amended. In the computation of the output VAT liability for the period, prior year's excess input VAT credits may be utilized to cover for such liability. However, the law mandates strict compliance with the invoicing requirements as it is the only way to determine the veracity of petitioner's refund claim. 19 The importance of submitting VAT official receipts/invoices as supporting documents in a claim for refund is emphasized by the Supreme Court in At/as Consolidated Mining and Development Corporation vs. Commissioner of Internal Revenue, 20 thus: "x x x First, a judicial claim for refund or tax credit in the CTA is by no means an original action but rather an appeal by way 14 Omnibus Motion. p 27.

15 Omnibus Motion, p. 29. 16 Citibank N.A. vs. Court of Appeals and Commissioner of Internal Revenue. G.R No. 107434, October 10, 1997 17 Commissioner of internal Revenue vs. S.C Johnson and Son, Inc, G.R. No. 127105, June 25, 1999 18 Kepco Ph1iippmes Corp. vs. Commissioner of Internal Revenue, G.R. No. 179961, January 31, 2011 19 /d.

20 G.R No 145526, March 16, 2007 (11

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue of petition for review of a previous, unsuccessful administrative claim. Therefore, as in every appeal or petition for review, a petitioner has to convince the appellate court that the quasi-judicial agency a quo did not have any reason to deny its claims. In this case, it was necessary for petitioner to show the CTA not only that it was entitled under substantive law to the grant of its claims but also that it satisfied all the documentary and evidentiary requirements for an administrative claim for refund or tax credit. Second, cases filed in the CTA are litigated de novo. Thus, a petitioner should prove every minute aspect of its cases by presenting, formally offering and submitting its evidence to the CTA. Since it is crucial for a petitioner in a judicial claim for refund or tax credit to show that its administrative claim should have been granted in the first place, part of the evidence to be submitted to the CTA must necessarily include whatever is required for the successful prosecution of an administrative claim." (Emphasis supplied) Contrary to petitioner's assertion, the aspects that must be substantiated by petitioner include its input tax carry-over from the previous taxable period especially since its current output tax liability is offset against the said carried-over input tax. In this case, petitioner merely relied on its VAT returns to show the amount of its input VAT carry-over, and not with the VAT official receipts/invoices as required by Sections 11 O(A)(1) and (B) of the NIRC of 1997, as amended 21 Thus, upon re-evaluation by the Court, the total additional input VAT of petitioner stands at P4,827,562.51, as follows:

Particular

Amount

Previously disallowed ORs due to unreadable !" 3,953,719.98 supporting documents Previously disallowed ORs due to alterations 873,842.53 without authorized countersignature

Total Additional Valid Input VAT

!" 4,827,562.51 Combining the total additional valid input VAT amount to the total allowable input VAT as determined in the assailed Decision, the total adjusted allowable input VAT now stands at P74,020,907.31, computed below:

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue

Total Allowable Input VAT per Decision

f" 69,193,344.80 Add: Allowed Input VAT upon reevaluation 4,827,562.51

Total Adjusted Allowable Input VAT

f" 74,020,907.31 The total adjusted allowable input VAT shall then be allocated to petitioner's VATable and VAT-zero rated sales in accordance with Section 112(A) of the NIRC of 1997, as amended, as follows:

Total Taxable Sales per VAT Return

f" 139,122,645.90

Divided by the Reported Total Sales per

Quarterly VAT Returns

3,612,870,12042 """"--

Multiplied by the Total Allowable Input

VAT

74,020,907.31

Valid Input VAT Allocated to Total

Taxable Sales Subject to 12% VAT

p 2,850,361.11 ~ - ---- -~

Total Zero-rated Sales per VAT Return

f" 3,743,747,474.52 -·· -· -----~----

Divided by the Reported Total Sales per

Quarterly VAT Returns

3,612,870,12042

Multiplied by the Total Allowable Input

VAT

74,020,907.31

Valid Input VAT Allocated to Total Zero-

rated Sales p 71,170,546.20 ----- -- Since petitioner's valid input VAT in the amount ofP2,850,361.11 allocated to sales subject to 12% VAT is insufficient to cover the P16,694,717.51 output VAT liability reported in its Quarterly VAT Returns, the output VAT still due against petitioner is P13,844,356.40, computed as follows:

Output VAT

f" 16,694,717.51

Valid Input VAT Allocated to Taxable Sales

Subject to 12% VAT

2,850,361.11

Output VAT Still Due

p 13,844,356.40 The valid input VAT attributable to zero-rated sales in the amount of P71, 170,546.20 shall then be utilized to offset the balance of the output tax due in the amount of P13,844,356.40. Thus, there is excess valid input VAT attributable to total reported zero-rated sales o~

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue

P57,326, 189.80. This amount shall be further allocated based on the valid zero-rated sales of P3,017,038,914.02, out of the total reported or declared zero-rated sales of P3,473,747,474.52, computed below:

Valid Input VAT Allocated to Reported Zero-

71.170,546.20 I rated Sales p Ou_tput VAT Still Due ··-- ...

13,844,356.40 .

Excess Valid Input VAT Allocated to

57.326.1~980 I

Reported Zero-rated Sales

Divided by Total Reported Zero-rated Sales

3,473,747,474.52

Multiplied by Total Valid Zero-rated Sales

3,017,038,914.02

Valid Input VAT Attributable to Valid

Zero-rated Sales

p 49,789,268.42 In summary, petitioner has sufficiently proven that it is entitled to a total VAT refund of P49,789,268.42 or an additional amount of P43,345,278.54, as shown below: 'Amount of refund granted in the assailed p 6,443,989.88 Additional refundable amount per this

43,345,278.54 Total Valid Input VAT attributable to valid zero-rated sales p 49,789,268.42 -·---- ..

----- ...

In view of the foregoing, as petitioner was able to discharge its burden for its entitlement to a refund in the total amount of P49,789,268.42, representing its excess and unutilized input VAT attributable to zero-rated sales for the first to fourth quarters of CY 2014, the Court finds no reason not to grant the same to petitioner.

WHEREFORE, premises considered, the exhibits offered 1n petitioner's Supplemental Formal Offer of Evidence filed on November 4, 2021 are ADMITTED. Petitioner's Motion for Reconsideration (Re: Decision dated October 7, 2020) filed on October 28, 2020 is PARTIALLY GRANTED. Accordingly, the Decision of this Court dated October 7, 2020 is MODIFIED. Respondent Commissioner of Internal Revenue is hereby ORDERED TO REFUND OR ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner Chevron Holdings, Inc. in the amooot of P49, 789,268.42, cepce,eotlog the lattec'' exoe" ao~ Chevron Holdings, Inc. vs. Commissioner of Internal Revenue unutilized input VAT attributable to zero-rated sales for the four quarters of calendar year 2014.

Presiding Justice

WE CONCUR:

C~

.1:.-

(NO PART)

CATHERINE T. MA AHAN MARIAN IVY F. REYES-FAJARDO

Associate Justice

Associate Justice

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above amended decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. ROMAN G. DEL ROSARIO

Presiding Justice