Court of Tax Appeals · First Division

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

CTA Case No. 9838 October 6, 2020

REPUBLIC OF THE PHILIPPINES

COURT OF TAX APPEALS

QUEZON CITY

First Division

MAXIMA MACHINERIES, INC.,

Petitioner,

-versus-

COMMISSIONER OF INTERNAL

REVENUE,

Respondent.

CTA CASE NO. 9838

Members:

DEL ROSARIO, P.J., Chairperson,

and MANAHAN, JJ.

Promulgated:

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

DECISION

DEL ROSARIO, P.J.:

This is a Petition for Review filed by petitioner Maxima Machineries, Inc. on May 18, 2018 praying that the Court render judgment ordering respondent to refund or issue a tax credit certificate in favor of petitioner in the amount of Thirty Two Million One Hundred Thirty Nine Thousand Seven Hundred Seventy Six Pesos and 94/100 (P32,139,776.94), representing its excess and unutilized input value added tax (VAT) allegedly attributable to its zero-rated transactions as declared in its quarterly VAT Returns for the 3rd and 4th quarters of fiscal year (FY) ending March 31 , 2016.

THE PARTIES

Petitioner Maxima Machineries, Inc. is a domestic corporation duly organized under and by virtue of the laws of the Philippines with principal business address at No. 908 Quezon Avenue corner Dr. Garcia Paligsahan, Quezon City. 1 It is registered with the Bureau of Internal Revenue (BIR) as a VAT taxpayer with Tax Identification No. (TIN) 006-618-023-000.2 1 Par. 8, Statement of Facts and Antecedent Proceedings, Petition for Review, CTA Docket, Vol. I, p. 12. 2 Par. 11 , Statement of Facts and Antecedent Proceedings, Petition for Review, CTA Docket, Vol. I, p. 13; Exhibit "P-3", CTA Docket, Vol. II, pp. 725-726 .~

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

Pursuant to petitioner's Amended Articles of Incorporation, the purposes for which it was formed are to buy, sell, barter, trade, lease out, manufacture, import, export or otherwise acquire, dispose of, and deal with any kind of goods, wares, and merchandise such as spare parts or replacement parts and/or complete assemblies of agricultural, industrial, or commercial machineries, automobiles, buses, trucks, tractors or other motor vehicles and/or related machineries and equipment of every kind and description and to carry on such business as manufacturers, wholesalers, retailers, importers and exporters except the manufacture of food, drugs and cosmetics.3 Respondent Commissioner of Internal Revenue (CIR) is empowered to perform the duties of his office, as well as the power to approve claims for refund or tax credit certificates as provided by laws and their implementing regulations. His office is located at BIR National Office Bldg., BIR Road, Diliman, Quezon City.4

THE FACTS

On December 29, 2017, petitioner filed with the BIR its quarterly VAT Returns for the periods covering October 1, 2016 to December 31, 2016 (3'd quarter of FY ending March 31, 2017)5 and January 1, 2017 to March 31, 2017 (4th quarter of FY ending March 31, 2017).6 On December 31, 2017, petitioner filed with the BIR its administrative claims for the issuance of a tax credit certificate (TCC) of P13,838,236.48 for the 3'd quarter of FY ending March 31, 2017 and P18,301 ,540.46 for the 4th quarter of FY ending March 31, 2017, or in the total amount of P32, 139,776.94. On April 20, 2018, petitioner received the denial of its administrative claims for refund issued by the BIR's OIC-Assistant Commissioner for Large Taxpayers Service, Teresita M. Dizon.7 3 Par. 11, Statement of Facts and Antecedent Proceedings, Petition for Review, CTA Docket, Vol. I, pp. 12-13; Exhibit "P-2", Amended Articles of Incorporation of Maxima Machineries, CTA Docket, Vol. II, pp. 713-724. 4 Par. (A) (1), Joint Stipulation of Facts and Issues (JSFI), CTA Docket, p. 591; par. (A)(1), Admitted Fact, Pre-Trial Order, CTA Docket, Vol. II, p. 663. 5 Exhibit "P-19", petitioner filed an Amended Return for the 3'd Quarter of fiscal year ending March 31, 2016, CTA Docket, Vol. II, pp. 749-751. 6 Exhibit "P-21", petitioner filed an Amended Return for the 4th Quarter of fiscal year ending March 31, 2016, CTA Docket, Vol. II, pp. 754-755. 7 Par. 39, Statement of Facts and Antecedent Proceedings, Petition for Review, CTA Docket, Vol. I, p. 19; Admitted in par. 2 of respondent's Answer, CTA Docket, Vol. I, p. 219. rf1

Maxima Machineries, Inc. vs. Commissioner of lntemal Revenue

On account of respondent's denial of petitioner's administrative claims for refund or issuance of TCC, the present Petition for Review was filed on May 18, 2018. On August 23, 2018, respondent filed his Answer, 8 with the following Special and Affirmative Defenses: 1.

The present judicial claim should be denied for petitioner's failure to substantiate the claim for refund at the administrative level; 11.

The CIR is correct in denying petitioner's claims for refund as petitioner failed to comply with the requirements provided under the laws and implementing rules and regulations that pertain to zero-rated transactions and input VAT from importation; iii.

Petitioner has the burden of proving that it was able to substantiate its claims to be entitled to the refund being prayed for;

1v.

Petitioner must prove that it has submitted complete documents to substantiate its administrative claims for refund;

The claimant has the burden of proof to establish the factual basis of the claim for tax credit or refund; and, vi.

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. On November 29, 2018, petitioner and respondent filed their respective Pre-Trial Briefs. 9 The Pre-Trial Conference was held on December 6, 2018. 10 The parties filed their Joint Stipulation of Facts and Issues 11 on December 19, 2018. The Pre-Trial Order12 was issued on March 4, 2019. The Court also terminated the Pre-Trial in the same Order. a CTA Docket, pp. 94-113. 9 Petitioner's Pre-Trial Brief, CTA Docket, Vol. I, pp. 552-568; Respondent's Pre- Trial Brief, CTA Docket, Vol. I, pp. 578-581.

10 Order issued on December 6, 2018; CTA Docket, Vol. 1., pp. 583-585.

11 CTA Docket, Vol. I, pp. 591-603.

12 CTA Docket, Vol. II, pp. 662-670.('11

Maxima Machineries, Inc. vs. Commissioner of lntemal Revenue

During trial, petitioner presented testimonial and documentary evidence. Petitioner's formally offered exhibits, as contained in its Formal Offer of Evidence, 13 were admitted in the Resolution dated June 11, 2019, 14 except for Exhibits "P-6", "P-7", "P-8", "P-9", "P-10", "P-11", and "P-12" for failure to present the original documents for comparison.

Respondent, on his part, also presented documentary and testimonial evidence. Respondent's formally offered exhibits, as contained in his Formal Offer of Evidence on June 20, 2019, 15 were admitted by the Court in the October 2, 2019 Resolution. 16 Considering the filing of the petitioner's Memorandum 17 on November 19, 2019 and respondent's Memorandum18 on November 15, 2019, the case was submitted for decision on December 4, 2019. 19

THE ISSUES20

The issues for consideration of the Court, as stipulated by the parties, are as follows: A.

Whether or not petitioner is entitled to tax refund of its excess unutilized input VAT allocable and directly attributable to its VAT zero-rated sales for the period from 01 October 2015 to 31 March 2016 amounting to Thirty- Two Million One Hundred Thirty-Nine Thousand Seven Hundred Seventy Six Pesos and 94/100 (Php32, 139, 776.94); and, B.

Whether the decision of the CIR denying the claims for refund is correct based on the documents submitted at the administrative level.

13 CTA Docket, Vol. II, pp. 692-709.

14 CTA Docket, Vol. II, pp. 798-801.

15 CTA Docket, Vol. II, pp. 810-813.

16 CTA Docket, Vol. II, pp. 872-875.

17 CTA Docket, Vol. II, pp. 885-925.

18 CTA Docket, Vol. II, pp. 876-884.

19 CTA Docket, Vol. II, p. 927.

20 Par. B, JSFI, CTA Docket, pp. 591-592; Issues, Pre-Trial Order, CTA Docket, Vol. II, p. 663. fJI\

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

THE COURT'S RULING

Petitioner cites Section 112 (A) and (C) of the National Internal Revenue Code (NIRC) of 1997, as amended, as its basis in claiming for the refund or issuance of TCC of its excess and unutilized input VAT which are attributable to its zero-rated sales, 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 106{A)(2}(a}(1), (2) and (b) and Section 1 08(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 or Tax Credit of Input Taxes shall be Made. - In proper cases, the Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in accordance with Subsection (A) hereof. In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty day-period, appeal the decision or the unacted claim with the Court of Tax Appeals."cfl

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

Pursuant thereto, in order to be entitled to a refund or tax credit of unutilized input VAT attributable to zero-rated or effectively zero- rated sales, it is imperative upon the claimant to prove the following:

1. that the taxpayer is VAT-registered;

2. that the claim for refund was filed within the prescriptive period both in the administrative and judicial levels;

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

4. that input VAT were incurred or paid;

5. that the input VAT due or paid were attributable to zero-rated sales or effectively zero-rated sales; and,

6. that the input VAT 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 Registration21 which shows that it is a VAT-registered taxpayer with TIN No. 006-618-023-000. Second Requisite:

Petitioner timely filed its administrative and judicial claims.

As mandated under Section 112(A) of the NIRC of 1997, as amended, the administrative claim for refund or the issuance of a TCC of input VAT must be filed with the BIR within two (2) years after the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made. Petitioner's claims involve the application for refund or issuance of TCC of input VAT attributable to zero-rated sales for the periods of October to December 2015, and January to March 2016. Thus, the end of the two-year period to file the administrative claims are as follows:

21 Exhibit "P-3", CTA Docket, Vol. II, pp. 725-726. ~

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

Date when Close of the Last day to file Administrative Taxable Quarter Administrative Claims were filed Quarter when Sales were Claim Made 3"' (October to December 31, 2015 December 31, 2017 December 29, 2017 December 201 ~ March 31,2018 4th (January to March March 31, 2016 201~ Based on the foregoing, petitioner's filing of its administrative claims on December 29, 2017 was well within the two {2)-year prescriptive period under Section 112 (A) of the NIRC of 1997, as amended.

As for the timeliness of petitioner's judicial claim, the relevant dates are illustrated below: Date of Filing of Receipt of Last day to Date when Quarter Administrative Last day of SIR's file Judicial Petition for Claim 120 days Decision Claim Review was filed 3'• (October to December 2015) December 29, 2017 April 28, 2018 April 20, 2018 May 20, 2018 May 18, 2018 41" (January to March 2016) Based on the above table, counting one-hundred twenty (120) days from December 29, 2017, respondent had until April 28, 2018 within which to act on petitioner's administrative claims for refund or issuance of TCC.

In the present case, respondent issued a decision denying petitioner's administrative claims for refund or issuance of TCC which was received by petitioner on April 20, 2018. Counting thirty (30) days therefrom, petitioner had until May 20, 2018 within which to elevate to this Court the CIR's denial of its administrative claims. The filing of the Petition for Review on May 18, 2018 was well within the reglementary period provided by Section 112(A) of the NIRC of 1997, as amended. ~

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

Third Requisite:

Petitioner 1s engaged in zero-rated or effectively zero-rated sales Sale of Goods and Services to Entities Registered with PEZA. SMBA. CDA. CEZA. CDC. and BOI Petitioner posits that its sales of goods and services to entities registered with the Philippine Economic Zone Authority (PEZA), Subic Bay Metropolitan Authority (SBMA), Clark Development Authority (CDA), Cagayan Economic Zone Authority (CEZA), Clark Development Corporation (CDC) and Board of Investments (BOI) during the period covering April 1, 2013 to June 30, 2013 are subject to zero percent (0%) VAT, pursuant to Sections 106(A)(2)(a){3), {5) and {c) and 108{B)(3) of the NIRC of 1997, as amended. The pertinent provisions of Sections 106(A)(2)(a)(3), (5) and (c) and 108{B)(3) of the NIRC of 1997, as amended, state: "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 (1) 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 ~

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

(c) 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." "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;"

Relative thereto, Sections 4.106-5 and 4.108-5 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,~

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

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 IRA) 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 (BOG); @ 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 I producer whose products are 100°/0 exported are considered export sales. A certification to this effect must be issued by the Board of Investment (801) which shall be good for one year unless subsequently re-issued by the 801. XXX XXX XXX

(c) 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." "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;"01 Maxima Machineries, Inc. vs. Commissioner of Internal Revenue Further, the special laws applicable to this case are Republic Act (RA) No. 7227, as amended by RA No. 9400, otherwise known as "Bases Conversion and Development Act of 1992", RA No. 7916, as amended, otherwise known as ''The Special Economic Zone Act of 1995", and RA No. 7922, otherwise known as "Cagayan Special Economic Zone Act of 1995". The relevant portions of said laws are quoted hereunder:

"REPUBLIC ACT NO. 9400 AN ACT AMENDING REPUBLIC ACT NO. 7227, AS AMENDED, OTHERWISE KNOWN AS THE BASES CONVERSION AND DEVELOPMENT ACT OF 1992, AND FOR

OTHER PURPOSES

SECTION 1. Section 12 of Republic Act No. 7227, as amended, otherwise known as the Bases Conversion and Development Act of 1992, is hereby amended to read as follows: 'SEC. 12. Subic Special Economic Zone.- xxx XXX XXX XXX

(b) The Subic Special Economic Zone shall be operated and managed as a separate customs territory ensuring free flow or movement of goods and capital within, into and exported out of the Subic Special Economic Zone, as well as provide incentives such as tax and duty-free importations of raw materials, capital and equipment. xxx

(c) The provision of existing laws, rules and regulations to the contrary notwithstanding, no national and local taxes shall be imposed within the Subic Special Economic Zone. xxx' XXX XXX XXX SEC. 2. Section 15 of the Republic Act No. 7227, as amended, is hereby amended to read as follows: 'SEC. 15. Clark Special Economic Zone (CSEZ) and Clark Freeport Zone (CFZ). - xxx. The CFZ shall be operated and managed as a separate customs territory ensuring free flow or movement of goods and capital equipment within, into and exported out of the CFZ, as well as provide incentives such as tax and duty-free importation of raw materials and capital equipment. xxx The provisions of existing laws, rules and regulations to the contrary notwithstanding, no national and local taxes shall be imposed on registered business enterprises within the CFZ. Xxxt»iJ

Maxima Machineries, Inc. vs. Commissioner oflnternal Revenue

XXX XXX XXX Duly registered business enterprises that will operate in the Special Economic Zones to be created shall be entitled to the same tax and duty incentives as provided for under Republic Act No. 7916, as amended:

Provided, That for the purpose of administering these incentives, the PEZA shall register, regulate, and supervise all registered enterprises within the Special Economic Zones." "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 SECTION 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 origin 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 SECTION 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" "REPUBLIC ACT NO. 7922

AN ACT ESTABLISHING A SPECIAL ECONOMIC ZONE AND

FREE PORT IN THE MUNICIPALITY OF SANTA ANA AND THE NEIGHBORING ISLANDS IN THE MUNICIPALITY OF APARRI, PROVINCE OF CAGAYAN, PROVIDING FUNDS THEREFOR,

AND FOR OTHER PURPOSES

SECTION 1. Short Title. - This Act shall be known as the 'Cagayan Special Economic Zone Act of 1995'. XXX XXX XXX tJrl

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

SEC. 4. Governing Principles.- The Cagayan Special Economic Zone shall be managed and operated under the following principles:

XXX XXX XXX

(b) Business establishments operating within the Zone shall be entitled to the existing fiscal incentives as provided for under Presidential Decree No. 66, the law creating the Export Processing Zone Authority (EPZA), or those provided under Book VI of Executive Order No. 226, otherwise known as the Omnibus Investment Code of 1987; c) Any provision of existing law, rules or regulations to the contrary notwithstanding, no taxes, local and national, shall be imposed on business establishments operating within the Zone. xxx" 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% VAT. This was elucidated by the Supreme Court in the case of Commissioner of Internal Revenue vs. Toshiba Information Equipment (Phils.), lnc., 22 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 tourisUrecreational 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 22 G.R No. 150154, August 9, 2005. {.JI¥1

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue 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 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." 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 0% VAT rate pursuant to Sections 106(A)(2)(a)(3), (5) and (c) and 108(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 PEZA, SBMA, CDC, CEZA and BOI, petitioner submitted various Certifications issued by said agencies. Petitioner also presented the Letter23 dated April 3, 2018 issued by PEZA Director General, Charita B. Plaza, stating that PEZA has issued VAT-zero rating certifications to the enterprises listed by petitioner as its clients, and that they are qualified enterprises for the purpose of VAT zero-rating of their transactions with its local suppliers of goods, properties, and services.

Meanwhile, Section 3(3) of Revenue Memorandum Order No. 9-2000, dated February 2, 2000, requires a BOI certification attesting that the products of the SOl-registered manufacturer/producer are 100% exported to be able to avail of automatic zero-rating. Hence, in order for sales to BOI registered manufacturer/producer whose products are 100% exported to be considered as export sales, a certification to this effect must be issued by the BOI which shall be good for one ( 1) year unless subsequently re-issued by the BOI. 23 Exhibit "P-4", CTA Docket, Vol. I, p. 313-318. ~

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

In the present case, petitioner offered in evidence a Certification dated April 27, 2018 signed by the 801 OIC-Executive Director, Atty. Marjorie 0. Ramos-Samaniego, on June 7, 2016, 24 confirming the 801's issuance of VAT zero-rating certifications to certain clients of petitioner and attesting that they are qualified for VAT zero-rated transactions. Upon review of the evidence offered by both petitioner and respondent, the Court finds that the following clients of petitioner are registered with PEZA, S8MA, CDC, and CEZA, including the Freeport Area of 8ataan (FA8}, 25 and with the 801 as manufacturer/producer whose products are 100% exported, viz.: Clients Certifying Proof of VAT Certification Body Zero-rating Exhibit Period

AD NAMA

Confirmation letter from P-5; BIR MINING BOI BOI dated April 27, 2018; Records pp.

5/7/15-12/31/15 RESOURCES Certificate No. 2015-113; 383-384, 3/14/16- 12/31/16 Certificate No. 2016-020 322-323 BERONG Confirmation letter from P-5; BIR NICKEL BOI BOI dated April 27, 2018; Records pp.

2/5/15-12/31/15 CORPORATION Certificate No. 2015-083; 380-381, 1/1/16- 12/31/16 Certificate No. 2016-013 319-320

BIG LIFT

PROPERTIES &

SBMA Certificate of Tax DEVELOPMENT Exemption P-97-y 3/31/15-3/30/16 CORPORATION CAGDIANAO Confirmation letter from P-5; BIR MINING BOI BOI dated April27, 2018; Records pp.

1/1/15-12/31/15 CORPORATION Certificate No. 2015-014; 376-377, 1/1/16- 12/31/16 Certificate No. 2016-003 316-317 CARMEN Confirmation letter from P-5; BIR COPPER BOI BOI dated April 27, 2018; Records pp.

1/1/15- 12/31/15 CORPORATION Certificate No. 2015-049; 373-374, 1/1/16- 12/31/16 Certificate No. 2016 008 314-313

CENTURY PEAK

Confirmation letter from P-5; BIR CORPORATION BOI BOI dated April 27, 2018; Records pp.

2/11/16- 12/31/16 Certificate No. 2015-088 371-372 CITINICKEL Confirmation letter from

MINES AND

P-5; BIR DEVELOPMENT BOI BOI dated April 27, 2018; Records pp.

4/11/16- 12/31/16 CORPORATION Certificate No. 2016-022 307-308 Confirmation letter from

CORAL BAY

PEZA dated April 3, NICKEL PEZA 2018;

P-4; BIR CORPORATION Certificate No. 2015- Records pp.

2015,2016 (CBNC) 1214;

370, 306 Certificate No. 2016-0856 I CTP Confirmation letter from P-5; BIR ~ CONSTRUCTIO BOI BOI dated April27, 2018; Records pp.

3/11/15-12/31/15

NAND MINING

Certificate No. 2015-103 _367 -368 '--- - - 24 Exhibit "P-5", CTA Docket, Vol. II, p. 733. 25 Section 4(e) of RA No. 9728, or the "Freeport Area of Bataan (FAB) Act of 2009" provides that the "FAB shall be managed and operated as a separate customs territory ensuring free flow or movement of goods and capital within, into and out of its territory" similar to ECOZONEs()i1

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

EAGLE SKY

TECHNOLOGY AMUSEMENT AND GAMING, CDC Certificate of Registration P-97-ai INC., (Formerly:

and Tax Exemption EAGLESKY TECHNOLOGY CO., INC.)

EARTH &

SHORE TOURISM FAB Certification P-97-ak LANDHOLDINGS CORP.

FASTECH Confirmation letter from P-4; BIR PROPERTIES, PEZA PEZA dated April 3, Records p.

INC. (FPI) 2018;

365 Certificate No. 2015-2304 Confirmation letter from P-5; BIR

FCF MINERALS

801 BOI dated April 27, 2018; Records pp.

CORPORATION Certificate No. 2015-016; 362-363, Certificate No. 2016-011 301-302 GSEASTASIA Confirmation letter from P-4; BIR MANILA INC.

PEZA PEZA dated April 3, Records p.

(GEAMI) 2018;

361 Certificate No. 2015-1661 HINATUAN Confirmation letter from P-5; BIR MINING 801 BOI dated April 27, 2018; Records pp.

CORPORATION Certificate No. 2015-039; 358-359, Certificate No. 2016-002 299-300 HOUSE Confirmation letter from TECHNOLOGY PEZA dated April 3, P-4; BIR INDUSTRIES PEZA 2018;

Records pp.

Certificate No. 2015- PTE., LTD.

0115;

357, 298 (HTIPL) Certificate No. 2016-0469 HYS-YACHT Certificate of Registration PHILS. LTD. CO.

SBMA P-97-aa INC.

and Tax Exemption JAMJLE PROPERTIES

(SUBIC) AND

DEVELOPMENT CORPORATION SBMA Certificate of Tax P-97-ab; P- (formerly: Jamjle Exemption 97-ac Equipments and Gen.

Merchandise Inc.)

MAJESTIC Confirmation letter from P-4; BIR LANDSCAPE PEZA PEZA dated April 3, Records p.

CORPORATION 2018;

352 (MLC) Certificate No. 2015-0130 MAPAN-IKWA SBMA Certificate ofT ax P-97-ad; P- TRADING, INC.

Exemption 97-ae MARCVENTURE Confirmation letter from P-5; BIR

S MINING AND

DEVELOPMENT BOI BOI dated April27, 2018; Records pp.

CORP.

Certificate No. 2016-018 358-359

METRO CLARK

WASTE CDC Certificate of Registration P-97-aj MANAGEMENT and Tax Exemption CORPORATION PHIL.

PEZA Confirmation letter from P-4; BIR BATTERIES PEZA dated April 3, Records p.

3/15/13-3/14/16 2016 2015, 2016 1/1/15- 12/31/15 1/1/16-12/31/16 2015,2016 1/1/15- 12/31/15 1/1/16-12/31/16 2015, 2016 7/15/15-7/14/16 11/27/14- 11/26/15 and 11/27/15- 11/26/16 i I 2015,2016 J 12/10/14- 12/09/15 and I 12/10/15- 12/09/16 2/16/16- 12/31/16 3/15/16-3/14/19 2015,2016 ~

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

INCORPORATE 2018;

345

D (PBI)

Certificate No. 2015- 1125;

PHILIPPINE Confirmation letter from ASSOCIATED PEZA dated April 3, P-4; BIR

SMELTING &

PEZA 2018;

Records pp.

Certificate No. 2015- REFINING 0331;

349,290 CORP.

Certificate No. 2016-0153 PHILIPPINE Confirmation letter from P-5; BIR GOLD PROCESSSING 801 BOI dated April27, 2018; Records pp.

AND REFINING

Certificate No. 2015-034; 347-346, CORP.

Certificate No. 2016-009 287-288 PLATINUM Confirmation letter from P-5; BIR GROUP 801 BOI dated April 27, 2018; Records pp.

METALS Certificate No. 2015-085; 342-344, CORPORATION Certificate No. 2016-011 285-286

RIO TUBA

Confirmation letter from P-5; BIR

NICKEL AND

801 BOI dated April27, 2018; Records pp.

MINING Certificate No. 2015-035; 338-339, CORPORATION Certificate No. 2016-007 282-283 SCAD Confirmation letter from

SERVICES (S)

PEZA dated April 3, P-4; BIR PTE., LTD.

PEZA 2018;

Records pp.

Certificate No. 2015- (PHIL. BRANCH) 0070;

337,281 (SSPL) Certificate No. 2016-0054 SHINDENGEN Confirmation letter from P-4; BIR PHILIPPINES PEZA dated April 3, CORPORATION PEZA 2018;

Records p.

(SPC) Certificate No. 2015-0106 336 SUBIC Certificate of Tax CONSOLIDATED SBMA Exemption P-97-ag PROJECTS, INC.

Confirmation letter from TAGANITO PEZA dated April 3, P-4; BIR

HPAL NICKEL

PEZA 2018;

Records pp.

CORPORATION Certificate No. 2015- (THPAL) 0414;

333,276 Certificate No. 2016-0534 Confirmation letter from P-5; BIR TAGANITO BOI dated April27, 2018; MINING 801 Certificate No. 2015-009- Records pp.

CORPORATION A· 330-331' Certificate No. 2015-110 273-274 TECHNOCLEAN PEZA Certificate No.

PHILIPPINES, PEZA P-97-t INC.lTPll 2016-1425 TRANSCOM Confirmation letter from P-4; BIR WORDLWIDE PEZA PEZA dated April 3, Records p.

(PHILIPPINES), 2018;

INC.

Certificate No. 2015-1855 329 Confirmation letter from UNICHAMP PEZA dated April 3, P-4; BIR MINERAL PEZA 2018;

Records pp.

PHILIPPINES, Certificate No. 2015- INC. (UMPI) 0137;

328,271 Certificate No. 2016-0951 Confirmation letter from

VI SAVAS

PEZA dated April 3, P-4; BIR

SLAKED LIME

2018;

PEZA Records pp.

CORPORATION Certificate No. 2015- 327, 270 (VSLC) 1583;

Certificate No. 2016-1519 2015, 2016 1/1/15-12/31/15 1/1/16- 12/31/16 2/6/15- 12/31/15 2/9/16-12/31/16 1/1/15- 12/31/15 1/1/16- 12-31/16 2015,2016 2015,2016 1/04/15-1/03/16 2015,2016 1/1/15- 12/31/15 1/1/15- 12/31/16 2016 2015, 2016 2015, 2016 ' 2015,2016 ' ' ell

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

WU KONG

SINGAPORE PTE.LTD PEZA Confirmation letter from PEZA dated April 3, 2018;

Certificate No. 2015- 0079;

Certificate No. 2016-0058 Sale of Services to Non-resident Foreign Corporations (NRFCsl P-4; BIR Records pp.

326, 268 2015, 2016 Petitioner alleges that out of its zero-rated sales aggregating in the amount of t-742,641,360.36 for the 3rd and 41h quarters of FY ending March 31, 2016, fit114,403,793.16 pertains to sale of services to NRFCs. Under an "indent arrangement", three (3) NRFCs had designated petitioner to be their agent in the Philippines to deal with former's local customers. Petitioner then arranged for the placing of orders of the local customers to these NRFC suppliers. For acting as an agent, petitioner earned indent commissions on all orders placed with the NRFC suppliers26 More particularly, petitioner earned a total peso equivalent of P114,403, 793.16 from the following clients: Customers 3"' Quarter 4'" Quarter Total Marubeni Corporation ~ 66,920,636.01 p 40,768,097.86 ~ 107,688,733.87 Hvundai Corporation - 868,773.11 868,773.11 Daewoo International Corporation 5,846 286.18 - 5,846,286.18 Total ~ 72,766,922.19 ~ 41,636,870.97 ~ 114,403,793.16 Section 108(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.-

{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 (BSP); 26 Petition for Review, CTA Docket, Vol. I, p. 15. (11

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

(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);" (Boldfacing supplied) 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 108(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 were performed;27

2. The payment for such services were made in acceptable foreign currency accounted for in accordance with the BSP rules;28

3. The services fall under any of the categories under Section 108(8)(2)29, or simply, the services rendered should be other than "processing, manufacturing or repacking goods";30 and,

4. The services must be performed in the Philippines by a VAT- registered person.

To be considered as a non-resident foreign corporation doing business outside the Philippines, each entity must be supported at the very least by both: (1) SEC Certification of Non-Registration of Corporation/Partnership; AND (2) Proof of Certificate/Articles of Foreign Incorporation/Association or printed screenshots of the US 27 Site/ Philippines Corporation (Formerly Clientlogic Phils., Inc.)

vs.

Commissioner of Internal Revenue, G.R. No. 201326, February 8, 2017. 28 Commissioner of Internal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., G.R. No. 153205, January 22, 2007; Commissioner of Internal Revenue vs. American Express International, Inc. (Philippine Branch), G.R. No. 152609, June 29, 2005. 29 Commissioner of Internal Revenue vs. American Express International, Inc. (Philippine Branch), supra. 3° Commissioner of Internal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., supra. ~

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

Securities and Exchange Commission (SEC) Website showing the state/province/country where the entity was organized. 31 For its alleged sale to Marubeni Corporation, petitioner submitted a SEC Certification of Non-Registration of Company32 and the duly-authenticated Articles of Incorporation of Marubeni Corporation. 33 In its Petition for Review, 34 petitioner indicated the corporate name "Marubeni Corporation - Japan" as one of those alleged NRFCs it rendered services to. Perusal of supporting documents such as official receipts, 35 bank certificates of inward remittance, 36 and even the duly-authenticated Articles of Incorporation, however, reveals that petitioner had transacted with "Marubeni Corporation" and not "Marubeni Corporation - Japan." As stated in the SEC Certification of Non-Registration of Company submitted in evidence by petitioner, there exists a company name "Marubeni Corporation" registered with the SEC. Thus, it cannot be said that Marubeni Corporation is an NRFC. Accordingly, petitioner's sales to Marubeni Corporation shall not be considered as zero-rated sales.

With respect to the export sale to Oaewoo International Corporation, petitioner submitted an SEC Certification of Non- Registration of Company. 37 Petitioner, however, did not offer in evidence any proof of incorporation/registration in a foreign country, such as Certificate/Articles of Foreign Incorporation/Association or printed screenshots of the US SEC Website. Thus, as correctly disallowed by the Court-commissioned Independent Certified Public Accountant (ICPA), the sales to Oaewoo International Corporation cannot be considered as zero-rated sales.38 As for the alleged export sale of service to Hyundai Corporation, petitioner was able to present both the SEC Certification of Non-Registration of Company39 and the duly authenticated Articles of Incorporation of Hyundai Corporation. 40 Petitioner likewise submitted a Certification dated December 28, 2017 showing the inward remittances made by Hyundai Corporation in favor of 31 Commissioner of Internal Revenue vs. CITCO International Support Services Limited-Philippine ROHQ, CTA EB No. 2015, November 29, 2019. 32 Exhibit "P-13", CTA Docket, Vol. I, p. 331. 33 Exhibit "P-14", CTA Docket, Vol. I, pp. 332-356. 34 Petition for Review, CTA Docket, Vol. I, p. 15. 35 Exhibit "P-88-a" to "P-88-c" and "P-88-f' to "P-88-j". 36 Exhibit "P-98-a" to "P-98-d". 37 Exhibit "P-17", CTA Docket, Vol. I, p. 401. 38 Exhibit "P-89".

39 Exhibit "P-99-b".

40 Exhibit "P-1 00-b". C1

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue petitioner.41 Petitioner, however, failed to offer any evidence to prove the kind of services it rendered to Hyundai Corporation that would qualify as zero-rated sales under Section 108(8)(2) of the NIRC of 1997, as amended. Other than the allegation that it rendered services for which it received indent commissions, no proof of any contract or service agreement was adduced by petitioner. Hence, the Court is unable to verify whether any service other than "processing, manufacturing or repacking of goods" was rendered by petitioner. In view of the foregoing, the Court adopts the findings of the ICPA that the VAT zero-rated sales to Daewoo International Corporation in the amount of t-5,846,286.16 should be disallowed; and in addition thereto, the sales of service to Marubeni Corporation and Hyundai Corporation in the total amount of P1 08,557,506.98 should also be disallowed, as follows: Customers 3"' Quarter 4'" Quarter Total Marubeni Corporation "' 66,920,636.01 "' 40,768,097.86 I" 107,688,733.87 Hyundai Corporation - 868,773.11 868,773.11 Total I" 66,920,636.01 I" 41 ,636,870.97 I" 108,557,506.98 Disallowed Zero-rated Sales In its 3rd and 4th quarterly VAT Returns42 for FY ending March 31, 2016, petitioner reported total sales of P2,740, 186,115.69 which included zero-rated sales in the amount of ~742,641,360.36, broken down as follows:

Sales Reported per Quarterly VAT Returns 3rd Quarter 4th Quarter Total VA Table Sales "' 971 '182, 118.47 I" 1,016,822,856.25 p 1,988,004,974.72 Sales to Government 2,491,611.11 7, 048, 169.50 9,539,780.61 Zero-rated Sales 396,978,672.96 345,662,687.40 742,641,360.36 Total Reported Sales per Quarterly VAT Returns I" 1 ,370,652,402.54 I" 1,369,533,713.15 I" 2,740,186,115.69 The Court shall examine whether the 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:

41 Exhibit "P-98-b" 42 Exhibits "P-19" and "P-21", CTA Docket, Vol. II, p. 749 and 754. (") Maxima Machineries, Inc. vs. Commissioner of Internal Revenue "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:

XXX XXX XXX

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

XXX XXX XXX

(3) The date of transaction, quantity, unit cost and description of the goods or properties or nature of the service; and" 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. 1)1{'1

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

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

(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;"

Zero-rated sales for the 3rd and 41h quarters ending March 31, 2016 in the amount of t-143,066,770.58 were noted with exceptions by the ICPA, as follows: 43 Exhibit No.

Exceptions 3rd Quarter 4th Quarter Export sale of services which are properly supported by VAT zero-rated ORs issued to companies with foreign address and with certificates of non-registration with SEC and certificates of bank inward remittance but with no consularized articles of P-89 incorporation provided ~ 5, 846,286. 16 ~ - Zero-rated sale of goods which are properly supported by VAT zero-rated invoices/zero-rated sale of services which are properly supported by VAT P-90 zero-rated ORs not dated within the 7,258,991.86 11,285,964.50

43 Exhibit "P-49", ICPA Report Binder, Part 1 of 4, pp. 9-11. rfl

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue quarter but falling within the same taxable year and not reported in VAT returns of other quarters Zero-rated sale of goods which are properly supported by VAT zero-rated invoices/zero-rated sale of services which are properly supported by VAT zero-rated ORs not dated within the quarter and not falling within the P-91 same taxable year 218,602.59 Zero-rated sale of services supported by documents other than VAT zero- P-92 rated ORs 6,244,430.55 Zero-rated sale of goods which are properly supported by VAT zero-rated invoices but without valid VAT zero- P-93 ratina incentive certificates provided - Zero-rated sale of goods which are properly supported by VAT zero-rated invoices but without VAT zero-rating P-94 stamp - VATable sales incorrectly tagged as P-95 zero-rated sales 76,612.00 Without supporting documents P-96 presented 56,622,162.88 Subtotal p 76,267,086.04 Total Zero-rated Sales Disallowed by ICPA - 5,410,018.04 27,967,678.41 15,817,753.15 - 6,318,270.44 p 66,799,684.54 '" 143,066,770.58 The Court finds the observations of the ICPA to be in order and adopts the above findings insofar as the denial of VAT zero-rating in the amount of t-143,066,770.58 is concerned. Upon further evaluation, the Court additionally finds that the reported zero-rated sales in the amount of P41,377,407.15 should also be denied 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: Date Reason for Exhibit No.

Invoice No.

Clients Amount Disallowance 1) Sale of oods supported by VAT Invoices but with unreadable details 3"' Quarter Unreadable PHIL GOLD date, payor PROCESSING & details and 10/1/15 P-85-p MLA No. 15080 REFINING CORP.

p 43,271.57 amounts

BERONG NICKEL

Unreadable 10/5/15 P-85-af MLA No. 15260 CORPORATION 208,528.00 amounts PHIL GOLD Unreadable PROCESSING & date and 10/5/15 P-85-am MLA No. 15083 REFINING CORP.

48,514.08 amounts PHIL GOLD Unreadable PROCESSING & date and 10/5/15 P-85-an MLA No. 15084 REFINING CORP.

35,337.06 amounts (JJ

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

BERONG NICKEL

10/6/15 P-85-as MLA No. 15269 CORPORATION 395,800.00 CARMEN 10/6/15 P-85-aw CEBU No. 16702 COPPER CORP.

285,550.00 PHIL GOLD PROCESSING & 10/6/15 P-85-be MLA No. 15085 REFINING CORP.

12,756.01 TAGANITO 10/6/15 P-85-bn BTN No. 07895 MINING CORP.

8,192.00 TAGANITO 10/6/15 P-85-br BTN No. 0821 0 MINING CORP.

85,560.00 TAGANITO 10/6/15 P-85-bt BTN No. 08212 MINING CORP.

256,416.00 CARMEN 10/7/15 P-85-bz CEBU No. 16717 COPPER CORP.

366,896.00 CARMEN 10/7/15 P-85-cb CEBU No. 16719 COPPER CORP.

214,704.00 CARMEN 10/7/15 P-85-ce CEBU No. 16722 COPPER CORP.

368,240.00 CARMEN 10/7/15 P-85-ch CEBU No. 16725 COPPER CORP.

536,256.00

BERONG NICKEL

10/8/15 P-85-cr MLA No. 15154 CORPORATION 20,320.00

BERONG NICKEL

10/8/15 P-85-cs MLA No. 15162 CORPORATION 268,928.00 CAGDIANAO MINING 10/8/15 P-85-cv BTN No. 08197-98 CORPORATION 358,984.00 PLATINUM

GROUP METALS

10/8/15 P-85-cy_ BTN No. 08143 CORP.

15,424.00 BTN No. 08217- TAGANITO 10/8/15 P-85-cz 08221 MINING CORP.

640,760.00 TAGANITO 10/8/15 P-85-da BTN No. 08222 MINING CORP.

7,056.00 TAGANITO 10/8/15 P-85-dd BTN No. 08226 MINING CORP.

19,840.00 TAGANITO 10/8/15 P-85-de BTN No. 08227 MINING CORP.

16,512.00 BTN No. 08228- TAGANITO 10/8/15 P-85-df 08229 MINING CORP.

99,168.00 FCF MINERALS 10/9/15 P-85-di MLA No. 15169 CORPORATION 97,193.58 TAGANITO 10/9/15 P-85-dl BTN No. 08182 MINING CORP.

192.00 TAGANITO 10/9/15 P-85-dm BTN No. 08199 MINING CORP.

12,440.00 TAGANITO 10/9/15 P-85-dn BTN No. 8200 MINING CORP.

8,848.00

BERONG NICKEL

10/12/15 P-85-do MLA No. 15186 CORPORATION 1,441,239.3_6 Unreadable date and amounts Unreadable date Unreadable date, payor details and amounts Unreadable date Unreadable date and amounts Unreadable date and amounts Unreadable date Unreadable date Unreadable date Unreadable date Unreadable date and amounts Unreadable amounts Unreadable date Unreadable ATP details Unreadable date, payor details and amounts Unreadable date Unreadable date Unreadable date Unreadable date, payor details and amounts Unreadable date, payor details and amounts Unreadable date and amounts Unreadable amounts Unreadable date and amounts Unreadable date and amounts _, (yJ I

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

HINATUAN MINING 10112115 P-85-du BTN No. 8230 CORPORATION 7,048.00 MARCVENTURES MINING AND DEVELOPMENT 10113/15 P-85-ee BTN No. 08266 CORPORATION 16,040.00 MARCVENTURES MINING AND DEVELOPMENT 10113115 P-85-ef BTN No. 08267 CORPORATION 45,184.00 RIO TUBA NICKEL MINING 10113115 P-85-eg MLA No. 15152 CORP.

493,600.00 TAGANITO 10113115 P-85-el BTN No. 08236 MINING CORP.

26,248.00 CARMEN 10114115 P-85-ep CEBU No. 16740 COPPER CORP.

6,144.00 CARMEN 10/16115 P-85-fb CEBU No. 16743 COPPER CORP.

31,384.00 CARMEN 10116115 P-85-fc CEBU No. 16746 COPPER CORP.

37,712.00 FCF MINERALS 10116115 P-85-fs MLA No. 15187 CORPORATION 61,385.00

BERONG NICKEL

10119115 P-85-gg MLA No. 15201-02 CORPORATION 781,583.08 PHIL GOLD PROCESSING & 10/19/15 P-85-gm MLA No. 15294 REFINING CORP.

41,510.69 MARCVENTURES MINING AND DEVELOPMENT 10/20/15 P-85-hb BTN No. 08375 CORPORATION 5,384.00 PLATINUM

GROUP METALS

10/21/15 P-85-ij BTN No. 8383 CORP.

10,672.00 CAGDIANAO MINING 10/22/15 P-85-it BTN No. 8324 CORPORATION 1,584.00 PHIL GOLD MLA No. 15228- PROCESSING & 10/22/15 P-85-iz 15229 REFINING CORP.

199,298.89 PHIL GOLD PROCESSING & 10/22/15 P-85-ja MLA No. 15230 REFINING CORP.

101,141.08 FCF MINERALS 10/23/15 P-85-id MLA No. 15233 CORPORATION 26,172.12 TAGANITO 10/26/15 P-85-jh BTN No. 08328 MINING CORP.

25,744.00 FCF MINERALS 10/27/15 P-85-ka MLA No. 15656 CORPORATION 10,830.00 CAGDIANAO MINING 10/28/15 P-85-kh BTN No. 08332 CORPORATION 69,808.00 HINATUAN MINING 10/29/15 P-85-ks BTN No. 08335 CORPORATION 67,824.00 10/29/15 P-85-kv MLA No. 15662 RIO TUBA 86,880.00 Unreadable date, payor details and amounts Unreadable date, payor details and amounts Unreadable date, payor details and amounts Unreadable date, payor details and amounts Unreadable date Unreadable date Unreadable date Unreadable date Unreadable date Unreadable date and amounts Unreadable date Unreadable amounts Unreadable date, payor details and amounts Unreadable date, payor details and amounts Unreadable amounts Unreadable amounts Unreadable date Unreadable date, payor details and amounts Unreadable date Unreadable date Unreadable _l)ayor details Unreadable Cf!

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

NICKEL MINING CORP.

TAGANITO 10/30/15 P-85-lh BTN No. 08065 MINING CORP.

10,320.00 TAGANITO 10/30/15 P-85-lm BTN No. 08345 MINING CORP.

27,624.00 TAGANITO 10/30/15 P-85-ls BTN No. 08051 MINING CORP.

14,208.00 TAGANITO 10/30/15 P-85-lt BTN No. 08052 MINING CORP.

4,136.00 TAGANITO 10/30/15 P-85-lu BTN No. 08053 MINING CORP.

9,048.00 TAGANITO 10/30/15 P-85-lv BTN No. 08054 MINING CORP.

7,424.00 TAGANITO 10/30/15 P-85-lw BTN No. 08055 MINING CORP.

816.00 TAGANITO 10/30/15 P-85-lx BTN No. 08056 MINING CORP.

5,168.00 TAGANITO 10/30/15 P-85-lv BTN No. 08057 MINING CORP.

3,552.00 TAGANITO 10/30/15 P-85-lz BTN No. 08058 MINING CORP.

36,064.00 TAGANITO 10/30/15 P-85-ma BTN No. 08059 MINING CORP.

1,024.00 TAGANITO 10/30/15 P-85-mb BTN No. 08060 MINING CORP.

8,192.00 TAGANITO 10/30/15 P-85-mc BTN No. 08061 MINING CORP.

2,584.00 TAGANITO 10/30/15 P-85-md BTN No. 08062 MINING CORP.

13,296.00 TAGANITO 10/30/15 P-85-me BTN No. 08063 MINING CORP.

4,424.00 TAGANITO 10/30/15 P-85-mf BTN No. 08064 MINING CORP.

14,208.00 CARMEN 11/2/15 P-85-na CEBU No. 17349 COPPER CORP.

263,904.00 CARMEN 11/2/15 P-85-nb CEBU No. 17350 COPPER CORP.

285,550.00 CARMEN 11/2/15 P-85-nc CEBU No. 17351 COPPER CORP.

120,736.00 CARMEN 11/2/15 P-85-nd CEBU No. 17352 COPPER CORP.

340,713.60 date Unreadable date and amounts Unreadable date, payor details and amounts Unreadable date, payor details and amounts Unreadable payor details and amounts Unreadable payor details and amounts Unreadable payor details and amounts Unreadable payor details and amounts Unreadable payor details and amounts Unreadable payor details and amounts Unreadable payor details and amounts Unreadable payor details and amounts Unreadable payor details and amounts Unreadable payor details and amounts Unreadable payor details and amounts Unreadable payor details and amounts Unreadable payor details and amounts Unreadable date, payor details and amounts Unreadable date, payor details and I amounts Unreadable I date, payor I details and amounts Unreadable "" date, payor t1J

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

CARMEN 11/2/15 P-85-ne CEBU No. 17353 COPPER CORP.

35,936.00 CARMEN 11/2/15 P-85-nf CEBU No. 17354 COPPER CORP.

36,224.00 PLATINUM

GROUP METALS

11/2/15 P-85-ng BTN No. 08411 CORP.

66,704.00 RIO TUBA NICKEL MINING 11/2/15 P-85-nh MLA No. 15637 CORP.

230,528.00 TAGANITO 11/2/15 P-85-ni BTN No. 08066 MINING CORP.

692,568.00

ADNAMA MINING

RESOURCES 11/3/15 P-85-ni BTN No. 08414 INC.

2,312.00 CARMEN 11/3/15 P-85-nk CEBU No. 17355 COPPER CORP.

45,376.00 CARMEN 11/3/15 P-85-nl CEBU No. 17356 COPPER CORP.

32,912.00 CARMEN 11/3/15 P-85-nm CEBU No. 17357 COPPER CORP.

32,912.00 CARMEN 11/3/15 P-85-nn CEBU No. 17358 COPPER CORP.

32,912.00 CARMEN 11/3/15 P-85-no CEBU No. 17359 COPPER CORP.

32,912.00 CARMEN 11/3/15 P-85-np CEBU No. 17360 COPPER CORP.

45,376.00 CARMEN 11/3/15 P-85-nq CEBU No. 17361 COPPER CORP.

45,376.00 CARMEN 11/3/15 P-85-nr CEBU No. 17362 COPPER CORP.

45,376.00 CARMEN 11/3/15 P-85-ns CEBU No. 17363 COPPER CORP.

45,376.00 CARMEN 11/3/15 P-85-nt CEBU No. 17364 COPPER CORP.

45,376.00 CARMEN 11/3/15 P-85-nu CEBU No. 17365 COPPER CORP.

95,216.00 details and amounts Unreadable date, payor details and amounts Unreadable date, payor details and amounts Unreadable date Unreadable date and amounts Unreadable date and amounts Unreadable date Unreadable date, payor details and amounts Unreadable date, payor details and amounts Unreadable date, payor details and amounts Unreadable date, payor details and amounts Unreadable date, payor details and amounts Unreadable date, payor details and amounts Unreadable date, payor details and amounts Unreadable date, payor details and amounts Unreadable date, payor details and amounts Unreadable date, payor details and amounts Unreadable date, payor details and amounts (J1

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

CARMEN 11/3/15 P-85-nv CEBU No. 17366 COPPER CORP.

95,216.00 CARMEN 11/3/15 P-85-nw CEBU No. 17367 COPPER CORP.

95,216.00 CARMEN 11/3/15 P-85-nx CEBU No. 17368 COPPER CORP.

95,216.00 CARMEN 11/3/15 P-85-ny CEBU No. 17369 COPPER CORP.

11,233.60 CARMEN 11/3/15 P-85-nz CEBU No. 17370 COPPER CORP.

95,216.00 CARMEN 11/3/15 P-85-oa CEBU No. 17371 COPPER CORP.

95,216.00 CARMEN 11/3/15 P-85-ob CEBU No. 17372 COPPER CORP.

89,912.00 CARMEN 11/3/15 P-85-oc CEBU No. 17373 COPPER CORP.

41,136.00 CARMEN 11/3/15 P-85-od CEBU No. 17374 COPPER CORP.

2,801.60 TAGANITO 11/3/15 P-85-oi BTN No. 08067 MINING CORP.

5,512.00 TAGANITO 11/3/15 P-85-ok BTN No. 08068 MINING CORP.

38,296.00 CARMEN 11/4/15 P-85-ol CEBU No. 17375 COPPER CORP.

153,384.00 CARMEN 11/4/15 P-85-om CEBU No. 17376 COPPER CORP.

16,416.00 CARMEN 11/4/15 P-85-on CEBU No. 17377 COPPER CORP.

9,120.00 CARMEN 11/4/15 P-85-oo CEBU No. 17378

COPPER CORP

9,120.00 CARMEN 11/4/15 P-85-oq CEBU No. 17380 COPPER CORP.

9,120.00 CARMEN 11/4/15 P-85-or CEBU No. 17381 COPPER CORP.

191,161.60 CARMEN 11/4/15 P-85-os CEBU No. 17382 COPPER CORP.

168,192.00 CARMEN _1_!t4t1L P-85-ot _ CEBU No. 17383 _ _c:oPPER CORP.

490,912.00 - - Unreadable date, payor details and amounts Unreadable date, payor details and amounts Unreadable date, payor details and amounts Unreadable date, payor details and amounts Unreadable date, payor details and amounts Unreadable date, payor details and amounts Unreadable date, payor details and amounts Unreadable date, payor details and amounts Unreadable date, payor details and amounts Unreadable payor details and amounts Unreadable date and amounts Unreadable payor details and amounts Unreadable payor details and amounts Unreadable payor details and amounts Unreadable date Unreadable date and _llayor details Unreadable date, payor details and amounts I Unreadable date, payor details and amounts Unreadable date, payor (Y1

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

CARMEN 11/4/15 P-85-ov CEBU No. 17385 COPPER CORP.

9,120.00 CARMEN 11/4/15 P-85-pd CEBU No. 17393 COPPER CORP.

10,208.00

CENTURY PEAK

11/4/15 P-85-pm BTN No. 08418 CORPORATION 9,936.00

CENTURY PEAK

11/4/15 P-85-Q_n BTN No. 08419 CORPORATION 6,384.00 TAGANITO 11/4/15 P-85-pw BTN No. 08070 MINING CORP.

13,704.00 TAGANITO 11/4/15 P-85-px BTN No. 08071 MINING CORP.

9,360.00 BTN No. 0807 4- TAGANITO 11/5/15 P-85-qq 08477 MINING CORP.

322,200.00 TAGANITO 11/5/15 P-85-qr BTN No. 08079 MINING CORP.

84,512.00

ADNAMA MINING

RESOURCES 11/6/15 P-85-qs BTN No. 08429 INC.

26,224.00 CARMEN 11/6/15 P-85-Qu CEBU No. 17414 COPPER CORP.

397,776.00 CARMEN 11/6/15 P-85-qy CEBU No. 17419 COPPER CORP.

430,233.60 CARMEN 11/6/15 P-85-qz CEBU No. 17430 COPPER CORP.

14,600.00 HINATUAN MINING 11/6/15 P-85-ri BTN No. 08069 CORPORATION 30,320.00 CAGDIANAO MINING 11/9/15 P-85-rn BTN No. 08085 CORPORATION 53,936.00 TAGANITO 11/9/15 P-85-rq BTN No.08083 MINING CORP.

3,552.00 TAGANITO 11/9/15 P-85-rr BTN No. 08084 MINING CORP.

2,584.00 TAGANITO 11/10/15 P-85-ru BTN No. 08086 MINING CORP.

113,920.00 TAGANITO 11/10/15 P-85-rv BTN No. 08087 MINING CORP.

2,976.00 TAGANITO 11/10/15 P-85-rw BTN No. 08089 MINING CORP.

92,872.00 FCF MINERALS 11/11/15 P-85-sd MLA No. 15705 CORPORATION 125,372.51 TAGANITO 11/11/15 P-85-sh BTN No. 08090 MINING CORP.

9,296.00 TAGANITO 11/12/15 P-85-sj BTN No. 08078 MINING CORP.

7,424.00 TAGANITO 11/12/15 P-85-sk BTN No. 08092 MINING CORP.

2,048.00 details and amounts Unreadable date, payor details and amounts Unreadable date Unreadable date Unreadable date Unreadable amounts Unreadable amounts Unreadable date and payor details Unreadable date and amounts Unreadable date Unreadable date Unreadable date and payor details Unreadable date and payor details Unreadable payor details Unreadable payor details Unreadable date and payor details Unreadable date Unreadable date and payor details Unreadable date and payor details Unreadable date and amounts Unreadable date Unreadable date, payor details and amounts Unreadable date, payor details and amounts Unreadable date, payor (!]

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

TAGANITO 11/12/15 P-85-sl BTN No. 08093 MINING CORP.

16,128.00 CARMEN 11/13/15 P-85-sr CEBU No. 17469 COPPER CORP.

9,120.00 HINATUAN MINING 11/13/15 P-85-su BTN No. 08095 CORPORATION 24,544.00 TAGANITO 11/13/15 P-85-sv BTN No. 08094 MINING CORP.

12,640.00 TAGANITO 11/13/15 P-85-sw BTN No. 08096 MINING CORP.

21,216.00 TAGANITO 11/14/15 P-85-sx BTN No. 08502 MINING CORP.

3,728.00 TAGANITO 11/16/15 P-85-tm BTN No. 08099 MINING CORP.

19,136.00 TAGANITO 11/16/15 P-85-tn BTN No. 08503 MINING CORP.

19,616.00 TAGANITO 11/17/15 P-85-tv BTN No. 08552 MINING CORP.

3,000.00 TAGANITO 11/17/15 P-85-tw BTN No. 08553 MINING CORP.

1,568.00 TAGANITO 11/18/15 P-85-uc BTN No. 08554 MINING CORP.

130,080.00 TAGANITO 11/18/15 P-85-ud BTN No. 08555 MINING CORP.

287,824.00 CARMEN 11/20/15 P-85-ui CEBU No. 17494 COPPER CORP.

45,376.00

CENTURY PEAK

11/24/15 P-85-vl BTN No. 08482 CORPORATION 28,056.00

CENTURY PEAK

11/24/15 P-85-vm BTN No. 08483 CORPORATION 29,824.00 FCF MINERALS 11/25/15 P-85-vn MLA No. 1 0459 CORPORATION 76,160.00 PHIL.

GOLD PROCESSING & 11/25/15 P-85-vs MLA No. 16020 REFINING CORP.

5,274.12 TAGANITO MINING 11/25/15 P-85-vx

BTN 08073

CORPORATION 108,000.00 TAGANITO 11/25/15 P-85-vy BTN No. 08562 MINING CORP.

192.00 MARCVENTURES MINING AND DEVELOPMENT 11/26/15 P-85-ws BTN No. 08486 CORPORATION 24,784.00 FCF MINERALS 12/2/15 P-85-xv MLA No. 16066 CORPORATION 37,480.00 MARCVENTURES MINING AND DEVELOPMENT 12/3/15 P-85-yn BTN No. 08489 CORPORATION 51,696.00 MARCVENTURES BTN No. 08490- MINING AND 12/4/15 P-85-zf 08491 DEVELOPMENT 1,142,815.08 details and amounts Unreadable date, payor details and amounts Unreadable date and payor details Unreadable date, payor details and amounts Unreadable date and amounts Unreadable date and amounts Unreadable date Unreadable amounts Unreadable date Unreadable amounts Unreadable amounts Unreadable date Unreadable date, payor details and amounts Unreadable date Unreadable amounts Unreadable date and amounts Unreadable date Unreadable amounts Unreadable date Unreadable date Unreadable date and amounts Unreadable date Unreadable date and amounts Unreadable date and amounts - arJ

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

CORPORATION TAGANITO 12/7/15 P-85-zp BTN No. 08567 MINING CORP.

859,928.00 FCF MINERALS 12/9/15 P-85-aae MLA No. 16088 CORPORATION 20,080.00 TAGANITO 12/9/15 P-85-aaj BTN No. 08572

MINING CORP

134,768.00 TAGANITO 12/9/15 P-85-aak BTN No. 08574 MINING CORP.

39,888.00 TAGANITO 12/9/15 P-85-aal BTN No. 08575 MINING CORP.

1,312.00 CAGDIANAO MINING 12/10/15 P-85-aar BTN No. 08581 CORPORATION 42,816.00 TAGANITO 12/10/15 P-85-abf BTN No. 08582 MINING CORP.

8,784.00 TAGANITO 12/10/15 P-85-abQ BTN No. 08583 MINING CORP.

44,545.60 TAGANITO 12/10/15 P-85-abi BTN No. 08586 MINING CORP.

1,896.00 TAGANITO 12/10/15 P-85-abj BTN No. 08587 MINING CORP.

4,264.00 TAGANITO 12/11/15 P-85-abr BTN No. 08589 MINING CORP.

4,008.00 CARMEN 12/14/15 P-85-abw CEBU No. 17883 COPPER CORP.

88,488.00 CARMEN 12/15/15 P-85-acs CEBU No. 17903 COPPER CORP.

273,744.00 TAGANITO 12/15/15 P-85-act BTN No. 08594 MINING CORP.

256,032.00 TAGANITO 12/15/15 P-85-acu BTN No. 08595 MINING CORP.

2,824.00

ADNAMA MINING

RESOURCES 12/16/15 P-85-acy CEBU No. 17576 INC.

14,917.00 CARMEN 12/16/15 P-85-acz CEBU No. 17904 COPPER CORP.

10,208.00 CARMEN 12/16/15 P-85-adc CEBU No. 17907 COPPER CORP.

ADNAMA MINING

RESOURCES 12/17/15 P-85-adk BTN No. 08640 INC.

168,864.00 CARMEN 12/17/15 P-85-adl CEBU No. 17909 COPPER CORP.

12,032.00 CARMEN 12/17/15 P-85-adt CEBU No. 17972 COPPER CORP.

60,480.00 HINATUAN MINING 12/17/15 P-85-adw BTN No. 08599 CORPORATION 129,536.00 CAGDIANAO MINING 12/21/15 P-85-aea BTN No. 08654 CORPORATION 20,280.00 CAGDIANAO MINING 12/21/15 P-85-aeb BTN No. 08655 CORPORATION 19,472.00 CAGDIANAO MINING 12/21/15 P-85-aec BTN No. 08656 CORPORATION 11,056.00 CAGDIANAO MINING 12/21/15 P-85-aed BTN No. 08657 CORPORATION 17,200.00 CARMEN 12/22/15 P-85-aeh CEBU No. 17944 COPPER CORP.

1,168,190.00 CARMEN 12/22/15 P-85-aew CEBU No. 17959 COPPER CORP.

204,678.40 CARMEN 12/22/15 P-85-aey CEBU No. 17961 COPPER CORP.

320,028.80 PHIL.

GOLD PROCESSING & 12/22/15 P-85-afl MLA No. 16433 REFINING CORP.

76,440.90 CARMEN 12/23/15 P-85-afp CEBU No. 17971 COPPER CORP.

72,852.80 PHIL.

ASS.

SMELTING & 10/23/15 P-86-aq

CEBU 17134

REF.CORP 187,899.10 wu KONG SINGAPORE 12/9/15 P-86-cz MLA No. 16172 PTE. LTD 20,411.00

TAGANITO HPAL

NICKEL 12/10/15 P-86-dd BTN No. 08494 CORPORATION 441,888.00 wu KONG SINGAPORE 12/11/15 P-86-dy MLA No. 16226 PTE. LTD 2,521.00 VISAYAS SLAKED LIME 12/21/15 P-86-eb BTN No. 08642 CORP.

15,560.00 JAMJLE PROPERTIES (SUBIC) AND DEVELOPMENT 10/2/15 P-87-a MLA-15006 CORPORATION 11,688.00 SUBIC CONSOLIDATED 10/8/15 P-87-f BTN-8255 PROJECTS, INC.

656.00 SUBIC CONSOLIDATED 10/20/15 P-87-n BTN-8372 PROJECTS, INC.

2,240.00 Subtotal- 3"' Quarter ~ 21,410,374.83 Unreadable date, payor details and amounts Unreadable date Unreadable date Unreadable date and amounts Unreadable date, payor details and amounts Unreadable date, payor details and amounts Unreadable date, payor details and amounts Unreadable date and payor details Unreadable date Unreadable date Unreadable date Unreadable date, payor details and amounts Unreadable date Unreadable amounts Unreadable date Unreadable amounts Unreadable date Unreadable amounts Unreadable date Unreadable date Unreadable date tf/ Maxima Machineries, Inc. vs. Commissioner of Internal Revenue 4'" Quarter TAGANITO 1/4/16 P-85-agv BTN No. 08658 MINING CORP.

p 25,024.00 TAGANITO 1/4/16 P-85-agz BTN No. 08662 MINING CORP.

4,224.00 TAGANITO 1/4/16 P-85-aha BTN No. 08663 MINING CORP.

155,104.00 TAGANITO 1/4/16 P-85-ahc BTN No. 08666 MINING CORP.

83,512.00 TAGANITO 1/4/16 P-85-ahd BTN No. 08667 MINING CORP.

165,840.00 TAGANITO 1/4/16 P-85-ahe BTN No. 08668 MINING CORP.

152,880.00 TAGANITO 1/4/16 P-85-ahf BTN No. 08669 MINING CORP.

345,072.00 TAGANITO 1/4/16 P-85-ahg BTN No. 08670 MINING CORP.

3,176.00 PHIL GOLD PROCESSING & 1/5/16 P-85-ahl MLA No. 16378 REFINING CORP.

9,660.02 PHIL.

GOLD PROCESSING & 1/5/16 P-85-ahq MLA No. 16383 REFINING CORP.

1,377.11 PHIL.

GOLD PROCESSING & 1/5/16 P-85-ahr MLA No. 16384 REFINING CORP.

134,232.00 RIO TUBA NICKEL MINING 1/6/16 P-85-aja MLA No. 16445-46 CORP.

331,496.00 RIO TUBA 1/6/16 P-85-ajb MLA No. 16447 NICKEL MINING - 870,35_2.00 Unreadable date, payor details and amounts Unreadable date Unreadable date Unreadable date Unreadable date Unreadable date Unreadable date Unreadable date Unreadable amounts Unreadable date Unreadable date Unreadable date Unreadable date Unreadable date Unreadable date Unreadable date Unreadable date Unreadable date Unreadable date Unreadable date Unreadable date Unreadable date Unreadable date Unreadable date Unreadable date Unreadable date, payor details and amounts Unreadable (j_ate, _,[layor VW1

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

CORP.

RIO TUBA NICKEL MINING 1/6/16 P-85-ajc MLA No. 16448-49 CORP.

456,792.00 RIO TUBA NICKEL MINING 1/6/16 P-85-ajd MLA No. 16450 CORP.

14,073.71 CARMEN 1/15/16 P-85-ame

CEBU 18106

COPPER CORP.

32,800.00 HINATUAN MINING 1/15/16 P-85-amx BTN No. 08695 CORPORATION 18,864.00

ADNAMA MINING

RESOURCES 1/18/2016 P-85-anb

BTN 08758

INC.

4,272.00 CARMEN 1/18/16 P-85-ane

CEBU 18127

COPPER CORP.

32,800.00 CARMEN 1/18/16 P-85-anf

CEBU 18128

COPPER CORP.

310,576.00 TAGANITO 1/20/16 P-85-ann BTN No. 08696 MINING CORP.

MINING CORP.

10,352.00 CARMEN 2/5/16 P-85-atl CEBU No. 18316 COPPER CORP.

10,955.20 CARMEN 2/9/16 P-85-aug CEBU-18339 COPPER CORP.

492,208.00 CARMEN 2/9/16 P-85-aul CEBU-18345 COPPER CORP.

32,240.00 CARMEN 2/12/16 P-85-awr CEBU-18378 COPPER CORP.

100,032.00 CARMEN 2/12/16 P-85-axa CEBU-18387 COPPER CORP.

32,912.00 PLATINUM

GROUP METALS

2/16/2016 P-85-axu

BTN 08902

CORP.

477,008.00 CARMEN 2/18/16 P-85-ayj CEBU-18427 COPPER CORP.

29,000.00 CARMEN 2/18/16 P-85-ayk CEBU-18428 COPPER CORP.

85,568.00 CARMEN 2/18/16 P-85-aym CEBU-18430 COPPER CORP.

MINING CORP.

4,768.00 RIO TUBA NICKEL MINING 3/10/16 P-85-bfz

MLA 0017463

CORP.

25,592.00 CARMEN 3/16/16 P-85-bgs CEBU No. 19001 COPPER CORP.

1,440.00 CARMEN 3/18/16 P-85-bhi CEBU No. 19015 COPPER CORP.

30,736.00 MARCVENTURES MINING AND DEVELOPMENT 3/18/16 P-85-bhm DV04418 CORPORATION 8,976.00 MARCVENTURES MINING AND DEVELOPMENT 3/18/16 P-85-bhn DV04419 CORPORATION 11,056.00 MARCVENTURES MINING AND DEVELOPMENT 3/18/16 P-85-bho DV04420 CORPORATION 152,064.44 PLATINUM

GROUP METALS

3/21/16 P-85-bhy

DVO 4426

CORP.

1,296.00 TAGANITO 3/23/16 P-85-bir

DVO 04435

MINING CORP.

33,432.00 Subtotal- 41• Quarter ,. 19,776,948.32 Total - Sale of goods supported by VAT Invoices but with unreadable details ,. 41,187,323.15 2) Sale of oods supported by incomplete documents 3"' Quarter TAGANITO 10/2/15 P-85-ad BTN No. 08183-85 MINING CORP.

p 165,532.00 Subtotal- 3"' Quarter ,.

165,532.00 Total- Sale of goods supported by incomplete documents ,.

165,532.00 3) Sale of oods to enti y without 801 certification 4'h Quarter BTN No.

CARRAS CAL

NICKEL 1/7/16 P-85-ajy_ 08742 CORP.

24,552.00 Subtotal- 41• Quarter ,.

24,552.00 Total - Sale of goods to entity without BOI certification ,.

24,552.00 Total Zero-rated Sales Disall()wed by the Court - ,. 41,377~07.15 details and amounts Unreadable date Unreadable amounts Unreadable date Unreadable date Unreadable date Unreadable date Unreadable date Unreadable date and payor details Unreadable date and payor details Unreadable date, payor details and amounts Unreadable amounts Unreadable date, payor details and amounts Incomplete supporting documents Buyer of goods without BOI certification - ·- - Thus, the total disallowances in petitioner's reported total zero- rated sales as per the Court's verification are as follows: ~

Maxima Machineries, Inc. vs. Commissioner of lntemal Revenue

Disallowances per Court's 3rd Quarter 4th Quarter further verification Sale of services to non-resident client not qualified for VAT zero- rating under Sec. 108(8)(2) of the N I RC of 1997, as amended I" 66,920,636.01 I" 41,636,870.97 Sale of goods supported by VAT invoices but with unreadable details (date, payor details, or amount) 21,410,374.83 19,776,948.32 Sale of goods supported by incomplete documents 165,532.00 - Sale of goods to entity without BOI certification - 24,552.00 Total disallowances per Court's verification ~ 88,496,542.84 ~ 61 ,438,371.29 Total I" 108,557,506.98 41,187,323.15 165,532.00 24,552.00 ~ 149,934,914.13 In sum, out of the reported zero-rated sales of t-742,641,360.36, only the amount of t-449,639,675.65 shall be considered as valid zero-rated sales for the 3'd and 4th quarters of FY ending March 31, 2016, detailed below: 3rd Quarter Total Reported Zero-rated Sales p Less: Sales denied of VAT zero- ratina Per ICPA Report Per Court's further verification Valid Zero-rated Sales ..

Petitioner incurred/paid taxes attributable to zero-rated sales 396,978,672.96 76,267,086.04 88,496,542.84 232,215,044.08 4th Quarter Total I" 345,662,687.40 I" 742,641,360.36 66,799,684.54 143,066,770.58 61,438,371.29 149,934,914.13 ..

217,424,631.57 ..

449,63~,675.~ Having found that petitioner had valid VAT zero-rated sales in the total amount of P449,639,675.65 for the 3'd and 4th quarters of FY ending March 31, 2016, the Court shall proceed to 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 3'd and 4th quarters of FY ending March 31, 2016, petitioner reflected a total amount ofP172,726,014.12 allowable input VAT arising from its amortization of input VAT on purchases of capital goods exceeding P1 million, domestic purchases and importation of goods other than capital goods, and domestic purchases of services, detailed as follows:

(/1/

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

Input tax as per Amended Quarterly VAT Returns Less: Input Tax on Purchases of Capital Goods exceeding 1M deferred for succeeding period (Line Input tax as per subject claim44 Total current input tax for the current quarter Less:

Input tax directly attributable to VA Table sale of machineries from current purchases Input tax directly attributable to government sales from current purchases Input tax directly attributable on current purchases not sold within the quarter Input tax directly attributable to zero-rated sales of machineries from current purchases Current input tax available for allocation Total input tax allocable to zero-rated sales Add:

Input tax directly attributable to zero-rated sales of machineries from current ~urchases 3"' Quarter 4'" Quarter p 3rd Quarter 4th Quarter ~ 65,308,243.64 p 107,417,770.48 9,407,909.06 35,626,985.17 8,230.31 57,852.34 23,719,153.52 31,823,307.34 975,489.41 1,812,673.50 31197,461.34 38,096,952.13 8,917,818.84 9,615,458.75 975,489.41 1,812,673.50 Consolidated Total p 172,726,014.12 45,034,894.23 66,082.65 55,542,460.86 2,788,162.91 69,294,413.47 18,533,277.59 2, 788,162.91

44 Application for Refund/TCC, Exhibit "P-34", CTA Docket, Vol. I, p. 52-88. C1'( '

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

Input tax directly attributable to zero-rated sales of machineries and spare parts which were imported in prior years but sold during the quarter 3,944,928.22 6,873,408.21 Total input tax claimed for refund/ issuance of TCC ..

13,838,236.47 ..

18,301,540.46 10,818,336.43 ..

32,139,776.93 In support of its total reported input VAT of ~172,726,014.12, petitioner offered in evidence various sales invoices, ORs, Import Entry and Internal Revenue Declarations {IEIRDs), Statement of Settlement of Duties and Taxes (SSDTs}, Bureau of Customs (BOC) ORs and other related documents, 45 which were examined by the I CPA.

Summarized below are petitioner's input VAT for the 3rd and 4th quarters of FY ending March 31, 2016, in the total amount of P172, 726,014.13:

Particulars 3rd Quarter 4th Quarter Total 1) Input tax on current quarter's importation directly related to VATable sale of machineries in the same quarter ..

9,407,909.06 ..

35,626,985.17 ..

45,034,894.23 2) Input tax on the importations in the current quarter directly related to zero-rated sale of machineries in the same quarter 975,489.42 1,812,673.50 2,788,162.92 3) Input tax on current purchase of machineries not sold within the quarter 23,719,153.52 31,823,307.34 55,542,460.86 4) Common input tax allocable between VATAble and zero-rated sales a) Input tax on current quarter's importations 24,890,562.00 27,045,652.00 51,936,214.00 b) Input tax on current quarter's domestic purchases 6,119,914.04 10,913,937.16 17,033,851.20 c) Input tax on capital goods exceeding P1 ' Million amortized for the period 195,215.60 195,215.32 390,430.92 ' Subtotal - Common input tax allocable I between VA Table sales 31,205,691.64 38,154,804.48 69,360,496.12 45 Exhibits "P-58" to "P-68" for current period importation of machineries; Exhibits "P-69" to "P-81" for domestic purchase of goods other than capital goods and domestic purchase of services; Exhibits "P-82" to "P-84" for prior period importation of machineries but sold during the taxable quarter. ~

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue and zero-rated sales Total Input Taxes for the Period _______ L_~_ 65,308,243.64 ~ _1_07,417,I70.49 ~ 1]2,726,014.13 Out of the input VAT amounting to P172,726,014.12, input taxes in the total amount of P69,360,496.12 are considered allocable between VA Table sales and zero-rated sales. Upon examination of the said documents, the ICPA noted exceptions in the total amount of P64, 132,726.65, as summarized below, which shall be disallowed for failure to meet the substantiation and invoicing requirements under Sections 11 O(A), 113(A) and (8), and 237 of the NIRC of 1997, as amended, in relation to Sections 4.110-1, 4.110-2, 4.110-8, and 4.113-1 of RR No. 16-05, as amended:

Exhibit No.

Exceptions 3rd Quarter 4th Quarter Total 1) Input tax on current quarter's importation of spare parts not directly attributable to VA Table sales and VAT zero-rated sales Supported by IEIRDsiSADs and SSDTs and traced to E2M schedule [but with no Certification from authorized agent bank (AAB) as to payment of P-63 taxes) ~22,141,311.00 ~ 22,933,838.00 ~ 45,075,149.00 Supported by IEIRDs/SADs and traced to E2M schedule [but with no SSDT and P-64 Certification from AAB] 6,471.00 - 6,471.00 Supported by SSDTs and traced to E2M schedule [with no IEIRDsiSAD P-65 submitted] - 18,531.00 18,531.00 Not supported by IEIRDs/SAD and SSDTs and not traced to E2M P-66 schedule - 26,276.00 26,276.00 Supported by IEIRDs/SAD, and SSDT and traced to E2M but dated in the prior quarters falling in the same P-67 taxable year 2,742,780.00 2,501,314.00 5,244,094.00 Supported by IEIRDs/SAD and traced to E2M but dated in the prior quarters not falling in the same taxable P-68 year - 1,565,693.00 1,565,693.00 Total - Input tax on current quarter's importation of spare parts not directly attributable to VA Table sales and VAT zero-rated sale ~ 24,890,562.00 ~ 27,045,652.00 ~ 51,936,214.00 2) Input tax on domestic purchases of goods other than capital goods and domestic purchase of services ' I I I o'l \

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

Domestic purchase of goods properly supported by VAT Invoice/purchase of services properly supported by VAT OR, that are issued in the name of the Petitioner with the Petitioner's complete TIN, address, business style, and with valid ATP but are dated in the prior quarter falling in the same taxable P-70 year I" 51,614.76 I" 40,478.93 I" 92,093.69 Domestic purchase of goods properly supported by VAT Invoice/purchase of services properly supported by VAT OR, that are issued in the name of the Petitioner with the Petitioner's complete TIN, address, and with valid ATP but without business P-71 style 820,151.67 1,389,727.51 2,209,879.18 Domestic purchase of goods not properly supported by VAT Invoice/purchase of services not properly P-72 supported by VAT OR 1,024,517.35 298,065.08 1,322,582.43 Domestic purchase of goods supported by VAT Invoice/purchase of services supported by VAT OR but not dated within the same taxable year or dated in the P-73 subsequent quarter 226,719.76 380,806.74 607,526.50 Domestic purchase of goods supported by VAT Invoice/purchase of services supported by VAT OR but P-74 without date 6,374.46 1,360.06 7,734.52 Domestic purchase of goods supported by VAT Invoice/purchase of services supported by VAT OR without valid Authority to P-75 Print (ATP) 18,994.73 52,761.41 71,756.14 Domestic purchase of goods supported by VAT Invoice/purchase of services supported by VAT OR with missing and/or incorrect P-76 Company name 54,035.06 87,843.69 141,878.75 Domestic purchase of goods supported by VAT Invoice/purchase of services supported by VAT OR with P-77 missing and/or incorrect TIN 332,054.14 381,989.07 714,043.21 Domestic purchase of goods supported by VAT Invoice/purchase of services supported by VAT OR with missing and/or incorrect P-78 registered address 43,977.58 62,192.40 106,169.98 ()(!

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

Domestic purchase of goods supported by VAT Invoice/purchase of services supported by 'J AT OR with a note "This document is not valid for claiming input 121,639.84 I P-79 taxes" 34,159.80 87,480.04 Domestic purchase of services with claimed input 598.991 P-80 VAT on exempt transactions 558.42 40.57 Domestic purchases without supporting lnvoices/ORs 6,800,609.421 P-81 presented 1,606,152.17 5,194,457.25 Total - Input tax on domestic purchases of goods other than capital goods and domestic purchase of setVices '" 4,219,309.90 '" 7,977 ,202. 75 '" 12,196,512.65 Total common i11put taxes disallowed per ICPA findings '"29, 109,871.90 '" 35,022,854.75 '" 64,132,726.65 Moreover, upon further verification, the Court disallows the following input VAT on domestic purchase of goods and purchase of capital goods exceeding P1 Million in the total amount of P2, 146,736.49 for failure to comply with invoicing requirements, as follows:

Date Exhibit No.

Supplier Input VAT 3rd Quarter 4th Quarter 1) Input VAT on domestic purchase of goods/services supported by VAT Invoice/OR wherein the VAT amount is not separately/properly indicated ONG, SALVE L.

(MAPULANG LUPA HARDWARE & CONSTRUCTION 10/15/15 P-69-ae SUPPLIES) '" 11.25 10/20/15 P-69-aj

INVISION MARKETING

122.14 WIDE WIDE WORLD EXPRESS 10/12/15 P-69-eu CORPORATION 369.60 MATATAG CARGO 10/22/15 P-69-ga

LOGISTICS CORP

62,481.30 QUEEN DIESEL 10/22/15 P-69-gd TRONICS INC.

6,071.26

DY TEBAN HARDWARE

AUTO SUPPLY(DY TEBAN TRADING 10/26/15 P-69-gm INCORPORATED) 325.71 SYNERGY GLOBAL LOGISTICS SOLUTION 10/29/15 INC 2,411.61 SYNERGY GLOBAL LOGISTICS SOLUTION 10/29/15 INC 65.28 SYNERGY GLOBAL LOGISTICS SOLUTION 10/29/15 INC 1,263.04 SYNERGY GLOBAL LOGISTICS SOLUTION 10/29/15 INC 2,042.80 SYNERGY GLOBAL I 10/29/15_ P-69-hn _'-LOGISTIC§_ SOLUT!Qt!_ 2,310.71 - - Cll

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

480.00 SEA WORTH INTERNATIONAL 12/17/15

FREIGHT INC

708.00 SEA WORTH INTERNATIONAL 12/17/15 P-69-qw

FREIGHT INC

420.00 ONG, JESTER JUDE A.

(LADRIANO 2/2/16 P-69-uc ENTERPRISES) STRONGHOLD 2/5/16 P-69-ui HARDWARE

INDU FLEX MARKETING

2/6/16 P-69-ui

AND AUTO SUPPLY

GAISANO SUPERSTORE

2/9/16 P-69-um

(BUTUAN CITY BRANCH)

VERACRUZ AUTOPARTS AND 2/10/16 P-69-ur HARDWARE ONG, FREDERICK (NEW EXTENSIVE AUTO 3/14/16 P-69-xt SUPPLY) 1/4/16 P-69-yq

LA PLANTA HOTEL AND

~ 3,294.64 9.11 150 00 102.83 81.96 187.50 ()1

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

RESTAURANT INC

OLIVARES, RODEL H.

(RHOTECH PEST 3/10/16 P-69-alm MANAGEMENT) QUEEN MARGARETTE 3/15/16 P-69-amb

HOTEL INC

CACQUINO, MARIE JERZEN D. (CANDOUR 3/17/16 P-69-ami

TRANSPORT SERVICES)

CORE SOLUTIONS AND

NETWORK 3/17/16 P-69-aml

INFRASTRUCTURE INC

3/22/16 P-69-anm LBC EXPRESS, INC.

SYNERGY GLOBAL LOGISTICS SOLUTION 3/23/16 P-69-anw INC

TOYOTA DAVAO CITY

3/23/16 P-69-anx INC MATATAG CARGO 3/28/16 P-69-aod

LOGISTICS CORP

3/31/16 P-69-aom

JITS CORPORATION

Total - Input VAT on domestic purchase of goods/services supported by VAT Invoice/OR wherein the VAT amount is not separatelv!propertv indicated ..

148,979.80 630.52 212.65 53.46 113.57 876.00 223.46 2,139.68 112.86 960.00 1.803.95 1,057.68 2.139.68 430.20 1.420. 78 959.42 7,985.04 1,560.00 225.00 15,803.57 17,132.14 162.32 6,802.84 321.43 6,321.43 396.00 ..

193,099.75 2) Input VAT on domestic purchase of goods/services supported by VAT Invoice/OR wherein indicated TIN is incorrect, incomplete or unreadable

GOLDEN BAT FAR EAST

10/9/15 P-69-q INC p 3,610.71 u FREIGHT 12/1/15 P-69-ob

PHILIPPINES INC

164.64 u FREIGHT 12/1/15 P-69-oc

PHILIPPINES INC

164.64 ()'1

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

STRONGHOLD 1/14/16 P-69-sj HARDWARE I" 77.68 1/28/16 P-69-acq

BAY S INN

139.29 LIFTING AND HEAVY EQUIPMENT SAFETY 3/17/16 P-69-amq SPECIALIST 4,285.71 Total - Input VAT on domestic purchase of goods/services supported by VAT Invoice/OR wherein indicated TIN is incorrect. incomplete or unreadable I" 3,939.99 P 4,502.68 3) Input VAT on domestic purchase of goods/services supported by VAT Invoice/OR with unreadable details (date, payor details and amounts) DY, DICKY C.

(NEW 1/21/16 P-69-sz

CONSOLIDATOR PHILS

2/11/16 P-69-afm INC 4,283.06 J 2/11/16 P-69-afn CWCOLE INC.

21.43 I

F2 GLOBAL LOGISTICS

2/11/16 INC 828.27

F2 GLOBAL LOGISTICS

2/11/16 P-69-afp INC 251.84 ~

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

F2 GLOBAL LOGISTICS

2/11/16 INC

F2 GLOBAL LOGISTICS

2/11/16 INC ANA MARGARITA LUSTRE MALl JAN 2/25/16 P-69-aig

(HOLIDAY SUITES)

276.17 ONG, JESTER JUDE A.

(LADRIANO 1/14/16 P-69-sh ENTERPRISES) SEE LEE ALFONSO 1/28/16 P-69-tq

(KIMSAN TRADING)

YU NELSON L.

(NEY 1/29/16 P-69-tu

SHELL STATION)

LEGARDA HARDWARE 2/18/16 P-69-vr INC DYNZTER BUSINESS 2/19/16 P-69-vx

CENTER INC

CD R KING 2/22/16 P-69-wb GENMERCHANDISE GOTRAVEL 1/7/16 P-69-zi

PHILIPPINES INC

GOTRAVEL 1/7/16 P-69-zi

PHILIPPINES INC

GOTRAVEL 1/7/16 P-69-zk

PHILIPPINES INC

IN NOVE

1/7/16 P-69-zl

COMMUNICATIONS INC

IN NOVE

1/7/16 P-69-zn

COMMUNICATIONS INC

1/20/16 P-69-abk

COMMUNICATIONS INC

BSM HEAVY EQUIPMENT TECHNICAL SERVICES 1/21/16 P-69-abq INC GOTRAVEL 1/21/16 P-69-abt

PHILIPPINES INC

IN NOVE

1/25/16 P-69-aca

COMMUNICATIONS INC

2/29/16 P-69-ais

COMMUNICATIONS INC

IN NOVE

2/29/16 P-69-ait

COMMUNICATIONS INC

12/17/15

AND WAREHOUSING CO

P-69-qu INC 1,153.28 SANTIAGO, MA.

1/14/16 CORAZON D.

(CORS P-69-si ENTERPRISES) 1/19/16 DY, DICKY C.

(NEW P-69-sr

MILLENNIUM TRADING)

GAUDIA, OLIVIA V.

1/21/16 (DINLYS INDUSTRIAL P-69-ta SALES) 1/25/16 DY, DICKY C.

MILLENNIUM TRADING)

2/17/16 P-69-vn

ITS SCIENCE PHILS INC

WORLD BEST 2/17/16 P-69-vq

INDUSTRIAL SALES INC

DELOS REYES, ANTHONY B.

(ADR 2/23/16 P-69-we

GENSET TRADING)

ONG, JESTER JUDE A.

(LADRIANO 2/24/16 P-69-wh ENTERPRISES)

KEN TOOL HARDWARE

2/27/16 P-69-wn CORPORATION 3/2/16 P-69-wu

CALOOCAN STANDARD

p 2,346.43 327.54 48.21 1,111.29 767.14 675.00 1,015.80 93.75 62.14 3,535.71 47.73 4,934.41 4,891.66 5,357.14 289.29 225.00 Owl

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

INC 3/3/16 P-69-wx

JT OIL PHILS INC

ADVANCE MICROSYSTEMS 3/4/16 P-69-wz CORPORATION DY, DICKY C.

(NEW 3/4/16 P-69-xc

MILLENNIUM TRADING)

ONG, JESTER JUDE A.

(LADRIANO 3/9/16 P-69-xj ENTERPRISES) ONG, JESTER JUDE A.

(LADRIANO 3/9/16 P-69-xk ENTERPRISES)

TDS AIRCONDITIONING

3/14/16 P-69-xv

INDUSTRIES INC

3/15/16 P-69-xy

FLEETSERV INC

3/15/16 P-69-xz

FLEETSERV INC

DY, DICKY C.

(NEW 3/16/16 P-69-yc

MILLENNIUM TRADING)

KESCO INDUSTRIAL 3/16/16 P-69-Je

SALES CORP

ONG, JESTER JUDE A.

(LADRIANO 3/17/16 P-69-yl ENTERPRISES)

BAUAN INTERNATIONAL

1/6/16 P-69-yr

PORT INC

PGA SOMPO INSURANCE 1/14/16 P-69-aan CORPORATION PGA SOMPO INSURANCE 1/14/16 P-69-aao CORPORATION WIDE WIDE WORLD EXPRESS 1/14/16 P-69-aas CORPORATION 1/28/16 P-69-acp

BAYS INN

GONDA, VICTORIA D.

(VILLA VICTORIA HOTEL

VICTORIA CUCCINA 2/3/16 P-69-adx

AND CATERING)

RICELAND INN I AND

2/10/16 P-69-afk

REAL ESTATE LESSOR

PGA SOMPO INSURANCE 2/11/16 P-69-aty CORPORATION PGA SOMPO INSURANCE 2/11/16 P-69-afz CORPORATION PGA SOMPO INSURANCE 2/11/16 P-69-aga CORPORATION RAMIREZ, ROILAN F.

257.14 MARl LAG BUSINESS AND INDUSTRIAL 10/22/15 P-69-fz

SERVICES INC

8,636.93 10/22/15 P-69-gb

MINVETS SECURITY INC

472.90 PHILIPPINE PORTS 10/22/15 P-69-QC AUTHORITY 259.48 PHILIPPINE PORTS 10/28/15 P-69-gw AUTHORITY 131.95 PHILIPPINE PORTS 10/28/15 P-69-gx AUTHORITY 223.58 10/29/15 P-69-hd FIVESTAR CARGO I ~

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

SERVICES INC

12/18/15 P-69-qz

MINVETS SECURITY INC

346.56 12/22/15 P-69-re

GLOBE TELECOM INC

194.89 3/17/16 P-69-yi

EEB AIRE MARKETING

PHILIPPINE PORTS 1/6/16 P-69-yw AUTHORITY PHILIPPINE PORTS 1/6/16 P-69-yx AUTHORITY PHILIPPINE PORTS 1/6/16 P-69-yy AUTHORITY PHILIPPINE PORTS 1/6/16 P-69-yz AUTHORITY PHILIPPINE PORTS 1/6/16 P-69-zc AUTHORITY PHILIPPINE PORTS 1/8/16 P-69-zs AUTHORITY PHILIPPINE PORTS 1/8/16 P-69-zt AUTHORITY PHILIPPINE PORTS 1/8/16 P-69-zv AUTHORITY PHILIPPINE PORTS 1/8/16 P-69-zw AUTHORITY PHILIPPINE PORTS 1/8/16 P-69-zx AUTHORITY PHILIPPINE PORTS 1/12/16 P-69-aag AUTHORITY PHILIPPINE PORTS 1/12/16 P-69-aah AUTHORITY ONG, JESTER JUDE A.

(LADRIANO 1/14/16 P-69-aam ENTERPRISES) PHILIPPINE PORTS 1/18/16 P-69-abg AUTHORITY FIVESTAR CARGO 1/28/16 P-69-acu

SERVICES INC

2/1/16 P-69-adn

MINVETS SECURITY INC

ONG, JESTER JUDE A.

(LADRIANO 2/4/16 P-69-aek ENTERPRISES) WIDE WIDE WORLD EXPRESS 2/4/16 P-69-aen CORPORATION PIONEER DETECTIVE CREDIT SECURITY 2/10/16 P-69-afj

AGENCY INC

FIVESTAR CARGO 2/11/16 P-69-afr

SERVICES INC

PRIMAVERA, NANETH (PRIMAVERA 2/11/16 P-69-agb ENTERPRISES) FIVESTAR CARGO 2/18/16 P-69-agt

SERVICES INC

FIVESTAR CARGO 2/18/16 P-69-agu

SERVICES INC

2/26/16 P-69-aik

MINVETS SECURITY INC

TOYOTA DAVAO CITY

3/1/16 P-69-aiy INC ONG, JESTER JUDE A.

(LADRIANO 3/3/16 P-69-ajl ENTERPRISES) 3/7/16 P-69-akh PRIMAVERA.

NANETH ,.

DAVAO PRIMA ELENA

1/29/16 P-69-adg

HOTEL (HOTEL ELENA)

LAGUNA INTERNATIONAL INDUSTRIAL PARK 2/9/16 P-69-afa ASSOINC MAAYO SHIPPING, 2/9/16 P-69-afb INCORPORATED MANILA TOLL EXPRESSWAY 2/9/16 P-69-afc

SYSTEMS INC

MAE WESS COMPANY, 2/11/16 P-69-afv INCORPORATED Total - Input VAT on domestic purchase of goods/services supported by VAT Invoice/OR where amount of VA Table sale incorrectly presented as VAT- exempt/zero-rated sale p 2,298.06 ,.

267.86 PRIMAVERA, NANETH (PRIMAVERA 1/12/16 P-69-aai ENTERPRISES) 26,057.14 1/15/16 P-69-aba LBC EXPRESS, INC.

182.69

DAVAO PRIMA ELENA

1/29/16 P-69-adi

HOTEL (HOTEL ELENA)

321.17 FIVESTAR CARGO 2/11/16 P-69-afq

SERVICES INC

7,489.32 MANILA TOLL EXPRESSWAY 2/20/16 P-69-ahm

SYSTEMS INC

267.86 2/24/16 P-69-ahu

2GO EXPRESS INC

45.25 MANILA TOLL EXPRESSWAY 2/24/16 P-69-ahy

SYSTEMS INC

535.71 QUEEN MARGARETTE 3/1/16 P-69-aiw

HOTEL INC

337.50 CLYBROS MERCHANDISING INC.

3/3/16 P-69-ajb (PARKWAY) 305.36 MANILA TOLL EXPRESSWAY 3/4/16 P-69-aka

FREIGHT INC

420.00 BIWATER PHILIPPINES 10/23/15 P-69-gi INC.

1,980.00 10/29/15

TOYOTA BUTUAN CITY

95.20 10/29/15 P-69-hp

TOYOTA BUTUAN CITY

95.20 MENDEZ SYSTEM MAINTENANCE AND 11/6/15 P-69-jb

MANPOWER SERVICES

1,198.21 WTEI REALTY AND DEVELOPMENT 11/12/15 P-69-kg CORPORATION 2,400.00 WTEI REALTY AND DEVELOPMENT 11/12/15 P-69-kh CORPORATION 2,400.00 WTEI REALTY AND DEVELOPMENT 11/12/15 P-69-ki CORPORATION 2,400.00 MATATAG CARGO 11/26/15 P-69-ne

LOGISTICS CORP

2,365.00 11/26/15 P-69-nn

U BIX CORPORATION

302.40 12/3/15 P-69-os

ZF PHILIPPINES INC

10,225.71 12/4/15 P-69-ou

FIERA DE MANILA INC

1,414.07 2/28/16 P-69-wp

SM HYPERMARKET INC

MATATAG CARGO 1/21116 P-69-abv

LOGISTICS CORP

CLYBROS MERCHANDISING INC.

1/28/16 P-69-acs (PARKWAY) 2/1/16 P-69-adp

RAKDELL INN

ALLEGIANCE CARGO 2/9/16 P-69-aez

ADVANTAGE INC

2/12116 P-69-agf MENDEZ SYSTEM ' ~ 239.25 267.86 349.29 160.71 1,031.69 (yl

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

MAINTENANCE AND 1,198.21

MANPOWER SERVICES

ASIA GLASS

PALACE, 2/18/16 P-69-aQp INCORPORATED 6,000.00 PAMBID, RAE M.

(SHINRA SOFTWARE 2/18/16 P-69-ahd SOLUTIONS) 660.00 MENDEZ SYSTEM MAINTENANCE AND 2/26/16 P-69-aij

MANPOWER SERVICES

1,198.21 CONTAINER JOCKEY TRANSPORTER 3/3/16 P-69-aic

TRUCKING COMPANY

24,321.43 WIDE WIDE WORLD EXPRESS 3/4/16 P-69-akc CORPORATION 938.34 WIDE WIDE WORLD EXPRESS 3/4/16 P-69-akd CORPORATION 992.33 3/31/16 P-69-aol

JITS CORPORATION

492.00 PRIMAVERA, NANETH (PRIMAVERA 3/31/16 P-69-aop ENTERPRISES) 4,285.71 TDS INDUSTRIAL 3/31/16 P-69-aou CORPORATION 182.14 Total - Input VAT on domestic purchase of goods/services supported by VAT Invoice/OR where it cannot be ascertained whether amount paid includes VAT amount since EWT amount is no/indicated ,.

40,337.20 ,.

42,317.17 15) Input VAT on capital goods exceeding P1 Million amortized for the period without any supporting documents N/A N/A N/A 195,215.60 195,215.32 Total- Input VAT on capital goods exceeding P1 Million amortized for the period without any supporting documents ,.

195,215.60 ,.

195,215.32 Total Input VAT by the Court upon verification for not being properly substantiated ,.

976,149.68 ,. 1,170,586.81 In addition, the Court finds that the following amounts of input VAT claimed by petitioner were higher than the amounts reflected in the VAT Invoices/Official Receipts, thus, the difference of fit10,211.16 should likewise be disallowed: Date Exhibit Input VAT Input VAT Excess No.

11/23/15 P-69-ly

TOLLWAYS CORP

90.92 8.00 82.92 ~ I

Maxima Machineries, Inc. vs. Commissioner of lntemal Revenue

976,816.92 .. 1,180,130.73 ~ 2,156,947.65 In view of the foregoing disallowances, the total valid input VAT of petitioner subject for allocation is P3,070,821.82, as shown below: 3rd Quarter 4th Quarter Total Total Common Input Tax for Allocation ~ 31 ,205,691.64 ~ 38,154,804.48 ~ 69,360,496.12 Less:

Disallowances per I CPA Exceptions 29,109,871.90 35,022,854.75 64,132,726.65 Disallowances per Court's further verification 976,816.92 1,180,130.73 2,156,947.65 Total Valid Common Input Tax for Allocation ..

1,119,002.82 ..

1 ,951 ,819.00 ..

3,070,821.82 I (y1

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

Considering that petitioner is engaged in taxable sales subject to 0% and 12% VAT, and its input VAT cannot be directly or entirely attributed to any of the transactions, the valid common input VAT of P3,070,821.82 shall be proportionately allocated on the basis of the volume of its sales, thus: Total VA Table Sales per VAT Return p 1,988,004,974.72 Divided by the Total Declared Sales per Quarterly VAT Returns 2, 740,186,115.69 Multiplied by the Total Valid Input VAT 3,070,821.82 Input VAT Allocated to Total VA Table Sales ~ 2,227,881.17 Total Zero-rated Sales per VAT Return ,.

742,641,360.36 Divided by the Total Declared Sales per Quarterly VAT Returns 2,740, 186,115.69 Multiplied by the Total Valid Input VAT Input VAT Allocated to Zero-rated Sales Petitioner has no excess input VAT available for refund 3,070,821.82 p 832,249.78 Having determined that petitioner had valid input VAT attributable to its zero-rated sales in the amount of P832,249. 78, the Court shall proceed to determine whether the same was not applied against its output VAT liability. After deducting the input VAT attributable to VATable sales in the amount of P2,227,881.17 from its output VAT liability of P238,560,596.97 from the said sales, petitioner still has a net output VAT payable of?D236,332,715.80, as computed below: Period Output VAT per Returns 3rd Quarter ~ 116,541,854.22 4th Quarter 122,018,742.75 Total ~ 238,560,596.97 Output VAT Per Returns p 238,560,596.97 Input VAT Allocated to VA Table Sales 2,227,881.17 Net Output VAT Payable ~ 236,332,715.80 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 ofP236,332,715.80. The input VAT attributable to~

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue zero-rated sales of P832,249. 78, however, is lower than the net output VAT payable of P236,332, 701.29. Consequently, petitioner still has net output VAT due of ft235,500,466.02, computed as follows: Net Output VAT Payable '" 236,332,715.80 Less: Input VAT Allocated to Zero-rated Sales 832,249.78 Net Output VAT Still Due '" 235,500,466.02 Petitioner claims that there is enough input VAT credit from previous periods to cover any output tax liability for the 3'd and 41h quarters of FY ending March 31, 2014 and that the amount being claimed for refund was not utilized or applied to the current VAT liability. A careful review of the evidence and the records of the case reveals that petitioner failed to fully substantiate with official receipts, service invoices, or other pertinent documents, its input VAT credit from previous periods albeit its quarterly VAT Return for the 3'd quarter of FY ending March 31, 2014 reflected the amount of P435,817,931.49 as "Input Tax Carried Over from Previous Period". Therefore, the input VAT carry-over of P435,817,931.49 cannot be validly applied against petitioner's output VAT liability 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 impmtant 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. There being no excess input VAT which may be the subject of a claim for refund or issuance of TCC, petitioner's 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. 46 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. 47 The pieces of evidence presented entitling a taxpayer to an exemption are also strictissimi scrutinized and must be duly proven.48 46 Citibank N.A. vs. Court of Appeals and Commissioner of Internal Revenue, G.R. No. 107434, October 10, 1997. 47 Commissioner o.f Internal Revenue vs. S.C. Johnson and Son, Inc., eta/., G.R. No. 127105, June 25, 1999. 48 Kepco Philippines Corporation vs. Commissioner of Internal Revenue, G.R. No. 179961, January 31, 2011. ~

Maxima Machineries, Inc. vs. Commissioner of Internal Revenue

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 49

WHEREFORE, in light of the foregoing, the Petition for Review filed on May 18, 2018 is hereby DENIED for lack of merit.

SO ORDERED.

Presiding Justice

I CONCUR:

~·~---~ CATHERINE T. MANAHAN Associate Justice

CERTIFICA T/ON

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