Court of Tax Appeals · Third Division

Chevron Holdings, Inc. vs. Commissioner of Internal Revenue

CTA Case No. 9350 February 12, 2020

REPUBLIC OF THE PHILIPPINES

COURT OF TAX APPEALS

Quezon City

Third Division

CHEVRON HOLDINGS, INC.,

Petitioner,

- versus -

COMMISSIONER OF INTERNAL

REVENUE,

CTA CASE NOS. 9350 & 9430

Iviembers:

UY, Chairperson

RINGPIS-LIBAN, and

MODESTO-SAN PEDRO, .Jl.

Promulgated:

Respondent.

FF 8 1 2 2020

.:r.::;;. o .e· V>1 •

X-----------------------------------------------------------------------------------

----------X

DECISION

RINGPIS-LIBAN, ].:

The Case

These Petitions for Review flied by Petitioner Chevron Holdings Inc. against Respondent Commissioner of Internal Revenue on May 16, 2016 (CTA Case No. 9350) and August 17, 2016 (CTr\ Case No. 9430), pray for the refund of unutilized input taxes allegedly attributable to Petitioner's zero-rated sales/ receipts for the first quarter of taxable year ("TY") 2015 in the amount of Php14,516,165.27 covered by CTA Case No. 9350; and for the second quarter of the same TY in the amount of Php18,968,294.79 covered in CTA Case No. 9430.1

The Partie//'

Docket (CTA Case No. 9350), Pre-Trial Order dated May 02, 2017, Statement of the Case, p. 1771.

Petitioner Chevron Holdings Inc. is represented herein by its counsel Du- Baladad & Associates with office at 20'h Floor, Chatham House, Rufino corner Valero Streets, Salcedo Village, Makati City, where it may be served notices and other processes of this Court2 Petitioner Chevron Holdings, Inc., formerly known as Caltex (Asia Limited), is a corporation organized and existing under the laws of the State of Delaware, United States of America (U.S.A.). It was granted a license to transact business in the Philippines by the Philippine Securities and Exchange Commission ("SEC") under SEC Reg. No. A199802486. 3 It is registered with the Bureau ofl nternal Revenue ("BIR") as a value-added tax ("VAT") taxpayer, with Tax Identification Number ("TIN") 201-056-391-0000.4 Respondent Commissioner of Internal Revenue is sued in his official capacity, having been duly appointed and empowered to perform the duties of his office, including, among others, the duty to act on and approve claims for refund as provided by law. He may be served with summons, notices and other court processes at his office at the BIR National Office Building, Diliman, Que7.on City. 5

The Facts

Antecedents (administrative level) On December 18, 2015, Petitioner filed with the BIR an Application for Tax Credits/ Refunds (BIR Form No. 1914),6 and the letter dated December 16, 2015,7 requesting for the issuance of tax credit certificates and/ or tax refund of its unutilized and excess input VAT in the total amount ofPhp14,516,165.27, for the first quarter ofTY 2015. Thereafter, on April 01, 2016, Petitioner filed with the BIR another Application for Tax CreditJ / Rejitndr (BIR Form No. 1914),8 and the letter dated December 16, 2015,9 requesting for the issuance of tax credit certificates and/ or tax refund of its unutilized and excess input VAT in the total amount of Php18,968,294.79, this time for the second quarter ofTY 2015/ 2 3 4 6 7 8 9 !d., Joint Stipulation of Facts and Issues (JSFI), Summary of Admitted Facts, Par. 1, p. 1725. !d., Exhibits "P-1", "P-2", "P-4", and "P-5", pp. 3658 to 3680, and 3683 to 3695. !d., Exhibit "P-3", pp. 3681 to 3682. !d., JSFI, Summary of Admitted Facts, Par. 2, p. 1725. !d., Exhibit "P-8", p. 3716. !d., Exhibit "P-6", pp. 3696 to 3705. !d., Exhibit "P-7", p. 3717. !d., Exhibit "P-7", pp. 3706 to 3715.

Proceedings before this court On May 16, 2016, Petitioner filed a Petition for Review before this Court. 10 The case was docketed as CTA Case No. 9350 and was initially raffled to this Court's First Division. In the said Petition, Petitioner prays that judgment be rendered ordering Respondent to refund in its favor the amount of Php 14,516,165.27, allegedly representing unutilized input VAT for the first quarter ofTY 2015.

Respondent then ftled its Answer in CTA Case No. 9350 on July 15,2016,11 interposing the following special and affirmative defenses, to wit: "SPECIAL AND AFFIRMATIVE DEFENSES 4.

Petitioner's alleged claim for refund is subject to administrative routinary investigation/ examination by the Bureau. 5.

The amount of P14,516,165.27 representing alleged unutilized VAT input taxes for the first quarter of taxable year 2015, was not properly documented. 6.

In an action for refund, the burden of proof is on the taxpayer to establish its right to refund, and failure to sustain the burden is fatal to the claim for refund/ credit. 7.

Petitioner must show that it has complied with the provisions of Section 112 of the NIRC of 1997 on the prescriptive period for claiming tax refund/ credit. 8.

There is no record of Petitioner ever submitting complete documents to substantiate its administrative claim for refund. Such is a requirement, otherwise, the administrative body will have sufficient reason to deny the claim. As held by the Honorable Supreme Court in the case of Atlas Consolidated lvf.ining and Development Corporation vs. Commissioner of Internal Revenue, G.R 145526, 16 March 2007:

'Petitioner's contention that non-compliance with Revenue Regulations 3-88 could not have adversely affected its case in the CTA indicates a failure on its part to appreciate the nature of the proceedings in that court. First, a judicial claim for 10 !d., pp. 10 to 24.

11 Id., pp. 102 to 109.

refund or tax credit in the CT A is by no means an original action but rather an appeal by way 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 case by presenting, formally offering and submitting its evidence to the CT A. 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 and underscoring supplied) The implementing rule for these complete documents required by law is RMO No. 53-98. Annex B-1 of said RMO lists all the required documents as follows:

VALUE-ADDED TAX

(For audit involving Claim for Refund / TCC) A.) Requirements from Taxpayer I.

Requirements mention in Annex B II.

Additional General Requirements

1) 3 copies of 'Application for

VAT

Credit/Refund'

2) Summary List of Local Purchases specifying the following:

XXX

X,~

XXX

3) Photocopies of VAT purchases invoices for purchase of goods and official receipts for purchase of services. (l'he invoices/ official receipts must be arranged according to the summary list) /

4) Summary of importations made during the period with the following details:

2CXX

X2C'\

XXX

Photocopies

of invoices, import entry documents, official receipts or confirmation receipts evidencing payment of VAT. (Segregate documents paid by cash from those paid by tax debit memo) 6) VAT returns ftled for the quarter showing that the amount applied for refund/TCC has been reflected as a deduction from the total available input tax, as well as VAT Return for the succeeding quarter 7) Certification of taxpayer showing the amount of Zero-rated Sales, Taxable Sales and Exempt Sales 8)

A

statement showing the amount and description of the sale of goods and services, name of persons or entities (except in case of exports) to whom the goods or services were sold and date of the transaction, where the applicant's zero-rated transactions are regulated by certain government agency.

9) Articles of Incorporation - for first time filers 10)

Sales Contract/ Agreement

11)

BOI Certificate of Registration

12)

BIR Certificate of Registration

13) Certification from BOI, DOF, BOC, EPZA, etc., that subject taxpayer has not filed similar claim for refund covering the same period. 14) Sworn statement that ending inventory as of the close of the period covered by the Claim has been used direcdy or indirecdy in the products subsequendy exported as supported by export documents, if the applicant is 100% exporte~

15) Documents of liquidation evidencing the actual utilization of the raw materials in the manufacture of goods at least 70% of which has been actually exported, if the applicant is an indirect exporter.

16)

Copy of the ITR and Certified Financial

Statement, if applicable.

17) Beginning and ending inventory of raw materials, work-in-process, finished goods, supplies and materials.

Additional Specific Requirements

1) For Zero-Rated Sales of Services (con tractors, mining, etc)

a. Authenticated copy /ies of the contract/ s whom the services of consideration, and documents showing the person/ s for were rendered, amount description of the services evidencing actual payments.

b. Photocopies of official receipts and billings together with a summary of the date of billing, name of principal, official receipt number, date of receipt, amount in foreign currency and the corresponding value thereof, date of remittance, name of bank, bank credit memo number and amount remitted in pesos.

c. Bank credit memoranda and certificate from the BSP with information similar to 1-c (export sales) As stated above, the first documentary requirement is that provided in Annex B of the same RMO. Annex B provides for more requirements as follows:

VALUE-ADDED TAX

A) Requirements from Taxpayers 1) Proof of claimed tax credits 2) Proof of Tax Compliance Certificates applied 3) Xerox copy of used Tax Credit Certificate (TCC) with annotation of issued TDM at the back, if applicable /v'

4) Proof of payment of deficiency tax, if any a) current year / period b) previous year / period 5) Certification of the appropriate government agency as to taxpayer's entitlement to tax incentives, if applicable 6) Xerox copies of the Official Receipts evidencing VAT payment on imported purchases, if applicable 7) Proof of exemption under special law, if applicable 8) Certification of the appropriate regulatory agency as to the exempt or zero-rated sales of the taxpayer under its regulatory supervision, if applicable 9) Certificate of Registration issued by the appropriate regulatory agency, together with the conditions attached to such registration, if applicable 10) Proof of 'Approval for Effective Zero-Rating of Sales', if applicable 11) Sample invoice / s for 'Export/Exempt Sales', if applicable 12) Proof that the acceptable foreign currency exchange proceeds on export/ sales foreign currency denominated sales had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP), if applicable.

The power to tax is the most effective instrument to raise needed revenues to finance and support the myriad activities of the government for the delivery of basic services essential to the promotion of the general welfare and enhancement of peace, progress, and prospenty of the people

(Mactan Cebu

International Airport Authority vs. Marcos, 261 SCRA 667, 690). Consequently, any delay in implementing tax measures would be to the detriment of the public. It is for this reason that claims for refund are required to be done within certain time frames. Tn the instant petition, the failure of Petitioner to comply with such periods is fatal to its cause. 10.

Moreover, Petitioner's failure to submit documents supporting its claim for refund makes its administrative claim for refund pro-forma. This pro-forma administrative claim should not be taken as proper compliance with the requirements of the law that an administrative claim for refund should have been f!l.ed prior to the institution of a judicial claim for refund. Thus, without a validly and duly filed administrative claim for refund, the Honorable Court is without jurisdiction to entertain the Petition for Review.

Petitioner's failure to comply with a condition precedent prior to the institution of its petition for review makes it ~ dismissible for absence of jurisdiction on the part of the Honorable Court.

11.

The claimant has the burden of proof to establish the factual basis of his claim for tax credit or refund. After all tax refunds, like tax exemptions, are construed stricdy against the taxpayer (Citibank N.A.

vs.

Court of Appeals

and Commissioner of Internal Revenue, 280 SCRA 459;

Commissioner of Internal Revenue vs. Tokyo Shipping Co., Ltd., 244 SCRA 332, both cited in Benguet Corporation vs. Commissioner of Internal Revenue, CTA Case No. 5392 promulgated October 30, 1998). 12.

Partaking of the nature of exemptions, claims for refund are stricdy construed against the claimant and cannot be allowed unless granted in the most explicit and categorical language (Sps. Aguilar vs. Commissioner of Internal Revenue, et al., G.R.SP No. 16432, March 30, 1999). Being in the nature of tax exemptions, these claims are regarded as in derogation of sovereign authority and to be construed strictissimi juris against the claimant and liberally in favor of the taxing authority (Commissioner of Internal Revenue vs. Procter and Gamble Philippines Manufacturing Corporation, 204 SCRA 377). Claims for refund are construed stricdy against the claimant for the same partake the nature of exemption from taxation (Commissioner of Internal Revenue vs. Ledesma, 31 SCRA 95) and such, they are looked upon with disfavor (Western Minolco Cory. vs. Commissionerojlnterna/Revenue, 124SCRA 1211)." The Pre-Trial Conference for CTA Case No. 9350 was initially set on September 14, 2016.12 The Respondent's Pre-Trial Brie[ for the said case was filed on July 29, 201613 Thereafter, Respondent transmitted to this Court the BIR Records for the same case on August 03, 2016.'4 On August 17, 2016, Petitioner flied another Petition for Review before this Court. 15 The case was docketed as CTA Case No. 9430 and was likewise initially raffled to this Court's First Division. In the said Petition, Petitioner prays that judgment be rendered ordering Respondent to refund in its favor the amount of Php18,968,294.79, allegedly representing unutilized input VAT for the second quarter ofTY 2015.;-V

12 Id., Notice of Pre-Trial Conference dated July 26, 2016, pp. 111 to 112.

13 Id., pp. 115 to 117.

14 Id., Compliance dated July 02, 2016, pp. 121 to 123.

15 Docket (CTA Case No. 9430), pp. 10 to 24.

Subsequently, on September 02, 2016, Petitioner filed a Motion to Comolidate (With Urgent Motion to Deftr Pre-Trial Conference) in CTA Case No. 9350,16 praying for the consolidation of the said case with CTA Case No. 9430, and the deferral of the Pre-Trial Conference. Simultaneously, Petitioner filed a Motion to Consolidate in CTA Case No. 9430,17 praying for the consolidation thereof with CTA Case No. 9350.

Thus, in the Resolutions dated September 21, 2016 separately promulgated for the said cases,18 the Court granted the said Motion to Consolidate, and ordered the consolidation of the said cases. On November 04, 2016, Respondent filed his Answer in CT A Case No. 9430,19 interposing the following special and affirmative defenses, to wit: "SPECIAL AND AFFIRMATIVE DEFENSES On the basis of the foregoing allegations and in further support of the Specific Denials herein set forth, Respondent respectfully alleged as her defenses that:

4. Taxes collected are presumed to be in accordance with laws and regulations.

5. Petitioner's alleged claim for refund is subject to administrative routinary investigation/ examination by the Bureau of Internal Revenue. A claim for refund is not ipso facto granted because Respondent still has to investigate and ascertain the validity of the claim.

6. Taxes arc essential to government's very existence; hence, the dictum that 'taxes are the lifeblood of the government.' For this reason, the right of taxation cannot easily be surrendered; statutes granting tax exemptions are considered as a derogation of the sovereign authority. Since tax refunds are regarded as tax exemptions therefore, these are to be construed strictissimi juris against the person or entity claim the exemption.

7. In action for refund, the burden of proof is on the taxpayer who claims the exemption and he must justify his claim by the clearest grant under the Constitutional or statutory law and cannot be permitted by vague implications. The taxpayer is charged with the heavy burden of proving that he has complie/

16 Docket (CTA Case No. 9350), pp. 127 to 130.

17 Docket (CTA Case No. 9430), pp. 82 to 85.

18 Docket (CTA Case No. 9350), p. 136; Docket (CTA Case No. 9430), p. 91.

19 Docket (CTA Case No. 9350), pp. 143 to 147; Docket (CTA Case No. 9430), pp. 93 to 97.

with and satisfied all the statutory and administrative requirements to be entided to the tax refund.

8. To support its claim, it is imperative for Petitioner to prove the following, viz:

The registration requirements of a value-added taxpayer in compliance with section 6 (a) and (b) of Revenue Regulations No. 6-97 in relation to Section 4.107-1 (a) of Revenue Regulations No. 7-95, and Section 236 of the Tax Code, as amended; b.

The invoicing and accounting requirements for VAT-registered persons, as well as the filing and payment of VAT in compliance with the provisions of Section 113 and 114 of the Tax Code, as amended; c.

Proof of compliance with the prescribed checklist of requirements to be submitted involving claim for VAT refund pursuant to

Revenue

Memorandum Order No. 53-98, otherwise there would be no sufficient compliance with the filing of an administrative application for refund which is a condition sine qua non prior to the filing of a judicial claim in accordance with Section 112 of the Tax Code, as amended. This requires the submission of complete documents in support of the application filed with the Bureau of Internal Revenue before the 120-day audit period shall apply, and before the taxpayer could avail of the judicial remedies as provided for in the law. Hence, Petitioner's failure to submit proof of compliance with the above-stated requirements warrants immediate dismissal of the Petitioner for review;

That the input taxes of P 18,968,294.79 allegedly incurred by Petitioner for the second quarter of taxable year 2015 were attributable to its zero-rated sales and such have not been applied against any output taxes and were not carried over to the succeeding taxable quarter or quarters; e.

That Petitioner's administrative and judicial claims for tax credit or refund of the unutilizcd input tax (VAT) was filed within the periods provided in Sections 112(A) and (C) of the Tax Code, as amended; / f.

That Petitioner's domestic purchases of goods and services were made in the course of its trade or business, properly supported by VAT invoices and /or official receipts and other documents, such as subsidiary purchase Journal showing that it actually paid VAT in accordance with Sections 110(A) (2) and 113 of the Tax Code, as amended, and pursuant to Section 4.105-5 (a) and (b) of Revenue Regulations No. 7-9 5 (Re: Substantiation of Claims for Input Tax Credits);

The requirements as enumerated under Section 4.105-5 of Revenue Regulations No. 7-95.

(Re:

Substantiation of Claims for Input Tax Credits)

Petitioner must prove that the aggregate amount of P18,968,294.79 being claimed by Petitioner arising from alleged excess and unutilized input VAT for the second quarter of taxable year 2015 is properly documented.

10. Following the premise above-mentioned, Petitioner has the burden of proving that the right to such tax refund indubitably exists and well-founded doubt is fatal to the claim." The Pre-Trial Conference for the consolidated cases was set to, and held on, February 22, 2017. 20 Respondent filed its Pre-Tn'al Bn'ef on December 19, 2016;'1 while Petitioner submitted its Consolidated Pre-Tn'al Brief on February 17, 2017. 22 On March 13, 2017 the parties filed their joint Stipulation of Facts and !JJttes GSFI). 23 In the Resolution dated March 23,2017,24 the Court approved the said JSFI, and deemed the Pre-Trial terminated. Thereafter, the Pre-Trial Order dated May 02, 2017 was issued by this Court. 25 The trial of the case then proceeded// 20 Docket (CTA Case No. 9350), Notice of Pre-Trial Conference dated November 11, 2016 and Minutes of the hearing held on and Order dated February 22, 2017, pp. 149 to 150 and 1654 to 1661.

" Id., pp. 153 to 156.

22 Id., pp. 164 to 175.

23 Jd., pp. 1725 to 1740.

24 !d., p. 1747.

2s Id., pp. 1771 to 1799.

During trial, Petitioner presented its documentary and testimonial evidence. It offered the testimonies of the following individuals, namely: (1) Ms. Carolyn C. Ardina,26 Pinance Coordinator of Petitioner; (2) Mr. Benedicto A. Santos,27 Manager - Business Analysis and Support; and (3) Atty. Walter L. Abela, Jr./8 the court-commissioned Independent Certified Public ;\ccountant (ICPA). 29 On November 5, 2017, Petitioner ftled its FormaJOffirofEvidence.30 Thus, in the Resolution dated February 26, 2018,31 the Court admitted Petitioner's Exhibits, except for the following:

1. Exhibits "P-17 4" and "P-188", for failure of the exhibit formally offered and identified to correspond with the document actually marked;

2. Exhibits "P-252.127", "P-252.486", "P-252.1 050", "P- 252.1397", "P-253.58", "P-259.8", "P-259.9", "P-259.49", "P- 200", "P-201", "P-202", and "P-203", for not being found in the records;

3. Exhibits "P-252.492", "P-252.494", "P-252.496", "P-252.498", "P-252.500", "P-252.502", "P-252.504", "P-252.506", "P- 252.542", and "P-252.978", for being blurred/unreadable; and

4. Exhibits "P-48", "P-58", "P-105", "P-109", "P-112", "P-116", "P-122" "P-126" "P-130" "P-136" "P-140" "P-144" "P- ' ' ' ' ' '

148" "P-152" "P-156" "P-161" "P-165" "P-169" "P-173"

' ' ' ' ' ' ' "P-178" "P-181" "P-185" "P-194" and "P-198" for failure to ' ' ' ' ' submit their originals for comparison. Thus, Petitioner filed a Motion for Reconsideration (With Motion to Set Additional Commissioner's Hearing) on March 13, 201832 In the Resolution date~ 26 Id., Exhibit "P-212" and Minutes of the hearing held on and Order dated May 09, 2017, pp. 209 to 222 and 1921 to 1923, and 1925 to 1926, respectively. 27 Id., Exhibit "P-214" and Minutes of the hearing held on and Order dated June 08, 2017, pp. 1944 to 1964 and 3395 to 3398. 28 !d., Exhibit "P-215" and Minutes of the hearing held on and Order dated August 17, 2017, pp. 3551 to 3570 and 3596 to 3599. 29 Id., Oath of Commission dated May 09, 2017 and Minutes of the hearing held on and Order dated May 09, 2017, p. 1924 and 1921 to 1923, and 1925 to 1926, respectively. 3o Id., pp. 3625 to 3656.

31 Id., pp. 4609 to 4612.

32 Id., pp. 4628 to 4636.

CTA CASE NOS. 93SO & 9430

October 22, 2018,33 the Court partially granted Petitioner's Motion for Recomideration, but still denied the admission of the following:

1. Exhibits "P-174" and "P-188", for failure to submit the duly marked exhibits;

2. Exhibits "P-259.8", "P-259.9", "P-200", "P-201", "P-202" and "P- 203", for not being found in the records of the case; and 3 Exhibits "P-48" "P-58" "P-105" "P-109" "P-112" "P-116" "P- .

' ' ' ' ' ' 122" "P-126" "P-130" "P-136" "P-140" "P-144" "P-148" "P- ' ' ' ' ' ' ' 152" "P-156" "P-161" "P-165" "P-169" "P-173" "P-178" "P- ' ' ' ' ' ' ' 181", "P-185", "P-194" and "P-198", for failure to submit their originals for comparison.

For his part, Respondent likewise presented his documentary and testimonial evidence. He offered the testimonies of Revenue Officer ("RO") Melinda M. Rugayan for CTA Case No. 9350,34 and RO Romualdo I. Plocios for CTA Case No. 9430,35 by way of their judicial affidavits. Respondent filed his Formal Offer of Evidence on March 01, 2018."' Thus, in the Resolution dated December 04, 2018,37 the Court admitted all the evidence offered by Respondent.

In the meantime, the instant consolidated cases were transferred to this Court's Third Division, pursuant to the Order dated October 01, 2018. 38 Subsequently, Respondent filed its Memorandum on January 09, 2019;39 while Petitioner filed its Memorandum on February 18, 2019. 40 The case was deemed submitted for decision on February 21, 2019. 41

The Issues//

33 Jd., pp. 4690 to 4694.

34 !d., Exhibit "R-3" and Order dated February 27, 2018, pp. 1669 to 1672 and 4613 to 4614.

35 !d., Exhibit "R-4" and Order dated February 27, 2018, pp. 1692 to 1695 and 4613 to 4614.

36 Jd., pp. 4615 to 4618.

37 !d., pp. 4696 to 4697.

38 !d., p. 4687.

39 !d., pp. 4698 to 4707.

40 !d., pp. 4718 to 4750.

41 Jd., Resolution dated February 21, 2019, p. 4753.

The parties submitted the following issues42 for this Court's resolution, to wit: "A.

Whether the Petitioner is entitled to the refund of unutilized input VAT it paid in the amount of Fourteen Million Five Hundred Sixteen Thousand One Hundred Sixty Five Pesos and Twenty Seven Centavos (Php14,516,165.27) for the first quarter of taxable year 2015 (CTA Case No. 9350); and B.

Whether the Petitioner is entitled to the refund of unutilized input VAT it paid in the amount of Eighteen Million Nine Hundred Sixty Eight Thousand Two Hundred Ninety Four Pesos and Seventy Nine Centavos (Php 18,968,294. 79) for the second quarter of taxable year 2015 (CTA Case No. 9430)". Petitioner's arguments:

Petitioner argues that it is VAT -registered; that it is engaged in zero-rated sales; that the input taxes are due or paid and have not been applied against output taxes during the quarter and in the succeeding quarters; that the input taxes being claimed are attributable to zero-rated sales; that the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with Bangko Sentral ng Pilipinas ("BSP") rules and regulations; that the input taxes were proportionately allocated on the basis of sales volume; that the claim is flied within two (2) years after the close of the taxable quarter when the sales were made; and that Petitioner is entitled to a claim for refund in the total amount of Php33,484,460.06, representing unutilized input taxes related to zero-rated sales/ receipts for the first and second quarters of 2015. Respondent's counter-arguments: Respondent counter-argues that the law requires that only "creditable input taxes" that are "directly attributable" may be refunded; that Petitioner failed to prove that all of its clients are non-resident foreign corporations doing business outside the Philippines; that it chose to carry-over the unutilized input tax to the succeeding period; and that partaking of the nature of exemptions, claims for refund are strictly construed against the claimant and cannot be allowed unless granted in the most explicit and categorical language.

Discussion/Ruling

The Court partially grants the instant consolidated Petitions for Revie~

42 Id., JSFI, Statement of Issues, p. 1726.

CIA CASE NOS. 9350 & 9430

Section 112 of the National Internal Revenue Code ("NIRC") of 1997, as amended by Republic Act (RA) No. 9337,43 provides: "SEC. 112. Refunds or Tax Credits of Input Tax.- (A) Zero-rated or Effectively Zero-rated Sales. - i\ny VAT- registered person, whose sales arc zero-rated or effectively zero- rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales under Section 106(A)(2)(a)(1),

(2) and (b) and Section 108(B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods or properties or services, and the amount of creditable input tax due or paid cannot be direcdy and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales: Provided, finally, That for a person making sales that arc zero-rated under Section 108(B)(6), the input taxes shall be allocated ratably between his zero-rated and nonzero-rated sales.

XXX

(C) Period within which Refund or Tax Credit of Input Taxes shall be Made. - In proper cases, the Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in accordance with Subsection (A) hereof. In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision/"V"' 43 AN ACI AMENDING SECTIONS 27, 28, 34, 106, 107, 108, 109, 110, 111, 112, 113, 114, 116, 117, 119, 121, 148, 151, 236, 237 AND 288 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES.

denying the claim or after the expiration of the one hundred twenty day-period, appeal the decision or the unacted claim with the Court of Tax Appeals."

Based on the foregoing provision, jurisprudence has laid down certain requisites which the taxpayer-applicant must comply with to successfully obtain a credit/ refund of input VAT. Said requisites are classified into certain categories, to wit:

As to the timeliness of the filing of the administrative and judicial claims:

1. the claim is flied with the BIR within two (2) years after the close of the taxable quarter when the sales were made;44

2. that in case of full or partial denial of the refund claim, or the failure on the part of the Commissioner to act on the said claim within a period of one hundred twenty (120) days, the judicial claim has been filed with this Court, within thirty (30) days from receipt of the decision or after the expiration of the said 120- day period;45 With reference to the taxpayer's registration with the BIR:

3. the taxpayer is a VAT-registered person;46 In relation to the taxpayer's output VAT:

4. the taxpayer is engaged in zero-rated or effectively zero-rated sales.47 ,

5. for zero-rated sales under Sections 106(A)(2)(1) and (2); 106(B); and 108(B)(1) and (2), the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with BSP rules and regulations;48 As regards the taxpayer's input VAT being refunded/ 44 Intel Technology Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 155732, April 27, 2007; San Roque Power Corporation v. Commissioner of Internal Revenue, G.R. No. 180345, November 25, 2009; and AT&T Communications Services Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 182364, August 03, 2010. 45 Steag State Power, Inc. (Formerly State Power Development Corporation) v. Commissioner of Internal Revenue, G.R. No. 205282, January 14, 2019; Rohm Apollo Semiconductor Philippines

v. Commissioner of Internal Revenue, G.R. No. 168950, January 14, 2015. 46 Intel Technology Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 155732, April 27, 2007; San Roque Power Corporation v. Commissioner of Internal Revenue, G.R. No. 180345, November 25, 2009; and AT&T Communications Services Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 182364, August 03, 2010. 47 Id.

48 Id.

CTA

Case

No.

9350 9430

6. the input taxes are not transitional input taxes;49

7. the input taxes are due or paid;50

8. the input taxes claimed are attributable to zero-rated or effectively zero-rated sales. However, where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes cannot be direcdy and entirely attributable to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume;51 and 9.

the input taxes have not been applied against output taxes during and in the succeeding quarters. 52

Petitioner's

administrative and judicial claims were timely filed. The first requisite pertains to the filing of the refund claim for tax credit or refund of input VAT before the BIR, within two (2) years from the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made. The present claim covers the first and second quarters ofTY 2015, which closed on March 31,2015 and June 30,2015, respectively. Counting two years from the said dates, Petitioner had until March 31, 2017 and June 30, 2017, respectively, within which to file its administrative claim for tax credit certificate or refund. Thus, Petitioner's administrative claims for the said quarters were seasonably filed, as shown below:

Period

Close of the

Last Day to File

Date of Filing of

Covered

Taxable

Administrative

Quarter

Claim

first Quarter of TY March 31, March 31,2017 December 18, 2015 2015

2015 51

second Quarter of TY June 30, 2015 June 30, 2017 April1, 201654 2015 The second requisite is to the effect that the judicial claim must have been filed within thirty (30) days from receipt of Respondent's decision or after t~ 49 !d.

50 !d.

51 Intel Technology Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 155732, April 27, 2007; and San Roque Power Corporation vs. Commissioner of Internal Revenue, G.R. No. 180345, November 25, 2009. 52 Intel Technology Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 155732, April 27, 2007; San Roque Power Corporation vs. Commissioner of Internal Revenue, G.R. No. 180345, November 25, 2009; and AT&T Communications Services Philippines, Inc., G.R. No. 182364, August 03, 2010.

53 Docket (CTA Case No. 9350), Exhibits "P-6" and "P-8", pp. 3696 to 3705, and 3716. 54 !d., Exhibits "P-7" and "P-9", pp. 3706 to 3715, and 3717.

I

CTA

Case

No.

9350 9430 expiration of the 120-day period under Section 112(C) of the NIRC of 1997, as amended. Considering that there is no indication that Respondent issued a decision relative to Petitioner's administrative claim, the determination of the 120+ 30-day period, as applied to this case, is shown as follows:

Date of Filing of

End of 120 days

End of30 for BIR

days from

Date of Filing of

Administrative

Claim

Commissioner to

expiration of

Petition for Review

decide the claim the 120 days December 18,2015 April 16, 2016 May 16,2016 May 16, 2016 April 1, 2016 July 30, 2016 August 29, August 17,2016 2016 As shown above, the instant Petitions for Review covering the first and second quarters of lY 2015 were flied on May 16, 2016 and August 17, 2016 respectively. Thus, Petitioner's judicial claims were likewise timely made. Such being the case, Petitioner fulfilled the above-stated first and second requisites.

Petitioner

is a

VAT-registered

person.

Petitioner complied with the third requisite considering that it is a VAT registered taxpayer under BIR Certificate of Registration No. OCN

8RC0000385300 with TIN 201-056-391-0000055

Petitioner was able to establish that it was engaged in zero-rated sales or effectively zero-rated sales during the first and second quarters of TY 2015, albeit only in the amount of Php1,655,274,685. 71.

The fourth andfifth requisites require that the taxpayer is engaged in zero- rated or effectively zero-rated sales, and for zero-rated sales under Section 106(A)(2)(a)(1) and (2), 106(B), and 108(B)(1) and (2) of the NIRC of 1997, as amended by RA No. 9337, the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with the BSP rules and regulatio/ 55 Jd., Exhibit "P-3", pp. 3681 to 3682. - !

I

In this case, Petitioner claims that its sale of services to its affiliates located and doing business outside the Philippines is a transaction subject to zero percent (0%) VAT, pursuant to Section 1 OS (B) (2) of the NIRC of 1997, as amended, to wit:

"SEC. 108. Value-added Tax on Sale of Servia1s 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 of goods for other persons doing business outside the Philippines which goods are subsequendy 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

Pilipinas

(BSP);"(Empham ours) Based on the foregoing provision, certain essential elements must be present for a sale or supply of services to be subject to the VAT rate of zero percent (0%), under Section 1 08(B)(2) of the NIRC of 1997, as amended, to wit: 1) The services fall under any of the categories under Section 108(8)(2),56 or simply, the services rendered should be other than "processing, manufacturing or repackinggoodl';;v 56 Commissioner of Internal Revenue v. American Express International, Inc. (Philippine Branch), G.R. No. 152609, June 29, 2005. 57 Commissioner of Internal Revenue v. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., G.R. No. 153205, January 22, 2007.

2) The service must be performed in the Philippines 58 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;59 and 4) The payment for such services should be in acceptable foreign currency accounted for in accordance with BSP rules.60 Anent the first essential element, Petitioner entered into a number of Service Agreements61 with the following foreign affiliates, to wit:

Service

I

Customer's Name

Agr

~ reement Chevron USA, Inc.

Chevron Information Technology Company (a Chevron USA, In~-:--

Division)

I

Chevron Services Company (a Chevron USA, Inc. Division) Chevron Products Company (a Chevron USA, Inc. Division) Chevron Africa and Latin America Exploration and Production

"P-30"

Company (a Chevron USA, Inc. Division)-FEABU HQ Branch (a CheYron USA, Inc. Division) Chevron Energy Technology Company (a Chevron USA, Inc.

Division)

Chevron Upstream (a division of Chevron USA, Inc.)

Chevron Australia Pty Ltd

"P-31"

Chevron New Zealand

"P-32"

Chevron USA Inc. Singapore Operations (Branch)

"P-33"

Chevron North Sea Limited

"P-34"

Chevron (fhailand) Limited

"P-35"

Chevron Singapore Pte. Ltd.

"P-36"

58 Commissioner of Internal Revenue v. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., G.R. No. 153205, January 22, 2007; Commissioner of Internal Revenue v. American Express International, Inc. (Philippine Branch), G.R. No. 152609, June 29, 2005. 59 Sitel Philippines Corporation (Formerly Clientlogic Phils. Inc.) v. Commissioner of Internal Revenue, G.R. No. 201326, February 8, 2017; Commissioner of Internal Revenue v. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., G.R. No. 153205, January 22, 2007; Accenture, Inc. v. Commissioner of Internal Revenue, G.R. No. 190102, July 11,2012. 6° Commissioner of Internal Revenue v. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., G.R. No. 153205, January 22, 2007; Commissioner of Internal Revenue v. American Express International, Inc. (Philippine Branch), G.R. No. 152609, June 29, 2005. 61 Docket (CTA Case No. 9350), Exhibit "P-30" to "P-60", pp. 3758 to 4230. I ;I

Chevron Products UK Limited

Chevron Hong Kong Ltd.

Chevron Iraq (Sarta) Limited

Chevron Malaysia Limited

Chevron Overseas Services Corporation - Argentina Home Office

(Branch)

Chevron Canada Resources

Chevron International Pte Ltd

Chevron South Africa (Pty) Limited

Chevron (Cambodia) Limited

Chevron Global Energy Inc.

Chevron Trading Pte Ltd

Chevron Asia Pacific Holdings Limited

Chevron Denmark Inc. - Denmark Branch Chevron Khazar, Ltd

Chevron Nebitgaz BV

Chevron (China) Investment Co. Ltd - Services

Chevron Canada Limited (Products Division)

Chevron Middle East Business Development Ltd

Campania Chevron de Panama S.A.

Chevron Overseas Services Corporation

Chevron Lubricants Lanka PLC

Chevron Pakistan Limited

"P-37"

"P-38"

"P-39"

"P-40"

"P-41"

"P-42"

"P-43"

"P-44"

"P-45"

"P-46"

"P-47"

"P-49"

"P-50"

"P-51"

"P-52"

"P-53"

"P-54"

"P-55"

"P-56"

"P-57''

"P-59"

'P-60" The Service Agreements provide in part the following services to be rendered by Petitioner:

1) Finance Services/Business Support; 2) Information Technology (IT) Services-PAD; 3) Information Technology (IT)-Infrastructure Assets (IA); 4) Manila Downstream Services Center; 5) Training and Human Resources Management; 6) Retail System Support;

7) Manila Procurement/Supply Chain Shared Services; and 8) Business Real Estate Services. Evidently, Petitioner complied with the first requisite, as the said services are not in the same category as ''processing, mamt[acturing or repacking of goods". As for the second essential element, the contracts or Service Agreements Petitioner entered into with its foreign affiliates establish that the parties to the contracts have agreed that Petitioner's services shall be performed in the Philippines, to wi~ "11.

Location of Services

CHI shall perform the Services in the Philippines unless OPCO reasonably requests that some Services be performed in another location subject to, in all cases, to the prior written consent of CHI. xxx"62 (Emphasis ours) Thus, there being no indication that the services were not performed in the Philippines, Petitioner complies with the said second essential element. Anent the third requisite, Petitioner presented the following documents1'1 to prove that its clients/ affiliates whom it had Service Agreements with, are non- resident foreign corporations doing business outside the Philippines:

1. Certification of Non-Registration of Company issued by the Philippine Securities and Exchange Commission (SEC);

2. Certificate/ Articles of Foreign Incorporation/Registration;

3. Service Agreements;

4. Screenshots of Foreign Government Website; and

5. Screens hots of Chevron Subsidiary Governance Website. However, each of the aforesaid documents, standing alone, is inadequate proof that Petitioner's client is a non-resident foreign corporation doing business outside the Philippines.

While the SEC Certificates of Non-Registration show that the named entities therein are not registered corporations/partnerships in the Philippines, the same do not prove that such entities are non-resident foreign corporations doing business outside the Philippines. The same holds true with

Certificates/ Articles

Foreign

Incorporation/Registration which only prove that the entities named therein were incorporated/ organized/ domiciled abroad but do not necessarily establish that such entities arc not doing business in the Philippines. Likewise,

the Service

Agreements

only show the names and addresses/incorporation of Petitioner's clients to whom it renders services bu~

62 !d., Exhibits ''P-30", "P-31", ''P-32", "P-33", ''P-34", "P-35", "P-36", "P-37", "P-38", "P-39" (Paragraph 12), Exhibit "P-40", Exhibit "P-41" (Paragraph 12), "P-42", "P-43", "P-44", "P-45", "P-46", "P-47", "P-49", "P-50" (Paragraph 12), "P-51" (Paragraph 12), "P-52" (Paragraph 12), "P-53", "P-54", "P-55", "P-56", "P-57", Exhibit "P-59", "P-60", p. 3765, 3781, 3807, 3822, 3839, 3858,3877,3896,3765,3930,3945,3965,3977,3992,4006,4020,4036,4052,4067,4083, 4099,4116,4142,4158,4178,4191,4210,4220.

63 Id., Exhibits "P-30" to P-199", "P-205", pp. 3758 to 4602.

the same do not establish that such clients are non-resident foreign corporations doing business outside the Philippines. In the case of Site! Philippines Corporation (formerly C!ientlogic Phi!s., Inc.) vs. Commissioner of Internal Revenue,64 the Supreme Court held that while Sitel's documentary evidence, which included Certifications issued by the Securities and Exchange Commission and Agreements between Site! and its foreign clients, may have established that Site! rendered services to foreign corporations and received payment therefor through inward remittances, said documents failed to specifically prove that such foreign clients were doing business outside the Philippines or have a continuity of commercial dealings outside the Philippines. Therefore, to be considered as non-resident foreign corporation doing business outside the Philippines, each entity must be supported at the very least by both SEC certificate of Non-Registration of Corporation/Partnership and proof of incorporation/ registration in a foreign country (e.g., Articles/ Certificate of Incorporation/Registration and/ or Tax Residence Certificate) and that there is no other indication which would disqualify said entity in being classified as a non-resident foreign corporation. In this regard, the Court cannot give credence or probative value to the printed screenshots of Chevron Subsidiary Governance Website as the information contained therein were retrieved from the database made and maintained by Petitioner's group of companies. Thus, the said documents arc self-serving and can be easily manipulated to favor Petitioner in view of its affinity with the entities that maintain or keep the said database. This is also true with the screenshots of Foreign Government \JC'ebsites which can also be easily manipulated, considering that none from the said foreign government attested to the authenticity of the said website and as to the registration of the purported Petitioner's foreign clients found therein. As a result, only the following clients of Petitioner for the first and second quarters of TY 2015 shall be considered non-resident foreign corporations doing business outside the Philippines:

~Customer's Name

Service

SEC Certification of

Articles/ Certificate

Agreement

Non-Registration of of Incorporation/

Company

Re2:istration I Chevron USA, Inc.

"P-30"

"P-205"

"P-62"(>S

I

i 64 G.R. No. 201326, February 08, 2017. / 65 This Exhibit pertains to the Amended and Reinstated Articles of Incorporation of Chevron USA, Inc. Article I (Management) of the Company By-Laws, the corporation shall operate through its several divisions as enumerated therein; and that each division shall have all requisite

Chevron Information Technology

Company (a Chevron USA, Inc. Division)

Chevron Services Company (a Chevron

USA, Inc. Division)

Chevron Products Company (a Chevron

US1\, Inc. Division) Chevron Africa and Latin 1\mcrica

Exploration and Production Company (a

Chevron USA, Inc. Division)-FEABU HQ Branch (a Chevron USA, Inc. Division)

Chevron Energy Technology Company (a

Chevron USA, Inc. Division) Chevron Upstream (a division of Chevron USA, Inc.)

Chevron Australia Pty Ltd.

Chevron New Zealand

Chevron USA Inc. (Singapore Branch)

Chevron North Sea Limited

Chevron (rhailand) Limited

Chevron Singapore Pte Ltd

Chevron Products UK Limited - Trading and Marine Lubricants Branch

Chevrof} Hong Kong Limited

''P-61"

"P-66"

"P-68"

"P-119"

"P-133"

"P-191"

"P-31"

"P-7 4"

"P-7 5"

"P-32"

"P-78"

"P-79"

"P-33"

"P-82"

"P-83"

"P-34"

"P-85"

"P-86"

"P-35"

"P-89"

"P-90"

"P-36"

"P-92"

"P-93"

"P-37"

"P-96"

"P-97"

"P-38"

"P-1 00"

"P-101"

Relative to the fourth requisite, Petitioner presented the Certificate of Bank Inward Remittances66 issued by JPMorgan Chase Bank N.A.-Manila Branch for the period January 2015 to June 2015, purportedly showing the remittances of its foreign clients/affiliates. Considering that the certification (or proof) of inward remittances attests to the fact of payment "in acceptable foreign mrrency and accounted for in accordance with the rules and regulations of the BSP', Petitioner is considered to have complied with the above-stated fourth essential element. In any event, equally important to consider is that the said foreit,rn currency remittances referred to under Section 108(B)(2) must be duly supported by VAT zero-rated official receipts in accordance with Section 113(A)(2), (B)(1), (2)(c) and (3) of the NIRC of 1997, as amended, as implemented by Section 4.113-l(A)(Z), B(1) and (2)(c) of Revenue Regulations ("RR") No. 16-05 which provide that a VAT taxpayer, like herein Petitioner, shall for every lease of goods or properties, and for every sale, barter or exchange of services, issue a VAT official receipt which must contain the information stated in the said provisions, towij/ corporate authority to take all such actions as it deems appropriate, and to fully obligate the corporation accordingly.

66 Exhibits "P-271.1" to "P-271.73."

I

' i

I

-i

I

"SEC. 113.

Invoicing and Arco11nting Requi1?ments for VAT- registered Persons. - (A) Invoicing Requirements. -A VAT-registered person shall 1ssue:

XXX

(2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services (B) Information Contained in the VAT Invoice or VAT Official Rempt. -The following information shall be indicated in the VAT invoice or VAT off1cial receipt: (1) A statement that the seller is a V,\T-registered person, followed by his Taxpayer's Identification Number (TIN); (2) The total amount which the purchaser pays or 1s obligated to pay to the seller with the indication that such amount includes the value-added tax: Provided, That:

XXX

(c) If the sale is subject to 7-ero percent (0%) value-added tax, the term 'zero-rated sale' shall be written or printed prominently on the invoice or receipt;

XXX

(3) The date of transaction, quantity, unit cost and description of the goods or properties or narure of the service; and xxx" (Underscoring ours) "SEC. 4.113-1.

I nvoidng Requirements. - (A) A VAT-registered person shall issue:-

XXX

XXX /

CTA CASE NOS. 93SO & 9430

(2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services. Only VAT-registered persons arc required to print their TIN followed by the word "VAT" in their invoice or official receipts. Said documents shall be considered as a 'VAT Invoice' or VAT official receipt. All purchases covered by invoices/ receipts other than VAT Invoice/VAT Official Receipt shall not give rise to any !nput tax.

VAT invoice/ official receipt shall be prepared at least in duplicate, the original to be given to the buyer and the duplicate to be retained by the seller as part of his accounting records. (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 Vi\T-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%) Vi\T, the term 'zero-rated sale' shall be written or printed prominently on the invoice or receipt;" (Underscoring ours) In the instant case, aside from the certificate of bank inward remittances, Petitioner also presented its Summary List of Sales07 and the related official receipts68 purportedly supporting its total declared zero-rated sales of Php1,862,756,405.59 for the first and second quarters of TY 2015, detailed as follows:

Period Covered

Zero-Rated Sales

first Quarter

Phfl

968,689,035.61 second Quarter 894,067,369.98 67 Exhibits "P-268.1" to "P-268.4" and "P-268.25" to "P-268.28". 68 Exhibits "P-262.1" to "P-262.101". ~

Customer's

Name

Chevron

(Thailand)

Limited

Chevron

(Thailand)

Limited

Chevron

(Thailand)

Limited

Chevron

(Thailand)

Limited

Chevron

(fhailand)

Limited

[Total

Php1,862,756,405.59l However, upon verification of the submitted documents, the Court finds that only the zero-rated sales of Php1,655,274,685.71 are duly supported by certificate (or proof) of inward remittances and zero-rated official receipts, detailed as follows:

Official

Proof of

Inward

Exhibit

Receipt

OR Date

Zero -rated Zero -rated

Remittance

No.

(OR)

sales in PhP sales in USD (P-271.1 to No.

25,706,942.57 577,210.92

Chevron

Australia Pty

P-262.7 5390 1/26/2015 14,846,792.31 335,982.91 T37SWIC:055558

Ltd

Chevron

P-

Australia Pty

262.15 5400 2/25/2015 12,654,157.15 285,857.41 T37SWIC05597 5

Ltd

Chevron

P-

1\ustralia Pty 262.28 5415 3/25/2015 12,556,422.06 281,138.29 T37SWIC056327

Ltd

Chevron

P-

Australia Pty

262.62 5449 4/24/2015 12,423,256.30 281,138.29 T37SWIC056749

Ltd

Chevron

P-

Australia P ty 262.76 5464 5/26/2015 12,539,620.43 281,138.29 T37SWIC057159

Ltd

Chevron

P-

,\ustralia Pty 262.90 5479 6/25/2015 12,675,306.13 281,138.29 T37SWIC057571

Ltd

Sub-total

- - - - 77,695,554 . .}§_ 1, 7 46,393.48 -- - ·- r

Chevron

Energy

Technology

Company (a

Chevron

U.S.A. Inc.

division)

Chevron

Energy

Technology

Company (a

Chevron

U.S.A. Inc.

division)

262.58 l Company (a 952,668.31 21,311.19 T37SWIC056359 4,135,004.02 92,706.79 T37SWIC057152 5,087,672.33 114,017.98 7,217,681.27 163,047.42 T37SWIC055976 931,292.54 20,851.64 T37SWIC056324 6,398,802.41 143,461.15 T37SWIC057140 14,547,776.22 327,360.21 179,993,262.48 4,073,247.53 T37SWIC055581 244,301,042.83 5,418,597.13 T37SWIC057584 254,252,955.29 5,687,638.61 T37SWIC056362 128,658,188.24 2,911,534.80 T37SWIC056764 r

CfA CASE NOS. 9350 & 9430

Chevron

U.S.A Inc.

division)

Sub-total

Chevron New

P-262.9 5393 1/26/2015

Zealand

Limited

Sub-total

Chevron

Products

Company (a

P-262.5 5388 1/26/2015

Chevron

U.S.A. Inc.

division)

Chevron

Products

Company (a

P-

5399 2/25/2015

Chevron

262.14 U.S.A. Inc.

division) 807,205,448.84 18,091,018.07 5,479,041.10 123,990.70 T37SWIC055554 7,239,041.17 163,529.94 T37SWIC055977 7 ,303, 704.33 163,529.94 T37SWIC056330 7,226,246.13 163,529.95 T37SWIC056751 7,293,931.31 163,529.94 T37SWIC057139 7,3 72,855.28 163,529.93 T37SWIC057567 41,914,819.32 941,640.40 4,820,413.61 109,085.96 T37SWIC055574 5,721,199.20 129,241.89 T37SWIC055972 9,798,016.08 219,377.58 T37SWIC056334 4,847,052.14 109,688.79 T37SWIC056745 4,892,452.72 109,688.79 T37SWIC057147 4,945,391.79 109,688.79 T37SWIC057566 35,024,525.54 786,771.80 21,963,899.25 497,043.04 T37SWIC055579 24,776,030.99 559,690.5 4 T37SWIC055987 r

Chevron

P-

262.74

Chevron

Products

Company (a

Chevron

jt 5462 5/26/2015 fo] 262.88 aa 5476 6/25/2015 _| 25,499,174.19 24,980,492.71

L

570,926.51

SL

565,308.55 25,214,475.47 565,308.54 _| —+——

T37SWI1C056344

T37SWIC056763

T37SWI1C057154

| —_{—

Sub-total {

division) _ J

Chevron

| 147,921,383.25 ao 25,487,310.64 565,308.55

T378W1C057580

Products UK

Limited -

Trading and

Marine

Lubricants

| Branch

p- 262.25 tot 5411 2/26/2015 7,448,042.29 3,323, 585. at 169,070.56 _|

T37SWI1C055991

Chevron

Products DIK

Limited -

Trading and

Marine

Lubricants

| Branch

P-

262.57 5491

Chevron

Products Ul

Limited -

Trading and

Marine

J.ubricants

Branch

fo p- 262.85 5473 __| - —>— 3/31/2015 = |_

TT

3,516,239.03 =e 78,552.78 a

T37SWIC056351

5/26/2015 7,007,384.48 157,105.56 t

Sub-total)

Chevron

Services

Company (a

P-

5431 3/26/2015 262.44

P-

5445 4/24/2015 262.59

P-

5461 5/26/2015 262.73

Sub-total

Sub-total

Chevron

P-

Upstream

5433 3/26/2015 (division of 262.46 --- 68,166,518.95 1,547,379.98 T37SWIC055993 70,3 7 4,821. 91 1,560,913.55 T37SWIC057589 69,910,451.05 1 ,563,896. 79 T37SWIC056361 68,998,252.32 1,561,430.45 T37SWIC056760 69,677,205.62 1,562,162.95 T37SWIC057155 416,451,733.72 9,364,596. 79 4,833,949.98 109,198.93 T37SWIC055971 5,160,065.65 115,533.87 T37SWIC056316 5,105,339.81 115,533.84 T37SWIC056741 10,417,840.85 231,067.71 T37SWIC057564 25,517,196.29 571,334.35 406,856.50 9,101.38 T37SWIC056357 '--------·- r

Chevron

U.S.A Inc.)

Sub-total

Chevron

U.S.A. Inc.

P-262.8 5392 1/26/2015

(Singapore

Branch)

Chevron

U.S.A. Inc.

P-

406,856.50 9,101.38 5,363,612.91 121,378.56

I

T37SWIC055576

5404 2/25/2015 6,846,394.86 154,660.06 T37SWIC0559861

(Singapore

262.18

J

Branch)

Chevron

U.S.A. Inc.

P-

5418 3/25/2015 6,907,550.69 154,660.06 T37SWIC056343

(Singapore

262.31

Branch)

Chevron

U.S.A. Inc.

P-

5451 4/24/2015 6,834,293.42 154,660.06 T37SWIC056762

(Singapore

262.64

Branch)

Chevron

U.S.A. Inc.

P-

5466 5/26/2015 6,898,307.76 154,660.06 T37SWIC057151

(Singapore

262.78

Branch)

Chevron

U.S.A Inc.

P-

5481 6/25/2015 6,972,951.31 154,660.06 T37SWIC057 578

(Singapore

262.92

Branch)

Sub-total

39,823,110.95 894,678.86

Total

1,655,274,685. 71 37,152,438.87 Therefore, out of the Php1,862,756,405.59 zero-rated sales declared per VAT Returns for the first and second quarters of TY 2015, only the amount of Php1,655,274,685.71, as presented above, qualifies for VAT zero-rating under Section 108(B)(2), in relation to Section 113(A)(2), (B)(1), (2)(c) and (3), both of the NIRC of 1997, as amended. The rest of Petitioner's declared zero-rated sales in the amount of Php207,481,719.88, as detailed below, shall be denied VAT zero-rating for the herein stated reasons:

I

Proof of Inward

Customer' Name

Exhibit

OR

OR Date

Zero -rated

Remittance

No.

712,200.14 Without Service Agreements proving the nature of services provided and that the purported services were performed in the Philippines; Without proof that the named clients were non- resident foreign corporation Chevron Global Energy Inc. -

Global Downstream Cost

P-262.49 5436 3/26/2015 2,332,864.10

T37SWIC056358

Allocation Branch

Chevron Al Khalij, a branch of

Chevron Asia Pacific Holdings

P-262.47 5434 3/26/2015 3,441,349.13

T37SWIC:056391

Limited

Chevron Canada Limited -

P-262.38 5425 3/25/2015 1,528,358.64

T37SWIC024609

Downstream Branch

Sub-total

Chevron Asia Pacific Holdings

P-262.50 5437 3/26/2015 1,048,234.24

T37SWIC056367

Limited

Chevron Canada Resources

P-

5490 6/30/2015 7,690,778.63 262.101

T37SWSW024700

Chevron International Pte. Ltd. P-262.22 5408 2/25/2015 4,322,544.93

T37SWIC055970

Chevron International Pte. Ltd. P-262.36 5423 3/25/2015 1,755,329.61

T37SWIC056315 •

Chevron Overseas Services

Corporation

Chevron Pakistan Limited -

branch

Chevron South Africa (Pty)

Limited

Chevron South Africa (Pty)

Limited

Chevron Trading_Pte. Ltd.

Chevron Trading Pte. Ltd.

Chevron U.S.A.. Inc.- Chevron

Global Downstream

Compania Chevron de Panama, S.A

Sub-total

P-262.39 P-262.99 P-262.2 P-262.69 P-262.97 P-262.43 P-262.72 P-262.33 P-262.83 P-262.71 P-262.51 P-262.84 P-262.26 P-262.56 P-262.11 P-262.42 P-262.70 P-262.37 P-262.52 5426 3/25/2015 1,331,872.71

T37SWIC056340

5488 6/26/2015 5,298,355.28

T37SWIC057588

5385 1/14/2015 1,408,458.30

T37SWIC055535

5456 4/24/2015 770,148.92

T37SWIC056759

5486 6/25/2015 523,849.41

T37SWIC057577

5430 3/25/2015 186,052.26

T37SWIC056298

5459 4/28/2015 78,482.10

T37SWIC056809

5420 3/25/2015 5,113,109.42

T37SWIC056319

5471 5/26/2015 4,527,404.10

T37SWIC057148

5458 4/27/2015 1,813,321.55

T37SWIC056768

5438 3/26/2015 803,857.40

T37SWIC056369

5472 5/26/2015 75,987.96

T37SWIC057129

5412 2/27/2015 4,860,923.45

T37SWIC056017

5443 3/30/2015 1,133,876.74

T37SWIC056413

5395 1/26/2015 3,282,441.89

T3 7SWI C055562

5429 3/25/2015 262,270.21

T3 7SWIC056317

5457 4/24/2015 259,488.73

T37SWIC056742

5424 3/25/2015 662,735.15

T37SWIC:056345

5439 3/26/2015 967,560.13

T37SWIC056378

59,657,497.52 Without proof that the name clients are non-resident foreign corporations; without supporting ORs and proof of inward remittances Chevron Denmark Inc.

january 415,875.61 Chevron Denmark Inc.

February

512,892.07 Chevron Denmark Inc.

March

520,690.97 Chevron Denmark Inc.

April

514,251.33 Chevron Denmark Inc.

May

519,297.50 Chevron Denmark Inc.

June

523,500.45 Chevron Global Energy Inc.

January

831,033.52 Chevron Global Energy Inc.

February

761,876.65 Chevron Global Energy Inc.

March

773,461.54 Chevron Global Energy Inc. "\pril 763,895.76 Chevron Global Energy Inc.

May

771,391.61 Chevron Global Energy Inc.

June

777,634.89

Chevron Middle East Business

March

601,660.11 Develo]J_ment Ltd

Chevron Middle East Business

April

297,109.54

Development Ltd

Chevron Middle East Business

May

300,024.98

Development Ltd

I

Chevron Middle East Business

Development Ltd

Chevron Overseas Services

Corporation-Argentina

Chevron Overseas Services

Corporation-Argentina

Chevron Overseas Services

Corporation-Argentina

Chevron Overseas Services

Corporation-Argentina

Chevron Overseas Services

Corporation-Argentina

Sub-total

June

302,453.24

February

4,884,546.70

March

769,885.51

April

760,363.96

May

Office

Exploration

Chevron Africa and Latin America

June

910,900.63

Exploration

Sub-total

6,262,117. 73

TOTAL

207,481,719.88 Having found that Petitioner had valid V1\T zero-rated sales on!J in the total amount of Php1,655,274,685.71 for the subject period of claim, the Court (

I

shall proceed to determine whether Petitioner complied with the remammg requisites pertaining to the input VAT being claimed for refund or issuance of a tax credit certificate.

The input VAT being claimed does not appear to be transitional input taxes.

In its Quarterly VAT Returns for the first and second quarters ofTY 2015, Petitioner declared total input VAT of Php40,889,343.15 from its current domestic purchases and importation of goods and services and input VAT on purchases of capital goods from previous quarters, as shown below: first Quarter of second Quarter

TY2015

ofTY 2015

Total

Exhibit P-1269

Exhibit P-1470

Input Tax Due on Previous Quarters'

Purchases

Deferred on Capital Goods exceeding Php25,367 ,062.82 Php22,179,769.48 Php47,546,832.30 Php 1 l'viillion from Previous Quarter Deferred for the succeeding period 22,179,769.49 19,058,702.00 41,238,471.49

Amortization of Input Tax Due on

Php 3,187,293.33 Php 3,121,067.48 Php 6,308,360.81 Capital Goods exceeding Php 1 Million

Input Tax Due on Current Domestic

Purchases of Goods Other than Capital 197,819.98 113,658.10 311,478.08

Coods

Sub-total

Pbp 3,385,113.31 Pbp 3,234,725.58 Pbp 6,619,838.89 lflJJ_ut Tax Paid on Current: Importation of Goods Other than

Php

62,663.00 Php 128,902.00 Php191,565.00

Capital Goods

Domestic Purchase of Services

12,060,657.26 17,762,134.76 29,822,792.02 Services Rendered bv Non-Residents 2,132,896.55 2,122,250.69 4,255,147.24

Sub-total

Pbp/4,256,216.81 Pbp20,013,287.45 Pbp34,269,504.26

Total Input Tax for the Period

Php17 ,641,330.12 Php23,248,013.03 Php40,889,343.15

Less: Output Tax

3,125,164.85 4,279,718.24 7,404,883.09 Excess input tax claimed for refund/TCC Php14,516,165.27 -- ·- ·-- ·--_.l....._ Php18,968,294. 79 Php33,484,460.06 The above input taxes do not appear to be transitional input taxes, as understood under Section 111 (A) of the NIRC of 1997, as amended, to wit: "SEC. 111. Transitional/Presumptive Input Tax Credits.- 69 Id., pp. 3722 to 3723.

'o Id., pp. 3726 to 3727.

(A) Transitional Input Tax Credits. - A person who becomes liable to value-added tax or any person who elects to be a VAT- registered person shall, subject to the filing of an inventory according to the rules and regulations prescribed by the Secretary of Finance, upon recommendation of the Commissioner, be allowed input tax on his beginning inventory of goods, materials and supplies equivalent to two percent (2%) of the value of such inventory or the actual value-added tax paid on such goods, materials and supplies, whichever is higher, which shall be creditable against the output tax." Apropos, transitional input tax credit operates to benefit newly VAT- registered persons, whether or not they previously paid taxes in the acquisitions of their beginning inventory of goods, materials and supplies. During the period of transition from non-VAT to VAT status, the transitional input tax credit serves to alleviate the impact of the VAT on the taxpayer71 Since there is no showing that the above-stated input VAT are transitional input VAT, Petitioner has complied with the sixth requisite for the grant of an input VAT refund under Section 112 of the NIRC of 1997, as amended. The input taxes being claimed are due and paid.

Out of the reported total input VAT of Php40,889,343.15, Petitioner claims for refund the excess input VAT amount of Php33,484,460.06, determined as follows:

first Quarter of second Quarter

Total

TY2015

ofTY 2015

Total Input Tax for the Period

Php17,641,330.12 Php23,248,013.03 Php40,889,343.15

Less: Output Tax

3,125,164.85 4,279,718.24 7,404,883.09 Excess input tax claimed for Php14,516,165.27 Php18,968,294. 79 Php33,484,460.06 refund/TCC In support of its input VAT due on purchases of capital goods exceeding Php1M from previous quarters and input VAT due on current domestic purchases of goods other than capital goods in the aggregate amount of Php6,619,838.89, Petitioner submitted in evidence various sales invoices and official receipts72 issued by its suppliers. t Corporation r Commissioner of Internal Revenue, G.R. Nos. 158885 and 170680, April 02, 2008. 72 Exhibits "P-254.1" to "P-254.535"; "P-259.1" to "P-259-150"; "P-253.1" to "P-253.108"; "P- 258.1" to "P-258.9".

Date

However, upon verification, the Court shall disallow the input VAT amounting to Php926, 169.25 for not being properly substantiated by VAT invoices and official receipts, as prescribed under Sections 113(A)(1) and (2), (B)(2)(a)and 237 of the NIRC of 1997, as amended, and as implemented by Section 4.113-1 (A)(1) and (2), (B)(2)(a)of RR No. 16-05, as amended, detailed as follows:

Disallowed

N arne of Vendor

Input VAT

Exhibit

·neferred.~on Cap,it~FG~d~ir~ifi*P,r~~~~el'g:'; .. · .. ~ "'i{~1"';. ,, ., ,,. -'"''·'*.:'.' Purchase of Goods/Services without supporting VAT lnvoice/Oflicial Receipt

DHL EXPRESS (PHILIPPINES)

May-10

CORPORATION

Php

83.33

Php

5.56 -

ROMULO PRINCILLO FREEZE-

AIRE 1\IR CONDITIONING

Aug-10

SPECIALISTS, INC.

48,053.61 4,805.36 - PHIL-DAT1\ BUSINESS SYSTEMS,

Dcc-10

INC.

128,945.65 12,894.57 - PHIL-DATA BUSINESS SYSTEMS,

Dec-10

INC.

518,814.98 51,881.50 - TRENDS AND TECHNOLOGIES,

Dec-10

INC.

609,434.40 60,943.44 -

ADTECH CONSTRUCTION AND

Mar-11

INDUSTRIAL SERVICES CORP.

197,459.25 19,745.93 - TRENDS AND TECHNOLOGIES,

Oct-11

INC.

1,867,488.84 186,748.88 -

CB RICHARD ELLIS

Nov-11

PHILIPPINES, INC.

35,919.64 3,591.96 -

CB RICHARD ELLIS

Nov-11

PHILIPPINES, INC.

16,489.29 1,648.93 -

ALECTO GENERAL

Dec-11

TECHNOLOGY CORPORATION

29,183.37 2,918.34 - r .·

I

Dec-11

Dcc-11

Dec-11

Mar-12

Mav-12

Jul-12

Sep-12

Nov-12

Dcc-12

ALECTO GENERAL

TECHNOLOGY CORPORATION

ALECTO GENERAL

TECHNOLOGY CORPO!U\TION

ALECTO GENERAL

TECHNOLOGY CORPORATION

l\lASTER AUTOMATED

SYSTEMS INC

RON},LD Mi\GBITANG

RONALD MAGBITANG

PLATON MARTINEZ FLORES

SAN PEDRO AND LEANO LAW

OFFICES

RONALD MAGBITANG

RONALD Mi\GBITANG

RONALD MAG BIT ANG

JLGT MARKETING

RONALD MAGBITANG

SUBTOTAL

213,513.85 21,351.39 - 114,077.85 11,407.79 - 101,844.91 10,184.49 - 190,502.25 19,050.23 - 326,163.26 32,616.33 - 530,430.23 53,043.02 - 360.00 36.00 - 151,029.28 15,102.93 - 234,618.75 23,461.88 - 43,908.00 4,390.80 - 9,168.00 916.80 - 3,984.00 398.40 - 152,400.68 15,240.07 - 15,000.00 1,500.00 - Php 745,235.45 Purchase of services supported by VATORs but the amount of input VAT is not separately indicated P-259.125 toP-

May-12

RONALD MAGBITANG

292,744.82 Php 29,274.48 259.126 P-259.127 toP-

May-12

RONALD MAGBITANG

205,191.43 20,519.14 259.128 P-259.129 toP-

May-12

RONALD MAGBITANG

604,117.11 60,411.71 259.130 P-259.131 toP-

Mav-12

RONALD MAGBITANG

424,344.18 42,434.42 259.132

SUB1DT/JL

Php 152,639.75 Input VAT supported by invoice but it cannot be ascertained whether it is a purchase of service or goods (not readable)

NETWORK SOLUTIONS AND

P-259.101 toP-

Nov-11

INTERFACES CORPORATION

128,758.38 Php 12,875.84 259.102

Over-claimed Input VAT

PLATON MARTINEZ FLORES

P-259.117 to P-

S1\N PEDRO AND LEANO LAW

Php

259.118

Mar-12

OFFICES

80.10 [(Php1,200.00- Php399.00) / 60mos.x6mos.] P-259.145 toP-

Nov-12

RONALD MAGBITANG

769.33 259.146 [(Php29,332.80- Php21,639.52)/60mos.x6mos.] P-259.147 to P-

Nov-12

RONALD MAGBITANG

14,568.78 259.148 ---- ..

- -r

I

I I

I

[(Php166,473.42- Php20,785.62)/60mos.x6mos.]

SUBTOTAL

15,418.21 Total disallowed input VAT deferred from previous quarters Php926,169.25 Current Domestk:Pur«hases.6f Goods"Offier'tllartCapitl!l ~l:iod.s.· . 7 " .· Supported by collection receipt

20-Apr-

15 EQUICOM INC.

Php

660.00 P-258.1 Supported by invoice dated outside the period of claim

17-Dec-

PERSONAL COMPUTER

14 SPECIALISTS, INC.

Php 37,668.00 P-258.6

PERSONAL COMPUTER

3-Dec-14 SPECIALISTS, INC 354.00 P-25.8

SUBTOTAL

38,022.00 Total disallowed input VAT on domestic purchases of goods Php 38,682.00 Total Disallowed input VAT on purchases of goods · - - - - - - - - - - Plp964,851.25 L__ __ As to the input VAT paid on its importations of goods other than capital goods, domestic purchases of services, and services rendered by non-residents in the total amount of Php34,269,504.26, Petitioner submitted in evidence various sales invoices and official receipts 73 issued by its suppliers, special bank receipts and various import documents issued by the BOC,74 and the Monthly Remittance Return of Value-Added Tax and Other Percentage Taxes Withheld (BIR Form 16oors it filed with the BIR for its payments to non-resident suppliers.

However, upon verification, the Court shall disallow the input VAT amounting to Php 7 55,826.22 for not being properly substantiated by VAT official receipts as prescribed under Sections 113(A)(2) and (B)(2), and 237 of the NIRC of 1997, as amended, and as implemented by Section 4.113-1 (A)(2) and (B)(2) ofRR No. 16-05, as amended, detailed as follows: P-260.1 toP-

OCTANNER

260.12

SUBTOTAL

Domestic Purchase~'of SerVice~;;' r

73 Exhibits "P-252.1" to "P-252.1,580"; "P-257.1" to "P-257.342"; "P-255.1" to "P-255.104"

74 Exhibits "P-255.1" to "P-255.104"; "P-260.1" to "P-260.12"

75 Exhibits "P-256.1" to "P-256.18".

Purchase of services supported by OR with notation "This document is not valid for claiminR' input taxes"

5,328.00

10-Dec-

14 JLGT l'vL\RKETING 93,205.30

30-Sep-

14 SMART COMMUNICATIONS INC.

117,700.45

SUBTOTAL

Php237,532.04 Input VAT claimed for VAT exempt/zero-rated sales

22-Jan-15 ANGARA ABELLO CONCEPCION

Php

476.76

REGAL\ I\ND CRUZ

22-Jan-15 ARDENT COMMUNICATIONS, INC. 2,550.00

14-Jan-15 1\SIAN RELOCATION MANAGEMENT

3,000.29 INC.

12-Jan-15 ATM PER-SONNEL ASSISTANCE, INC. Php2, 115.45 12-Jan-15 ATM PERSONNEL ASSIST,\NCE, INC. 1,884.60 4,000.05

6-Jan-15

ATM PERSONNEL ASSISTANCE, INC. 1,513.20 26-Jan-15 X I'M PERSONNEL ASSISTANCE, INC. 3,761.37 14-Jan-15 ATM PERSONNEL ASSISTANCE, INC. 1,381.37 14-Jan-15 1\TM PERSONNEL ASSISTANCE, INC. 1,139.41 14-Jan-15 1\TM PERSONNEL ASSISTANCE, INC. 2,580.80 14-Jan-15 ,\TM PERSONNEL ASSISTANCE, INC. 1,173.63 - - - ·- P-257.1 P-257.3 P-257.5 P-257.7 P-257.9 P-257.11 P-257.13 P-257.14 P-257.15 P-257.16 P-257.17 toP- 257.18 P-257.19 toP- 257.20 P-257.21 toP- 257.22 P-257.23 toP- 257.24 P-257.25 toP- 257.26 P-257.27 toP- 257.28 P-257.29 toP- 257.30 P-257.31 toP- 257.32 P-257.33 toP- 257.34 P-257 .35 toP- 257.36 P-257.37 toP- 257.38 r

14-Jan-15

7-Jan-15

13-Jan-15

7-Jan-15

7 -Jan-15

22-Jan-15

20-Jan-15

12-Jan-15

5-Jan-15

6-Jan-15

23-Jan-15

12-Jan-15

GLOBAL BUSINESS SUPPORT

SERVICES, INC.

GLOBAL BUSINESS SUPPORT

SERVICES, INC.

GLOBJ\L BUSINESS SUPPORT

SERVICES, INC.

MASTER AUTOMATED SYSTEMS, INC. MASTER AUTOMATED SYSTEMS, INC. MASTER J\UTOMATED SYSTEMS, INC. MASTER AUTOM1\TED SYSTEMS, INC. MASTER AUTOMATED SYSTEMS, INC. MASTER J\UTOMATED SYSTEMS, INC. MISNET EDUCATION INC.

NETWORK SOLUTIONS AND

INTERFACES CORPORATION

NETWORK SOLUTIONS AND

INTERFACES CORPORATION

PERSONAL COMPUTER SPECIALISTS, INC.

PERSON1\L COMPUTER SPECIALISTS, INC.

PHILIPPINE INTERNATIONAL

CONVENTION CENTER

PLATON MARTINEZ FLORES SAN

PEDRO AND LEi\NO LAW OFFICES

PLATON MARTINEZ FLORES SAN

PEDRO AND LEANO LAW OFFICES

PL1\TON MARTINEZ FLORES SAN

PEDRO AND LEJ\NO LAW OFFICES

PLATON MARTINEZ FLORES SAN

PEDRO i\ND LEi\NO LAW OFFICES

PLATON MARTINEZ FLORES SAN

PEDRO AND LEANO LAW OFFICES

PLATON MARTINEZ FLORES SAN

257.188 pane 99,395.18 | O95 Oto P- 4,320.00 eon % te P| “| 4,320.00 ee to P- | 12,040.21 P-257.197 to P- 257.198

19-Mar- | SCHNEIDER ELECTRIC IT

15 PHILIPPINES, INC.

24,080.42 P-257.199 to P| 257.200 12,040.21 } |— 12-Mar- | s--¢ PRRSONNEL ASSISTANCE, INC. 776.84 P-257.201 to P- 15 257.202 12Mar |. — P-257.203 to P- ys. | ATM PERSONNEL ASSISTANCE, INC. 687.80 ee 504 i2-Marw |... — P-257.205 to P- 1" | ATM PERSONNEL ASSISTANCE, INC. 555.89 ey ne 2-Mar- 957. ;

ve ATM PERSONNEL ASSISTANCE, INC. | 202.81 200838 P ome |

20-Mar- | PLATON MARTINEZ FLORES SAN

|__| 9-Mar-15 | ATM PERSONNEL ASSISTANCE, IN 9-Mar-15 | ATM PERSONNEL ASSISTANCE, INC.

257.222 ?~ - — 728 “| 1,037.34 ene P- 9-Mar-15 | ATM PERSONNEL ASSISTANCE, INC.

______} 257.232 P-257.231 to P- a

9-Mar-15 | ATM PERSONNEL ASSISTANCE, INC. 3,647.88 19,211.72 | ona P 10-Mar- | TM PERSONNEL ASSISTANCE, INC. 2,230.92 P-257.235 0 P- | 15 257.236 - - 235 >.

| 10-Mar AM PERSONNEL ASSISTANCE, INC. 1,252.76 P.257.237 to} 15 257.238 - _ _ € om 10 ra ATM PERSONNEL ASSISTANCE, INC. 1,370.24 4953.92 | © oa 11-Mar- VT pape soTeT A P-257.241 to P- | 43 ATM PERSONNEL ASSISTANCE, INC. 794.10 469 349 . - _ >.

i a ATM PERSONNEL ASSISTANCE, INC. | 1,638.14 P ann } ~ - - _ " ae ATM PERSONNEL ASSISTANCE, INC. 2,847.06 5,279.30 | P een PLATON MARTINEZ FLORES SAN | P-257.247 to P- 6-Mar-15 | PEDRO AND LEANO LAW OFFICES | 7,200.00 257.248 1 PLATON MARTINEZ FLORES SAN P-257.249 to P- 06-Mar-15 | be DRO AND LEANO LAW OFFICES 312.00 | 1,512.00 |_257.250 20-Mar- | PLATON MARTINEZ FLORES SAN 524.00 P-257.251 to P- 15 | PEDRO AND LEANO LAW OFFICES 257.252 [ 20-Mar- | PLATON MARTINEZ FLORES SAN | 720.00 1 344,99 | P-257-253 to P- | 15 | PEDRO AND LEANO LAW OFFICES ae 257.254 23-M@™ | \~M PERSONNEL ASSISTANCE, INC. 2,149.99 BA29 7.259 to P- 15 257.256 2 ~L - . - . ~_ °3 nat ATM PERSONNEL ASSISTANCE, INC. LL 1,378.79 P alan 7 23 ae ATM PERSONNEL ASSISTANCE, INC. 1,274.65 4803.43 ant P- 8-Apr-15 | ARKIGRAFIX CORPORATION | 234.00 | eee P- '3-Apt- | TM PERSONNEL ASSISTANCE, INC. 1,154.50 | P-227.263 to P- 15 | 257.264 1S-APE | MISNE'T EDUCATION INC. 3,171.43 P-257.269 to P- 15 257.266 27-APT |v ISNET EDUCATION INC. 2,142.86 | P-297267 to P- 15 257.268 | : PERSONAL COMPUTER SPECIALISTS, P-257.269 to P- 8-Apr15 | ie 4,676.35 | 467970 Ys. Apr-15 | PERSONAL COMPUTER SPECIALISTS, | 1.936.15 9612.50 | P-257-271 to P- oP INC. 790- tie 257.272 17-Apr-_ | PLATON MARTINEZ FLORES SAN | 595.00 | P-257.273 to P- 15 | PEDRO AND LEANO LAW OFFICES 257.274 17-Apr-_ | PLATON MARTINEZ FLORES SAN 0.00 P-257.275 to P- 15 | PEDRO AND LEANO LAW OFFICES 257.276 17-Apr- | PLATON MARTINEZ FLORES SAN 480.00 P-257.277 to P- 15 PEDRO AND LEANO LAW OFFICES | 257.278 17-Apr-_ | PLATON MARTINEZ FLORES SAN 120.00 P-257.279 to P- 15 | PEDRO AND LEANO LAW OFFICES 257.280 i CTA CASE NOS, 9350 & 9430 17-Apt- | PLATON MARTINEZ FLORES SAN 135.00 355.90 | P-257-281 to P- _15 | PEDRO AND LEANO LAW OFFICES 257.282 21-Apr- |< - P-257.283 to P-

- DL

76 a RONALD MAGBITANG 3,048.19 | P oe at > } 14-May- | SCHNEIDER ELECTRIC IT | 13.040.21 | P-257.313 to P- 15 | PHILIPPINES, INC. ue 257.314 ANGARA ABELLO CONCEPCION P-257.315 to P- 9Jun-15 | ReGaLA AND CRUZ | 1,200.00 | "257.316 M-Jun- | aRKIGRAFIX CORPORATION 1,553.57 P-257.317 to P- 15 | 257.318 - - ~ ¢ - 'IJun- | ARKIGRAFIX CORPORATION 257.14 P-257-31) to B |__is 257.320 - - oa - vise ARKIGRAFIX CORPORATION 50.40 1861.11 | oe P- | Jun: | BENIPAYO VILMA BOBIS | 567.86 | es BP. duns | BIO-LECH ENVIRONMENTAL 535.7) | P-257.325 to P- | Jun-1 | oR VICES PHILS. INC. | 257.326 tunis | BIO-TECH ENVIRONMENTAL 996.79 P-257.327 to P- Ju SERVICES PHILS. INC. | | 257.328 |

Fi

4-Jun-15

5-Jun-15

Less: Disallowances

Input VAT due on purchases of goods Php964,85 1.25 Input VAT paid on importations of goods, domestic purchases of services

I

and services rendered by non-residents 755,826.22 1,720,677.47 I Valid input VAT for the period Since there are both zero-rated or effectively zero-rated sales and taxable sales, the said amount of Php39,168,665.68 shall be proportionately allocated on the basis of sales volume.

Php39,168,665.68 To reiterate, the eighth requisite is to the effect that the input taxes claimed are attributable to zero-rated or effectively zero-rated sales. However, where there are both 7:ero-rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes cannot be directly and entirely attributable to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume.

In this case, for the subject periods of the claim, there exists a zero-rated or effectively zero-rated sales and taxable sales. Specifically, in the amended Quarterly VAT Return for the first quarter ofTY 2015, Petitioner reported total r

CTA CASE NOS. 93SO & 9430 sales in the amount of Php994,732,076.01;76 while in the amended Quarterly VAT Return for the second quarter ofTY 2015, Petitioner declared its total sales in the amount of Php929,731,688.6877 In other words, Petitioner had sales for the said periods in the aggregate amount ofPhp1,924,463,764.69. However, since its input VAT cannot be directly or entirely attributed to any of the transactions, this Court shall allocate the valid input VAT of Php39,168,665.68 proportionately on the basis of the volume of its sales, as shown below:

Taxable Sales for the first and second quarters ofTY 201578 Phr_ 61,707,359.10 Divided by the Reported Total Sales per Amended Quarterly Vi\T Php1,924,463,764.69

Returns

Multiplied by Total Valid Input VAT

Php

39,168,665.68 Valid input VAT allocated to sales subject to the 12% VAT

Php

1,255,931.63

Total Valid Zero-Rated Sales

Php 1,655,27 4,685. 71 Divided by the Reported Total Sales per Amended Quarterly VAT Php1,924,463,764.69

Return

Multiplied by Total Valid Input VAT

Php 39,168,665.68 Valid Input VAT allocated to valid zero-rated sales Php 33,689,852.71 Thus, for purposes of, and with regard to Petitioner's compliance with, the eighth requisite, only the amount of Php33,689,852.71 represents valid input VAT attributable to valid zero-rated sales. Determination of the refundable amount.

Having determined that Petitioner had valid input VAT attributable to its zero-rated sales, this Court shall now determine whether the same was applied against its output VAT liability during and in the succeeding quarters, relative to the ninth requisite for the successful prosecution of an input VAT refund claim. For the periods under consideration, Petitioner has output VAT liabilities in the amount of Php7,404,883.0979 Since Petitioner's valid input VAT in the 76 Docket (CTA Case No. 9350), Exhibit "P-12", pp. 3722 to 3723. 77 !d., Exhibit "P-14", pp. 3722 to 3723. 78 !d., Line 15A of Exhibit "P-12" and Line 15A of Exhibit "P-14", pp. 3722 to 3723. 79 Com outed as foil ~ .........

Exhibit

Cutout VAT

1" nuarter TY 2015

P-12

Pho 3 125 164.85 2nd nuarter TY 2015

P-14

4 279 718.24

Total

Php 7,404,883.09 r' amount of Php1,255,931.63 (supra) allocated to sales subject to the 12% VAT is not enough to cover the said output VAT liability, the output VAT still due against Petitioner is computed as follows: Output VAT liabilities for the first and second quarters of TY 2015 Php7,404,883.09 Less: Valid Input VAT allocated to Sales subject to the 12%

VAT

1,255,931.63

Output VAT Still Due

Php6,148,951.46 As shown earlier, the valid input VAT attributable to valid zero-rated sales 1n the amount of Php33,689,852.71 shall then be utilized against the said remaining output VAT liability of Petitioner in the amount of Php6,148,951.46. Correspondingly, only the remaining input VAT ofPhp27 ,540,901.25 represents Petitioner's unapplied/ excess input VAT attributable to its valid zero-rated sales, as determined below:

Substantiated Total Input VAT Allocated to Zero-Rated Sales Php33,689 ,852. 71 Less: Output VAT still due 6,148,951.46 Excess input VAT attributable to valid zero-rated sales Php 27,540,901.25 Needless to state, the said amount of Php27 ,540,901.25 is included in the amounts of the subject refund claim, i.e., the amounts of Php14,516,165.27 and Php18,968,294.79 for the first and second quarters of TY 2015, respectively. Although the said amounts of input VAT claims were initially carried-over by Petitioner in its succeeding Quarterly VAT Returns,80 the same remained unutili:?.ed until the same was deducted as 'VAT Refund/TCC Claimed" in its Monthly VAT Declarations for the months of October 201581 and February 2016,82 respectively.

In fine, Petitioner is deemed to have fulfilled the said ninth requisite in the refund of input VAT under Section 112(A) of the NIRC of 1997, as amended. Correspondingly, Petitioner is entided to refund or issuance of tax credit certificate in the amount ofPhp27,540,901.25.

WHEREFORE, in light of the foregoing considerations, the instant consolidated Petitions for Review is PARTIALLY GRANTED. Accordingly, Respondent is ORDERED TO REFUND OR ISSUE A TAX CREDIT r

80 Id., Exhibits "P-14", "P-17'', "P-20", and "P-23", pp. 3726 to 3727, 3732 to 3733, 3738 to 3739, and 3744 to 3745, respectively.

81 !d., Line 200 of Exhibit "P-28", p. 3755.

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