Silicon Philippines, Inc. vs. Commissioner of Internal Revenue

DECISION

UY, J .. :

This is a Petition for Review filed before the Court of Tax Appeals En Bane on March 1, 2007 under Republic Act- N_o .. 1125, as amended by Republic Act No. 9282, seeking a review of the Decision ~nd Resolution dated October 11, 2006 and January 11, 2007, respectively, rendered by the First Division of this Court1 ,(Court in Division) in the case of Silicon Philippines, Inc. vs. Commissioner of Internal Revenue in C.T.A. Case No. 6310.

The disp.;,itive portions thereof read as follows: ~ 1 Ponencia of Associate Justice Lo~ell· R. Bautista, concurred by Associate Justice Caesar A. Casanova, with Coricmring and Dissenting Opinion by Presiding Justice Ernesto D. Acosta. 3.l6 j l !

1 J I l DECISION C.T.A. EB NO. 266 Page 2 of29;

Decision promulgated on October 11, 2006: "IN VIEW OF THE FOREGOING, the instant Petition for Review is hereby DENIED for lack 'bf merit.

THE FACTS

· The antecedent facts, as found· by the Court 1n Division, are as follows:

Silicon Philippines Inc., previously known as Intel Philippines Manufacturing Inc., is a corporation duly.organized and existing under and by virtue of the laws of the Republic of the Philippines with principal office at No, 1321 Apolinario Street, Bangkal, Makati City. It is registered as a value- added tax (VAT) taxpayer effective January 30, 1996, as evidenced by Certification of Registration .No. 32A-3-002649 and BIR Form No. 1556 - Certification of Registration No. 94:.048-02621. · Petitioner is likewise registered with the Board of Investments (BOI) as a preferred-pioneer enterprise for the production I manufacture and export of tested and untested integrated circuits, 1 such as large scale integrated circuits and microprocessor.

The Commissioner of Internal Revenue is the appointed government official vested with authority to exercise the functions of his office, including, among others, the power to refu.n~ any internal revenue tax erroneously o~L I .. ·17 "" J ..

DECISION C.T.A. EB NO. 266 Page 3 of:29 illegally assessed or collected under the National Internal Revenue Code (NIRC) of 1997, as amended, with office address at the BIR National Office Building, Oiliman, Quezon City. On July 22, 1999, petitioner filed its VAT return for the second quarter .of 19.9.9 declaring, . among others, zero-rated sales . of P1 ,81 0, 154,723.64, output VAT of P34,799.57 and excess input taxes of P52,809,939.93 for the said quarter. Convinced t~at it is entitled to the above-mentioned excess input VAT pay"ments of P52,809,939.93, on August 6, 1999, petitioner filed with the One-Stop-Shop Inter Agency Tax Credit and Duty Drawback Center of the Department of Finance an administrative claim for refund or tax credit i.

per BIR Form No. 2552 and Claimant Information Sheet with No. 35421. Due to the inaction of the DOF on its claim, on June 29, 2001, petitioner filed a Petition for Review with the Court in Division. in order to toll the running of the two-year prescriptive period provided under Section 229 of the NIRC of 1997.

In the Decision dated October 11, 2006 2 , the Court in Division found that petitioner was able to substantiate and prove that its :products were actually sold and shipped abroad; that i~ consideration thereof, it received for~ign cu_rrency payments, which were inwardly remitted in accordance with the rules and regulations of the BSP; and thus, these expo1i sales may prop~rly fall within the export sales ~ransactiCms .subject to zero percent (OO,:o) VAT referred to under Section 106(A)(2)(a)(1) of the NIF.<C of 1997, as ~mended. After a close scrutiCy of petitioner's sales invoices, however, the.,.J -Annex "D", Docket, pp. 74-87. · I'J"- Jla .

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C.T.A. EB NO. :?.66 j Court in Division found that ~hese were not duly registered with the BIR as 1 mandflted under Section 237 of the NIRC of 1997 ·and that there was no ' j authority to print or BIR permit number, TIN-VAT nuqlber and·the imprinted word "zero-rated" reflected on said invoices. Thus, the Court in Division held that petitioner's reported export sales in the amount of P1 ,81 0,154,723.64 for the second quarter of 1999 cannot qualify for zero-rating under SeCtion 1 06(A)(2)(a)(1) of the NIRC of 1997; , .

I and without zero-rated sales, the Court in Division denied petitioner's claimed input VAT payment pertaining to its purchase .of goods and services attributable thereto. With respeCt to petitioner's claim for refund on input VAT paid· on imported capital equipment, the Court in Division likewise denied the same and said thus:

"Petitioner avers that the total claim of P52,809,939.93 included input VAT paid on impoiiation of goods I capital equipment in the amount of P29, 122,031.00. However, per report of the commissioned CPA, out of the claimed input VAT payment of P29, 12~,031.00, the amount of P7, 125,713.00 was not supported by documents, such FIS Bureau. of Customs (BOC) official receipts or mach·in~ validated· Import Entry and Internal Revenue _Declaration establishing actual payment thereof tQ the BOC, xxx While petitioner' was able to prove actual payment of the remaining input VAT of P21 ,996,318.00 (P29, 122,031.00 less P7,125,713.00) on its importation, it nonetheless f~iled to submit documents, such as detailed schedule of capital goods purchases, detailed general ledger, and audited financial statements proving th<;:~t the related importation qualify as capital goods. It must be stressed that under Section 4.106- 1 (b) of RR 7-95, in order that items purchased can be classified as capital goods or properties, it must be sh.own that: 1) the goods or properties have economic useful life of more than one year; 2) such goods or properties are treated as depreciable assets under Section 29(f) [now 34(F) of the till ' .

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C.T.A. EB NO. 266

NIRC of 1997]; and 3) they are used directly or indirectly in the proc:juction or ~ale of taxable good$ or services . . For petitioner's failure to present documents proving that its importation fall within the definition of ca~;Jital goods under Section 4.106-1(b) of RR 7-95, the claimed input VAT payment of P21 ,996,318.00 allegedly attributable thereto cannot be granted."

A Concurring and Disse'nting Opinion was rendered by the Honorable ' Presiding Justice Ernesto D. Acosta, 3 Chairperson of the First Division of this C:ourt, stating his position that peti~ioner .shouid be. entitled to the tax refund or tax credit of the_ amount of its.unutilized input VAT. attributable to its zero-rated sales considering that: "...

( 1) pertinent provision~ of the 1997 Tax Code do not require. imprinting of the word "zero-rated"; (2) the absence of the term "zero-rated" in the invoice does not affect the admissibility and competency of the same as evidence in support of its refund claim; (3) assuming the propriety of imposing the alleged requirement to imprint the word "zero- rated" in· the invoice, the· invalidation of the same and the denial of the refund claim are not the legally imposable penalties for failure to meet such alleged requirement; and (4) the other equally valid pieces of evidence presented and formally offer~d are sufficient proof to justify the grant of the VAT refund claim attributable to its zero-rated transactions. Xxx XXX XXX The High Tribunal in the recently promulgated case of Commissioner of Internal Revenue vs.

Seagate Technology (Philippines), G.R. No. 153866, February 11, 2005, pointed out th~ need to focus only on the legally mandated requirements for claims for VAT refund and explained that, A VAT-registered status, as well as compliance with the invoicing requirements (Section 113 (A) of the Tax Code), is sufficient for the effective zero-rating of the transactions of a taxpayer. The nature of its business and transactions can easily be perused from, as already clearly indicated in, its VAT registration papers and photocopied documents attached, thereto.

xxx.

Administrative convenience cannot thwart legislative mandate." 'Ibid, Docket, pp. 88-92. . . ' ~ J i~ 0 I ~

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C.T.A. EB NO. 26RtL

' Petitioner filed through registered mail its Motion for Reconsideration on November 2, 20064 seeking a reversal of the Decision of the Court in ' Division but the same was denied in the subject Resolution promulgated on January 11, 200,7. 5 Hence, this recourse before the Court En Bane pray1ng that the assailed Decision ana Resolution dated October 11, 2006 and January 11, 2007, resp·ectively, be reversed and set aside, and in lieu thereof, a new ' one be rendered granting petitioner's claim for refund I issuance o(Tax · Credit Certificate in the total amount of P52,809,939.93 representing its exc·ess and unutili?:ed input VAT incurred for the second quarter of 1999. I, , These are the grounds relied upon by petitioner in the instant Petition for Review, to wit:

"GROUNDS I.

'THE FIRST DIVISION Q~ THE HONORABLE COURT OF TAX APPEALS ERRE,D IN DENYING PETITIONER'S CLAIM FOR REFUND OR ISSUANCE OF TAX CREDIT CERTIFICATE ON THE BASIS OF NON-EXISTENT GROUNDS, THAT IS, ON

ALLEGED VIOLATION

OF INVOICING REQUIREMENTS. II.

THE FIRST DIVISION OF THE '·HONORABLE COURT OF

TAX APPEALS ERRED IN INVALIDATING AND DENYING

OU.TRIGHT THE CLAIM FOR REFUND OF THE PETITIONER,

THE SAME

BEING

NOT AMONG

THE PENAL TIES PROVIDED FOR UNDER ARTICLE 264 OF THE TAX CODE.

Ill.

THE FIRST DIVISION OF THE HONORABLE COURT OF

TAX APPEALS ERRED IN NOT GRANTING PETITIONER'S

·~ Annex ''E", Docket, pp. 93-124. ~ , Annex 'T', Docket, pp. 125-133. ' 0

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CLAIM FOR REFUND ON ITS IMPORTATION OF CAPITAL

GOOOS"6

1. THE ISSUES The issues in this petition,. based on the grounds submitted by petitioner, are summarized as follows: A.

Whether or not p·etitioner violated the invoicing requirement by not reflecting its BIR authority to. print, TIN-VAT number and the imprinted ' word "zero-rated" in its export sales invoices and thus operating to forfeit its entitlement to a tax refund I credit of its unutilized input VAT attributable to its zero-rated sales; and ' B.

Whether or not petitione'r was able to prove, through documentary evidence, that items purchased were properly classified as capital goods or properties in order to support its claim for refund or issuance of tax credit certificate for its input VAT on ·imported I locally purchased capital equipment.,

PETITIONER'S ARGUMENTS

According to petitioner, the Co~rt'a quo fquf.ld and confirmed that its export sales properly fall within the export sales transactions .subject to zero percent (0%) VAT referred to under Section 106(A)(2)(a)(1) of the NIRC of 1997.

And for input VAT attributable 'to zero-rated export sales to be refunded, what the NIRC of 1997 requires, specifically the aforementioned section, is for the export sales to be zero-rated export. And to be zero- rated, th~ sale must comply with the following requisites: "xxx sale .and actual shipment of goods from the Philippines to a foreign country; xxx an~ " Docket, p. 17.

C.T.A. EB NO: 266 paid for in acceptab)e foreign currency and accounted for in accordance with the ru,les and regulations of the Bangko Sentral ng Pilipinas (BSP)". 7 Petitioner further argues that the provisions under the NIRC of 1997, particularly Sections 113, 237 and 238, do not require the taxpayer to reflect its .authority to print in its invoices and failure to print such authority is not penalized by any law or statute such that the invoices which do not contain the BIR authority for petitioner to print its sales invoices are rendered inadmissible in evidence. Further, there is allegedly nothing in the said provision that requires the imprinting of the word "zero-rated" on sales invoices. To quote:

"Sec. 113. Invoicing and Accounting Requirements for VAT-Registered Persons.- (A) Invoicing Requirements.- A VAT-registered person shall, for .every sale, issue an invoice or receipt. In addition to th~ information required under Section 237, the following information shall be indicated in the invoice or receipt:

(1) A statement that the seller is a VAT registered . person, followed by his taxpayer's identification number; and

(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. xxx" "Sec.

237.

Issuance of Receipts or Sales or Commercial Invoices. - All persons subject to an internal revenue tax shall, for each sale or transfer of merchandise or for services rendered valued at Twenty-five pesos (P25.00) or more, issue duly registered receipts or sales or commercial invoices, prepared at least in duplicate, showing the date of transaction, quantity, unit cost and description of rnerchandise or nature of service: Provided, however, That in the ~case of sales, receipts or transfers in the amount of One Hundred Pesos (P100.00) or more, or regardless of amount, where the 7 Docket, p. 27.

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C.T.A. EB NO. 266

'I sale or transfer is made by a person liable to value-added tax to another person also liable to value-added tax; or where the receipt is issued to cover payment made as rentals, commissions, compensations or fees, receipts or invoices shall be issued which shall show the name, business style, if any, and address of the purchaser, customer or client; Provided, .. further, That where the purchaser is a VAT- registered person, in addition to the information· herein req'uired, the invoice or receipt shall further show the Taxpayer Identification Number (TIN) of the purchaser." "Sec.

238.

Printing of Receipts or Sales or Commercial, Invoices. - All persons who are engaged in bu.siness shall secure from the Bureau of Internal Revenue an authority to print receipts or sales or commercial invoices before a printer can print the same. No authority to print receipts or sales or commercial invoices shall be granted unless the receipts or invoices to be printed are serially numbered and shall show, among other things, the name, business style, Taxpayer Identification Number (TIN) and busines.s .address of the person or entity to use the same, and ~uch other information that may be required by rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner.

All persons who print receipt or sales or commercial invoices shall rnaintatn a logbook/register of taxpayer who availed of the\r printing services. ·The logbook/register shall contain the following information:

(1) Names, Taxpayer Identification Numbers: of the persons or entities for whom the receipts or sales or commercial invoices are printed; a.nd ' .

' . (2) Number of booklets, number of sets per booklet, number of copies per set and the serial numbers of the receipts or invoices in each booklet." Petitioner asserts that what the above provisions require 1s the issuance of a "duly registered receipt' 1 for sale o'f goods or services. The only provision where the requirement of reflecting "zero-ratea" on the VAT invoice or receipt can get it's authority from is Revenue Regulations No. 7- , .

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95, the pertinent portion of which provid~~: _,j .

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C.T.A. EB NO. 266

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~ "SECTION 4.108-1.

Invoicing Requirements - All VAT-registered persons shall, for every sale or lease of goods or properties or services, issue duly registered receipts or sales or commercial invoices which must show:

1. the name, TIN ~nd address of seller;

2. date of transaction;

3. quantity, unit cost and description of merchandise or nature of service;

4. the name, TIN, business style, if any, and address of the VAT-registered purcha.s~r. customer or client; 5.

the: word ",zero rated" ·,imprinted on the invoice covering zero-rated sales; and · · 6. the invoice value or consideration." Petitioner emphasizes that the above-quoted provision is merely a regulation designed , for the sole and lir:nited objective of implementing a very exact law. A$ it has been long-established by the Supreme Court, the rule is that administrative rules and regulations cannot expand the letter and spi~it of the law they seek to enforce. Suyh rules and regulations should be corfined and limited by the power conferred by the legislature. With regard the requirement that the TIN-V of the petitioner should be imprinted in the face of the invoice, it states that failure to indicate this information is also not fatal to its claim' for refund or tax credit. Petitigner further submits that imprinting of the TIN-V applies only to )~1 J1· domestic or locai sales considering that the seller's output tax, which is the input tax on the part of the local purchaser, may be claimed by the latter as a credit against its own output VAT. Since petitioner exports all Qf its finished products to a non-resident foreign purchaser, the purpose of .

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imprinting its TIN-VAT number becomes irrelevant because the transaction · involved are zero-rated export sales and the foreign buyer is not liable for input VA~ and thus,, not entitled as well to input VAT refund.-"~ ,,·, '25~ ~ J ~-- \ i l j \ .1· DECISION C.T.A. EB NO. :266 Page II of:29 With respect to the issue regarding the Court in Division's denial of its claim for input taxes arising from importation of capital goods or properties, petitioner mainta~ns that the document~ that it has submitted provin,g the importation of capital goods is enough to show that the goods imported were indeed capital goods. And that it need not present the ledger::;, books, among other in proving that the goods imported were capital goods.

Further, th~ law defines capital goods as to include even thosEC goods which are indirectly used .in the production or sale of taxable goods or services. Therefore, the input VAT paid by it on capital goods that were indirectly used in the production or sale of taxable goods or services are refundable.

RESPONDENT'S COUNTER-ARGUMENTS

Respond~nt, in his . C()mment, stresses that the 1nvotc1ng requirements as stated in the NIRC of 1997 and more specifically in Revenue Regulations No. 7-95 must be faithfully complied with before any taxpayer's claim f~r refund or credit can be granted. Moreover, the omission· of the word "zero-rated" and its TIN-VAT number on the face of the invoice is a patent violation of Section 4.108-1 of Revenue Regulations No. 7-95 that explicitly requires that these details be imprinted on the invoices covering zero-rated sales. Respondent's. assetiion allegedly finds support 1n Revenue Memorandum Circular No. 42-2003 (Clarifying Certain Issues Raised Relative to the Processing of Claims for Value-Added Tax [VAT] Credit/Refund), pertinent portion of the said circular provides: .

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C.T.A: EB NO. :266

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xxxx ., If the ciJim for refundfrCC is based on the existence of zero-rated sales by the taxpayer but it fails to comply with the invoicing requirements in the issuance of saJes invoices (e.g. failure to indicate the TIN), its claim for tax credit/refund of VAT on its p~rchases shall be denied considering that the invoice it is issuing to its customers does not depict its being a VAT -registered taxpayer whose sales are classified as zero- rated sales. Nonetheless, this treatment is without prejudice to the right of the taxpayer to charge the input taxes to the appropriate expense account or asset account subject to depreciation, whichever is applicable. Moreover, the case shall be referred by the processing office to the concerned BIR office for verification of other tax liabilities of the taxpayer."

Furthermore, respondent contends that petitioner's claim for refund or credit of alleged input taXEfS paid on capital goods was correctly denied by the Court in Division on the ground that it was petitioner's legal duty to present evidence that the items in question were capital goods. He stressed that petitioner merely had to present documents showing that the goods have the chgracteristics mentio~ed under Section 4.106-1 (b) of Revenue R_egulations No. 7-95, but it failed to do so.

THE COURT EN BANC' S RULING

The pertinent provisions of the NIRC of 1997 in the instant petition are. as follows: Sedion 1 06(f\)(2)(a)(1) ·.on VAT on the sale of goods or properties; particularly with respect to export sales; and Section 112 (A) and (B) on Refunds or Tax- Credits of Input Tax arising from domestic purchases of taxable goods and services and importation of goods 1 capital equipment in relation with Zero-rated or Effectively Zero-rated Sales. I These provisions provid"'j' . •J "'J o.) (., I j l l I

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·1 j DECISION C.T.A. EB 1;10. :266 Page 13 of:29 "Section 106. Value-added Tax on Sale of Goods or Properties.

(A) Rate and Base of Tax. -- xxx xxxx '

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

(a) Export Sales.--The term 'export sales' means: (1.) The sale and actual shipment of goods from the .Philippines to a foreign country, irrespective of any shipping arrangement' that may be agreed upon which may influence or determine the transfer of ownership of the goods so exported and paid for in acceptable foreign currency or its equivalent in goods or services, and accounted: for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP)." I "Section 112. Refunds or Tax Credits of Input Tax.- (A) Zero-rated or Effectively Zero-rated Sqles. - Any . VAT-registered person, ·whose sales are zero-rated or effectively zero-rated may within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, . except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales under Section 1 06(A)(2)(a)(1 ), (2) and (B) and Section 108 -(8)(1) pntJ (2), th~ acceptable foreign currency exchange proceeds· · thereof had been duly accounted for in accordance with the rules and regula.tions of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer· is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods or properties or services, and the am.ount 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. (B) Capital Goods. - A VAT-registered person may apply for the issuance of a tax credit certificate or refund of input taxes paid on capital goods imported or locally purchased, to the extent that such input taxes have not been applied against output taxes. The application may be made only within two (2) years after the close of the taxable quarter when the importation or purchase was made." .

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C.T.A. EB NO. 266

' Based on the· afore-quoted provisions, export sales, or sales outside the Philippines, are subject to VAT at zero percent (0%) rate, if made by a VAT-registered person. When appliee:l.to the tax base, the zero percent (0°io) rate obviously results in zero tax liability chargeable against the purchaser. The seller of such, transactions charges no output tax, but it can claim a refund or tax credit certificate for the VAT previously charged by suppliers, provided the following requi.sites are· cornplied with:

(1) the taxpayer Is engaged in sales which are . zero-rated or effectively zero-rated;

(2) the taxpayer is VAT-registered;·

(3) the claim must be filed within two years after the close of the taxable quarter when such sales were made;

(4) the creditable input tax due or paid must be attributable to such sales, to the extent that such input tax has not been applied against the output tax; and

(5) in case of zero-rated sales under Section 1 06(A)(2)(a)(1) and· (2), Section 1 06(8), and Section 1 08(8)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with BSP rules a~d regulationsa I The Court in Division, in its assailed Decision, held that petitioner may be entitled to refund or tax credit when it found that the documents submitted "proved th~t petitioner's products were actually sold and shipped abroad and in consideration thereof, petitioner received foreign currency .

I ' 8 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No. 166732. April 27.2007 (522 SCRA 657). .

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C.T.A~ EB NO. 266 payments, which were inwc;lrdly remitted in accordance with the rules and regulations of the BSP. Thus, it said that these export sales may properly fall within the export sales transactions subject to zero percent (0%) V (\ T referred to under Section 1 06(A)(2)(a)(1) of the NIRC of 1997, as amended, · xxx."

However, notwithstanding said finding, petitioner's claim was denied by the Court in Division for. its failure to comply with the invoicing requirem~nts as provided under Sections 113, 237 and 238 of the NIRC of 1997, as well as Section 4.108-1 of Revenue Regulations No. 7-95, particularly on registration of s~l~s or commercial invoices or receipts, failure to reflect authority to p~int or BIR permit number, TIN-V and I or the word "zero-rated" in the face of the invoice or receipt as issued. In line with the recent decision of the Supreme Court in the case of Intel Technology Philippines, Inc. vs. Commissioner of Internal ·. >.Revenue9 , · involving the same. parties, the Supreme Court clarified the same issue involved in the instant petition of whether or not the provision of Section 113, in relation to Section 237 of the N IRC of 1997, ':'las violated by reason of petitioner's failure to indicate the BIR Authority to Print on its sales , ' invoices. The Supreme Court said that · 9 Ibid.

"It is clear from the forego,ing (pertaining to Sections 113, 237 and 238 of the Tax Code, Sectio'n 4.108-1 of RR 7- 95 and Section 19d of RR 2-90) that while entities engaged in business are required to secure from the BIR an authority to print receipts or invoices and to issue duly registered receipts or invoices, it is not required that the BIR authority to prin.t be reflected or indicated therein. Only the following items are required to be indicated in the receipts or invoices: ( 1) a statement that the seller is a VAT- I· .

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. . DECISION C.T.A. EB NO. 266 Page 16of~9 registered entity followed by its TIN-V; (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; (3) date of the transaction; (4) quantity of merchandise;

(5) unit cost; (6) description of merchandjse or nature of service; (7) the name, business style, if any, and address of the purchaser, customer or client in the case of sales, receipt or transfers in the amount of .P.1 00.00 or more, or reg·ardless of the amount, where the sale or transfer is made by a person liable to VAT ~o another person also liable to VAT, or where the receipt is issued to cover payment made as rentals, commissions, compensati·OF1S or fees; and (8) the TIN of the purchaser where the purchaser is a VAT-registered person. XXX XXX XXX In any case, the above cited prov1s1ons of iaw and revenue regulations do not provide that failure to reflect or indicate in thEe invoices or receip~s the BIR authority to print, as well as ~he.TIN-V, would result in the outright invalidation of these invoices or receipts. Neither is it provided therein that such omission or failure would result in the outright denial of a claim for tax credit/refund. Instead, Section 264 ·of the Tax Code imposes the penalty of ·fine and· imprisonment for, among others, invoices or receipts that do not truly reflect or contain all the required information, xxx · XXX XXX XXX It bears reiterating that while the pertinent provisions of the Tax Code and the rules and regulations implementing them require entities engaged. iri business. to secure a BIR authority to print invoices or ·receipts and to issue duly registered invoices or receipts, it is not specifically required that the BIR authority to print be reflected or indicated therein. Indeed, what is important with respect to the SIR authority to print is that it has ~een secured or obtained by the taxpayer, and that invoices or receipts are duly registered." (Emphasis Ours) Ap_plying the foregoing jurisprudential pronouncements, this Court re- examined petitioher's documenta·ry evidence, as submitted before the Court in Division, to determine whether or not the ?Ubject sales can qualify as zero-rated sales. A~d after due. verification of the invoices I receipts forming~ .· 'i 1 ,J '· .

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DECISION ·\l~iil'~iJ~(.~>:.; ... c.T.A. EB NO. 266 Pagel7of29 part of th,-cords.:of the case under .review, We found that out of the de.clared .zero-rated sales of petitioner of P1 ,81 0, 154,723.64, only the f ·II b t · t'1ated Tlll·s amount is amouht of P1 ,014,477,202.26 was u y su s aA .

broken down as follows: Invoice Exll.

Invoice Date No.

P12-P14 5-Apr-99 41 '19 P15-P17 6-Apr-99 4120 P18-P20 7-Apr-99 -;t121 P22-P24 7 -Apr-99 4122 P59-.P61 20-Apr-99 ;t -1 ~- • P98-P1.p£ ~ -· ·t-'·-::18 4165 . , u-t'" I 22-Apr-99 "4168 P113-P115 23-Apr-99 4169 P155-P157 26-Apr-99 4186 P158-P160 26-Apr-99 4186-a P161-P163 27-Apr-99 4187 P164-P166.

27 -Apr~99 4189 P170-P172 28-Apr-99 4192 P173-P175 29~(\pr-99 41;33 . P176-P178 29-Apr-99 4194 P179-P181 29-Apr-99 4195 P182-P184 30-Apr-99 4196 (:,~:: +. f· •:· Subtotal - April ~~ , • ~!,rp• 1 ,, :J . · -~ 1 '' S j;fP201-P203 3-May-99 4208 .

. ........ P206-P208 7 -May-99 4212 P224-P226 9-May-99 4222 P280-P28~ 14-May-99 4237 P284-P286 15-May-99 4239 P287-P289 15-May-99 4240 P326-P328 21-May-99 4256 P329-P331 21-May-99 4257 P332-P334 21-May-99 4258 ., P353-P355 24-May-99 4273 P587-P589 24-May-99 7270 ·. P357-P359 28-May-99 4275 P360-P362 28-May-99 4276 P366-P368 30-May-99 4279-a P369-P371 31-May-99 4280 Subtotal- May P393-P395 2-Jun-99 4284 P413-P415 1 0-Jun-99 4292 P420-P422 6-Jun-99 4297' P423-P425 6-Jun-99 4298 10 Exhibit "P'', CTA Case No. 6310. Amount.in USD 110,430.26 411,876.38 165,697.20 1 ') ':J.'JJ·"<~ 3,035,956 00 6,521 04 611,916.46 2,956.18 165,729 60 154,588.89 89,643.84 20,901 77 1,509,407.26 1,212,845 20 1,185.00 13,860.00 671,744.58 9, 907,060.40 805,453.60 80,560.52 450,860.52 268.00 453,177 64 681 '165 26 69,069.21 9,948,058.12 1,270,301.87 9,240.00 1,557.40 890,255.28 359,626.84 134.00 74,628.86 15, 0~4, 357. 12 34,320.76 2,370.00 287,638.16 170,527.61 ' I u ....

Exclla~~e Rate Amount in PllP 38.458 381,005,728 86 37.770 570,113,868.42 - f· ......

j DECISION j C.T.A. EB NO. '266 P<1ge 18 of '29 P426-P428 6-Jun-99 P452-P454 1 0-Jun-99 P473-P475 14-Jun-99 P477-P479 18-Jun-99 P520-P522 20-Jun-99 P523-P525 20-Jun-99 P526-P528 24-Jun-99 'P529-P531 25-Jun-99 P532-P534 25-Jun-99 P535-P537 26-Jun-99 P538-P540 26-Jun-99 P541-P543 26-Jun-99 P581-P583 28-Jun-99 Subtotal- June TOTAL 4300 365,395.67 4305 56"3,607.90 4311 .6,934.61 4314 2,823 54 4331 55,546.30 4332 44,906.57 4333 50,634.54 4334 55,54844 4335 14,951.88 4336 2,328.19 4337 23.80 4338 242 50 4350 18,592.74 1,676,393 21 37.794 63,357,604.98 26,677,810.73 1,014,477 ,2D2.26 The rest of petitioner's claimed zero-rated sales in the amount of P795,677,521.38 with invoices without the word "zero-rated" 11 or without supporting airway pills and e~'port documents 12 are hereby disallowed. Considering that only the sum of P1,014,477,202.2? qualifies as zero-rated sales, it is but proper that only the portion of the claimed input VAT attributable to such qualified zero-rated sales will be considered for 1 ,~,i;f:, ;~·v·•{efund. The rate to be applied· then should be based on the volume of !:~'"~qualified zer'~:.::~:d sales over petitioner·s total declared zero·rated sales. computed as follows:

,fb .· ;~ 1 Sre Mira1~t (Navotas II) Corporation (Formerly: Southern Energy Navotas II Po1ver, Inc) vs. Coimnissioner of Internal Revenue, CTA EB No. 229, September II, 20Q7: Southern Philippines Power ,Corporation vs. Commissioner of Internal Revenue, CTA' EB No. 214, July 31, 2007: Panasonic Communications Imaging Corporation (if the Philippines, (formerly, MATSUSillTA BUSINESS MACl-llNE CORPORATION OF THE PHILIPPINES) vs. Commissioner of Internal Revenue, CT A EB No. '239, May 23, 2007: Kepco Philippines Corporation vs. Commissioner of Internal Revenue, CTA EB No .. 186, May 17, 2007: Kepco Philippines Corporation vs. Commissioner of Internal Revenue, CTA EB No. 174, May 9, 2007: Applied Food Ingredients Co., Inc: vs. Commissioner of Internal Revenue, CT A EB. No. 220, May 7, 2007; Intel Technology Philippines Inc. vs. Commissioner of•lnternal Revenue, CTA EB No. 181, March 27, 2007; and J.R..A. Philippines Inc. vs. Commissioner of Internal Revenue, CTA EB No. 1 '28, January 15, 2007. 12 CTA Case Nos. 6368 and 6480, December 15, 2004, cited in the cases of Mirant (Navotas II) Corporation (formerly Southern Energy Navotas II Povver, Inc. vs. Commissioner of Internal Revenue, CTA Case No. 6418, April II, 2006 (Entr!f or Judgment dated "September 14, '2006) and Takenaka Corp. Phil. Branch VS. Commissioner of.lnternal Rev'en~le, CTA Case No. 675?., January 2007 (Entry of Judgment dated-february 16, 2007). 333 DECISION.

C:I.A. EB.:NO_ 266 Page 19of29 Supported zero-rated sC)Ies Divided by total declared 'zero-rated sales Rate of supported zero-rated sales p 1,014,477,202.26 p 1,810,154,72364 56.04% In a claim for refund or issuance of a tax credit certificate attributable to zero-rated sales, ~hat is to be closely scrutinized is the documentary . substantiation of the input VAT paid, as may be proven by other export .

' ' documents, rather than the supporting documents for the zero-rated export sales 13 .

As petitioner has established by sufficient evidence that it is entitled to a refund or issuance of q ·tax credit certificate. with the existence of qualified zero-rated sales, ~=md in accordance with the requirements of Sections 106 (A)(2)(a)(1) and 112(A)· of the NIRC of 1997, it becomes necessary now for the Court En Bane to re-evaluate the· documentary evidence on record, specifically, petitioner's unutilized input VAT for the second quarter of 1999, to determine whether or not the same has been The p ·· of substantiation of input VAT is necessary to ascertain nd ensure that what will be refunded to the petitioner are only those taxes J· . -);:~~~~l::!~hat have actually been remitted and paid. to the Government, in accordance ( .. :1 with the requirements of the law, and also, to determine whether such input VAT has not yet been utilized by the petitioner in the succeeding quarters . ..

Out of the excess unutilized input VAT being claimed for refund by . petitioner amou~J\ng to P52,809,939.93, the amount of P23,687,908.93 .. ;~lertains to input VAT on domestic purchases of goods and services, whil~ '~~~I til~ ' I ,' r::i:}' Supra, Intel Techn~logy Philippines. Inc. vs. Commissioner of Internal Revenue. .

-~ '" ' t . ·., ' .,If;·.·

I :

L. !.

I I

.. Ji I . 1$!1#2 the re,~ning amount of P29, 122,031.00 consists of input VAT on irnpo~ation of capital goods I equiprnen.t. Anent petitioner's refund claim for input VAT on domestic purchases, the Court commissioned independent CPA (ICPA) verified the voluminous ' supporting documents submitted by petitioner and the ICPA Report 14 showed that out of the totar claimed input VA~ on dome.stic purchases, the amount of P6,404,917.86 should be dis·a·llowed for the following reasons: Missing invoice or official receipt Petitioner is not the actual claimant Incorrect computation of input VAT TOTAL p 5,976,048 68 228,278.61 200,590 57 p 6,404,917.86 Further evaluation, by this Court, of the documents 15 presented reveal that petitioner's claim should again be reduced in the amount of . .

.

. P3,061, 110.11, broken down as follows: Invoice/OR Invoice/OR Ex h.

Supplier Date Number Input Tax 1.) Purchase of services with OR dated outside the period of claim N-4983 Comfac Corpo~ation 1-Jul-99 18462 p 27,272.73 D?ta Center Design Corp. 22-Jul-99 5709/5961 .10,553 64 Oata Center pesign Corp. 22-Jul-99 5712/5961 8,930 00 Data CenterDesign Corp. 22-Jul-99 5706/5961 4.404 55 Data Center Design Corp. 22-Jul-99 5717/5961 5,329.92 Data Cente~,.Oesign Corp 22-Jul-99 5704/5961 4,404 55 Data Center;Design Corp. 22-Jul-99 5707/5961 4.404.55 Data Center.Design Corp.\ 22-Jul-99 5705/5961 4,404.55 Data Center. Design Corp. I 22-Jul-99 5715/5961 5,329 92 . .Data Center;()esign Corp,, 22-Jul-99 5713/5961 8,930.00 Data CenterDesign Corp. 22-Jul-99 5714/5961 8,930.00 Data Cent~r Design Corp. 22-Jul-99 5711/5961 8,930 00 Data,y~~~~!Wr·~sign·Corp, 22-Jul-99 5721/5961 5,329 92 Data Ceht~~';:!P:~sign Corp; 22-Jul-99 5719/5961 5,329.92 Data Cent~r;:pesjgn Corp. 22-Jul-99 5718/5961 5,329.92 Data Center Design Corp. 22-Jul-99 5720/5961 5,329.92 Data Center. Design Corp i 22-Jul-99 5708/5961 10,553.64 Data c ign Corp .• 22-Jul-99 5710/5961 10,553.64 ign Corp.

22-Jul-99 5703/5961 5,138.64 ign Corp.

22-Jul-99 5702/5961 5,138.64" xhibit ''Q", CT A Case No .. 63 I 0 . . 1" ]ipits ''N-N5033", CTA Case No. 6310. ,~,: ]: - ... , ..

335 Page 21 of29 N-1109 Data Center Design Corp 9/23/1999 5716/6168 5,329 92 N-1167 Digital Equipment Filipinas Inc. . 1-Jul-99 7054 95,407 83 OMS Engineering & Services 1-Jul-99 12357/6466 1,045.45 OMS Engineering & Services 1-Jul-99 12356/6466 345.46 N-1233 OMS Engineering & Services 1-Jul-99 12399/6466 13,09091 OMS Engineering & Service.s 1-Jul-99 '12396/6466 3,636 36 OMS Engineering & Services 1-Jul-99 12397/6466 3,381.82 N-1239 OMS Engineering & Services 8-Jul-99 12361/6468 581.82 OMS Engineering & Services 29-Jul-99 12390/6471 2,072 70 N-1284 OMS Enginyering & Services 29-Jul-99 12391/6471 26,381 82 OMS Engineering & Service::; 29-Jul-99 12389/6471 22,609.09 OS Steel Factors & Construction 1-Jul-99 1070/1154 18,000 00 DS Steel Factors & Construction 1-Jul-99 1604/1154 625.00 N-1292 DS Steel Factors & Construction 1-Jul-99 1610/1154 450.00 DS Steel Factors & Construction 1-Jul-99 1613/1154 625 00 DS Steel Factors & Construction 1-Jul-99 1632/1154 625.00 ~-1571 Electro Systems Industries Corp 29-Jul-99 10109/15936 20,809.09 Electro Systems Industries Corp. 29-Jul-99 10105/15936 6,000 00

N-157 4

Electro Systems Industries Corp. 1-Jul-99 10013/15831 1,07273 Electro Systems Industries!, Corp. 1-Jul-99 9202/15831 1,072.73 N-1640 Flik Industries Inc.

15-Jul-99 1723/1419 4,453.18 Flik Industries Inc.

15-Jul-99 1721/1419 7,600 00 N-1657 Foodmach Incorporated 1-Jul-99 19243/23286 1,881 82 N-1661 Fortress Consultancy Group,lnc. 15-Jul-99 607/559 4,409.09 N-2412 Globe Telecom Inc.

8-Jul-99 146410.6 440,663 80 N-2867 Genetron Engineering Supply & 8-Jul-99 3052 956 37 Services Co., Inc.

N-2873 Genetron Engineering Supply & ·15-Jul-99 3056 1,71881 Services Co., Inc.

' N-2870 Genetron Engineering Supply & Serv'ices Co., Inc.

' 22-Jul-99 3058 1 ,236 36 N-2897 GRAJM Engineering 1-Jul-99 534 19,263.64 N-2899 G.RAJM Engineering 16-Sep-99 535 99545 ·<:e'Gard All Electronic Security 29-Jul-99 7672/5469 1,109.54 .:.9x;;;terr.~ !rJ.~·til/ . · . · ..

·· 'Gt;l~f.~\~.ll~f.RJ 1~~tronlc Secupty 29-Jul-99 7671/5469 2,15545 Systems Inc."

G~ardAII E:lectronic Security 29-Jul-99 7673/5469 6,16505 . ~~ i,:\~#.w~,;n!3.·1no.::'·> ... ,, .. I· :;.:.

! ':':@'riar~:Ait'p[~dronic Security 29-Jul-99 7674/5469 4,965 61 Systems I ric.

•'Guard All Electronic Security 29-Jul-99 7083/5469 60.50 ·Systems Inc.

~. Gyard All Electronic Security ., ·Systems Inc.

· · '22-Jul-99 7538/5481 12,19018 1: B:~ElC9, .. 1j~h:~l~ctron ic Secur,ity 1-Jul-99 7513/5391 7,090 90 ~g\:1)' '•' J,pp,':

.

.,. j .~'If:,,/ • ·· . :, I Electronic SecuritY 1-Jul-99 7533/5391 548.19 1{' · Systems Inc JE Automated Parts Enterprises 8-Jul-99 662 2,110.91 .:'.)!;:Automated Parts Enterprises 28-Jul-99 666 1,309.09 .·r•i;tlJ>:F-3027 ,J.E Automated Parts Enterprises , 26-Aug-99 .670 1,819.00 , ... ";r!· ,, ~ ·.:: ·..

if~l'.~2J7 , i ;f>rome Construction · 22-Jul-99 191 2,909.09 •·:<'·~~fo~4.i:r·; ;.Lia~g Chi Industry Co Ltd 29-Jul-99 3148 7,000 00 · :~~~.~~401 tyl •' , oodcraft Manufacturing 7-Jul-99 4707' 12,157.2t ·, ::;~; .,,\,. '~~~''·':t, " .' :

' ' i.i~i~ilJ~~~~~ .. 336 .. pECISION :r.A EB NO. ?.66 ... age 22 of19 - N-3432 Metro Engineering & Supply Co. 15-Jul-99 2362/1682 4,54545 Metro Engineering & Supply Co. 15-Jul-99 2363/1682 2,76773 NCR Corporation Philippines 15-Jul-99 332602/285107 20,874.96 N-3464 NCR Corporation Philippines 15-Jul-99 332601/285107 20,874 96 RCF Contractor& Services 15-Jul-99 525/637 1,500 00 N-3902 RCF Contractor & Services 15-Jul-99 524/63T 2,181.82 N--3905 RCF Contractor & Services . 22-Jul-99 527/638 63,154 55 N-3907 RCF Contractor&, Services 28-0ct-99 517/645 2,909.09 N-3907 Skyline Food Services 1'-Jul-99 3362 242.00 N~3907 Skylir:e Food Services 1-Jul-99 3363 8,927.27 Tricon Technical Services Inc. 15-Jul-99 1985/587 17,13115 N-4464 Tricon Technical Services Inc. 15-Jul-99 1998/587 10,56741 Tricon Technical Services Inc. 15-Jul-99 1990/587 12,960.82 N-4469 Tricon Technical Services Inc. 22-Jul-99 1407/590 2,335.97

N-4639 ·

Xybernetiks Softwa~e Devt & Control 8/5/1999 0121.· 6,639.36 ASB Realty Corp.

7/1/1999 99-05- 12,360.66 11/15155 N-4672 ' 99-05- ASB Realty Corp.

'•7/1/1999 25/15155 15,65682 N-470~ OS Steel Factors & Construction 7/1/1999 1154 16,20000 N-4777 Micro-Biological Laboratory, Inc. 7/29/1999 19707 12,272.73 N-4803 Reuters Limited 9/2/1999 22496 11,992.50 N-4925 NCR Corporation Philippines 3/30/1999.

285372 13,514.69 Sub-total p 1,182,070.62 2) Purchase of goods with invoices dated outside the period of claim N-686 Bryan Distributors & Services, Inc. 5-Mar-99 13143 p 312.70 N-161 Alta-Meco, Inc.

4-Mar-99 67366 11,05338 N-719 Camden Industries, Inc. 4-Jan-99 40632 10,778 24 N-803 Comfac Corporation 29-Jul-97 13370 2,004.55 Comfac Corporation 12-Jan-98 14733 2,004.55 Comf<jC Corporation

i. -- lj~ :

,30-Nov-96 11953 2,810.55 Comfac Corporation .,, .

• .. 26-Dec-96 12137 2,129.55 j Consolidateq lndustriai-Gqsf:!s Inc. 11-Mar-99 112744 4,717.30 ~~·~~~1-®;~·?!i~::~~~:~~::: ~:::: :~~ 30-Mar-99 67503 70,377.50 27-Mar-99 67482 69,051 61 j;:

N;§O~R c6nsolidated Industrial Gases Inc 27-Mar-99 67476 2,566 39 Ji.· :.•~iMfi:lt"Consol~dated lndustnal GC)Jses Inc. 30-Mar-99 113420 1,363.64 I · N,r:.B.~. :; · Consolidated lndustnal Gases Inc. 31-Mar-99 113430 1,090.91 ' ;1.:·;-', .. l. '· N~8~3 Consolidated Industrial Gases Inc. 29-Mar-99 113336 4,71727 .: N~834· Consolidated Industrial Gases Inc. 31-Mar-99 67595 43,433 50 .. : .~, . .

.

· N-835

Consolidated Industrial Gases Inc. 31-Mar-99 157405 5,64544 '· .

.... { N-862 Co"nsolidated Industrial Gases Inc. 4-Dec-98 158327 "1 ,890.91 Y•'. N~863 Consolidated Industrial Gases Inc. 28-Nov-98 158034 1,89091 N-864 Consolidated Industrial Gases Inc. 9-Dec-98 109118 1,41818 Consolidated Industrial Gases Inc. 9-Dec-98 109119 1,418.18 Consolidated Industrial Gases Inc. 1-Dec-98 158087 1,41818 .,:9~q.~q;!icjated Industrial Ga1es Inc 1-Dec-98 158086 1,418 18 · .Consolidated lndustnal Gases Inc. 14-Dec-98 109305 1,418.18 Consolidated Industrial Gases Inc 17-Dec-98 109394 1,418.18 Consolidated.l.ndustrial Gases Inc. 17-Dec-98 •;·~: ) '' .

109395 1,418.18 Consolidated ln\]ustrial Gases Inc. 14-Dec-98 109304 .. 1,418.18 Consolidated Industrial Gases Inc 21-Dec-98 109510 1,418 18 r ' ! .·•·· 337 I.

' :I !'I;

,.'~~ y ... \·.;;~ ':~ .. ~·. ,;

DEC IS I ON;;;:.;:,~,~,~·,li,.:,, · .

A'. EB NO. 26~\\'' N-881 N-882 N-883 N-884 N-885 N-886- N-887 N-888 N-889 N-890 N-891 N-892 N-893 N-894 N-895 N-897 N-898 N-900 N-903 N-904 N-905 N-906 N-907 Nc908 N-909 N-910 N-911 N-912 N-995 23 of29 Consolidate Con"solidate . Consolidated I Consolidated lnc{ustrial Gases Inc. Consolidated Industrial Gases Inc. Consolidated Industrial Gases Inc. Consolidated Industrial Gases Inc. Consolidated Industrial Gases Inc. Consolidated Industrial Ga~es Inc. Consolidated Industrial Gases Inc. Consolidated Industrial Gases Inc Consolidated Industrial Gases Inc. Consolidated Industrial Gase~ Inc. Consolidateq Industrial Gases Inc. Consolidated Industrial-Gases Inc. Consolidated Industrial Gases Inc. Consolidated Industrial Gases Inc. Consolidated Industrial Gases Inc. Consolidated Industrial Gases Inc Consolidated Industrial Gases Inc. Consolidated Industrial Gases Inc. Consolidated Industrial Gases Inc. Consolidated Industrial Gases Inc. Consolidated Industrial Gases Inc. Consolidated Industrial Gases Inc. Consolidated Industrial Gases Inc. Consolidated Industrial Gases Inc. Consolidated Industrial Gases Inc. •. ·., .: ... ,,N~1075 f:''·~~N~-1157 Cornersteel Systems Corporation Dakilq ,Trading Corp. Daui~Thdustrial Sales ' ,, · ·~·. "1 ,159 ,J?esigners World Trade Center 'h.~,d.i'~~".§'tr,~Y C:all C~ .. JXJ.[Tl,Fhil~.,lf)c,: N-1320 •;;,;~t~~?sy Call Cf?n1m. Phils.C!Hc:o N-1321 Easy Call Comm. Phils. lric, 1 c~.l;mn- Phils lrJc. 1 co~m. Phils. lric;

Call Comm. Phils. Inc~ Call Comm. Phils. lnb, . Phils. lrici Phils_ 10c(' ndising Merchancjising Merch~.ffidising J'f'~~~ ".I."

I' 26-Feb-99 26-Feb-99 12-Mar-99 · 9-Mar-99 22-Feb-99 19-Feb-99 16-Feb-99 1 0-Feb-99 6~Mar-99 9-Mar-99 12-Mar-99 2-Mar-99 , 13-Feb-99 · .. 26-Mar-99 26-Mar-99 4-Feb-99 4-Feb-99 21-Dec-98 8-Jan-99 8-Jan-99 15-Jan-99 25-Jan-99 25-Jan-99 30-Jan-99 2"Feb-99 22-Jan-99 18-Jan~99 7-Jan-99 29-Mar-99 4-Feb-99 29-Mar-99 26-Mar-99 19-Mar-99 12-Mar-99 19-Mar-99 19-Mar-99 19-Mar-99 19-Mar-99 26-Mar-99 31-Mar-99 31-Mar-99 30-Mar-99 30-Mar-99 31-Mar-99 -26-Mar-99 26-Mar-~9 26-Mar~99 26-Mar-99 26-Mar-99 26-Mar-99 26-Mar-99 26-Mar-99 26-Mar-99 33~ 111571 1 ,418.18 111572 1,418.18 112796 1,418.18 112647 1,890.91 111414.

1,890.91 111318 1,890.91 111186 1,890.91 110986 1,890.91 112579 1,890.91 112667 945.45 112797 1,418.18 111695 1,890.91 1-11119 1,890.91 113266 1,890.91 113295 94545 '11 0826 1,418.18 110825 1,418.18 109509 1,418.18 109862 1,418.18 109861 1,418.18 110152 1,41818 110458 ~,418.18 110459 1,418.18 110628 1,890.91 110716 1,890.91 110353 1,89091 110209 1,89091 109819 1,890 91 01498 34,150.35 24508 10,750 55 0071 89,272.72 995 413.82 163442 383.64 163423 767 27 163443 383.64 163446 383.64 163444 383 64 163445 1 '150 91 157620 3,060.00 163481 1,102.91 163478 1,102.91 4894~ 509 09 4893 3,340.91 4899 463.64 2075 879.90 2062 365.60 2092 100.00 2080 293.20 2064 1,009.05 2081 536 00 2156 716 60 2088 408.25 2154 25510~

C.T.A. EB NO. 266

N-1394 Eker Merchandising N-1395 Eker Merchandising N-1396 Eker Merchandising N-1397 Eker Merchandising N-1398 Eker Merchandising N~1399 Eker Merchandising N-1400 Eker Merchandising N-1401 Eker Merchandising N-1402 Eker Merchandising N-1403 Eker Merchandising N-1404 Eker Merchandising N-1405 Eker Merchandising N-1406 Eker Merchandising N-1407 Eker Merchandising N-1408 Eker Merchandising N-1409 Eker Merchandising N-1410 Eker Merchandising N-1411 Eker Merchandising N-1412 Eker Merchandising N-1413 Eker Merchandising N-1414 Eker Merchandising N-1415 Eker Merchandi$ing N-1416 Eker Merchandising.

N-1417 Eker Merchandising N-1418 Eker Merchandising N-1419 Eker Merch,~J:)r~islng N-1622 Festo Inc ·.;::•H'I;, .

~i ~.\1\. C' N-]629 Festo Inc. , ' .

~~i~\~N '\ '1.''· I:;

··'!:_:::!

24-Mar-99 26-Mar-99 26-Mar-99 26-Mar-99 26-Mar-99 26-Mar-99 26-Mar-99 26-Mar-99 26-Mar-99 26-Mar-99 26-Mar-99 26-Mar-99 26-Mar-99 26-Mar-99 26-Mar-99 26-Mar-99 26-Mar-99 26-Mar-99 26-Mar-99 26-Mar-99 26-Mar-99 26-Mar-99 26-Mar-99 26-Mar-99 30-Mar-99 29-Mar-99 31-Mar-99 5-Mar-99 1 0-Feb-99 19-Mar-99 29-Mar-99 31-Mar-99 '·ii'A(~i~fi;[ 11-Mar-99 19-Mar-99 'i• 29-Mar-99 23-Jan-99 24-Mar-99 '11-Mar -99 f29-Dec~98 18-0ec-98 29-Dec-98 24-Mar-99 30-Mar-99 4-Mar-99 5-Aug-99 5-Aug-99 5-Aug-99 19-Nov-98 3-Dec-98 5-Mar-9~ · · 29-Mar-99 13-Jan-99 2070 155.85 2071 455.75 2084 . 826.00 2155 208.58 2065 394.25 ' 2083 76.13 2090 50.00 2153 240.10 2085 57.60 2072 94 95 2079 273.00 2063 114.25 2073 440.65 2086 52.99 2089 53 75 2087 97.00 2082 456 33 2078 70.23 2151 442.00 2152 59895 2076 104.23 2074 96.10 2077 .· 1,075.15 2091 1,105 00 2099 492.68 2093 522.00 0068754 132.14 0068531 6,792.50 1660 9,138.86 1678 27,224.46 13778 3,201.65 13780 27,272 72 0002 6,089.52 1064 5,784.73 028.

7,265.81 0755 568.18 0871 15,90910 0847 2,727.28 2948 4,14145 2932 4,142.36 2945 4,241.82 5424.

18240 5427 58,348 10 0272 16,199.54 11870 1,062.18 11871 2,299.55 11876 2,090 91 19015 57,579 72 38441/38442 17,996 27 £10133 10,099 10 4611 1,144.54;

5634 1,779.00 PECISION C.T.A. EB NO. 266 Page 25 of29 N-4287 N-4288 N-4289 N-4290 N-4291 N-4293 N-4294 N-4384 N-4417 N-4559 N-4560 N-4561.

N-4563 N-4640 N-4642 N-4666 Technico Techno Molds Inc.

Techno Molds Inc.

Techno Molds Inc.

Techno Molds Inc.

Techno Molds Inc.

Techno Molds Inc.

Tom~Eie KT Electrical Trading Tratek Asia Inc.

Versatrade Marketing Versatrade Marketing Versatrade Marketing Versatrade Marketing Zorin System Zorin System Alert 1, Inc.

Sub-total 3.) Purchase of services without suppoH,ing OR N-5014 N-5015 N-2906 N-2907 N-290.8 N-2909 N-2910 N-2911 N-2912 ~~~.~913 N-2914 N-2915 N-2916 N-3029 w~~,~-tJ-4953 '·1 N-4954 Genetron Engineering Supply & Sefvices Co., Inc.

Genetron Engineering Supply & Services Co., Inc: , ''·' Inter Tek Testing Services Inter Tek Testing Services Inter Tek Testing Services Inter Tek Testing Services Inter Tek Testing Services Inter Tek Testing Services' Inter Tek Testing Services ,, Inter T ek Testing Services \"'l\h' ' .

.

Inter Tl'l.k T!",st.in(;J Services Inter 'f.·~~~kt Ti~sting Services · .. ,:!~~.,-,H:~.;:·,•·· International Elevator~ Equip Inc. Jeeps Enterprises Teradyne ~.~i.ls. Ltd. Teradyne Phils. Ltd.

Teradyne Phils. Ltd.

Teradyne Phils.· Ltd. Teradyne Phils. Ltd Teradyne Phils. Ltd.

Teradyne Phils. Ltd.

. Teradyne Phils. Ltd. Teradyne Phils. Ltd.

Teradyne ·Phils. Ltd. .Teradyne Phils. Ltd. · Teradyne Phils. Ltd. Sub-total i 30-Mar-99 24-Mar-99 24-Mar-99 26-Mar-99 24-Mar-99 30-Mar-99 30-Mar-99 31-Dec-98 25-Mar-99 2/12/1999 3/30/1999 3/30/1999 3/17/1999 3/29/1999 3/5/1999 3/22/1999 6-Apr-99 · 6-Apr-99 15-Mar-99 15-May-99 15-May-99 29-Apr-99 29-Apr-99 29-Apr-99 30-Apr-99 15-May-99 8-Ap~-99 9-Jun-99 · 15-Apr-99 15-Apr-99 9/8/1998 10/12/1998 4/12/1999 '3/26/1999 4/26/1999 5/3/1999 4/15/1999 5/24/1999 5/24/1999 4/26/1999 10/12/1998 11/17/1998 · .. !3 1s~ of goods or services \rit~p,qLsupporting invoices or ORs .. ·• ' Bryan Distributors & Services, Inc. · 12-Feb-99 Digital E~uipment Fili8in'ls Inc. 26-Apr-99 Liang Ch1 lngJil:~bf.:Y,:•9·9!H9!- .·· 20-Mar-99 Metro Engi~~~rir1g & $l,~pply Co. 13-May-99 ·.' ,.

o ' ' ,·,:::·ji~;·}· I ~ 033 3466 3467:

3469 3468 3472 3471 1260 161 1728 1821 1822 1800 6015 5974 0348 2717 2720 19533 21834 21833 20942 20943 20941 21084 21832 20145 23120 14808 139.

00049 00064 00534 28388 00540 00546 00539 00563 00568 00541 00062 00090 12861 6974 3304 2351 12,27273 1,100.00 1,320 00 1,95000 3,600.00 900 00 675.00 6,363.64 17,598.69 10,288.77 11,00878 7,183.05 15,17873 2,728.01 2,454 61 16,064.26 _!>~~821.3L p 40,47773 10,909.00 890.00 2,799 32 120.45 1,183.64 1,204.55 2,168.19 16,104.55 973.36 973.36 973.36 1,000 00 1,800.00 2,643 22 2,880 89 21,410 34 26,745 62 19,43418 5,865.30 564,630.53 11,311.74 6,109.02 6,493.77 1,154.61 ___ 8,727.01_ p 758,983.74 p 43,952.88 52,099.56 7,000.00 .. v\ 22,391.10 rf ~-. Mic,,r~wontrol Design Technology 'r\iij;~6control Design Technology Rubicon Printing Corporation Sub-total -Mar-99 Mar-99 7-May-99 633 632 04478 5.) Purchase of services supported with Provisional Receipts (PR) only N-3375 Manila Genesis 8-Apr-99 147 N-337.7 Manila Genesis 14-Apr-99 149 Sub-total (l~~;t:

6.) Purchase JJ~!~ervices supported with Non-VAT OR N-4966 T~0~ & Country Agri Reapers, Inc. 5/26/1999 541 Sub-total · · 7) Purchase of goods supported with VA T-exemp't !n.voice N-4634 Wise & Company Inc._ 4/8/1999 Sub-total 8.) Input VAT on purchase of service~ erroneously computed N- Guard All Electronic Security 2908/2910 Systems Inc.

' · 23-Feb-99 Sub-total TOTAL 139406 7192 3,600 00 34,831 80 26,880 00 p 190,755.34 p 17,605.26 17,605 26 p 35,210.52 p 16,363 64 p 16,363.64 p 13,768 55 p 13,768.55 p 3,136 37 p '3,136.37 p 3,061,110.11 Therefore, out of the total claim of P23,687 ,908.93 pertaining to input VAT on domestic purchases1· of goods and services, petitioner can only validly claim the amount of P14,221 ,880.96, computed as follows: Claimed input VAT on domestic purchases p 23,687,908.93 ;111··_,_,_,hl=_ ss: Disallowance~ ,i · · ,;J"··w,'\;i I''·· .

• .

I'' :_.;'!_:_:

• 1) Per CPA report · . , "1''.' • '''" 2) Per Court's verification p 6,404,917 86 3,061,110.11 ___ 9::...>·~466,027 97 . .

: .:

:

i ,:

Validly §upporteS") illP~.Jt.YAT or;tdpmestic· purchases · ii/: • ; i,) r.: 'I)',}~J!{~\~;<, . 'i' \. ·.i J p 14,221,880.96 Aneflt .. P~.ti~ioper's. r€1fynd claim for input VAT on importation of .. .. . ' . :~~t:~~ . ; . . ' ~ ' ":k;i;:' •.·. 9&\9 1 ~/99.Pit~_!~ 1:~;:d,i':'j5rnent in th\3 amount of P29, 122,031.00, t~e documents 16 , ·· , · · ·; · r · · .·.~ ' .. ::!;)·~:~:~~ ~ 1 \:~:. ·:, 1.

• ;

P.~ji~l~d _w~tffl)~~~~~ 1f~\CY-~~~~~~~l:~0ifp,ined an~ a total of P21 ,924,350.00 should ..

. ' . .

. .• ..

. . d·.o'•' ·..

.

!

;

. isal · · on tht:; following reasons: J~~~;::~:.::,!

Bank OR No.

Input VAT documents p 29,122,031.00 g 25,096,576.00 ;

p 4,025,455.00 .)41 .. ' l.

' .,· ..

1 l.

DECI$\.ON C.T.A.!~.B N0.166 Page 27of:29 2.) Outside . of claim 0 998 3943521 p 371,471 00 0-5 9/14/1998 4656990 15,375.00 0-14 4/24/1998 3944783 1,078,402 00 0-20 4/3/1998 3943432 1,058,934 00 0-24 2/11/1998 3874782 ' 409,464.00 0-31 3/6/1998 3941487 1,708,520 00 0-36 2/11/1998 3874780 1,436,833 00 0-44 2/11/1998 3874781 143,371 00 0-51 3/18/1998 3942187 367,650.00 0-56 3/17/1998 3942104 1,994,508 00 0-60 4/1/1998 3943216 303,474.00 0-63 3/30/1998 3942974 1,043,006.00 0-67 3/13/1998 3941937 1,995,062.00 0-161 5/14/1998 ' 4291043 4,364,497 00 0-169 3/28/199!9 341.00 0-173 3/28/1999 3,378 00 Subtotal p 16,294,286.00

3) /ERD

17 notlegibltj :

0-180 4/13/1999 p 1 ,604,609 OQ__ Subtotal p 1,604,609.00

TOTAL DISALLOWANCES

p 21,924,350.00 Consequently, only the amount of P7,197,681.00 was fully substantiated pursuant to the provisions of Section 4.1 04-5(b) of Revenue 87 . 009988 $,oo;9990 q009991 5009989 5010793 /%l~l~Mc@!»!!ll/.~ 1,,;! g. ·.1:~ti~'~Jp1 0796 99 . '!:}5010797 4/fZO'r 999 ... ~9 1 0798 4/2Q/;;rw99 :.!~:'&Jl10792 4/20/1999 ' 5010790 4/20/1999 5010799 · PJ.i1;4.1, 4/20/~ 999 .rq01 0800 .... ~~r· :(· .... i}~ J 0-'1:46 ..

4/f0/1 ~:119 ·:·'i··:9.91 0801 0-151 4/20/1999 ·.:115010802 0-156 4/20/1999 ·' .5010791 .

: '! ',~~·:9i!t~1' .

·::~~~:i;

" I ,",:j,IJ'~~.~(:,·, I ·.:\.

·,l., TOTAU ...

........ ~.

·:~.:~w· ....

17 Import Entry and Revenue Declarc:tion. p p Input VAT 654,387 00 549.00 3,988 00 . 891 00 . 3,291,640.00 3,212,699.00 338.00 12,19200 3,952.00 678.00 713.00 465 00 4,985 00 773.00 373.00 295.00 248.00 8,515.00 7,197,681.00 I DECISION · . C.T.A. EB NO. 266 Page 28 of 29 · I ...

In the light ·· i foregoing discussiolls, the Court En Bane finds legal basis to partially grant the instant petition as petitioner is entitled to claim a refund for its input VAT for the second quqrter of 1999 in the reduced amount of P12,003,522.52, computed as follows: Validly supported input VAT on domestic purchases Validly supported input VAT on importations Total valid input VAT .claim Multiply by rate of supported zero-rated sales Input VAT claim attributed to substantiated zero-rated sales p 14,221,88096 7,197,681 00 p 21,419,561 96 56.04%

p. 12,003,522.52

WHEREFORE, the instant petition is PAR.TIALL Y' GRANTED. The . . ·:. . .

~ •..

I '' · assailed Decision a~d Res-olution of the Court in Division dat~d October 11, · · ·:L.·;~rl.~i :··\~~~006 and January 11, 2007; re~p·~ctively, are hereby REVERSED and SET ' ., ,l.;c.

~1.: :' ASIDE .. · Accordingly, respondent is hereby ORDERED to REFUND or ISSUE .

' .-.q, a TA~, CREDIT CERTIFICATE in favor of petitioner in the reduced amount . 3,522.52 represe!Jting unutilized excess input VAT on domestic ·~~~~f •.

, .

pu , of goods and services ·C\rjd importation ~f goods I capital ~i~·~~.•.cJ;:,~J~l·,, , •.; ·..

- ·1 ·M~f.{;\'·:~"1 ' equipment attributable to its zero-rated sales for the second quarter of the taxable year 1999.

WE CONCUR:

With Concurring and Dissenting Opinion) ,;} ERNESTO .. P. ACOSTA : Presidjrig Justice .J43 '!it'l·' '" it:rim~. C .. TANE~A,~. Associate Justice CAESA~ANOVA Associate Justice o~~z Associate Justice C· E R T I F I C A T I 0 N Pursuant to Section 13, Article VIII 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 En Bane.

tt_ ~ \.o- a____ ERNESTO D. ACOSTA Presiding Justice