Court of Tax Appeals · First Division

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue

CTA Case No. 9836 May 25, 2021

REPUBLIC OF THE PHILIPPINES

Court of Tax Appeals

QUEZON CITY

FIRST DIVISION

REMA TIP TOP PHILIPPINES,

CTA Case No. 9836

INC.,

Petitioner,

Members:

DEL ROSARIO, P.J., Chairperson,

- versus -

and MANAHAN, JJ.

COMMISSIONER OF INTERNAL

Promulgated:

REVENUE,

Respondent.

)(- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

DECISION

DEL ROSARIO, P.J.:

Before this Court is a Petition for Review filed on May 15, 2018 by petitioner Rema Tip Top Philippines, Inc. against respondent Commissioner of Internal Revenue (CIR), praying for the refund of Five Million Eight Hundred Ninety-Seven Thousand Nine Hundred Seventeen and 11/100 Pesos (P5,897,917.11) representing its input Value-Added Ta)( (VAT) allegedly attributable or allocated to its zero- rated sales for ta)(able year (TY) 2016.

THE PARTIES

Petitioner Rema Tip Top Philippines, Inc. is a corporation duly organized and e)(isting under Philippine laws, with principal business address at Unit 502 Richmonde Plaza Ortigas, San Miguel Ave. cor. Lourdes St., Pasig City.1 It is registered with the Bureau of Internal Revenue (BIR) as a VAT ta)(payer with Ta)( Identification No. (TIN) 008-042-655-000 under Certificate of Registration No.

OCN3RC0000758904. 2 1 Par. 8, Petition for Review, CTA Docket vol. I, p. 19; and Exhibit "P-4-1 ", CTA Docket vol. VI, p. 3469.

' Exhibit "P-2", CTA Docket vol. VI, p. 3442()f1 Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue Respondent, on the other hand, is the duly appointed Commissioner of the BIR, with principal office at the 5th Floor, BIR National Office Building, Agham Road, Diliman, Quezon City.3

THE FACTS

Petitioner was incorporated on May 9, 2011.4 Its primary purpose as stated in its Amended Articles of lncorporation5 is as follows:

"To operate, conduct and carry on the business of engaging in any construction or construction-related work on commercial or industrial facilities to maximize the operational readiness thereof by employing or installing corrosion and wear and tear protection using techniques, now employed or to be developed, and taking advantage of versatile properties or materials such as, but not limited to, rubber, polyurethane, polytetrafluor ethylene, polyethylene, aluminum oxide ceramics and plyurea; to make, execute, and receive contracts or assignments or delegations of contracts for or relating to or connected with the business of providing corrosion and wear and tear protection and other commercial and industrial solutions; to manufacture, import or otherwise acquire, and to furnish all other tools and equipment connected with or required for the business; to manufacture, produce, adapt, prepare, import, and deal in any materials, articles, or things incidental to, or required for, or useful in connection with, any of such activities; and generally to carry on any other activities which can be advantageously pursued in conjunction with or incidental to any of the above purposes." On July 12, 2017, petitioner filed with the BIR its Amended Quarterly VAT Return for the first, second, third and fourth quarters of TY 2016. 6 On April 2, 2018, petitioner filed with respondent, through Revenue District Office (ROO) No. 43, an administrative claim for refund of input VAT attributable to zero-rated sales made in TY 2016.7 On April 12, 2018, petitioner received a Letter dated April 10, 2018 from ROO No. 43 denying its administrative claim for refund. 8

3 Par. 2, II. Statement of Facts and Issues, Pre-Trial Order, CTA Docket VI, p. 3082.

4 Exhibit "P-3-1", CTA Docket vol. VI, p. 3455.

5 Exhibit "P-3", CTA Docket vol. VI, pp. 3443-3453.

6 Exhibits "P-8", "P-9", "P-10" and "P-11", CTA Docket vol. VI, pp. 3489-3490, 3487-3488, 3485- 3486 and 3483-3484.

7 Exhibit "P-5", CTA Docket vol. VI, p. 3477.

8 Exhibit "P-70", CTA Docket vol. VI, p. 3592.()1)

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue

In view of the denial of its administrative claim, petitioner filed the present Petition for Review before the Court on May 15, 2018.9 On July 13, 2018, within the extended period10, respondent filed his Answer, 11 with the following special and affirmative defenses: ( 1) petitioner's claim for tax refund was correctly denied for its failure to submit the documents required in Revenue Memorandum Order (RMO) 54-2014; (2) petitioner failed to comply with the invoicing and accounting requirements under the National Internal Revenue Code (NIRC); (3) the Financial Statements of petitioner did not show that it recorded nor earmarked the alleged unutilized input taxes subject of the present claim; (4) claimant has the burden of proof to establish the factual basis of the claim for tax credit or refund; and (5) tax refunds are in the nature of tax exemptions which are construed strictissimi juris against the taxpayer and liberally in favor of the government. On November 5, 2018, both the respondent's Pre-Trial Brief1 2 and petitioner's Pre-Trial Brief13 were filed. The Pre-Trial Conference was held on January 17, 201914. On April 11, 2019, the Court issued the Pre-Trial Order15 thereby terminating the pre-trial. Upon motion16 of petitioner, the Court commissioned Ms. Ma. Theresa R. Dela Roca, as Independent Certified Public Accountant (I CPA), on April 11, 2019. 17 .

During trial, petitioner presented testimonial and documentary evidence.

It presented the following witnesses: Ms. Jennilyn U. Gaanan, 18 petitioner's Director, Treasurer and Chief Financial Officer; and Ms. Ma. Theresa R. Del a Roca, 19 the Court-commissioned I CPA. Petitioner's Formal Offer of Documentary Exhi.bits20 was filed through registered mail on October 25, 2019. Petitioner's exhibits were admitted in evidence in the Resolution21 dated February 26, 2020, 9 CTA Docket vol. I, p. 12. 10 CTA Docket vol. V, p. 2299. 11 CTA Docket vol. V, pp. 2300-2305. 12 CTA Docket vol. V, pp. 2821-2823. 13 CTA Docket vol. V, pp. 2824-2856. 14 CT A Docket vol. V, pop. 2872-287 4. 15 CTA Docket vol. V, pp. 3081-3094. 16 CTA Docket vol. V, pp. 2861-2865. 17 CTA Docket vol. V, pp. 3072-3077. 18 Exhibit "P-93", Judicial Affidavit of Jennilyn U. Gaanan, CTA Docket vol. V, pop. 2882-2905; and Minutes of Hearing dated May 21, 2019, CTA Docket vol. VI, pp. 3122-3123. 19 Exhibits "P-90" and 'P-92", CTA Docket vols. V and VI, pp. 3053-3059 and 3355-3372; and Minutes of Hearing dated September 3, 2019, CTA Docket vol. VI, pp. 3384-3388. 2o CTA Docket vol. VI, pp. 3422-3439.

21 CTA Docket vol. VI, pp.3603-3607 ~

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue except those exhibits the originals of which were not presented by petitioner for comparison, were not found in the records, and were not identified.

During the hearing on September 3, 2019, respondent manifested that he has no evidence to present. 22 Petitioner filed its Memorandum23 on July 1, 2020, while respondent failed to file his memorandum despite due notice.24 The case was submitted for decision on July 22, 2020. 25

THE ISSUE

The parties stipulated the following issue26 for resolution: "Whether petitioner is entitled to a refund of its alleged input VAT attributable or allocated to zero-rated sales made during the TY 2016 in the aggregate amount of P5,897,917.11."

PARTIES' ARGUMENTS

Petitioner argues that: (i) it is entitled to a refund of input VAT attributable to zero-rated sales made in TY 2016; (ii) under Section 1 06(A)(2)(a)(5) and 1 08(8)(3) of the NIRC of 1997, as amended, sales by a VAT -registered taxpayer to enterprises registered with the Philippine Economic Zone Authority (PEZA) or the Board of Investments (801) are subject to zero-rated VAT; (iii) it has complied with the requirements for a claim for VAT refund under Section 112(A) of the NIRC of 1997, as amended; (iv) the supporting documents submitted by petitioner for its administrative claim for refund are deemed complete.

On the other hand, respondent in his Answer counter-argues that: (i) petitioner's claim for tax refund has no basis since its request was denied for petitioner's failure to submit the documents required in RMO No. 54-2014; (ii) petitioner failed to comply with the invoicing and accounting compliance required by the NIRC of 1997, as amended; and, (iii) the Financial Statements of petitioner did not show that it recorded nor earmarked the alleged unutilized input taxes that is the 22 CTA Docket vol. VI, pp. 3391-3392. 23 CTA Docket vol. VI, pp. 3609-3639. 24 CTA Docket vol. VI, p. 3608. 2s CTA Docket vol. VI, 3645.

26 Issue, Pre-Trial Order, CT A Docket vol. V, p. 3082o'j

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue subject of the present claim; and, (iv) the claimant has the burden of proof to establish the factual basis of the claim for tax credit or refund since tax refunds are in the nature of tax exemptions which are construed strictissimi juris against the taxpayer and liberally in favor of the government.

THE COURT'S RULING

Petitioner anchors its claim for refund on Section 112(A), in relation to Section 112(C), of the NIRC of 1997, as amended by R.A. No. 1096327 [otherwise known as the Tax Reform for Acceleration and Inclusion Act (TRAIN law)], viz.: "SEC. 112. Refunds or Tax Credits of Input Tax- (A) Zero-Rated or Effectively Zero-Rated Sales. - Any VAT- registered person, whose sales are zero-rated or effectively zero- rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales under Section 1 06(A)(2)(a)(1 ), (2) and

(b) and Section 108 (8)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods of properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales: Provided, finally, That for a person making sales that are zero-rated under Section 1 08 (8)(6), the input taxes shall be allocated ratably between his zero- rated and non-zero-rated sales. XXX XXX XXX (C) Period within which Refund of Input Taxes shall be Made. - In proper cases, the Commissioner shall grant a refund for creditable input taxes within ninety (90) days from the date of submission of the official receipts or invoices and other documents in support of the application filed in accordance with Subsections (A) and (B) hereof: Provided, That should the Commissioner find that the 27 An Act Amending Sections 5, 6, 24, 25, 27, 31, 32, 33, 34, 51, 52, 56, 57, 58, 74, 79, 84, 86, 90, 91, 97, 99, 100, 101, 106, 107, 108, 109, 110, 112, 114, 116, 127, 128, 129, 145, 148, 149, 151, 155, 171, 174, 175, 177, 178, 179, 180, 181, 182, 183, 186, 188, 189, 190, 191, 192, 193, 194, 195, 196, 197, 232, 236, 237, 249, 254, 264, 269, AND 288; Creating New Sections 51-A, 148-A, 150-A, 150-8, 237-A, 264-A, 264-8, and 265-A; and Repealing Sections 35, 62, and 89; All Under Republic Act No. 8424, Otherwise Known as the National Internal Revenue Code of 1997, as Amended, and for Other PurposesO"J Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue grant of refund is not proper, the Commissioner must state in writing the legal and factual basis for the denial. In case of full or partial denial of the claim for tax refund, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim, appeal the decision with the Court of Tax Appeals: Provided, however, That failure on the part of any official, agent, or employee of the SIR to act on the application within the ninety (90)-day period shall be punishable under Section 269 of this Code."

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

1. the taxpayer-claimant must be VAT-registered;

2. the claim was filed within the prescribed periods both in the administrative and judicial levels;

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

4. input taxes were incurred or paid;

5. such input taxes are attributable to zero-rated or effectively zero- rated sales; and,

6. said input taxes were not applied against any output VAT liability.

First Requisite: Petitioner is a VAT-registered entity Petitioner has proven its compliance with the first requisite through its BIR Certificate of Registration which shows that it is a VAT- registered taxpayer with TIN No. 008-042-655-000.28 Second Requisite: Petitioner's administrative and judicial claims for refund were timely filed Anent petitioner's administrative claim, Section 112 (A) of the NIRC of 1997, as amended, specifically requires that the taxpayer's 2a Exhibit "P-2", CTA Docket vol. VI, p. 3442(Wl

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue application for refund or issuance of TCC of unutilized and/or excess input VAT arising from its domestic purchases of services and importation of goods other than capital goods, which are attributable to its zero-rated sales, must be made within two (2) years after the close of the taxable quarter when the sales were made. Petitioner's claim for refund or issuance of TCC covers the four

(4) quarters of TY 2016 which closed on March 31, 2016, June 30, 2016, September 30, 2016 and December 31, 2016, respectively. Thus, it had two (2) years from the said dates or until March 31, 2018, June 30, 2018, September 30, 2018 and December 31, 2018, respectively, within which to file its administrative claim for the quarters concerned. Thus, the filing of the administrative claim for refund or tax credit for the four quarters of TY 2016 with the BIR, on April 2, 2018, fell within the respective two-year prescriptive period. As shown below, petitioner timely filed its administrative claim for the four (4) quarters of

TY 2016:

Taxable Quarter End Last day of filing Date of Filing of Quarter Administrative Administrative

(TY 2016)

Claim for Refund Claim for Refund 1st Quarter March 31, 2016 April 2, 201829 I 2nd Quarter June 30, 2016 June 30,2018 April 2, 2018 I 3rd Quarter September 30, 2016 September 30, 2018 ' 4th Quarter December 31, 2016 December 31 , 2018 I Anent petitioner's judicial claim for refund or issuance of TCC, Section 11 of Republic Act No. (RA) 1125,30 as amended by RA No. 9282, 31 provides the period of limitation within which to file an appeal before this Court, viz.: "SEC. 11. Who May Appeal; Mode of Appeal; Effect of Appeal. -Any party adversely affected by a decision, ruling or inaction of the Commissioner of Internal Revenue, the Commissioner of Customs, the Secretary of Finance, the Secretary of Trade and Industry or the Secretary of Agriculture or the Central Board of Assessment Appeals or the Regional Trial Courts may file an appeal with the CTA within thirty (30) days after the receipt of such decision or ruling or after the 29 March 31,2018 fell on a Saturday. April2, 2018 is the next working day. 30 An Act Creating the Court of Tax Appeals.

31 An Act Expanding the Jurisdiction of the Court of Tax Appeals (CTA), Elevating Its Rank to the Level of a Collegiate Court with Special Jurisdiction and Enlarging its Membership Amending for the Purpose Certain Sections of Republic Act No. 1125, as amended, otherwise known as the law creating the Court of Tax Appeals, and for Other Purposes.(1J

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue expiration of the period fixed by law for action as referred to in Section 7(a)(2) herein. Appeal should be made by filing a petition for review under a procedure analogous to that provided for under Rule 42 of the 1997 Rules of Civil Procedure with the CTA within thirty (30) days from the receipt of the decision or ruling or in the case of inaction as herein provided, from the expiration of the period fixed by law to act thereon. xxx" As aforestated, petitioner filed its administrative claim for refund or issuance of TCC representing its excess and/or unutilized input VAT forTY 2016 in the amount of P5,897,917.11 on April 2, 2018. Within the 90-day period to act on petitioner's administrative claim for refund, the CIR denied petitioner's administrative claim in a Letter dated April 10, 2018.

Since petitioner received the aforesaid Letter on April 12, 2018, petitioner had thirty (30) days from said date or until May 12, 2018 within which to appeal to the CTA. Considering, however that May 12, 2018 fell on a Saturday and May 14, 2018 was declared as a non- working holiday, petitioner had until May 15, 2018, the next working day, within which to file its judicial claim for refund. The Petition for Review filed on May 15, 2018 was therefore filed within the reglementary period to appeal. Thus, the Court has jurisdiction to take cognizance of the Petition for Review. Third Requisite: Petitioner had zero-rated sales during the subject period in the amount of P62,449,305. 68 Sales of Goods and Services to Entities Registered with PEZA and 801 whose products are 100% exported Petitioner maintains that its sales of goods and services to entities registered with PEZA and 801 during the period October 1, 2015 to March 31, 2016 are subject to zero percent (0°/o) VAT, pursuant to Sections 1 06(A)(2)(a)(3), (5) and (c) and 1 08(8)(3) of the NIRC of 1997, as amended. The pertinent provisions of Sections 1 06(A)(2)(a)(3), (5) and (c) and 108(8)(3) of the NIRC of 1997, as amended, state~

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue

"SEC. 106. Value-Added Tax on Sale of Goods or Properties. (A) Rate and Base of Tax- xxx XXX XXX XXX

(2) The following sales by VAT-registered persons shall be subject to zero percent (0%) rate:

(a) Export Sales.- The term 'export sales' means: XXX XXX XXX

(3) Sale of raw materials or packaging materials to export oriented enterprise whose export sales exceed seventy percent (70%) of total annual production;

XXX XXX XXX

(5) Those considered export sales under Executive Order No. 226, otherwise known as the Omnibus Investment Code of 1987, and other special laws.

XXX XXX XXX

(1) Sales to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects such sales to zero rate." (Boldfacing supplied) "SEC. 108. Value-added Tax on Sale of Services and Use or Lease of Properties. - (A) Rate and Base of Tax.- XXX XXX XXX (B) Transactions Subject to Zero Percent (0%) Rate. - The following services performed in the Philippines by VAT- registered persons shall be subject to zero percent (0%) rate:

XXX XXX XXX

(3) Services rendered to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects the supply of such services to zero percent (0%) rate;" (Boldfacing supplie~ Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue Relative thereto, Sections 4. 1 06-5 and 4.1 08-5 of Revenue Regulations (RR) No. 16-2005, as amended by RR No. 04-07, also provide:

"SEC. 4.106-5. Zero-Rated Sales of Goods or Properties. -XXX The following sales by VAT-registered persons shall be subject to zero percent (0%) rate:

(a) Export sales.- 'Export Sales' shall mean: XXX XXX XXX

(5) Transactions considered export sales under Executive Order No. 226, otherwise known as the Omnibus Investments Code of 1987, and other special laws. 'Considered export sales under Executive Order No. 226' shall mean the Philippine port F.O.B. value determined from invoices, bills of lading, inward letters of credit, landing certificates, and other commercial documents, of export products exported directly by a registered export producer, or the net selling price of export products sold by a registered export producer to another export producer, or to an export trader that subsequently exports the same; Provided, That sales of export products to another producer or to an export trader shall only be deemed export sales when actually exported by the latter, as evidenced by landing certificates or similar commercial documents; Provided, further, That pursuant to EO 226 and other special laws, even without actual exportation, the following shall be considered constructively exported: (1) sales to bonded manufacturing warehouses of export-oriented manufacturers; (2) sales to export processing zones pursuant to Republic Act (RA) Nos. 7916, as amended, 7903, 7922 and other similar export processing zones; (3) sale to enterprises duly registered and accredited with the Subic Bay Metropolitan Authority pursuant to RA 7227; (4) sales to registered export traders operating bonded trading warehouses supplying raw materials in the manufacture of export products under guidelines to be set by the Board in consultation with the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC); (5) sales to diplomatic missions and other agencies and/or instrumentalities granted tax immunities, of locally manufactured, assembled or repacked products whether paid for in foreign currency or not. For purposes of zero-rating, the export sales of registered export traders shall include commission income. The exportation of goods on consignment shall not be deemed export sales until the export products consigned are in fact sold by the consignee: and Provided, finally, that sales of goods, properties or services made by a VAT -registered supplier to a SOl-registered manufacturer/ producer whose products are 100% exported are considered export sales. A certification to this effect must be issued by tht!l

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue

Board of Investment (801) which shall be good for one year unless subsequently re-issued by the 801. XXX XXX XXX

(b) 'Sales to Persons or Entities Deemed Tax-exempt under Special Law or International Agreement'- Sales of goods or property to persons or entities who are tax-exempt under special laws, e.g. sales to enterprises duly registered and accredited with the Subic Bay Metropolitan Authority (SBMA) pursuant to R.A. No. 7227, sales to enterprises duly registered and accredited with the Philippine Economic Zone Authority (PEZA) or international agreements to which the Philippines is signatory, such as, Asian Development Bank (ADB), International Rice Research Institute (IRRI), etc., shall be effectively subject to VAT at zero-rate." (Boldfacing supplied) "SEC. 4.108-5. Zero-Rated Sale of Services. - XXX XXX XXX

(b) Transactions Subject to Zero Percent (0%) VAT Rate.- The following services performed in the Philippines by a VAT- registered person shall be subject to zero percent (0%) VAT rate: XXX XXX XXX

(3) Services rendered to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects the supply of such services to zero percent (0%) rate;" (Boldfacing supplied) RA No. 7916, as amended by RA No. 8748, otherwise known as "The Special Economic Zone Act of 1995", provides for the creation of the PEZA and treatment of special economic zones (Ecozones) as separate customs territory, to wit: "REPUBLIC ACT NO. 7916 (AS AMENDED BY REPUBLIC ACT NO. 8748)

AN ACT PROVIDING FOR THE LEGAL FRAMEWORK AND

MECHANISMS FOR THE CREATION, OPERATION, ADMINISTRATION, AND COORDINATION OF SPECIAL ECONOMIC ZONES IN THE PHILIPPINES, CREATING FOR THIS PURPOSE, THE PHILIPPINE ECONOMIC ZONE AUTHORITY (PEZA) AND FOR OTHER PURPOSES. XXX XXX XXX SEC. 8. ECOZONE to be Operated and Managed as Separate Customs Territory.- The ECOZONE shall be managed and operated by the PEZA as separate customs territory. The PEZA is hereby vested with the authority to issue certificates of origi(!1

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue for products manufactured or processed in each ECOZONE in accordance with the prevailing rules of origin, and the pertinent regulations of the Department of Trade and Industry and/or the Department of Finance. XXX XXX XXX SEC. 24. Exemption form National and Local Taxes.- Except for real property taxes on land owned by developers, no taxes, local and national, shall be imposed on business establishments operating within the ECOZONE. xxx" (Boldfacing supplied) Since an Ecozone is treated as a foreign territory by legal fiction, sales of goods and services made by a VAT -registered person in the Philippine customs territory to an entity registered and operating within an Ecozone are considered exports to a foreign country subject to 0°/o VAT. This was elucidated by the Supreme Court in Commissioner of Internal Revenue vs. Toshiba Information Equipment (Phils.), lnc., 32 to wit:

"This Court agrees, however, that PEZA-registered enterprises, which would necessarily be located within ECOZONES, are VAT-exempt entities, not because of Section 24 of Rep. Act No. 7916, as amended, which imposes the five percent (5%) preferential tax rate on gross income of PEZA-registered enterprises, in lieu of all taxes; but, rather, because of Section 8 of the same statute which establishes the fiction that ECOZONES are foreign territory. xxx An ECOZONE or a Special Economic Zone has been described as- ... [S]elected areas with highly developed or which have the potential to be developed into agroindustrial, industrial, tourist, recreational, commercial, banking, investment and financial centers whose metes and bounds are fixed or delimited by Presidential Proclamations. An ECOZONE may contain any or all of the following: industrial estates (IEs), export processing zones (EPZs), free trade zones and tourist/recreational centers. The national territory of the Philippines outside of the proclaimed borders of the ECOZONE shall be referred to as the Customs Territory.

Section 8 of Rep. Act No. 7916, as amended, mandates that the PEZA shall manage and operate the ECOZONES as a separate customs territory; thus, creating the fiction that the ECOZONE is a foreign territory. As a result, sales made by a supplier in the Customs Territory to a purchaser in the ECOZONE shall be treated as an exportation from the Customs Territory. Conversely, sales made by a supplier from the ECOZONE to a purchaser in the Customs "G.R. No. 150154, August 9, 2005.~ Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue Territory shall be considered as an importation into the Customs Territory.

Given the preceding discussion, what would be the VAT implication of sales made by a supplier from the Customs Territory to an ECOZONE enterprise? The Philippine VAT system adheres to the Cross Border Doctrine, according to which, no VAT shall be imposed to form part of the cost of goods destined for consumption outside of the territorial border of the taxing authority. Hence, actual export of goods and services from the Philippines to a foreign country must be free of VAT; while, those destined for use or consumption within the Philippines shall be imposed with ten percent (10%) VAT." Meanwhile, pursuant to RMO No. 9-2000,33 sales of goods, properties or services made by a VAT-registered supplier to a 801 registered entity whose products are 1 OOo/o exported shall be accorded automatic VAT zero-rating, subject to the reportorial and documentary requirements prescribed under Section 3 thereof, thus: "SECTION.3. Sales of goods, properties or services made by a VAT registered supplier to a 801 registered exporter shall be accorded automatic zero-rating, i.e., without necessity of applying for and securing approval of the application for zero-rating as provided in Revenue Regulations No. 7-95, subject to the following conditions:

(1) The supplier must be VAT-registered;

(2) The SOl-registered buyer must likewise be VAT-registered;

(3) The buyer must be a SOl-registered manufacturer/producer whose products are 100% exported. For this purpose, a Certification to this effect must be issued by the Board of Investments (801) and which certification shall be good for one year unless subsequently re-issued by the 801;

(4) The SOl-registered buyer shall furnish each of its suppliers with a copy of the aforementioned SOl Certification which shall serve as authority for the supplier to avail of the benefits of zero-rating for its sales to said SOl-registered buyers; and

(5) The VAT-registered supplier shall issue for each sale to SOl- registered manufacturer/exporters a duly registered VAT invoice with the words 'zero-rated' stamped thereon in compliance with Sec.4.108-1 (5) of Revenue Regulations No. 7-95. The supplier must likewise indicate in the VAT-invoice the name and SOl-registry number of the buyer." (Boldfacing supplied) 33 SUBJECT: Tax Treatment of Sales of Goods, Properties and Services Made by VAT-registered Suppliers to SOl-registered Manufacturers-Exporters With 100% Export Sales. ~ Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue Based on the foregoing, sales of goods and services by a VAT- registered taxpayer, such as petitioner, to entities located in the ECOZONEs, as well as to SOl-registered entities whose products are 100% exported, are considered "export sales" subject to VAT zero- rating pursuant to Sections 1 06(A)(2)(a)(3), (5) and (c) and 1 08(8)(3) of the NIRC of 1997, as amended, and as implemented by Sections 4.106-5 and 4.108-5 of RR No. 16-05, as amended. To prove that its clients are duly registered with the PEZA and the 801, petitioner submitted various certifications issued by the said agencies. Listed below are the clients of petitioner registered with the PEZA and the 801:

Clients Certifying Proof of VAT Exhibit Certification Body Zero-rating Period Confirmation Letter from 801 dated April 29, January 1 to 2016; Certificate P-28 to December

FCF MINERALS CORPORATION

801 No. 2016-011 P-28.1 31, 2016

CORAL BAY NICKEL

Certificate No.

CORPORATION (CBNC)

PEZA 2016-0856 P-29 2016

TAGANITO HPAL NICKEL

Certificate No.

CORPORATION (THPAL)

PEZA 2016-0534 P-30 2016 Upon review of the certifications issued by the PEZA and the 801, the Court considers the sales of goods and services by petitioner to the above-listed clients subject to VAT zero-rating. Sales of Service to Non-resident Foreign Corporations (NRFCs) Petitioner alleges that out of its zero-rated sales aggregating in the amount of P83, 178,005.10 for the four quarters of TY 2016, P3,309,019.20 pertains to sale of services to NRFCs, as follows: Customers 3rd Quarter 4th Quarter Total Rema Tip Top Malaysia BHD PTY fit 1,023,663.08 - p 1,023,663.08 Rema Tip Top Malaysia SDN BHD Total - 2,285,356.12 2,285,356.12 p 1,023,663.08 2,285,356.12 fit 3,309,019.20 Section 1 08(8)(2) of the NIRC of 1997, as amended, provides: "SEC. 108. Value-added Tax on Sale of Services and Use or Lease of Properties.- C1 Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue

(A) XXX

(B) Transactions Subject to Zero Percent (0%) Rate. - The following services performed in the Philippines by VAT-registered persons shall be subject to zero percent (0%) rate:

(1) Processing, manufacturing or repacking goods for other persons doing business outside the Philippines which goods are subsequently exported, where the services are paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (SSP);

(2) Services other than those mentioned in the preceding paragraph rendered to a person engaged in business conducted outside the Philippines or to a non- resident person not engaged in business who is outside the Philippines when the services are performed, the consideration for which is paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP); xxx" (Boldfacing supplied) Certain essential elements must be present in order for a sale or supply of services to be subject to VAT rate of zero percent {0°/o} under Section 1 08(8)(2) of the NIRC of 1997, as amended, to wit:

1. 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 are performed; 34

2. The payment for such services should be in acceptable foreign currency accounted for in accordance with the 8SP rules· 35 '

3. The services fall under any of the categories under Section 1 08(8)(2)36, or simply, the services rendered should be other than "processing, manufacturing or repacking goods";37 and

34 Site/ Philippines Corporation (Formerly Clientlogic Phi/s., Inc.) vs. Commissioner of Internal Revenue, G. R. No. 201326, February 8, 2017

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

36 Commissioner of Internal Revenue vs. American Express International, Inc. (Philippine Branch), supra.

37 Commissioner of Internal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., supra.\?1

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue

4. The services must be performed in the Philippines by a VAT- registered person.38 To prove that its clients are NRFC for purposes of VAT zero- rating under Section 1 08(8)(2) of the NIRC of 1997, as amended, petitioner must establish that: (1) the client was established under the laws of a foreign country; and, (2) it is not engaged in trade or business in the Philippines. To be sure, there must be sufficient proof of both of these requirements to establish that the clients are foreign corporations AND are not doing business in the Philippines.39 Thus, petitioner must submit for each NRFC client, at the very least, both:

(1) the SEC Certificate of Non-Registration of Corporation/Partnership; AND (2) Proof of Certificate/Articles of Foreign Incorporation/Association showing the state/province/country where the entity was organized.40 The SEC Certificate of Non-Registration shows that the foreign client is not engaged in trade or business in the Philippines. On the other hand, the Certificate/Articles of Foreign Incorporation/Association proves that the client was established under the laws of a foreign country. Together, these two (2) documents prove the two (2) requisites necessary to establish the NRFC status of a client.

Upon review of the records, it is shown that petitioner failed to present the two (2) required documents to prove the NRFC status of its foreign clients. Thus, the entire amount of P3,309,019.20 representing sales to alleged NRFCs, detailed below, shall be disallowed:

ORIS I

Exhibit ORJSI Date Customer Amount 3rd Quarter

OR 1032

P-4814 8/25/16

REMA TIP TOP MALAYSIA BHO PTY

p 506,653.13

OR 1042

P-247 9/23/16

REMA TIP TOP MALAYSIA BHO PTY

517,009.95 Subtotal - 3rd Quarter 1,023,663.08 4th Quarter

OR 1045

P-267 10/21/16

REMA TIP TOP MALAYSIA SON BHO

643,453.72

OR 1050

P-296 11/10/16

REMA TIP TOP MALAYSIA SON BHO

705,561.54 38 Section 108(8), NIRC of 1997, as amended. 39 Commissioner of Internal Revenue vs. Deutsche Knowledge Services Pte. Ltd., G.R. No. 234445, July 15, 2020. 4° Commissioner of Internal Revenue vs. CITCO International Support Services Limited-Philippine ROHQ, CTA EB No. 2015, November 29, 2019~

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue

OR 1055

P-308 12/22/16

REMA TIP TOP MALAYSIA SON BHD

OR 1055

P-309 12/22/16

REMA TIP TOP MALAYSIA SON BHD

OR 1053

P-310 12/16/16

REMA TIP TOP MALAYSIA SON BHD

63,792.04 250,782.37 621,766.45 Subtotal - 4th Quarter 2,285,356.12 Total p 3,309,019.20 Disallowed Zero-rated Sales In its 15\ 2nd, 3rd and 4th Quarterly VAT Returns41 forTY 2016, petitioner reported total sales of P97,802,307.14 which included zero- rated sales in the amount of P83, 178,005.10, broken down as follows: Sales 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total VA Table Sales fD 3,570,726.25 fit 3,147,236.77 p 4,634, 724.97 p 3,271,614.05 P14,624,302.04 Zero-rated Sales 22,759,452.94 19,064,944.08 20,776,007.25 20,577,600.83 83,178,005.10 Total -- p 26,330,179.1~-- p 22,212,180.85 P25,410,732.22 p 23,ll_49,214.88 p 97,802,307.14 The Court shall then examine whether the reported zero-rated sales of petitioner complied with the invoicing requirements under Sections 113(A)(1) and (2), (8)(1 ), (2)(c) and (3) of the NIRC of 1997, as amended, viz:

"SEC. 113. Invoicing and Accounting Requirements for VAT- Registered Persons.- (A) Invoicing Requirements. -A VAT-registered person shall issue:

(1) A VAT invoice for every sale, barter or exchange of goods or properties; and

(2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services.

(B) Information Contained in the VAT Invoice or VAT Official Receipt - The following information shall be indicated in the VAT invoice or VAT official receipt:

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

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

41 Exhibit Nos. "P-8" to "P-11", CTA Docket vol. VI, pp. 3483-3491l!'IJ

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue

XXX XXX XXX

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

(3) The date of transaction, quantity, unit cost and description of the goods or properties or nature of the service; xxx" The same requirements are provided for under Sections 4.113- 1 (A)(1) and (2), (8)(1) and (2)(c) of RR No. 16-2005, as follows: "SEC. 4.113-1. Invoicing Requirements.- (A) A VAT-registered person shall issue:-

(1) A VAT invoice for every sale, barter or exchange of goods or properties; and

(2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services.

Only VAT-registered persons are required to print their TIN followed by the word 'VAT' in their invoice or official receipts. Said documents shall be considered as a 'VAT Invoice' or VAT official receipt.

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

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

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

XXX XXX XXX

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue

(c) If the sale is subject to zero percent (0%) VAT, the term 'zero-rated sale' shall be written or printed prominently on the invoice or receipt; xxx" Upon further evaluation, the Court finds that the reported zero- rated sales in the amount of P17,255,349.43 could not qualify for VAT zero-rating for petitioner's failure to comply with the invoicing requirements under the NIRC of 1997, as amended, and RR No. 16- 2005, as follows:

ORIS I

OR/51 Date Customer Amount Exhibit 1) Sale of services not supported by VAT OR 1st Quarter

TAGANITO HPAL NICKEL

P-337,

CR 0033

1/11/16 CORPORATION p 615,887.20 P-4829 Subtotal - 1st Quarter 615,887.20 Total- Sale of service not supported by VAT OR 615,887.20 2) Sale of services supported by VAT OR wherein date, payor details or amounts are unreadable 1st Quarter

TAGANITO HPAL NICKEL

OR 1010

1/15/16 CORPORATION 1,948,286.07 P-4796 SI1094/SI

TAGANITO HPAL NICKEL

P-134 to

1 093/SI 1 092

2/20/16 CORPORATION 4,976,751.35 P-134-B Subtotal- 1st Quarter 6,925,037.42 2nd Quarter

TAGANITO HPAL NICKEL

Sl 1157 5/6/16 CORPORATION 2,846,064.78 P-338 Subtotal - 2nd Quarter 2,846,064.78 4th Quarter

TAGANITO HPAL NICKEL

OR 1051

12/16/16 CORPORATION 516,274.00 P-4827

TAGANITO HPAL NICKEL

OR 1051

12/16/16 CORPORATION 2,808,076.00 P-4827

TAGANITO HPAL NICKEL

OR 1051

12/16/16 CORPORATION 1,744,010.03 P-4827

TAGANITO HPAL NICKEL

OR 1051

12/16/16 CORPORATION 1,800,000.00 P-4827 Subtotal - 4th Quarter 6,868,360.03 Total- Sale of services supported by VAT OR wherein date, payor details or amounts are unreadable 16,639,462.23 Total Zero-rated Sales Not Proper!}' Substantiated t-17,255,349.43 Thus, the total disallowances on petitioner's reported total zero- rated sales per the Court's verification amounts P20,564,368.63, as shown hereunder:0/

OR 1030

8/12/16 CORPORATION 2,500,000.00 p 4,155,182.94 t-161,330.25

TAGANITO HPAL NICKEL

OR 1031

8/28/16 CORPORATION 60,000.00 57,000.00 3,000.00 Subtotal - 3rd Quarter p 4,376,513.19 p 4,212,182.94 P164,330.25 Total Excess Zero-rated Sale Claimed P164,330. 79 In sum, out of the total reported zero-rated sales of P83, 178,005.10, only the amount of t-62,449,305.68 shall be considered as valid zero-rated sales for the four quarters of TY 2016, detailed as follows:

Exhibit P-101 P-124 P-4800 P-166 P-4811 P-4811 P-4812 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Zero-rated Sales p 22,759,452.94 p 19,064,944.08 p 20,776,007.25 p 20,577,600.83 p 83,178,005.10 Less: Disallowances 7,540,924.62 2,846,064.78 1,023,663.08 9,153,716.15 20,564,368.63 Excess Claims 0.21 0.33 164,330.25 - 164,330.79 Total Valid Zero- rated Sales p 15,218,528.11 p 16,218,878.97 p 19,588,013.92 p 11 ,423,884.68 p 62,449,305.68 I I Ill

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue

Fourth and Fifth Requisites: Petitioner incurred/paid input taxes attributable to zero-rated sales in the total amount of P291,262.93 Having found that petitioner had valid VAT zero-rated sales in the total amount of P62,449,305.68 for the four quarters of TY 2016, the Court shall determine whether petitioner complied with the requisites pertaining to the input VAT being claimed for refund or issuance of a tax credit certificate. For the four quarters of TY 2016, petitioner claims a total amount of P6,762,558.04 allowable input VAT arising from its domestic purchases and importation of goods other than capital goods, and domestic purchases of services. Summarized below are petitioner's current domestic purchases and importation of goods other than capital goods and domestic purchases of services in the total amount of P56,354,650.42, and the corresponding input taxes for the four quarters of TY 2016 in the total amount of P6,762,558.04: Gross Amount of Purchases and Importations 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Domestic Purchases of Goods Other Capital Goods (Line 21E) p 114,574.85 p 98,156.47 p 87,326.02 p 287,282.26 p 587,339.60 Importation of Goods Other than Capital Goods (Line 21G) 759,331.16 1 ,323,256.87 395,878.16 946,617.16 3,425,083.35 Domestic Purchase of Services (Line 211) 318,512.62 484,343.63 892,450.48 1,497,611.51 3,192,918.24 Others (Line 21 N) 9,965,604.54 15,473,118.03 6,709,880.34 17,000,706.32 49,149,309.23 Total Current Purchases/Importations P11,158,023.17 P17 ,378,875.00 P8,085,535.00 P19,732,217.25 P56,354,650.42 Input Tax on Purchases and Importations 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Domestic Purchases of Goods Other Capital Goods (Line 21F) p 13,748.98 p 11,778.78 p 10,479.12 p 34,473.87 p 70,480.75 Importation of Goods Other than Capital Goods (Line 21 H) 91,119.74 158,790.82 47,505.38 113,594.06 411,010.00 Domestic Purchase of Services (Line 21J) 38,221.51 58,121.24 107,094.06 179,713.38 383,150.19 Others (Line 21 0)42 1 '195,872.54 1,856,774.16 805,185.64 2,040,084.76 5,897,917.10 Total Curre_nt Input Tax p 1 ,338,962. 77 p 2,085,465.00 p 970,264.20 p 2,367,866.07 P6, 762,558.04 Petitioner claims that out of the total domestic purchases and importation of goods other than capital goods, and domestic purchases of services in the total amount of P56,354,650.42, with corresponding input VAT in the amount of P6,762,558.04, domestic purchases and 42 No figures reported in the Quarterly VAT Returns of TY 2016. Amounts were computed by the Court.QI'J

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue importations as reflected in "Others (Line 21 N/0 )" of the Quarterly VAT Returns of TY 2016 in the total amount of ~49, 149,309.23, with corresponding input VAT amount of~5,897,917.10 should be granted for refund. As validated by the Court-commissioned Independent Certified Public Accountant (ICPA) in the Amended ICPA Report,43 petitioner segregated the purchases of goods and services and importations directly attributable and allocable to zero-rated sales in the portion "Others (Line 21 N/0)" in the Quarterly VAT Returns of TY 2016.

Domestic purchases and importation of goods other than capital goods, and domestic purchase of services in the total amount of ~49,149,309.23, with corresponding input VAT of ~5,897,917.10 as reported in "Others (Line 21 N/0)" in the Quarterly VAT Returns of TY 2016 was determined by petitioner44 and the ICPA45 to be composed of purchases of goods and services directly attributable to zero-rated sales, and purchases of goods and services allocable to zero-rated sales, as follows:

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Purchases allocated to Zero-rated Sales p 9,592,319.46 P15, 168,639.11 p 6,215,096.42 P16,523,644.49 P47,499,699.48 Purchases Directly Attributable to Zero-rated Sales 373,285.08 304,478.92 494,783.92 477,061.83 1,649,609.75 Total Purchases Allocated and Directly Attributable to Zero-rated Sales (Line 21 N of Quarterly VAT Return) ~ 9,965,604.54 ~15,473, 118.03 ~ 6,709,880.34 ~17,000,706.32 ~49, 149,309.23 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Input VAT allocated to Zero-rated Sales p 1 '151 ,078.34 p 1 ,820,236.69 p 745,811.57 p 1,982,837.34 p 5,699,963.94 Input VAT Directly Attributable to Zero-rated Sales 44,794.21 36,537.47 59,374.07 57,247.42 197,953.17 Total Input VAT Allocated and Directly Attributable to Zero-rated Sales p 1 '195,872.54 _ _ jltJ,8_5E;,774.16 ~ 805,185.64 ~ 2,040,084.76 ~ 5,897,917.11 Upon verification by the Court, it is found that petitioner failed to prove that certain domestic purchases and importation of goods other than capital goods, and domestic purchase of services in the total amount of ~1 ,649,609. 75 were directly attributable to zero-rated sales made during the four quarters of TY 2016. Thus, the Court is constrained to consider the whole amount of ~56,354,650.42 as petitioner's total domestic purchases and importation of goods other than capital goods, and domestic purchase of services, subject to proportional allocation between VATable, VAT-exempt and VAT

43 Exhibit "P-91", CTA Docket vol. VI, pp. 3213-3214.

44 Petition for Review, CTA Docket vol. I, pp. 22-23.

45 Tables XIV-A to XIV-E, Exhibit "P-91", CTA Docket vol. VI, pp. 3226-3230. ~

101.79 -- 2/19/2016 P-1744 COKALIONG SHIPPING LINES INC. 56.25 -- 3/3/2016 P-3409

ESPRUTINGKLE GAS & SERVICE INC

11.25 -- Subtotal- 1st Quarter 3,341.04 - 2nd Quarter - 5/20/2016 P-649 GAC PHILIPPINES, INC.

41,896.80 5/20/2016 P-651 GAC PHILIPPINES, INC.

2,185.39 -- 6/9/2016 P-1031

JETT CONSTRUCTION AND ELECTRICAL SUPPLY

11.25 - 4/14/2016 P-2803

MANDAUE TRADE ENTER CEBU

3.75 -- 5/11/2016 P-3569

KIML Y MERCHANDISE

42.86 -- Subtotal - 2nd Quarter 44,140.05 -- 3rd Quarter -- 7/8/2016 P-671 GAC PHILIPPINES, INC.

2,383.23 8/12/2016 P-673 GAC PHILIPPINES, INC.

4,644.71 -- 8/26/2016 P-766

JETT CONSTRUCTION AND ELECTRICAL SUPPLY

53.57 -- 9/24/2016 P-2669

HONEYLEMON FOODS INC

12.11 -- Subtotal - 3rd Quarter 7,093.62 4th Quarter 10/21/2016 P-612 I TRIPLEPLAYHUB NETWORKS INC. 15,284.57 Subtotal - 4th Quarter 15,284.57 Total-Input VAT on domestic purchase of goods/services supported by VAT Invoice/OR wherein I ft 69 859 28 the VAT amount is not separately/property indicated ' · 3) Input VAT on domestic purchase of goods/services supported by VAT Invoice/OR wherein indicated TIN is incorrect, incomplete or unreadable 4th Quarter 10/7/2016 P-748 GLOBAL SECURITY SOLUTIONS, INC. p 536.8

11/18/2016 I

P-1781 I CITI HARDWARE BACOLOD INC

149.08 Subtotal - 4th Quarter 685.88 ft 685.88 Total-Input VAT on domestic purchase of goods/services supported by VAT Invoice/OR wherein indicated TIN is incorrect, incomplete or unreadable CiJ I

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue

4) Input VAT on domestic purchase of goods/services supported by VAT Invoice/OR where the payor's name is incorrect, incomplete, or unreadable 1st Quarter 1/21/2016 P-744 RICHMONDE PLAZA CONDOMINIUM ASSOCIATION INC. fD 766.8 2/19/2016 P-661 GAC PHILIPPINES, INC.

1,356.26 2/2/2016 P-1073

GOODHOPE HARDWARE

38.04 2/5/2016 P-1086

GOODHOPE HARDWARE

SANFORD MARKETING CORPORATION

43.37 7/29/2016 P-1924

B2Y'S AUTO SUPPLY AND GENERAL MERCHANDISE

217.5 CYJ

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue

7/29/2016 P-1925 | IRON CITY CALTEX STATION 261.96 7/29/2016 P-1943 | TT & COMPANY, INC. 1,267.26 7/15/2016 P-1985 | TT & COMPANY, INC. 1,091.24 7/1/2016 P-1993 | CD-R KING GEN. MERCHANDISE 6.43 the payor's name is incorrect, incomplete, or unreadable address is incorrect, incomplete, or unreadable

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue

2/19/2016 P-502

AEROPHONE ENTERPRISES AND CO

1/26/2016 P-1761 GLOBAL SECUIRTY SOLUTIONS INC. 2/19/2016 P-659 GAC PHILIPPINES, INC.

2/19/2016 P-665 GAC PHILIPPINES, INC.

2/19/2016 P-667 GAC PHILIPPINES, INC.

2/2/2016 P-1076 GRANDRESTO INC.

2/3/2016 P-1078

CEBU ATLANTIC HARDWARE

2/4/2016 P-1083

DMC BUSA PRINTERS

2/9/2016 P-1097

NATIONAL BOOK STORE

2/9/2016 P-1100 PACIFIC CATV, INC 2/10/2016 P-1115

CEBU ATLANTIC HARDWARE

2/15/2016 P-1129 CAV AUTO OPTIONS INC.

2/15/2016 P-1133 GOODHOPEHARDWARE 2/16/2016 P-1135 LANTAW SEAFOOD & GRILL INC. 2/23/2016 P-1177 SUPER SHOPPING MARKET, INC 2/19/2016 P-1178 MACRO TIRES, INC.

WINSHER MARKETING

1/29/2016 P-1678

MOTHERS CHOICE SURIGAO INC

2/21/2016 P-1695

EMB NATURAL GAS STATION

2/22/2016 P-1701

IRON CITY CALTEX STATION

2/26/2016 P-1706 SURIGAO M.S ENTERPRISE 2/26/2016 P-1707 D MICHAEL CO INDUSTRIAL SUPPLY CORP. 2/18/2016 P-1709 TT & COMPANY INC.

2/18/2016 P-1712

MOTHERS CHOICE SURIGAO INC

IRON CITY CALTEX STATION

3/28/2016 P-2392

IRON CITY CALTEX STATION

3/18/2016 P-2396 TT & COMPANY INC.

3/18/2016 P-2397

MOTHERS CHOICE SURIGAO INC

3/18/2016 P-2401 PARKWAY 3/8/2016 P-2416 TT & COMPANY INC.

3/18/2016 P-2419

SILICON VALLEY

3/11/2016 P-2450

MOTHERS CHOICE SURIGAO INC

3/4/2016 P-2485 TAl-PAN DEVELOPMENT INC 3/31/2016 P-3323

ESPRUTINGKLE GAS & SERVICE INC

3/30/2016 P-3364

PACIFIC CATV INC

3/19/2016 P-3372

K-BROTHERS LAYOUT & PRINT

3/23/2016 P-3375

K AND S HOTEL & MANAGEMENT CORPORATION

3/22/2016 P-3376

K AND S HOTEL & MANAGEMENT CORPORATION

3/8/2016 P-3385 GOODHOPEHARDWARE 3/9/2016 P-3388

SUPER SHOPPING MARKET INC

3/10/2016 P-3390

AEROPHONE ENTERPRISES & CO

-- 107.14 107.14 107.14 123.42 1,425.54 107.14 567.86 107.14 192.21 685.18 343.61 139.29 211.71 482.14 241.07 1,653.78 1,320.91 133.62 138.64 115.71 937.92 235.52 330.6 918.01 369.64 939.62 263.2 162.71 116.98 107.14 1,040.07 615.5 883.44 641.25 861.43 833.67 105.14 187.5 133.93 112.5 176.79 I 353.57] 795.86 I 209.33 107.1..:1 i (If

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue

P-3408 | GOODHOPE HARDWARE 409.39 Subtotal - 1st Quarter 40,859.28

| P20

3/1/2016

NEW SURIGAO PAINTHAUS AND AUTOPARTS GEN

4/5/2016 P-3141 MERCHANDISE 107.15

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue

4/4/2016 P-3327

COMTECH REFRIGERATION & AIRCONDITIONING SERVICES

4/4/2016 P-3328

OCTAGON COMPUTER SUPERSTORE

6/10/2016 P-4401

GAC PHILIPPINES INC

Subtotal - 2nd Quarter 3rd Quarter 8/30/2016 P-404

EJS GARDEN BY THE BAY

8/10/2016 P-410

PETRON XPRESSFILLSTATION

8/13/2016 P-411

BATTERY MASTER'S INC

9/15/2016 P-571 LINCOLN REALTY CORP.

8/20/2016 P-755

PRIVIS CORPORATION

8/24/2016 P-758

SANFORD MARKETING CORPORATION

9/16/2016 P-2694

375 CAR SPECIALIST

9/24/2016 P-3232

OCTAGON COMPUTER SUPERSTORE

ACE HARDWARE PHILIPPINES INC

401.79 266.14 4,835.19 57,668.73 380.36 126.22 616.07 3,214.29 130.18 165.72 2,294.89 425.89 142.5 107.14 17.14 7,620.40 360 1,080.00 180 599.25 85.61 4,800.00 536.8 141,360.00 214,800.00 195,300.00 80,212.50 184.18 195.59 140.99 119.14 230.36 2,241.00 212.97 169.29 214.29 133.1 147.21 2,317.50 428.04 158.38 1,555.29 819.4 ~

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue

12/28/2016 P-1847

DY TEBAN HARDWARE AND AUTO SUPPLY

12/18/2016 P-1860

HUKAD BUTUAN

11/4/2016 P-2232

SURIGAONON VISAYAN MARKETING CORPORATION

11/11/2016 P-2239

SURIGAONON VISAYAN MARKETING CORPORATION

10/26/2016 P-3155

PACIFIC CATV INC

10/27/2016 P-3156

FAMILYHEALTH AND BEAUTY CORP

12/8/2016 P-3280

CHOOBI CHOOBI FLAVORS CORPORATION

12/14/2016 P-3292

GOLDEN COWRIE HUKAD NATIVE RESTAURANT

11/30/2016 P-3300

PARILYA SOUTH SEAFOOD AND GRILL

11/14/2016 P-4236 SUPERVALUEINC 11/18/2016 P-4243

MAGALLANES MANAGEMENT CORPORATION

12/10/2016 P-4279

PIGAR TRADING

12/9/2016 P-4295

SANFORD MARKETING CORPORATION

10/17/2016 P-4389

CEBU PORT AUTHORITY

Subtotal - 4th Quarter Total - Input VAT on domestic purchase of goods/services supported by VAT Invoice/OR where the business address is incorrect, incomplete, or unreadable 167.14 130.61 155.36 155.36 142.5 135.59 108.64 201.75 154.82 106.55 201.8 330.64 266.22 107.88 650,945.75 p 757,094.16 6) Input VAT on domestic purchase of goods/services supported by VAT Invoice/OR where either there is no indicated business style or the indicated business style is incorrect 1st Quarter 1/26/2016 P-397

GORGEOUS FOODS INC

p 486.68 1/15/2016 P-444

PETRON XPRESSFILLSTATION

121.28 2/25/2016 P-454

TRAVELBEE MANAGEMENT CORPORATION

531.43 3/3/2016 P-491 ABACUSBOOKANDCARDCORP 240 2/10/2016 P-500

GORGEOUS FOODS INC

175.06 2/17/2016 P-541 PLDTINC 756.26 2/18/2016 P-743 RICHMONDE PLAZA CONDOMINIUM ASSOCIATION INC. 766.8 1/15/2016 P-4792 GLOBAL SECUIRTY SOLUTIONS INC. 341.51 3/1/2016 P-607 INNOVE COMMUNICATIONS, INC. 752.99 2/16/2016 P-636 D. MICHAEL CO INDUSTRIAL SUPPLY (DMC) CORP 1,285.71 3/22/2016 P-658 GAC PHILIPPINES, INC.

38,069.40 2/19/2016 P-663 GAC PHILIPPINES, INC.

1,416.00 1/25/2016 P-669 GAC PHILIPPINES, INC.

1,724.00 2/26/2016 P-3252 TT & COMPANY INC.

937.92 3/4/2016 P-2461

K-3 CENTERPOINT

168.32 3/4/2016 P-2465

MOTHERS CHOICE SURIGAO INC

170.21 3/4/2016 P-2477 TT & COMPANY INC.

1,521.39 3/4/2016 P-3415

SILICON VALLEY

166.08 3/7/2016 P-3431

PACIFIC CATV INC

142.5 2/26/2016 P-3785 TRAVELBEE 648 3/1/2016 P-3795 SUPERVALUEINC 149.67 Subtotal- 1st Quarter 50,571.21 2nd Quarter 6/20/2016 P-387

CEBU GOLDEN RESTAURANT INC

254.68 i 4/15/2016 P-737 RICHMONDE PLAZA CONDOMINIUM ASSOCIATION INC. 766.8 6/17/2016 P-4781 GLOBAL SECUIRTY SOLUTIONS INC. 323.64 5/31/2016 P-4783 GLOBAL SECUIRTY SOLUTIONS INC. 675.32 - ~

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue

5/6/2016 P-4785 GLOBAL SECUIRTY SOLUTIONS INC. 6/13/2016 P-604 INNOVE COMMUNICATIONS, INC. 4/28/2016 P-605 INNOVE COMMUNICATIONS, INC. 4/18/2016 P-606 INNOVE COMMUNICATIONS, INC. 6/10/2016 P-647 GAC PHILIPPINES, INC.

4/15/2016 P-652 GAC PHILIPPINES, INC.

4/15/2016 P-653 GAC PHILIPPINES, INC.

4/15/2016 P-656 GAC PHILIPPINES, INC.

4/15/2016 P-657 GAC PHILIPPINES, INC.

6/1/2016 P-589

PEAR ENTERPRISES

6/28/2016 P-911

SANFORD MARKETING CORPORATION

6/30/2016 P-917

GOODHOPE HARDWARE

6/22/2016 P-955

ULTIMA RESIDENCES CONDOMINIUM CORPORATION

6/22/2016 P-958

PACIFIC CATV INC

6/21/2016 P-959

CHIKA-AN SA CEBU RESTAURANT

6/16/2016 P-963

ACE HARDWARE PHILIPPINES INC

6/19/2016 P-976 TRAVELBEE 6/24/2016 P-977 TRAVELBEE 6/24/2016 P-980

PRIVIS CORPORATION

6/18/2016 P-996

CEBU PRIMEGRILL CORP

5/24/2016 P-1014

EJ'S GARDEN BY THE BAY

6/9/2016 P-1015

GRANDRESTO INC

6/10/2016 P-1016

HARRISON MILLER SCHWARTZ CORP

6/3/2016 P-1018

PACIFIC CATV INC

6/3/2016 P-1019

ULTIMA RESIDENCES CONDOMINIUM CORPORATION

6/8/2016 P-1026 GOODHOPEHARDWARE 5/30/2016 P-1032 GOODHOPEHARDWARE 5/26/2016 P-1046

SANFORD MARKETING CORPORATION

6/6/2016 P-1047

THE FIRST FAMILY APPLIANCE CIRCLE CORP

6/6/2016 P-1049

AKROASIA PETRON SERVICE STATION

6/7/2016 P-1060 GOODHOPEHARDWARE 6/6/2016 P-1065 GOODHOPEHARDWARE 6/14/2016 P-1069

PAGES HOLDINGS INC

4/7/2016 P-1296 CHOWKING 4/7/2016 P-1301

JOLLIBEE MCIAA

5/3/2016 P-1359

DUNKIN DONUTS

5/3/2016 P-1361

ROBINSONS SUPERMARKET CORPORATION

5/2/2016 P-2287

TAALEI\JA RESORTS CORPORATION

5/5/2016 P-2290 AEROPHONE ENTERPRISES & CO. 4/25/2016 P-2291 AEROPHONE ENTERPRISES & CO. 5/6/2016 P-2294

SANFORD MARKETING CORPORATION

5/10/2016 P-2298 ESPRUTINGKLE GAS & SERVICE INC. 5/7/2016 P-2305 MANDAUE FOAM INDUSTRIES INC. 5/11/2016 P-2312 PACIFIC CATV, INC.

5/16/2016 P-2314 ESPRUTINGKLE GAS & SERVICE INC. - 323.64 448.28 390.42 404.35 12,720.00 4,726.87 1,497.25 2,889.00 2,296.43 70,470.00 289.37 132.59 439.5 256.5 292.39 259.68 478.29 239.14 308.04 200.89 514.29 513.64 107.14 267.32 687.3 203.57 174.11 134.33 3,132.75 • 214.29 599.46 327.32 169.82 218.79 150.64 192.86 191.79 161.79 107.14 107.14 157.61 168.23 3,185.09 267.32 179.05 ,

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue

342.43 150

P-2315 | GRANDRESTO INC

P P P P 5/13/2016 5/17/2016 5/23/2016 5/6/2016 MOTHER'S CHOICE SURIGAO INC. 175.76

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue

4/6/2016 P-4018

TOYOTA PASIG

6/6/2016 P-4396

ORIENTAL PORT AND ALLIED SERVICES CORP

6/6/2016 P-4397

ORIENTAL PORT AND ALLIED SERVICES CORP

Subtotal - 2nd Quarter 3rd Quarter 9/19/2016 P-380

WATERFRONT AIRPORT HOTEL AND CASINO

8/9/2016 P-408

CITRA MERTO MANILA TOLLWAYS CORPORATION

8/10/2016 P-3254

BRYON INDUSTRIAL SALES & SERVICES

8/16/2016 P-531

PLOT INC

7/18/2016 P-532

PLOT INC

7/18/2016 P-734 RICHMONDE PLAZA CONDOMINIUM ASSOCIATION INC. 7/15/2016 P-4777 GLOBAL SECUIRTY SOLUTIONS INC. 9/23/2016 P-601 INNOVE COMMUNICATIONS, INC. 9/30/2016 P-576

PEAR ENTERPRISES

8/27/2016 P-578

PEAR ENTERPRISES

8/11/2016 P-583

PEAR ENTERPRISES

7/8/2016 P-2004

TRI-MIX ENTERPRISES

7/8/2016 P-2005

SURIGAO GLASSMASTER

296.35 1,237.08 181.92 131,485.66 728.57 214.29 1,836.00 795.93 756.26 766.8 541.99 1,029.42 167,460.00 47,280.00 83,700.00 3,238.06 169.29 956.57 142.5 209.84 116.79 504.11 1,403.57 130.07 126.16 385.71 142.5 190.12 • 365.89 149.97 177.62 133.23 159 212.14 468.01 205.83 139.23 1,606.61 165.54 107.14 133.93 1,003.40 303.21 160.71 fl]

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue

7/8/2016 P-2010 | DMC

9/25/2016 P-2646 | MOTHERS CHOICE SURIGAO INC 833.6

8/19/2016 P-2956 | MOTHER'S CHOICE SURIGAO INC

8/6/2016 P-3008 | IRON CITY CALTEX STATION 205.71 8/10/2016 P-3022 | LAVENDER SHELL SERVICE STATION & GEN. MDSE. 107.14 8/19/2016 P-2958 | TT & COMPANY, INC 1,057.15 8/12/2016 P-2983 | MOTHER'S CHOICE SURIGAO INC 471.21 Subtotal - 3rd Quarter 334,556.09 8/3/2016 P-3000 | CIT|LHARDWARE BACOLOD, INC 183.29 -t

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue

12/2/2016 MOTHERS CHOICE SURIGAO INC

992.65

153 6/17/2016 P-2508 HONEYLEMON FOODS INC.

13.39 6/24/2016 P-2533 CHOWKING 25.82 6/17/2016 P-2535

9/25/2016 P-2645

TAIPAN DEVELOPMENT INC

9/22/2016 P-3225

RED RIBBON

Subtotal - 3rd Quarter 4th Quarter 12/9/2016 P-1811

MOTHERS CHOICE SURIGAO INC

10/14/2016 P-2121 MOTHER'S CHOICE SURIGAO INC. 10/14/2016 P-2123 MOTHER'S CHOICE SURIGAO INC. 10/16/2016 P-2155

ROBINSONS DEPARTMENT STORE

11/21/2016 P-2249

CHOWKING-SURIGAO DOWNTOWN

Subtotal - 4th Quarter Total-Input VAT on domestic purchase of goods/services supported by VAT Invoice/OR where A TP details are not indicated and/or unreadable or the A TP is expired 10.61 10.61 2,428.17 12.32 10.61 55.97 75 153.9 88.93 43.39 160.71 5.36 21.11 319.5 ~ 3,576.03 9) Input VAT on domestic purchase of goods/services supported by VAT Invoice/OR where alterations were made without authorized countersignature 1st Quarter 2/1/2016 P-382

TRAVELBEE MANAGEMENT CORPORATION

fD 265.71 2/12/2016 P-4794 GLOBAL SECUIRTY SOLUTIONS INC. 1,042.73 2/27/2016 P-1737 PRUDENTIAL CUSTOMS BROKERAGE SERVICES INC. 5.16 3/23/2016 P-2376 PARKWAY 115.79 3/18/2016 P-2413 GREENWICH 149.46 2/24/2016 P-3433 MA. UNA CATERING SERVICES 514.29 2/24/2016 P-3434 ESPRUTINGKLE GAS & SERVICE INC. 10.71 3/2/2016 P-3878

JOLLIBEE FOOD CORPORATION

8.79 3/18/2016 P-3907 MANGINASALRESTAURANT 11.89 Subtotal - 1st Quarter 2,124.53 2nd Quarter 5/8/2016 P-381

THE BELLEVUE MANILA

4,903.15 6/20/2016 P-953

MANDAUE STAR OIL GASOLINE STATION & CONVENIENT STORE

68.46 6/8/2016 P-1028 GOODHOPEHARDWARE 19.07 5/23/2016 P-2309

CEBU ADGEM AUTO PARTS

6.96 5/18/2016 P-2311 NIKKIE POLLUTION TEST CO. 32.14 5/23/2016 P-2327

9/8/2016 P-3199 | SANFORD MARKETING CORPORATION

9/8/2016 P-3204 | AKROASIA PETRON SERVICE STATION

79.07 141.44 107.14 1,069.93 155.64 13.5 256.07 124.31 4.29 8.46 10.71 256.07 25.71 11.79 9/14/2016 P-3210 | AEROPHONE ENTERPRISES & CO. 9/20/2016 P-3218 | ESPRUTINKLE GAS & SERVICES INC.

9/22/2016 P-3226 | LAVSHELL SERVICE STATION

8/30/2016 P-4162 | RUFO'’S FAMOUS TAPA

8/30/2016 P-4165 | MQUAD SOLUTIONS INC.

8/31/2016 P-4166 ; SUPERVALUE, INC.

8/31/2016 P-4167 | BLUE BOZ

9/2/2016 TROPICAL HUT HAMBURGER

9/2/2016 MICHEAL T. TAGORDA 9/5/2016 MQUAD SOLUTIONS INC.

9/6/2016 SAM HIRANAND FOOD CORPORATION

9/9/2016 SAM HIRANAND FOOD CORPORATION

Subtotal - 3rd Quarter 4th Quarter

10/13/2016 PEAR ENTERPRISES

10/10/2016 AKROASIA PETRON SERVICE STATION

10/14/2016 THE FIRST FAMILY APPLIANCE CIRCLE CORP.

12/5/2016 ERNA GASOLINE STATION

11/15/2016 | _P-4256 | MOMS FLOWERSHOPPE

Wo7016 ODEXO BENEFITS AND REWARDS SERVICES PHILIPPINES, Ss INC.

Subtotal - 4th Quarter Total - Input VAT on domestic purchase of goods/services supported by VAT Invoice/OR where alterations were made without authorized countersignature 10) Input VAT on domestic purchase of goods/services supported by Non-VAT Invoice/OR 51,980.00 214.29 2,538.75 10.71 21.22 5,713.71 60,478.69 P 86,459.35 |

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue

Total Input VAT on Domestic Purchases Not Properly Substantiated 1,562,076.91 With regard to the refund of input VAT on importation of goods other than capital goods in the total amount of ?3,570,947.00, it is important to emphasize that to be entitled to its claim, petitioner must prove, among others, (/) the fact of importation; and, (//) the payment of VAT on said importation.

It must be noted that the Court denied admission in evidence™ petitioner's Exhibit Nos. “P-3255” to “P-3271", with sub-markings, which pertains to the Bureau of Customs’ Single Administrative Documents (SAD) and Statement of Settlement of Duties and Taxes (SSDT) on its alleged importation of goods. Without the SAD and SSDT, the Court cannot ascertain the fact of importation and the payment of VAT on such importation. Thus, the input VAT on importations in the total amount of ?3,570,947.00 shall be disallowed, as follows:

Date of ry No. Payment |istQuarter | | 944,264.00 | |2ndQuarter ee eee P-3260 to P-3260-D, P-3272, C-11595 P-4750-A R-22751 4/26/2016 290,294.00 P-3261 to P-3261-E, P-3272, C-1200 P4751 R-23688 4/7/2016 55,031.00 2nd Quarter fe P-3262, P-3864 R-30588 6/3/2016 27,775.00 P-3263 to P-3263-1, P-3864 R-30433 6/2/2016 896,014.00 P-3264 to P-3264-E, P-3864 R-30767 6/3/2016 258,063.00 C-1552 C-15560 C-15671 NO | Subtotal-1stQuarter | 527,177.00 | |3rdQuarter | Subtotal-3rdQuarter | 184,014.00 | [4thQuarter C-30184 P-3267, P-3868 R-65981 10/17/2016 59,364.00 C-4249 P-3268, P-3868 R-72605 10/13/2016 179,107.00 C-4785 P-3269, P-3869 R-81085 11/21/2016 44,420.00 5° Resolution dated February 26, 2020, CTA Docket vol. VI, pp. 3603-3607. g)

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue

C-37240 I

P-3270, P-3870 R-70074 12/12/2016 137,970.00

C-5146 I

P-3271, P-3870 R-86195 12/13/2016 497,631.00 Subtotal - 4th Quarter 918 492.00 Total Input VAT on Importations Not Supported by Admitted Evidence p 3,570,947.00 The total disallowances per the Court's further verification of petitioner's input taxes for the four quarters of TY 2016 is ~5, 133,023.91, computed as follows: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Input VAT on Domestic Purchases Not Properly Substantiated p 104,849.85 p 245,287.73 p 376,323.87 p 835,615.46 p 1,562,076.91 Input VAT on Importations Not 3,570,947.00 i Supported by Admitted Evidence 941,264.00 1,527,177.00 184,014.00 918,492.00 Total Disallowances per Court's further verification p 1,046,113.85 p 1,772,464. 73 p 560,337.87 p 1,754,107.46 p 5,133,023.91 In view of the foregoing disallowances, the total valid input taxes of petitioner subject for allocation is ~342,472.59, as shown below: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Total Input VAT P1,338,962. 78 P2, 085,465.00 p 970,264.20 P2,367,866.07 P6,762,558.05 Less: Disallowance per ICPA Exception 338,285.47 150,499.55 189,997.23 79,414.02 758,196.27 Disallowance per Court's Further Verification 1,046,113.85 1,772,464.73 560,337.87 1,754,107.46 5,133,023.91 Valid Common Input Tax for Allocation (45,436.54) 162,500.72 219,929.10 534,344.59 871,337.87 Less: Input Tax on Unaccounted Purchases 528,865.28 Net Valid Common Input Tax for Allocation - '-··p 342,472.59 Considering that petitioner is engaged in taxable sales subject to both Oo/o and 12°/o VAT, and its input VAT cannot be directly or entirely attributed to any of the transactions, the valid common input VAT of ~342,472.59 shall be proportionately allocated on the basis of the volume of its sales in accordance with Section 112(A) of the NIRC of 1997, as amended, thus: Total VA Table Sales per Quarterly VAT Returns p 14,624,302.04 Divided by Total Declared Sales per Quarterly VAT Returns 97,802,307.14 Multiplied by Total Valid lnQut VAT 342,472.59 Input VAT Allocated to Total VA Table Sales p 51,209.66 1 Total Zero-rated Sales per Quarterly VAT Returns P 83,178,005.10 Divided by Total Declared Sales per Quarterly VAT Returns 97,802,307.14 I rr1

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue

Multiplied by Total Valid Input VAT 342,472.59 Input VAT Allocated to Zero-rated Sales ..

291,262.93 Thus, petitioner has valid input VAT attributable to its zero-rated sales in the amount of P291 ,262.93. Sixth Requisite: Petitioner has no excess input VAT available for refund Having determined that petitioner had valid input VAT attributable to its zero-rated sales, the Court shall now determine whether the same was not applied against its output VAT liability. After deducting the input tax attributable to VA Table sales in the amount of P51 ,209.66 from its output VAT liability of P1, 754,936.25 from the said sales, petitioner still has a net output VAT payable of P1, 703,726.59, as computed below: Period Output VAT 1st Quarter p 428,487.15 2nd Quarter 377,688.41 3rd Quarter 556,167.00 4th Quarter 392,593.69 Total fit 1,754,936.25 Output VAT per Returns p 1,754,936.25 1 Less: Input VAT Allocated to Total VA Table Sales 51,209.66 I Net Out~ut VAT Payable p 1 '703, 726.59 !

Since petitioner's input VAT attributable to VA Table sales is not enough to cover its output VAT liability, the valid input VAT attributable to zero-rated sales shall be utilized against the remaining output VAT liability of P1, 703,726.59. However, the input VAT attributable to zero- rated sales of P291 ,262.93 is way lower than the net output VAT payable of P1 ,703,726.59. Consequently, petitioner still has net output VAT due of P1 ,412,463.66, computed as follows: Net Output VAT P~able p 1,703,726.59 Less: Input VAT Allocated to Zero-rated Sales 291,262.93 Net Output VAT Still Due ..

1,412,463.66 While the Court notes that petitioner's 1st Quarterly VAT Return for TY 2016 reflected the amount of P4,249,849.48 as "Input Tax Carried Over from Previous Period", petitioner failed to submit documents, official receipts and invoices to support the input tax carry~

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue over of P4,249,849.48. Hence, petitioner's input tax carried over from previous period cannot be validly applied against petitioner's net output VAT due pursuant to Section 110(A) in relation to Section 110(8) of the NIRC of 1997, as amended. Verily, in claiming excess or unutilized input VAT from zero-rated transactions, it is the excess over the output VAT which should be refunded to the taxpayer or credited against other internal revenue taxes. It is important for the taxpayer to prove that it has enough prior year's excess input VAT credits to cover its output VAT liability for the current taxable year. To reiterate, in cases filed before this Court, which are litigated de novo, party-litigants must prove every minute aspect of their case. 51 Consequently, there being no excess input VAT which may be the subject of a claim for refund or issuance of tax credit certificate, the present claim must be denied. Finally, 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. 52 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. 53 The pieces of evidence presented entitling a taxpayer to an exemption are also strictissimi scrutinized and must be duly proven.54 Hence, an applicant for a claim of tax refund or tax credit must not only prove entitlement to the claim but also compliance with all the documentary and evidentiary requirements. 55

WHEREFORE, in light of the foregoing, the Petition for Review filed on May 15, 2018 is hereby DENIED for lack of merit.

SO ORDERED.

Presiding Justice 51 Commissioner of Internal Revenue vs. United Salvage and Towage (Phils.), Inc., G.R. No. 197515, July 2, 2014.

52 Citibank N.A. vs. Court of Appeals and Commissioner of Internal Revenue, G.R. No. 107434, October 10, 1997.

53 Commissioneroflnternal Revenue vs. S.C. Johnson and Son, Inc., eta/., G.R. No. 127105, June 25, 1999.

54 Kepco Philippines Corporation vs. Commissioneroflnternal Revenue, G.R. No. 179961, January 31,2011.

55 Eastern Telecommunications Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No. 183531, March 25, 2015.

Rema Tip Top Philippines, Inc. vs. Commissioner of Internal Revenue

I CONCUR:

~~·7.~ CXTHERINE T. MANAHAN Associate Justice CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court.

Presiding Justice