Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue

DECISION

COT ANGCO-MANALAST AS, J. : This resolves the Petition for Review 1 filed by Pilipinas Total Gas, Inc., on August 27, 2010, pursuant to Section 18 of Republic Act (R.A.) No. 1125, as amended by Section 11 of R. A. No. 9282, and Section J(b), Rule 8 of the 2005 Revised Rules of the Court of Tax Appeals (RRCTA), assailing the Decision 2 and Resolution 3 promulgated by the Second Division of this Court on April 8, 2010 and August I 0, 2010, respectively. The dispositive portions of which reads: V

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue

Decision dated April 8, 20 10: "WHEREFORE, premises considered, the Petition fo r Review is hereby DENIED for lack of merit.

ANTECEDENT FACTS

The facts, as narrated by the Court in Division in its Decision.f, are reproduced hereunder:

" Petitioner is a domestic corporation duly organized and existing under the laws of the Philippines, with principal place of business located at MOD 12 1 East Science Avenue, Laguna Technopark, Binan Laguna. It is engaged in the sale, transportation, and distribution of industrial gases as well as the sale of gas equipment and other related businesses on wholesa le basis. ~

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue

It is registered with the Bureau of Internal Revenue (BIR) as a VAT taxpayer, with Taxpayer Identification No. 004-609-53 8-000, as evidenced by its Cer1ificate of Registration No. 3 RC000003 164 7. Respondent, on the other hand, is the duly appointed Commissioner of the Bureau of Internal Revenue empowered to perform the duties of said office including, among others, the power to decide, approve, and grant refunds or tax credits of erroneously or excessively paid taxes.

Respondent

holds office at the BIR National Office Building, Agham Road, Diliman, Quezon C ity.

Petitioner filed w ith respondent its Q uarterly VAT Returns and Final Amended Quar1erly VAT Returns for the four quarters of 2006 on the following dates:

Year

Exh.

Date Filed of

Exh.

Date filed of the 2006

Quarterly VAT

Final Amended

Returns

Quarterly VAT

Returns

I st

"J"

Apri I 25, 2006

"N"

September 19,

Qtr

2007 2"d

"W"

July 25, 2006

"Z"

September 19,

Qtr

2007 3'd

" II"

October 23,

" LL"

September 19,

Qtr

2006 2007 4'"

" U U"

January 23,

" XX"

September 19,

Qtr

2007 2007 On July 3 1, 2007, petitioner filed an administrative claim for tax refund/tax credit of the alleged excess input tax for taxable year 2006, in the amount of Pl 7,528,906.17, before the BIR Revenue District Office No. 057- Biiian, Laguna. However, respondent had not issued a fin al decision on said c laim for refund or tax credit. Hence, petitioner filed the instant Petition for Review on April 24, 2008.

In Answer, respondent interposed the fo llowing Special and A ffi rmati ve Defenses:

"4.

She re iterates and re-p leads the preceding paragraphs of this Answer as part of her Special Affirmative Defenses; 5.

Petitioner's alleged claim for refund is subject to administrative investigation/examination by respondent's Bureau; 6.

Petitioner failed to demonstrate that the amount allegedly paid was erroneously or illegally collected; ~

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue

7.

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

8.

Petitioner's claim for refund has prescribed already in view of Section 11 2(C) of the 1997 National Internal Revenue Code which provides that:

' Section 11 2. Refunds or Tax Credits of

Input Tax -

(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 fo r creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application fil ed 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 (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' . - (Italics supplied) Hence, when petitioner filed its administrative claim for tax refund/credit with the Bureau of Internal Revenue (' BIR') Revenue District Office No. 57 on 3 1 July 2007, respondent had 120 days within which to decide on petitioner's claim for tax refund/credit. And in case of full or partial denial of the claim or failure of respondent to act on the application within the 120 day period, petitioner has 30 days to appeal the decision or inaction w ith the Court of Tax Appeals. Thus, respondent had to render a decision w ithin 120 days from 31 July 2007 or until 28 November 2007. In the event that respondent fa iled to act upon petitioner's cla im for tax refund/credit, petitioner has 30 days from 28 November 2007 or until 28 December 2007 to appeal the unacted claim with the Court of Tax V

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue

Appea ls.

Petitioner fi led the instant Petition for Review with the Court of Tax Appeals only on 24 April 2008, almost fo ur (4) months after the lapse of the period allowed by law to file the j udicial claim for tax refund/credit with the Court of Tax appeals. Th is being so, the instant petition for review was clearly fi led out of time. The above-mentioned periods are clearly given fo r strict compliance as a prerequisite before seeking redress in a competent court. Such statutory periods are set to prevent delays as well as enhance the orderly and speedy discharge of j udicial functions (Agpalo, Statutory Construction, Third Edition 1995, p. 266). For this reason, the courts construe these provisions of statutes as mandatory (Ibid., citing Alvero vs. De Ia Rosa, 76 Ph il. 428, 434). The power to tax is the most effective instrument to raise needed revenues to fi nance and supp01t the myriad activities of the government fo r the delivery of basic services essential to the promotion of the general welfare and enhancement of peace, progress, and prosperity of the people

Mactan Cebu International

A irport Authority vs. Marcos, 261 SC RA 667, 690). Consequently, any delay in implementing tax measures would be to the detriment of the public. It is for this reason that claims fo r refund are req uired to be done within certain time frames. In the instant petition, the fai lure of petitioner to comply with such periods is fatal to its cause. 9.

Assuming w ithout admitting that the subject c la im fo r refund has not yet prescribed, it is imperative for the petitioner to prove its compliance w ith the following: a.

The registration requirements of a value-added taxpayer under the perti nent provision of the

National Internal Revenue

Code of 1997, as amended, and its implementing revenue regulations; b.

The invoicing and accounting requirements for VAT-registered persons, as well as the fi ling and payment of VAT pursuant to the prov isions of Sections I 13 and 11 4 of the Tax Code of 1997, as amended.

Fai lure to comply with the invoicing requirements on the documents supporting the sale of goods and services will result in the disallowance V

DECISION

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue of the claim for input tax of the taxpayer claimant (Revenue Memorandum C ircular No. 42-2003); c.

The submission of complete documents in support of the administrative claim for refund pursuant to Section I 12 (C) of the Tax Code of 1997, as amended, otherwise, there would be no sufficient compliance with regard to the filing of administrative claim for refund which is a condition sine qua non prior to the filing of judicial cla im in accordance with Section 229 of the Tax Code, as amended;

d.

That the input taxes of P 17,528,906.¹ 7 allegedly representing unutilized input VAT from its domestic purchases of goods and services and importation of goods were:

1.

paid by the petitioner;

11.

attributable to its zero-rated or effectively zero-rated sales; and, 111.

such input taxes paid should not have been applied against any output tax; e.

That petitioner's claim for tax credit or refund of the unutilized input tax (VAT) in the amount of Pl 7,528,906.17 was fil ed w ithin two (²) years after the close of the taxable quarter when the sales were made in accordance with Section 11 2 (A) of the Tax Code of 1997, as amended;

f.

That petitioner has complied with the governmg rules and regulations with reference to recovery of tax erroneously or illegally co llected as explicitly provided in Sections 11 2 (A) and 229 of the Tax Code, as amended.

Page 6 of 37

I 0.

Moreover, in an action for tax refund , the burden of proof rests upon the taxpayer to esta blish by sufficient and competent evidence its entitlement to a claim for refund ; I I.

Basic is the rule that tax refunds are in the nature of tax exemptions and are to be construed strictissimi juris against the entity cla iming V

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue the same (Philippine Geothermal, Inc., vs. Commissioner of Internal Revenue, G.R. No. 154028, July 27, 2005). Moreover, statutes in derogation of sovereignty such as those contai ning exemption from taxation should be strictly construed in favor of the State. In this regard, taxation is the rule and exemption is the exception. The law does not look with favor on tax exemptions and that he who would seek to be thus privi leged must justify it by words too plain to be mistaken and too categorical to be misinterpreted. (SeaLand Service, Inc., vs. Court of Appeals, 357 SCRA 444)." During trial, petitioner presented its documentary and testimonial evidence to support its claim. However, respondent' s counsel manifested that she is waiving the right of respondent to present evidence absent an aud it report.

On January 5, 2010, this Court issued a Resolution submitting this case fo r Decision, considering that petitioner and respondent have already submitted their Memoranda on December 28, 2009 and January 4, 20 10, respectively.

The parties' j ointly stipulated issues are as fo llows:

1. Whether or not Petitioner's j udicial claim for tax refund of unutilized input VAT with this Honorable Court was fil ed out of time.

2.

Whether

or not the

Petitioner

has complied w ith the substantiation requirements as provided by law. 3.

Whether or not the input taxes of P 17,528,906.17 alleged ly representing unutilized input VAT from its domestic purchases of goods and services and importation of goods, were: a.

paid by Petitioner;

b. attributable to its zero-rated or effectively zerorated sales; and c.

not applied against any output tax 4.

Whether or not Petitioner is entitled to its claim for refund or issuance of TCC on its unutilized input tax attributable to zero- rated sales in the amount of P 17,528,906.17 incurred fo r taxable year 2006."

The foregoing issues may be summed up into the single issue of whether or not petitioner is entitled to a refund or issuance of tax credit V

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue certificate in the amount of P 17,528,906.17, allegedly representing petitioner' s unuti lized input taxes for the taxable year 2006.

The Ruling of the Court in Division

The Court in Division denied the petition. While the Court a quo agrees with petitioner that its sales to PEZA and CDC- registered enterprises are subject to zero percent (0%) VAT, the Court in Division found that petitioner failed to sufficiently substantiate its reported zero-rated sales to said enterprises, as well as the input VAT on its domestic purchases of goods and services for taxable year 2006. Further, the Court in Division declared that even though the court- commissioned Independent Certified Public Accountant (ICPA) attested and confirmed that he examined the original copies of the documents, such as petitioner's VAT returns, official receipts, invoices, the said documents, however, were not presented and formally offered in evidence before this Court. A Motion for Reconsideration was filed by petitioner on April 27, 2010, however, said Motion was likewise denied by the Court a quo for lack of merit. Undaunted, petitioner filed the instant Petition for Review5. On September 20, 2010, the Court En Bane ordered respondent CIR to file her comment within ten ( 1 0) days from receipt of resolution.6 Respondent's Comment7 was sent by registered mail on October 13, 2010, and was received by this Court on October 22, 2010. V

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue

In response to respondent's Comment, petitioner filed its Reply (To Respondent's Comment)8 on November 4, 2010. In a Resolution9 dated November 2, 2010, the parties were ordered to submit their respective Memoranda within a non-extendible period of thirty (30) days from receipt thereof.

Petitioner filed its Memorandum on December 8, 2010, whereas respondent's Memorandum was received by this Court on January I 0, 2011 ; thus, the above-captioned case was submitted for decision on January 19, 2011.

ISSUES

The foregoing account, as revealed by the records of this case, leads this Court to resolve the following controversies: I.

Whether this Court through its Second Division erred in denying petitioner's claim for refund or tax credit of its unutilized input VAT for taxable year 2006 on the following grounds, to wit: [i] petitioner's failure to sufficiently substantiate its reported zero-rated sales to PEZA and CDC-registered enterprises; and [ii] petitioner's failure to formally offer the pieces of evidence in support of its claim, i.e. official receipts and invoices.

II.

Whether petitioner is entitled to refund or issuance of a tax credit certificate (TCC) in the amount of P17,528,906.71 , allegedly representing excess and unutilized input VAT for taxable year 2006, arising from its zero-rated sales to PEZA and CDC-registered enterprises. V

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue

III.

Whether this Court is bereft of jurisdiction to try the instant case on the ground of prescription of judicial claim. Arguments o(Petitioner Petitioner disagrees with the findings of the Court in Division that it failed to formally offer the VAT returns, official receipts, invoices, and other supporting documents to support its claim for refund or tax credit. According to petitioner, a perusal of its Formal Offer of Evidence and Supplemental Formal Offer of Evidence shows that all of the VAT returns, sales invoices and official receipts for taxable year 2006 were formally offered in evidence, and all such exhibits were admitted by the Court in Division.

In particular, petitioner pointed out that Exhibits "A" up to "XX", consisting of petitioner's monthly and quarterly VAT returns for taxable year 2006, were included in petitioner's Formal Offer of Evidence dated February 12, 2009 and admitted in the Resolution dated March 25, 2009. Exhibits "RRRR", "SSSS" and "TTTT", consisting of petitioner's quarterly VAT return for the first quarter of taxable year 2007, were offered in the Supplemental Formal Offer of Evidence dated October 23, 2009 and admitted in the Resolution dated November 23, 2009. As to sales invoices and official receipts, petitioner asserts that these were included in petitioner's Formal Offer of Evidence. Pages 16 to 24 of the Formal Offer of Evidence covers sales invoices and official receipts numbered 1-4,755; pages 25 to 27 covers sales invoices and official receipts numbered 4,756-5,929; and pages 36 to 43 covers sales invoices and official receipts numbered 5,930-7,132. jr

DECISION

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue

Page II of37

In addition, petitioner argued that the ICPA commissioned by the Court in Division has identified, pre-marked, and submitted all the sales invoices and official receipts involved in the claim for refund or tax credit. Petitioner finally manifests that upon verification with the Records Division of this Court on April 22, 2010, it was able to confirm that the VAT returns, sales invoices and official receipts relevant to petitioner's claim are in the actual custody of this Court.

In its Reply to respondent's Comment, petitioner expresses its dissension to respondent's allegation that its judicial claim was filed out of time.

Petitioner

maintains that while its administrative claim was timely filed on July 31, 2007, the final submission of various supporting documents occurred on December 13, 2007 with Revenue District Office No. 57 [Exhibits "QQQQ" and "UUUU"]; thus, pursuant to Section 112 (C) of the National Internal Revenue Code (NIRC) of 1997, as amended, respondent had one hundred twenty ( 120) days from December 13, 2007, or until April 11, 2008, within which to decide on the administrative claim, and in turn, petitioner had thirty (30) days from the lapse of the 120-day period, or until May 11 , 2008, within which to file an appeal with this Court. Hence, petitioner insists that its petition was timely filed with the Court in Division on April 24, 2008. Arguments o[Respondent Respondent manifests that this Court is bereft of jurisdiction to hear and decide on petitioner's claim for refund and/or issuance of tax credit certificate allegedly representing unutilized input VAT for the taxable year 2006 on the ground that petitioner's judicial claim was filed beyond the " 120-30 day period" provided under Section 112 (C) of the NIRC of 1997, as amended. V

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Cas, Inc. vs. Commissioner of Internal Revenue lso, respondent avers that petitioner failed to comply with the requisites for refund of input tax under the pertinent provisions of the NIRC of 1997, as amended, and other pertinent rules and regulations governing the application for tax refund or issuance of tax credit certificate. Respondent submits that petitioner failed to prove that the substantiated input VAT is entirely attributable to the reported zero-rated sales of petitioner considering that petitioner has vatable transactions subject to twelve (12%) percent and zero-rated transactions. To support its argument, respondent cites Section 4.110.-4 of Revenue Regulations (RR) No. 16-2005. According to respondent, the audit report did not specifically and categorically stated which of the input tax being claimed by petitioner are directly attributable to its zero- rated transaction, the court commissioned ICPA attributed all the input VAT being claimed to petitioner's alleged zero-rated transactions when it is evident that there exists transactions subject to 12% VAT rate.

THE RULING OF THE COURT EN BANC

The Petition for Review is hinged principally on Section 11 2 (A) and (C) of the NIRC of 1997, as amended, which pertains to refunds or tax credits of input tax attributable to zero-rated or effectively zero-rated sales, viz : "SEC. I 12. 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, w ithin 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 pa id attributable to such sa les, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in V

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue the case of zero-rated sales under Section I 06(A)(2)(a)( I), (2) and

(b) and Section I 08 (B)( I) 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 (S SP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also 111 taxable or exempt sale of goods of properties or services, and the amount o f creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it sha ll 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 I 08 (8)(6), the input taxes shall be allocated ratably between his zero-rated and non-zero-rated sales. "(B) Cancellation of VAT Registration. - 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 w ithin one hundred twenty ( 120) days from the date of submi ssion of complete documents in support of the application fil ed 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 w ithi n the period prescribed above, the taxpayer affected may, w ithin thirty (³ 0) days from the recei pt 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.

"(D) Manner of Giving Refund.- xxx." It is readily apparent from the above-quoted provision that a taxpayer engaged m zero-rated or effectively zero-rated transactions may apply for tax refund or V

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue issuance of TCC for unutilized input VAT provided the following requisites are satisfied:

( 1) the taxpayer is VAT registered;

(2) the taxpayer is engaged in zero-rated or effectively zero-rated sales;

(3) the input taxes were incurred or paid; ( 4) the input taxes have not been applied against output taxes during and in the succeeding quarters;

(5) the input taxes claimed are attributable to zero-rated or effectively zero- rated sales;

( 6) the claim was applied/filed within the period prescribed in Section 112(A) and (C) of the NIRC of 1997, as amended. Timeliness of Petitioner's judicial claim for refund or tax credit of input VAT for taxable year 2006. Before the Court En Bane proceeds in resolving the first two issues, We deem it appropriate to first resolve the third issue pertaining to the timeliness of petitioner's judicial claim for refund or tax credit of input tax, seeing that the resolution of this controversy is pivotal in determining whether this Court should proceed with the disquisition of the other issues raised in this petition. In determining whether petitioner Pilipinas Total Gas, Inc. timely filed its judicial claim for refund or issuance of TCC of unutilized input VAT, reference must be made to the aforementioned provision of Section 112(C) of the NIRC of 1997, as amended. Section 11 2(C) clearly provides that the CIR has " 120 days from the date of submission of the complete documents in support of the application [for tax refund/credit]," within which to grant or deny the claim. In case of full or partial V

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue denial by the CIR, the taxpayer' s recourse is to file an appeal before the Court of Tax Appeals (CT A) within 30 days from receipt of the decision of the CIR. However, if after the 120-day period the CIR fails to act on the application for tax refund/credit, the remedy of the taxpayer is to appeal the inaction of the CIR to the CT A within 30 days. 10 In this case, records show that: ···-······

Quarters

(2006)

Administrative

Claim Filed

Submitted

Supporting

Documents with the BIR

11

End of 120 Days for the BIR

Commissioner to Decide the

Claim

End of 30

Days from the expiration of the 120 days J udicial Claim

Filed

I

51 to 4 1 ' • July 31 , 2007 December 13, April 11, 2008 May 11 , 2008 April 24, 2008 2007 Petitioner filed its administrative claim for refund for all the quarters of 2006 on July 31 , 2007, pursuant to Section 112(C) of the NIRC of 1997, as amended, the CIR has 120 days, from the date of submission of the complete documents in support of the application for tax refund/credit, within which to grant or deny the claim. The records of this case affirm petitioner's allegation that while its administrative claim was filed on July 31 , 2007, the final submission of various supporting documents occurred on December 13, 2007 with Revenue District Office No. 57 considering that petitioner was able to sufficiently substantiate the same by furnishing this Court with a copy of its letter 12 to BIR sending the documents in support of its input VAT refund/ tax credit, which letter was attached as Exhibit "UUUU" to its Supplemental Formal Offer of Evidence 13 . The respondent having interposed no objection to the aforesaid Supplemental Formal Offer of Evidence, the said formal offer was admitted by the V 1° Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc., G.R. No. 184823, October 6, 20 I 0.

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue

Court a quo in a Resolution 14 dated November 23, 2009. Thus, the Court En Bane is persuaded that December 13, 2007 is the reckoning point in counting the 120-day period. Counting 120 days from December 13, 2007, respondent CIR had until April 11, 2008 within which to decide the claim for refund/tax credit, consequently, petitioner had 30 days from April 11 , 2008 or until May 11, 2008 within which to appeal to this Court.

Clearly, respondent CIR' s allegation imputing prescription on petitioner's judicial claim does not have a leg to stand on, petitioner's judicial claim was filed on April 24, 2008, which is definitely within 120 days from the date of submission of complete documents, i.e. April 11, 2008, and within 30 days from the lapse of the 120-day period, i.e. May 11, 2008. Hence, with regard to petitioner's judicial claim for refund/tax credit of input VAT for the taxable year 2006, We find the same to have been filed within the period allowed under Section 11 2(C) of the NIRC of 1997, as amended, as it was filed on April 24, 2008, thus, has not yet prescribed. Whether the Court m Division erred in denying petitioner's claim for refund/tax credit of input VATfor taxable year 2006 on the ground that petitioner failed to substantiate its claim for failure of petitioner to formally offer the evidence in support of its claim.

After having ascertained the timeliness of petitioner's judicial claim for refund/tax credit of input VAT for taxable year 2006, the next issue relevant to the proper adjudication of the instant petition is whether the Court in Division correctly V

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue ruled that petitioner failed to substantiate its claim for refund/tax credit for failure of petitioner to have the pieces of evidence in support of its claim, particularly, sales invoices and official receipts, formally offered in evidence. After going over the records of this case and due consideration of the parties' arguments, We fi nd that the pieces of evidence, i. e. sales invoices, official receipts, needed to be assessed, reviewed and evaluated by this Court for the purpose of verifying the authenticity and veracity of the independent auditor's conclusions and petitioner's claim, were in fact presented and identified in open court, and formally offered in evidence.

Invoices and O{ficial Receipts: Pre-marked In the case at bar, petitioner moved to refer the voluminous documents to be introduced in evidence to an ICP A. Section 5, Rule 12 of the RRCT A governs the procedure in the presentation of voluminous documents, viz:

RULE 12

TRIAL

XXX

SEC. 5. Presentation of voluminous documents or long accounts. - In the interest of speedy admin istration of j ustice, the fo llowing rules shall govern the presentation of voluminous documents or long accounts, such as receipts, invoices and vouchers, as evidence to estab lish certain facts:

(a) Summary and C PA certification. - The party who desires to introduce in ev idence such volum inous documents or long accounts must, upon motion and approva l by the Court, refer the voluminous documents to an independent Cert ified Public Accountant (CPA) for the purpose of presenting:

( I)

a summary contarnrng, among other matters, a chrono logical listing of the numbers, dates and amounts covered by the invoices or receipts and the amount(s) of taxes paid and

(2) a certification of an independent C PA attesting to the correctness of the contents of the summary after making an V

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue examination, evaluation and audit of vo luminous receipts, invoices or long accounts.

The name of the Certified Public Accountant or partner of a professional partnership of certified public accountants in charge must be stated in the motion. The Court shall issue a commission authorizing him to conduct an audit and, thereafter, testify relative to such summary and certification.

(b) Pre-marking and availability of originals. - The receipts, invoices, vouchers or other documents covering the said accounts or payment to be introduced in evidence must be pre-marked by the party concerned and submitted to the Court in order to be made accessible to the adverse party who desires to check and verify the correctness of the summary and CPA certification. The original copies of the voluminous receipts, invoices or accounts must be ready for verification and comparison in case doubt on its authenticity is raised during the hearing or resolution of the formal offer of ev idence. (n) Records show that the ICPA has provided this Court the above-mentioned summary (Exhibits "NNNN-5" to "NNNN-5- 12"; "NNNN-8" to "NNNN-8-12"; "NNNN- 11 " to "NNNN- 11 -12"), and the !CPA likewise attested and confirmed that he examined the original copies/certified true copies of petitioner's documents, such as petitioner's Monthly and Quarterly VAT returns, official receipts, invoices, Schedule of Sales and Receipts, PEZA VAT zero-rating certificates, CSEZ Certificates of Registration and Tax Exemption and other supporting documents. The ICPA also testified that he has pre-marked the said documents. 15 As regards the invoices and official receipts, an inspection of the records at hand shows that the invoices and official receipts from January to December 2006 were conspicuously pre-marked as "Supporting Documents" with reference numbers (numbered 1 until 7, 132). Each invoice and offi cial receipt has its own distinctive reference number. V

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue

The e reference numbers were intricately appended on each of the invoices and official receipts; they are visible on and can be traced on the last columns of each summary, i.e. Summary List of Purchases, Schedule of Sales and Receipts, and Summary of Official Receipts. On the last column of each row of the said summary and schedules there can be found a specific reference number which points to a particular invoice or official receipt on record - which this Court can look into in order to verify the authenticity and veracity of the !CPA's conclusions. Also, these reference numbers of the invoices and official receipts were likewise chronologically listed in petitioner's Formal Offer of Evidence to support a particular summary or schedule. In view of the foregoing considerations, the Court is of the sense that petitioner has substantially complied with the requisite pre-marking of the invoices and official receipts.

Invoices and O[ficial Receipts: Presented Before the Court and Formally Offered Crucial to the issue on formal offer of evidence is Section 34, Rule 132 of the Revised Rules of Court which provides: "SEC. 34. Offer of evidence. - The Court shall consider no evidence which has not been formally offered. The purpose for which the evidence is offered must be specified." In the case of People vs. Villanueva 16, the Supreme Court had the occasion to reiterate its ruling in the case of Heirs of Pedro Pasag v. Parocha 17, viz: The rule on formal offer of evidence is not a trivial matter. Failure to make a formal offer within a considerable period of time shall be deemed a waiver to submit it. Consequently, as in this case, any evidence that has not been offered shall be excluded and rejected. ~

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue xxxx The Rules of Court [provide] that 'the court shall consider no evidence which has not been formally offered.' A formal offer is necessary because judges are mandated to rest their findings of facts and their judgment only and strictly upon the evidence offered by the parties at the trial. Its function is to enable the trial j udge to know the purpose or purposes for which the proponent is presenting the evidence. On the other hand, this allows opposing patties to examine the evidence and object to its admissibility. Moreover, it facilitates review as the appellate court will not be required to review documents not previously scrutinized by the trial court.

xxxx Thus, the trial court is bound to consider only the testimonial evidence presented and exclude the documents not offered. Documents which may have been identified and marked as exhibits during pre-trial or trial but which were not fonnally offered in evidence cannot in any manner be treated as evidence. Neither can such unrecognized proof be assigned any evidentiary weight and value. It must be stressed that there is a significant distinction between identification of documentary evidence and its formal offer. The former is done in the course of the pre-trial, and trial is accompanied by the marking of the evidence as an exhibit; while the latter is done only when the party rests its case. The mere fact that a particular document is identified and marked as an exhibit does not mean that it has already been offered as patt of the evidence. It must be emphasized that any evidence which a party desires to submit for the consideration of the court must formally be offered by the party; otherwise, it is excluded and rejected. Clearly, without a formal offer of evidence, courts are constrained to take no notice of the evidence even if it has been marked and identified.18 In the case before us, records manifest that the pieces of evidence, i.e. invoices, official receipts, were presented and identified in open court. The invoices and official receipts pre-marked as "Supporting Documents" with reference numbers V 18 Far East Bank & Trust Co. vs. Commissioner of Internal Revenue, G. R. No. 149589, September 15, 2006.

DECISION

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue

Page2 1 of37

from 1 until 7,132 were identified and presented in open court during the hearing held on January 13,2009, fol lowing is an excerpt of the ICPA's testimony 19: ATTY. CAPPLEMAN :

Q.

Mr. W itness, in your judicial Affidavit you likewise mentioned that you have examined the origi nal copies of petitioner's official receipts and invoices. Do you have copies of the same with you? MR. FERNANDO:

A.

I have the machine reproductions of those documents, your Honors.

ATTY. CAPPLEMAN :

Q.

Can you identify the same?

JUSTICE BAUTISTA:

You identify those documents by bunch. MR. FERNANDO:

A.

Yes, your Honors.

This bunch of documents, your Honors, represents the official receipts issued by Pilipinas Total Gas, Inc., for the period January 2006 to December 2006. Exhibits "NNNN" with submarkings Exhibits "NNNN-1 " to "NNNN-1 - 12". Thi s bunch of documents represents the copy of offi cial recei pts and sales or charged invoice of input VAT claim for the month of January 2006 to December 2006, your Honors. While this bunch of documents supports the sales invo ice issued by Pilipinas Total Gas, Inc., for the period January 2006 to December 2006, your Honors.

JUSTICE BAUTISTA:

A II right.

ATTY. CAPPLEMAN :

Q.

Mr. Witness, do you affirm and confirm that these are the faithfu l reproductions of the originals which you have examined?

MR. FERNANDO:

A.

Yes, Ma'am. V

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue

Furthermore, a careful scrutiny of petitioner's Formal Offer of Evidence (FOE) filed on February 12, 2009 reveals that the invoices and official receipts pre- marked as "Supporting Documents" with reference numbers 1 to 7,132 were formally offered in evidence.

Petitioner's FOE, pages 16-24, lists down the "Summary List of Purchases" for the months of January to December 2006, marked as Exhibits "NNNN-5-1" up to "NNNN-5-12". On the same pages it is noticeable that, other than the "Summary List of Purchases", each exhibit actually includes the "Supporting Documents" with corresponding reference numbers for that particular summary; in other words, one exhibit number (e.g. "NNNN-5-1 ") embraces or covers two (2) separate pieces of evidence, i.e. "Summary List of Purchases " and the "Supporting Documents ". Upon verification, We were able to confirm that these so-called "Supporting Documents" are indeed copies of official receipts and sales/charge invoices for taxable year 2006 with reference numbers.

Clearly, the invoices and receipts subject of the aforesaid Summary List of Purchases were in fact formally offered and can be traced on pages 17 to 24 of petitioner's FOE captioned as follows: "Supporting documents for Exhibit NNNN-5-1 per reference no. 1-438 ";

"Supporting documents for Exhibit NNNN-5-2 per reference no. 439-886 "; "Supporting documents for Exhibit NNNN-5-3 per reference no. 887-1323 "; "Supporting documents for Exhibit NNNN-5-4 per reference no. 1324-1723 "; "Supporting documents for Exhibit NNNN-5-5 per reference no. 1724-2134 "; "Supporting documents for Exhibit NNNN-5-6 per reference no. 2135-2515 "; "Supporting documents for Exhibit NNNN-5-7 per reference no. 2516-2888 "; "Supporting documents for Exhibit NNNN-5-8 per reference no. 2889-327 1"; v

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner a./Internal Revenue

"Supporting documents for Exhibit NNNN-5-9 per reference no. 3272-3630 "; "Supporting documents f or Exhibit NNNN-5-1 0 per reference no. 3631-4014"; "Supporting documents .for Exhibit NNNN-5-11 per reference no. 4015-4400 "; "Supporting documents .for Exhibit NNNN-5- 12 per reference no. 4401-4755 ". findings:

Below is an excerpt of petitioner's FOE for easier appreciation of our

Exhibit

XXX

NNNN-5- 1

NNNN -5-2

Description

XXX

Summary List of Purchases

for the month of January 2006 [Emphasis ours} Supporting documents for

Exhibit NNNN-5- 1 as per

reference no.

1-43 8 [Emphasis ours]

Purpose

XXX

To prove that the independent

CPA

conducted the required verification of

Petitioner's

Invoices, Official Receipts and

Summary List of Purchases for

the month of January 2006 and that the said documents support and substantiate

Petitioner's

claim fo r tax refund/issuance of tax credit certificate fo r taxable year 2006.

To prove that the amount of Input Tax claimed by Petitioner for taxable year 2006 ts duly substantiated by documentary evidence;

To prove that the various invoices and receipts 111 support of Petitioner' s input tax for 2006 are in compliance with the invoicing requirements provided under

Section I 13 of the 1997 Tax

Code and as implemented under

Section

4. 1 13- 1 of

Revenue

Regulations No. 16-05 To prove that the independent

CPA

has conducted the verification of petitioner's VAT returns and other supporting documents and that the fo regoing documents support and substantiate Petitioner's claim fo r tax refund/issuance of TCC for taxable year 2006.

Summary List of Purchases

To prove that the independent for the month of February

CPA

conducted the required ~----------~2_0_0_6~ [£_,_np~ 'h_ as_i_ s _o_u_~~l ______ ~v_e_r_ifi_ t c_a_t_ i o_n ____ o_f ____ P_e_t_ it_ i o_n_e_ r '_s_J~

DECISION

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue

Xxx

Supporting documents for

Exhibit NNNN-5-2 as per

reference no.

439-886 [Emphasis ours}

XXX

Page 24 of37

Invoices, Official Receipts and

Summary List of Purchases for

the month of January 2006 and that the said documents support and substantiate

Petitioner's

claim for tax refund/issuance of tax credit certificate fo r taxable year 2006.

To prove that the amount of Input Tax claimed by Petitioner for taxable year 2006

IS

duly substantiated by documentary evidence;

To prove that the various invoices and recei pts 111 support of Petitioner's input tax for 2006 are in compliance w ith the invoicing requirements provided under

Section 1 13 of the I 997 Tax

Code and as implemented under

Section

4. 1 13- 1 of

Revenue

Regulations No. 16-05 To prove that the independent

CPA

has conducted the verification of petitioner's VAT returns and other supporting documents and that the foregoing documents support and substantiate Petitioner' s claim for tax refund/issuance of TCC for taxable year 2006.

XXX

Further, listed on pages 25-27 of petitioner's FOE are the Schedule of Sales and Receipts for the months of January to December 2006 marked as Exhibits "NNNN-8-1" up to "NNNN-8-12". The invoices and receipts subject of the said Schedule ofSales and Receipts were also formally offered and can be traced on pages 26 and 27 of petitioner's FOE collectively labelled as "Supporting documents for Exhibit NNNN-8-1 to Exhibit No. NNNN-8-6 per reference no. 4756-5302" and "Supporting documents for Exhibit NNNN-8- 7 to Exhibit No. NNNN-8- 12 per reference no. 5303-5929". V

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue

Also, pages 36-43 of petitioner's FOE list down the Summary of Official Receipts for the months of January to December 2006 marked as Exhibits "NNNN- 11-1" up to "NNNN-11-12". The invoices and receipts subject of the said Summary of Official Receipts were likewise formally offered and can be traced on pages 36 to 43 of petitioner's FOE collectively captioned as follows : "Supporting documents for Exhibit NNNN-11-1 per reference no. 5930-6047"; "Supporting documents for Exhibit NNNN-11-2 per reference no. 6048-6119"; "Supporting documents for Exhibit NNNN- 11-3 per reference no. 6120-6225 "; "Supporting documents for Exhibit NNNN- 11-4 per reference no. 6226-6316 "; "Supporting documents for Exhibit NNNN- 11-5 per reference no. 63 17-6408 "; "Supporting documents for Exhibit NNNN-11-6 per reference no. 64 09-6513 "; "Supporting documents for Exhibit NNNN-11-7 per reference no. 6514-6613 "; "Supporting documents for Exhibit NNNN-11-8 per reference no. 6614-6715 "; "Supporting documents for Exhibit NNNN-11 -9 per reference no. 6716-6829 "; "Supporting documents for Exhibit NNNN-11-10 per reference no. 6830-6927"; "Supporting documents for Exhibit NNNN- 11-11 per reference no. 6928- 7046 "; "Supporting documents.for Exhibit NNNN- 11-12 per reference no. 7047-7132 ". It is indubitably visible to the eye that the invoices and official receipts pre- marked as "Supporting Documents" with reference numbers 1 to 7,132 were all listed on petitioner's FOE, and the purpose/s for which these pieces of evidence were offered had also been specified. We deem this to be sufficient compliance with the rule on offer of evidence which plainly provides that 'the Court shall consider no evidence which has not been formally offered. The purpose (or which the evidence is offered must be speci{ied' 20 . V 20 Section 34, Rule 132 ofthe Revised Rules of Court.

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue

This Court is aware and accede to the rule and well-settled principle in this jurisdiction that 'while the CTA is not governed strictly by technical rules of evidence, as rules of procedure are not ends in themselves but are primarily intended as tools in the administration of justice, the presentation of the purchase receipts and/or invoices is not [a} mere procedural technicality which may be disregarded considering that it is the only means by which the CTA may ascertain and verify the truth of respondent's claims,2 1 however, such failure to present the purchase receipts and invoices is not obtaining in this instance, and thus, the aforementioned precept finds no application in the case at bar. The invoices and official receipts were pre-marked as "Supporting Documents" with reference numbers I to 7, 132, and these reference numbers were incorporated and consciously made to appear on each of the summary, schedules, and formally offered on petitioner's FOE. By the manner these invoices and official receipts were pre-marked and incorporated by reference numbers to the summary, schedules and formally offered on petitioner's FOE, - buttressed by the fact that all these documents are in the custody of this Com1 - We are confident that this Court has all the means by which to ascertain and verify the truth of petitioner's claim. As mentioned earlier, the main object of having the evidence pre-marked and submitted to the Court is to attain the ultimate goal of making the documents 'accessible to the adverse party who desires to check and verify the correctness of the summary and CPA certification ' 22 . To reiterate, the invoices and official receipts were pre-marked by reference numbers, incorporated in the summary andV 21 Atlas Consolidated Mining and Development Corporation vs. Commissioner of Internal Revenue, G.R. No. 145526, March 16,2007. 22 paragraph (b) Section 5, Rule 12 of the RRCT A.

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue schedules, formally offered in the FOE, and currently in the custody of this Court; thus, to this Court's mind, the spirit of this rule and jurisprudential precept has been achieved and gratified.

As pronounced by the Supreme Court in the case of Philippine Phosphate Fertilizer Corporation vs. Commissioner of Internal Revenue23 " We reiterate the fundamental principle that technical rules of procedure are not ends in themselves but are primarily des igned to aid in the administration of j ustice. And in cases before tax courts, Rules of Court applies only by analogy or in a suppletory character and whenever practicable and convenient shall be liberally construed in order to promote its objective of securing a just, speedy and inexpensive disposition of every action and proceeding. The quest for orderly Qresentation of issues is not an absolute. It should not bar the courts fro m considering und isQuted facts to arrive at a just determination of a controversy. This is because, after all, the Qaramount consideration remains the ascertainment of truth. Section 8 of R.A. No. 11 25 creating the CTA also expressly provides that it shall not be governed strictly by technical rules of ev idence. And, in the case of BPI-Family Savings Bank, Inc. vs. Court of Appeal/ 4 the Supreme Court explicitly pronounced that: " .. . Technicalities and legalisms, however exalted, should not be misused by the government to keep money not belonging to it and thereby enrich itself at the expense of its law-abid ing c itizens. If the State expects its taxpayers to observe fa irness and honesty in paying their taxes, so must it apply the same standard against itself in refunding excess payments of such taxes. Indeed, the State must lead by its own example of honor, dignity and uprightness."

In this regard, while We share the Court a quo 's stance in being a strong proponent of the rule on formal offer of evidence under Section 34, Rule 132 of the V

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue

Rules of Court, which essentially states that courts cannot consider evidence which was not formally offered, We beg to differ with respect to the Court in Division's finding that petitioner failed to substantiate its claim for refund/tax credit due to petitioner's lapse in having the pieces of evidence in support of its claim, particularly, invoices and official receipts, formally offered in evidence. As pointed out in the above discourse, the pieces of evidence, i.e. invoices, official receipts, needed by this Court verify the authenticity and veracity of the independent auditors conclusions and petitioner's claim, were pre-marked by reference numbers and incorporated in the summary and schedules, presented in open court, formally offered in evidence, and currently in the custody of this Court. Whether petitioner is entitled to refund or issuance of TCC in the amount of P1 7,528,906. 71, allegedly representing excess and unuti/ized input VAT for taxable year 2006, arising from its zero- rated sales to PEZA and CDC-registered enterprises.

Having established that the pteces of evidence, i.e. sales invoices, official receipls, in suppot1 of petitioner's claim for refund/tax credit were formally offered in evidence and that petitioner's judicial claim for refund/tax credit of input VAT for taxable year 2006 was timely filed, it is now appropriate for this Court to proceed in giving due course to the instant Petition for Review for the purpose of determining whether petitioner is entitled to refund or the issuance of TCC in the amount of P17 ,528,906. 71 representing its excess and unutilized input VAT incurred for taxable year 2006 attributable to zero-rated sales to PEZA and CDC-registered enterprises. V

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Cas, Inc. vs. Commissioner of Internal Revenue

As earlier discussed, one must be guided and abide by the provision of the NIRC of 1997, as amended, specifically Section 112 (A), in claiming a refund/tax credit of unutilized input VAT attributable to zero rated or effectively zero-rated sales. The aforesaid provision mandates that the following requisites be satisfied before a taxpayer engaged in zero-rated or effectively zero-rated transactions may be granted a refund/tax credit for unutilized input VAT:

(1) the taxpayer is VAT registered;

(2) the taxpayer is engaged in zero-rated or effectively zero-rated sales;

(3) the input taxes were incurred or paid; ( 4) the input taxes have not been applied against output taxes during and in the succeeding quarters;

(5) the input taxes claimed are attributable to zero-rated or effectively zero- rated sales;

(6) the claim was applied/filed within the period prescribed in Section 112(A) and (C) of the NIRC of 1997, as amended. Inasmuch as We have already resolved the issue on the timeliness of petitioner's judicial claim, this Court shall now proceed in determining whether petitioner was able to satisfactorily meet the first five requisites for the grant of its claim for refund/tax credit of its unutilized input VAT for taxable year 2006 arising from its zero-rated sales.

For the year 2006, petitioner generated sales in the form of goods and services to entities duly registered with PEZA and Clark Special Economic Zone (CSEZ) as ~

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue evidenced by the various sales invoices25 and official receipts26 issued by petitioner to its customers, certifications27 issued by PEZA and Certificates

28 of Registration and

Tax Exemption issued by CDC. Such sales qualify for VAT zero-rating under Section 1 06(A)(2)(a)(5) of the NIRC of 1997, as amended, in relation to Articles 23 and 77 ( 1) and (2) of Executive Order No. 226, also known as the "Omnibus Investment Code of 1987, Sections 106(A)(2)(c) and 108(8)(3) ofthe NIRC of 1997, as amended, in relation to Section 15 of Republic Act (RA) No. 7227 otherwise known as the "Bases Conversion Development Act of 1992", as amended by RA No. 9400, Sections 23 and 24 of RA No. 7916 otherwise known as "The Special Economic Zone Act of 1995", as amended by RA No. 8748. The VAT zero-rating of sales of goods and services to ecozone entities is in consonance with the Cross Border Doctrine under the Philippine VAT system as clarified by the BIR in Section 3.3 Revenue Memorandum Circular No. 74-99 and affirmed by the Supreme Court in Commissioner of Internal Revenue vs. Toshiba Information Equipment (Phils.), Inc., 29 and Commissioner of Internal Revenue vs. Sekisui Jushi Philippines, Inc. 30 However, a comparison of the amounts of zero-rated sales/receipts as reflected in petitioner's Quarterly VAT Returns and as shown in its monthly Summary of Sales and Receipts for the same period revealed a discrepancy in the amount of P88,771.68, broken down as follows: V 25 Reference Nos. 4756-5302 and 5303-5929. 26 Reference Nos. 5930 to 7 132.

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Tala! Gas, Inc. vs. Commissioner of Internal Revenue

Per Summary of Sales

Per Return and Receipts

Discrepancy

Year 2006

Amo un t Ex h.

Amou nt Ex h.

January

p 14,439,298.68

NNNN-8- 1

February

15,976,890.62

NNNN-8-2

March

15,872,534.00

NNNN-8-3

Total - 1st Qtr p 46,377,494.97

"N"

p 46,288,723.30 p 88,771.67

April

p 13,202,583.70

NNNN-8-4

May

16,860,502.89

NNNN-8-5

June

14,805,735.45

NNNN-8-6

Total - 2nd Qtr 44,868,822.05 "Z'' p 44,868,822.04 0.01

July

p 16,078,94 7.02

NNNN-8-7

August

14,0 10,0 17.86

NNNN-8-8

September

14,065,432.3 1

NNNN-8-9

Total - 3rd Qtr 44,154,397.19

"LL"

p 44,154,397.19 0.00

October

p 18,158,125.72

NNNN-8- 10

November

15,74 1,625.68

NNNN-8- 11

December

16,⁴ 18,808.2 1

NNNN-8-12

Total - 4th Qtr 50,3 18,559.61

"XX"

p 50,318,559.61 0.00 Grand Tota l p 185,719,273.82 p 185,630,502.14 p 88,77 1.68 Since petitioner failed to substantiate the amount of P88,77 1.68, the same shall be denied VAT zero-rating.

Moreover, a careful scrutiny of the documents supporting petitioner's claimed zero-rated sales/receipts in the amount of P 185,630,502. 14 showed that the amount of P 11 ,806,953.22 should be disallowed for the fo llowing reasons31:

Findings

Amount

I. Sales of services supported by official receipts with no word "zero- rated" in violation of Section 11 3(8 (2)(c) of the N IRC of 1997, as amended p 6,837,⁵ 18.00

2. Sales of goods to entities with no certifications from PEZA or CDC 2, I 15,8 1 I. 19

3. Sales of goods supported by invoices with no word "zero-rated" in violation ofSection 11 3(8 )(2)(c) ofthe NIRC of 1997, as amended 59 1,948.65

4. Sales of services and others not supported by official receipts I ,058,505.38

5. Zero-rated sales with no supporting documents I ,203,170.00

TOTAL

P II ,806,953.22 Thus, Petitioner was able to properly substantiate its reported zero-rated sales/receipts for taxable year 2006 but only to the extent of P 173,823,548.92, computed as fo llows: V 3 1 See Annex A attached herewith for detai Is.

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue

Declared zero-rated sales/receipts p 185,7 19,273.82 Less: Unsubstantiated difference in zero-rated sales/receipts as reflected per VAT returns and per summary 88,77 1.68

Other Disallowances

I I ,806, 953.22 Substantiated zero-rated sales p 173,823,548.92 Consequently, only the portion of the input VAT claim attributable to the substantiated zero-rated sales/receipts of P173,823,548.92 will be considered for refund. The rate to be applied is based on the total amount of reported zero-rated sales/receipts and is computed as follows: Substantiated zero-rated sales/receipts p 173 ,823,548.92 Divided by total declared zero-rated sales/receipts

7 P

185,7 19,273.82 Rate of q ua lified zero-rated sa les/receipts 93.59% Petitioner's input VAT claim of P 17,528,906.17 represents the input VAT incurred on its domestic purchases and importation of goods and services less the output tax due plus the VAT paid per its Quarterly VAT Returns for taxable year 2006, as shown below:

In put tax for the O utput tax for VAT Pa id per Ex h.

Qtr.

qua rter the qua rter returns VAT Cla im

N

I Sl

p 4,263,850.64 p 63,727.00 p 19,1 18.10 p 4,2 19,241.74 z 2"d 4,471 ,971.03 259,440.00 77,832.00 4,290,363 .03

LL

3'0 4, 199,696.88 122,2 10.42 36,663. 13 4,114,149.59

XX

4" 4,923 ,668.58 23,443 .96 4,927.19 4,905, 15 1.81

TOTAL

P l7,859, 187.1 3 p 468,82 1.38 p 138,540.42 p 17,528,906.17 The Court-commissioned independent CPA 32 tasked to verify petitioner's claim recommended for the disallowance of the following input taxes in the amount of P1 ,161 ,284.50 before allocation33 :

Item

Nature

Exhi bit Amoun t I.

Input VAT on purchase of goods and services supported by documents where the address and TIN of the Company is not indicated

NNNN-10-6

p 732,395.28 2.

Input VAT on purchase of goods and services without original supporting documents

NNNN-10-1

182,802.91 '2 , Mr. Armando T. Fernando, a Partner of Dy Go Fernando and Company.

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue

Item

Nature

Exhi bit

Amount

., Input VAT on purchases of goods and services .) .

where no withholding taxes were recognized

NNNN-10-3

158,973.65 4.

Input VAT on purchase of goods and services with identified errors in VAT computation

NNNN-10-5

53,343.09 5.

Input VAT on purchase of goods and services supported by official receipts not in the name of

the Company

NNNN-10-2

32, 160.97 6.

Other invalid input VAT claims on purchase of goods and services

NNNN-10-4

I ,608.60 Disallowed input VAT cla ims before a llocation p 1, 161,284.50 The Court agrees with the ICPA's findings except for the input taxes under nos. 3 and 4.

The input VAT of P 158,973.65 under no. 3 of the ICPA 's findings shall not be disallowed for the reason that petitioner's failure to withhold expanded withholding tax from its purchases does not affect the amount of input tax incurred on the said purchases.

As regards the input VAT of P53,343.09 under no. 4 of the !CPA's findings pertaining to petitioner's purchases of goods and services with identified errors in VAT computation, only the amount of Pl ,533.90 representing the excess of the P26,270.09 claimed input VAT over the correct input VAT of P24,736.19 on the following purchases shall be denied:

Reference

Input Taxes

Correct

Disallowed

Month

Supplier

Num ber C la imed In put Tax

Input Tax

May

Insular Life Health Care, Inc. 2095 p I ,356.2 1 p 266.40 p 1,089.81

June

BPIIMS Insurance Corporation

2495 4,438.80 4,359.68

79. 12 Nov.

BPI/MS Insurance Corporation

4030 20,475.08 20, 110. 11 364.97 p 26,270.09 p 24,736. 19 p 1,533.90 While petitioner's claimed input VAT of P⁶,894.04 on the following purchases were correctly computed, the same shall be denied for the following reasons:

I

I

Reference I

Mo nth Supp lier Numbe r C laimed In put Taxes I. Purchases of services supported by documents other than ORs (such as delivery receipt and statement of accou nt)

I

~ ~~--------~----------------~~

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue

Reference

In put Taxes Mo nth

Supplier

Number

Claimed

Feb

Blu Boz

804 p 18.18

Aug

Globe Telecom

3248 131.95

PLOT

325 1 I, 124.⁷ 1

PLOT

3252 173 .16

PLOT

3523 283.90

PLOT

3254 928.58

PLOT

3255 363.66

Dec

Globe Telecom

4751 342.98

Globe Telecom

4752 159.43

2. Purchases of services supported by ORs dated outside the period of claim

Dec

PLOT

4732 I, 130.97

PLOT

4733 491 .62

PLOT

4734 187.88

PLOT

4735 1, 114.54

PLOT

4736 442.48

Total

p 6,894.04 In other words, out of the P53,943.09 input VAT disallowed by the ICPA, the amount of P44,9 15.15 (P53,343.09 less PI ,533.90 less P6,894.04) represents petitioner's valid claim as it was properly computed and supported by VAT invoices and official receipts.

In fine, the ICPA's recommended disallowances shall be reduced to the amount ofP957,395.70, computed as follows: Input VAT Disallowances per !CPA's Report p I, 161 ,284.50

Less:

Input VAT Claims found to be valid by the Court Per !C PA 's Finding No.3 p 158,973 .65 Per !C PA 's Finding No.4 44,915.15 203,888.80

Adjusted Input VAT Disallowances per ICPA's Report

p 957,395.70 In addition to the above disallowances, petitioner's claim should be reduced by the following input taxes totaling P1 ,126,013.41 34 :

Findings

Input Tax

I. Purchases of services not supported by official receipts in violation of Section 113(A)(2) of the N I RC of 1997, as amended p 494,712.17

2. Purchases of goods not supported by sales invoices in vio lation of Section 113(A)(l) of the N IRC of 1997, as amended 336,276.35 34 See Annex 8 attached herewith for detai ls.

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue

Find ings

Input Tax

3. Purchases of services supported by official receipts with the phrase "Not a valid source of input tax" indicated thereon 152,664.27

4. Purchases of goods supported by invoices which are not le.gible 28,057.72

5. Purchases of goods or services with overclaimed input tax 20,212.27

6. Purchases of goods or services with no supporting documents 21,788.92 7.1mportation of goods supported by IEIRD which has no machine validation as to the amount paid for customs duties and taxes (including VAT) 71,766.00 8.Purchase of services supported by an official receipt which is dated outside the period of claim 535.7 1

TOTAL

p 1 '1 26,013.41 Thus, petitioner's valid input VAT on domestic purchases and importation of goods and services amounts to only P15,445,497.06 and only P14,455,440.70 thereof is attributable to Petitioner's qualified zero-rated sales, as computed below:

Input VAT Claim

p 17,528,906.17

Less: Disallowances

Per ICPA's Report, as adjusted p 957,395.70 Per this Court's further verification I, 126,013.41 2,083,409.11 Validly supported input VAT p 15,445,497.06 Multiply by rate of qualified zero-rated sales 93 .59% In put VAT claim attributa ble to qualified zero-rated sales p 14,455,440.70 Finally, anent the fourth requisite, petitioner's claim is net of its output liability for the year 2006. In its amended Quarterly VAT Returns for the four quarters of the same taxable year, petitioner deducted the following amounts as "Any

VAT Refund/TCC Claimed":35

VAT Refund/TCC

Qua rter Ex hibit C la imed 1'1

N

p 4,219,241.74 2"d z 4,290,363.03 3rd

LL

4,114,149.59 411

XX

4,905,151.81

TOTAL

p 17,528,906.1 7 Thus, petitioner could not have possibly utilized the substantiated input VAT of Pl4,455,440.70 in the succeeding quarters. In view of the foregoing, petitioner's refundable claim amounts to Pl4,455,440.70. [/

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue

WHEREFORE, premises considered, the instant Petition for Review is hereby GRANTED but in a reduced amount of Pl4,455,440.70. Accordingly, the appealed Decision dated April 8, 2010 and Resolution dated August 10, 2010 are hereby REVERSED and SET ASIDE. Respondent is ORDERED TO REFUND, or in the alternative, ISSUE A TAX CREDIT CERTIFICATE in favor of the petitioner in the amount of P 14,455,440.70 representing excess and unutilized input VAT for taxable year 2006, arising from its zero-rated sales.

Associate Justice

WE CONCUR:

~" · c.~ ERNESTO D. ACO""'ST A

Presiding Justice

Q ___ .-J- c. a.r~ / Q_ .

(I votfto ~m the Court a quo dtd~ ion as evidence adverted to was not formally offered.) JUANITO C. CASTANEDA, JR.

Associate Justice

j_,~~tn~~ ';;Jh ~onf:tf/%f/~nion)

OLGA PALANCA-ENRIQUEZ

Associate Justice

J2_

(I join Associate Justice Castaneda, Jr.) CAESAR A. CASANOVA

Associate Justice

~ ~ - M~ --~~

(ljoin Associate Justice Castaneda, Jr.) CIELITO N. MINDARO-GRULLA

Associate Justice

C.T.A. EB CASE No. 674 (C.T.A. Case No. 7777) Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation with the members of the Court En Bane before the case was assigned to the writer of the opinion of the Court.

\___....;< & • (2_ r- ERNESTO D. A COST A

Presiding Justice

CTA EB No. 674 (7777)

ANNEX A

Pilipinas Total Gas vs. CIR

DISALLOWED ZERO-RATED SALES

FOR THE TAXABLE YEAR 2006

PER VERIFICATION OF THE COURT

Ref.# I nv./OR #

Customer

Amount ( PhP)

1. Sale of services supported by official receipts with no word ''zero-rated" 4756 4506 Rohm Apollo Electronic Co., Ltd. 265,000.00 4757 4515 Ushio Philippines, Inc.

33,605.00 4758 4455

Airwater Philippines

40,000.00 4761 4456 Showa Aluminum Mfg.

183,921.50 4782 4553

Airwater Philippines

21,911.40 4798 4435 Epson Precision (Phils.) Inc. 20,000.00 4800 4299 F-Tech Phils. Mfg.

47,622.34 4803 4436

Hitachi Global Storage Technologies

45,000.00 4806 4482 Rohm Apollo Electronic Co., Ltd. 60,000.00 4808 4461

Rohm Mechatech

5,500.00 4814 4431 Yokohama Tire Phils.

33,000.00 4815 4484 Futaba Corp. Phils.

10,600.00 4816 4484 Futaba Corp. Phils.

10,984.00 4817 4468

Airwater Philippines

62,000.00 4822 4367 Nanox Phils.

28,000.00 4835 4519 Fortunecross Phils.

1,000.00 4843 4484 Futaba Corp. Phils.

22,300.00 4850 4467

Airwater Philippines

4,500.00 4859 4314 Rohm Apollo Electronic Co., Ltd. 60,000.00 4879 4559

Airwater Philippines

21,693.00 4882 4449 Epson Precision (Phils.) Inc. 20,000.00 4884 4561 F-Tech Phils. Mfg.

47,147.67 4887 4606

Hitachi Global Storage Technologies

45,000.00 4892 4560

NEC Tokin Electronics

37,188.00 4917 4627 Yokohama Tire Phils.

33,000.00 4918 4574 TDK Phils. Corp.

18,594.00 4919 4522 Nanox Phils.

28,000.00 4920 4613

Hitachi Global Storage Technologies

18,648.00 4922 4315

Rohm Mechatech

5,500.00 4931 4617 Hoya Glass Disk Phils.

87,454.00 4941 4653 Epson Precision (Phils.) Inc. 29,640.00 4942 4756

Hitachi Global Storage Technologies

18,700.00 4944 4648

Hitachi Global Storage Technologies

59,000.00 4952 4590 TDK Phils. Corp.

80,573.00 4956 4572

Airwater Philippines

21,911.40 4958 4537 Nanox Phils.

28,000.00 4961 4616 Yokohama Tire Phils.

33,000.00 4964 4593 F-Tech Phils. Mfg.

17,070.46 4977 4628

Hitachi Global Storage Technologies

45,000.00 4981 4570

NEC Tokin Electronics

36,810.00 4983 4315

Rohm Mechatech

5,500.00 5018 4626 Epson Precision (Phils.) Inc. 20,000.00 5022 4665 Rohm Apollo Electronic Co., Ltd. 60,000.00 5031 4804 TDK Phils. Corp.

31,140.00 5032 4598 Ushio Philippines, Inc.

36,330.00 5033 4596 Toshiba Information Equipt. 57,090.00 5041 4587

NEC Tokin Electronics

37,285.20 5067 4591

Airwater Philippines

21,749.70 5070 4645 Epson Precision (Phils.) Inc. 20,000.00 5072 4593 F-Tech Phils. Mfg.

17,287.90 5083 4638

Hitachi Global Storage Technologies

45,000.00 5090 4681 Rohm Apollo Electronic Co., Ltd. 60,000.00 v

Page 1 of 5

CTA EB No. 674 (7777)

ANNEXA

Pilipinas Total Gas vs. CIR Ref.# Inv./OR #

Customer

Amount ( PhP)

5094 4540 Nanox Phils.

28,000.00 5097 4751 Yokohama Tire Phils.

33,000.00 5103 4371

Rohm Mechatech

5,500.00 5108 4697 Rohm Apollo Electronic Co., Ltd. 62,400.00 5123 4762

Hitachi Global Storage Technologies

51,000.00 5129 4802

NEC Tokin Electronics

38,059.20 5132 4371

Rohm Mechatech

5,500.00 5136 4673

Airwater Philippines

1,365.00 5141 4759 Epson Precision (Phils.) Inc. 96,114.00 5147 4713 Nanox Phils.

28,000.00 5150 4718 Yokohama Tire Phils.

33,000.00 5171 4805

Airwater Philippines

22,201.20 5174 4807 F-Tech Phils. Mfg.

17,646.78 5179 4755

Hitachi Global Storage Technologies

45,000.00 5187 4697 Rohm Apollo Electronic Co., Ltd. 60,000.00 5188 4697 Rohm Apollo Electronic Co., Ltd. 72,000.00 5202 4377 Epson Precision (Phils.) Inc. 20,000.00 5215 4697 Rohm Apollo Electronic Co., Ltd. 60,000.00 5216 4697 Rohm Apollo Electronic Co., Ltd. 72,000.00 5222 4813

NEC Tokin Electronics

38,239.20 5235 4694

Rohm Mechatech

5,500.00 5242 4812

Airwater Philippines

22,306.20 5245 4815 F-Tech Phils. Mfg.

17,730.24 5250 4770

Hitachi Global Storage Technologies

45,000.00 5292 4868 Ushio Philippines, Inc.

90,000.00 5295 4774 Epson Precision (Phils.) Inc. 20,000.00 5297 4712 Nanox Phils.

28,000.00 5300 4777 Yokohama Tire Phils.

33,000.00 5314 4379 Ushio Philippines, Inc.

34,865.00 5323 4904 Hoya Glass Disk Phils.

35,920.00 5369 4823 F-Tech Phils. Mfg.

17,186.08 5373 4913 Epson Precision (Phils.) Inc. 20,000.00 5377 4812

Airwater Philippines

21,621.60 5383 4793

Hitachi Global Storage Technologies

45,000.00 5384 5529

Hitachi Global Storage Technologies

51,000.00 5385 4865

Airwater Philippines

18,920.00 5387 4818

NEC Tokin Electronics

37,065.60 5401 4868 Ushio Philippines, Inc.

45,000.00 5408 4796 Yokohama Tire Phils.

33,000.00 5409 4915 Nanox Phils.

28,000.00 5410 4883 Rohm Apollo Electronic Co., Ltd. 60,000.00 5411 4883 Rohm Apollo Electronic Co., Ltd. 72,000.00 5412 4882

Rohm Mechatech

5,500.00 5459 4829

Airwater Philippines

21,333.90 5460 4929 Epson Precision (Phils.) Inc. 20,000.00 5461 4828 F-Tech Phils. Mfg.

16,957.40 5462 4918

Hitachi Global Storage Technologies

45,000.00 5463 4916 Nanox Phils.

28,000.00 5464 4831

NEC Tokin Electronics

36,572.40 5465 4883 Rohm Apollo Electronic Co., Ltd. 60,000.00 5466 4883 Rohm Apollo Electronic Co., Ltd. 72,000.00 5467 4882

Rohm Mechatech

5,500.00 5468 4380 Ushio Philippines, Inc.

45,000.00 5469 4924 Yokohama Tire Phils.

33,000.00 5525 5529

Hitachi Global Storage Technologies

18,700.00 5526 5503 Hoya Glass Disk Phils.

74,590.50 v

Page 2 of 5

CTA EB No. 674 (7777) Pilipinas Total Gas vs. CIR Ref.# Inv./OR #

Customer

Amount (PhP)

5527 5503 Hoya Glass Disk Phils.

98,377.50 5552 4746 Ushio Philippines, Inc.

9,500.00 5563 4836

Airwater Philippines

21,088.20 5564 5512 Epson Precision (Phils.) Inc. 20,000.00 5565 4835 F-Tech Phils. Mfg.

16,762.11 5566 5517

Hitachi Global Storage Technologies

45,000.00 5567 4725 Nanox Phils.

28,000.00 5568 4831

NEC Tokin Electronics

36,151.20 5569 5471 Rohm Apollo Electronic Co., Ltd. 60,000.00 5570 5471 Rohm Apollo Electronic Co., Ltd. 72,000.00 5571 5452

Rohm Mechatech

5,500.00 5572 4748 Ushio Philippines, Inc.

45,000.00 5573 4942 Yokohama Tire Phils.

33,000.00 5618 5540

Hitachi Global Storage Technologies

11,472.00 5619 5524 Toshiba Information Equipt. 8,194.00 5633 5004 Yokohama Tire Phils.

1,360,600.00 5635 5011 Epson Precision (Phils.) Inc. 18,915.00 5640 5534

Airwater Philippines

20,932.80 5641 5536 Epson Precision (Phils.) Inc. 20,000.00 5642 4845 F-Tech Phils. Mfg.

16,638.59 5643 5529

Hitachi Global Storage Technologies

45,000.00 5644 4954 Nanox Phils.

28,000.00 5645 5533

NEC Tokin Electronics

35,884.80 5646 4967 Rohm Apollo Electronic Co., Ltd. 60,000.00 5647 4967 Rohm Apollo Electronic Co., Ltd. 72,000.00 5648 5470

Rohm Mechatech

5,500.00 5649 5473 Ushio Philippines, Inc.

45,000.00 5650 5515 Yokohama Tire Phils.

33,000.00 5684 5531 TDK Phils. Corp.

108,386.64 5688 5458 Fuji Electric Phils. Inc.

11,210.00 5728 4749 Clarion Mfg. Corp.

27,000.00 5776 5202 Toshiba Information Equipt. 49,163.40 5781 4970 Nanox Phils.

28,000.00 5782 4966

Rohm Mechatech

5,500.00 5783 4848

Airwater Philippines

20,857.20 5784 4850 F-Tech Phils. Mfg.

16,578.49 5788 4847

NEC Tokin Electronics

35,755.20 5790 2601 Fuji Electric Phils. Inc.

35,000.00 5791 4963 Ushio Philippines, Inc.

45,000.00 5792 5543 Yokohama Tire Phils.

33,000.00

Sub-total

fi837,Sl⁸.00

2. Sale of goods to entities wtth no certification from PEZA or CDC 4762 6373 Yield Ltd., Inc.

4763 6374 Yield Ltd., Inc.

4779 6392 Yield Ltd., Inc.

4809 6423 Suncall Corp.

4833 6466 Tomoe Shokai Co. Ltd.

4849 6468 Yield Ltd., Inc.

4895 6516 Suncall Corp.

4933 6554 Tomoe Shokai Co. Ltd.

4984 6610 Suncall Corp.

5044 6676 lOESS 5092 6727 Suncall Corp.

5104 6740 Yield Ltd., Inc.

5118 6750 Nidec Precision Phils.

Page 3 of 5

15,860.10 52,867.00 104,340.00 8,800.00 106,368.40 78,300.00 6,600.00 24,800.58 6,600.00 5,282.07 6,600.00 108,990.00 500.oov

ANNEXA

CTA EB No. 674 (7777) Pilipinas Total Gas vs. CIR Ref.# Inv./OR #

Customer

Amount (PhP)

5127 6761 Yield Ltd., Inc.

5142 6777

OMTPI

5190 6825 Suncall Corp.

5223 6859 Yield Ltd., Inc.

5239 6877 Yield Ltd., Inc.

5271 6909 Suncall Corp.

5306 6939 Tomoe Shokai Co. Ltd.

5309 6944 Yield Ltd., Inc.

5310 6945 Yield Ltd., Inc.

5317 6956 Sumisetsu Phils.

5360 7002

First Sumiden

5389 7031 Suncall Corp.

5497 7144 Suncall Corp.

5524 7172 Yield Ltd., Inc.

5611 7318 Suncall Corp.

5617 7324 Yield Ltd., Inc.

5625 7341 Yield Ltd., Inc.

5677 7296 Suncall Corp.

5709 7366 Suncall Corp.

5746 7403

Sun Machinery

5747 7404 Tomoe Shokai Co. Ltd.

5798 7464 Yield Ltd., Inc.

5823 7489 Suncall Corp.

5904 7569 Suncall Corp.

5928 7594 Yield Ltd., Inc.

Sub-total

3. Sale of goods supported by invoices w1th no word "zero-rated" 4777 6390 Epson Precision (Phils.) Inc. 5027 6655 Rohm Apollo Electronic Co., Ltd. 5028 6656

Hitachi Global Storage Technologies

5122 6755

T&S Laser Solutions

5308 6943 Toshiba Information Equipt.

Sub-total

4. Sale of services and others not supported by an official receipt 5636 7255

Hitachi Global Storage Technologies

5738 7395 Hoya Glass Disk Phils.

5779 7443 Epson Precision (Phils.) Inc. 5780 7444

Hitachi Global Storage Technologies

5785 7449 Rohm Apollo Electronic Co., Ltd. 5787 7451 Rohm Apollo Electronic Co., Ltd. 5835 7502 PHCP, Inc.

5847 7508 PHCP, Inc.

5862 7526

Airwater Philippines

5864 7528 Epson Precision (Phils.) Inc. 5865 7529

Hitachi Global Storage Technologies

5866 7530 Nanox Phils.

5867 7531

Rohm Mechatech

5868 7532 Ushio Philippines, Inc.

5869 7533 Yokohama Tire Phils.

5870 7534 PHCP, Inc.

5871 7535

Airwater Philippines

5872 7536 F-Tech Phils. Mfg.

5873 7537

NEC Tokin Electronics

5874 7538 Rohm Apollo Electronic Co., Ltd.

Page 4 of 5

79,425.00 165,813.36 4,400.00 42,222.71 159,330.00 6,600.00 27,640.80 245,312.00 52,320.00 146,320.72 5,406.00 6,600.00 4,400.00 165,858.00 8,800.00 150,360.00 75,566.05 2,200.00 4,400.00 23,381.28 3,597.12 49,660.00 6,600.00 6,600.00 147,090.00 2,11~811.19 8,974.65 427,500.00 108,000.00 47,020.00 454.00 S91,948.6S 18,700.00 18,993.00 20,000.00 45,000.00 60,000.00 72,000.00 21,000.00 230,000.00 11,450.00 20,000.00 45,000.00 28,000.00 5,500.00 45,000.00 33,000.00 21,000.00 20,592.60 16,368.18 35,301.60 60,000.00 v

ANNEXA

CTA EB No. 674 (7777) Pilipinas Total Gas vs. CIR Ref.# Inv./OR #

Customer

5875 7539 5919 7585 5926 7592 Rohm Apollo Electronic Co., Ltd. Yokohama Tire Phils.

Philippines HKR Inc.

Sub-total

5. Zero-rated sales with no supporting documents 6533 Ushio Philippines, Inc.

6662

T&S Laser Solutions

6839 Ushio Philippines, Inc.

7081 TDK Phils. Corp.

7386 TDK Phils. Corp.

7516 Hoya Glass Disk Phils.

Sub-total

TOTAL

Page 5 of 5

Amount (PhP}

72,000.00 64,600.00 95,000.00 1,058,505.38 72,000.00 285,000.00 824,760.00 11,110.00 6,300.00 4,000.00 1,203,170.00 11,806,953.22 ~

ANNEXA

CTA EB No. 674 (7777)

Annex B

Pilipinas Total Gas vs. CIR

ADDITIONAL DISALLOWANCES

PER VERIFICATION OF THE COURT

Ref. No.

Supplier

OR/ Invoice No.

Date

Amount ( PhP)

1. Purchase of services not supported by an official receipt 2 Ingasco, Inc.

191578 1/31/2006 110,000.00 3 Ingasco, Inc.

207880 1/31/2006 1,320.00 4 Ingasco, Inc.

207878 1/31/2006 210.00 5 Ingasco, Inc.

107875 1/31/2006 17,981.75 6 Ingasco, Inc.

207408 1/31/2006 3,576.14 11 Ingasco, Inc.

207386 1/31/2006 1,065.00 12 Ingasco, Inc.

207385 1/31/2006 30,071.70 362

Globe Telecom

289.66 363

PLDT

58001987858 942.65 364

PLDT

58001987858 196.65 365

PLDT

58001987858 656.32 366

PLDT

58001987858 161.58 367

PLDT

58001987858 346.61 397

Globe Telecom

176.45 403

Smart Communication

318.18 435

Mobile Carwash

27.27 812

Globe Telecom

132.07 813

Globe Telecom

212.46 814

Globe Telecom

138.03 815

PLDT

1,131.19 816

PLDT

457.27 817

PLDT

217.42 818

PLDT

1,228.37 819

PLDT

419.89 829

Smart Communication

375.00 1297

Globe Telecom

214.75 1298

Globe Telecom

430.93 1299

Smart Communication

438.36 1309

Globe Telecom

129.11 1319

PLDT

294.82 1320

PLDT

1,056.63 1321

PLDT

183.55 1322

PLDT

446.16 1323

PLDT

1,129.50 1492 Ingasco, Inc.

211501 4/17/2006 5,887.20 1493 Ingasco, Inc.

211500 4/10/2006 120,000.00 1667

Globe Telecom

41280905 251.09 1671

Smart Communication

375.00 1703

Isuzu Pasig

21471 4/25/2006 241.07 1704

Isuzu Pasig

21470 4/25/2006 392.89 1715

PLDT

58002139534 307.42 1716

PLDT

58002139533 1,155.37 1717

PLDT

58002139532 176.67 1718

PLDT

58002157272 454.31 1719

PLDT

58002157271 1,119.71 1731 PCM Industrial Sales, Inc.

4867 5/24/2006 5,880.00 1732 PCM Industrial Sales, Inc.

4868 5/24/2006 1,260.00 1733 PCM Industrial Sales, I nc. 4869 5/24/2006 4,440.00 2093

Globe Telecom

37 1,890.00 2108

Globe Telecom

8 192.86 2109

Globe Telecom

14 187.25 2110

Smart Communication

84652617 375.00 v

Page 1 of 4

CTA EB No. 674 (7777)

Annex B

Pilipinas Total Gas vs. CIR Ref. No.

Supplier

OR/Invoice No.

Date

Amount ( PhP)

2117

Globe Telecom

38 147.39 2129

PLOT

58002190612 329.82 2130

PLOT

58002190611 1,022.63 2131

PLOT

58002190610 221.91 2132

PLOT

58002208352 544.17 2141 PCM Industrial Sales, Inc.

4884 5/24/2006 480.00 2142 PCM Industrial Sales, Inc.

4886 6/13/2006 2,160.00 2143 PCM Industrial Sales, Inc.

4892 6/20/2006 16,925.76 2484

Globe Telecom

188.11 2486

Globe Telecom

219.93 2488

PLOT

58002190612 1,136.65 2489

PLOT

58002190611 528.79 2490

PLOT

58002190610 183.86 2491

PLOT

58002208352 1,314.18 2492

PLOT

58002208351 310.86 2493

Smart Communication

85640177 375.00 2520 PCM Industrial Sales, Inc.

4955 8/7/2006 3,360.00 2521 PCM Industrial Sales, Inc.

4921 7/17/2006 852.24 2522 PCM Industrial Sales, Inc.

4933 7/24/2006 1,850.04 2523 PCM Industrial Sales, Inc.

4936 7/28/2006 968.45 2524 PCM Industrial Sales, Inc.

4943 7/31/2006 11,555.90 2851

Globe Telecom

190.58 2852

Globe Telecom

192.86 2855

PLOT

58002316731 1,113.09 2856

PLOT

58002316732 428.07 2857

PLOT

58002297586 184.77 2858

PLOT

58002297587 971.04 2859

PLOT

58002297588 342.41 2864

Smart Communication

86633895 375.00 3247

Globe Telecom

228.88 3249

Globe Telecom

192.86 3259

Smart Communication

087640095 7/28/2006 385.95 3278 PCM Industrial Sales, Inc.

4995 9/11/2006 10,986.72 3279 PCM Industrial Sales, Inc.

4997 9/11/2006 1,167.04 3608

Globe Telecom

300.45 3609

Globe Telecom

200.87 3610

Globe Telecom

192.86 3617

Smart Communication

088681462 8/2/2006 376.03 3632 Ingasco, Inc.

221623 10/31/2006 707.14 3633 PCM Industrial Sales, Inc.

5016 10/4/2006 1,026.00 3634 PCM Industrial Sales, Inc.

5022 10/9/2006 9,000.00 4006

Globe Telecom

381.16 4012

Smart Communication

479.13 4013

Globe Telecom

196.19 4014 Republic Courier Service, Inc. 365.29 4022 PCM Industrial Sales, Inc.

5059 11/13/2006 19,542.32 4023 PCM Industrial Sales, Inc.

5060 11/13/2006 35,373.55 4024 PCM Industrial Sales, Inc.

5061 11/13/2006 11,697.35 4371

Globe Telecom

184.83 4372

Globe Telecom

399.65 4398

Smart Communication

481.03 4403 Ingasco, Inc.

225151 12/31/2006 697.24 4411 PCM Industrial Sales, Inc.

5085 12/11/2006 732.11 4413 PCM Industrial Sales, Inc.

5088 12/13/2006 2,019.60 4414 PCM Industrial Sales, Inc.

5089 12/13/2006 19,563.30 4415 PCM Industrial Sales, Inc.

5090 12/13/2006 726.00 ~

Page 2 of 4

CTA EB No. 674 (7777)

Annex B

Pilipinas Total Gas vs. CIR Ref. No.

Supplier

OR/Invoice No.

Date

Amount (PhP)

4460 Ingasco, Inc.

225153 12/31/2006 2,643.48 4461 Ingasco, Inc.

225152 12/31/2006 2,618.18 4462 Ingasco, Inc.

225150 12/31/2006 2,100.00 4516 Ingasco, Inc.

224726 12/19/2006 17.79 4674 Ingasco, Inc.

223853 12/6/2006 35.57 4738

Globe Telecom

185.82 4750

Smart Communication

472.96

Sub-total

494,712.17

2. Purchase of goods not supported by an invoice 13 Beta Chemicals, Inc.

11505 2/24/2006 3,600.00 18 Beta Chemicals, Inc.

11427 2/17/2006 3,600.00 19 Beta Chemicals, Inc.

11456 2/10/2006 3,600.00 360 Anrah LT. Products, Inc.

1274 2/3/2006 3,656.36 837 Anrah LT. Products, Inc.

1759 3/3/2006 300.00 843 Tricorn Dynamics, Inc.

128105 3/3/2006 1,568.14 887 Pacific Carbonic Corp.

4490 5/12/2006 12,283.66 893 Pacific Carbonic Corp.

4484 4/10/2006 14,686.98 1295 Anrah I.T. Products, Inc.

1884 4/7/2006 1,366.07 1714 Pilipinas Shell Petroleum Corp. 428055 5/16/2006 3,524.60 1739 Beta Chemicals, Inc.

12031 6/30/2006 4,821.43 1740 Beta Chemicals, Inc.

11945 6/23/2006 3,857.14 1748

VAF Enterprises

2423 5/25/2006 66,306.72 1749 Manila Fluid System, Inc.

3918 6/7/2006 64.61 1750

Marman Trading

39137 6/26/2006 4,285.71 2111 Anrah I.T. Products, Inc.

2279 5/19/2006 4,079.46 2134 Pilipinas Shell Petroleum Corp. 4,705.41 2144 Beta Chemicals, Inc.

12054 7/7/2006 3,857.14 2145 Beta Chemicals, Inc.

13087 7/28/2006 3,857.14 2146 Beta Chemicals, Inc.

13088 7/28/2006 8,678.57 2487 Pilipinas Shell Petroleum Corp. 434079 7/18/2006 3,750.00 2530

VAF Enterprises

2421 7/19/2006 62,904.00 2854 Pilipinas Shell Petroleum Corp. 437715 8/16/2006 4,841.54 2899 Beta Chemicals, Inc.

12275 9/15/2006 3,857.14 2901 Toolec Inc.

23284 8/25/2006 1,671.43 2906 Festa Inc.

54951 9/22/2006 355.92 3250 Pilipinas Shell Petroleum Corp. 441678 9/14/2006 4,595.69 3266 Anrah I.T. Products, Inc.

3871 9/1/2006 3,337.17 3270

The Great Swan Lake Trading

2048 9/22/2006 433.71 3272 Pacific Carbonic Corp.

4536 11/6/2006 15,723.71 3280 Beta Chemicals, Inc.

12602 11/17/2006 4,800.00 3281 Beta Chemicals, Inc.

12487 10/27/2006 6,000.00

3289 to 3291 Jetmar Industrial Sales

6457 10/6/2006 1,899.11 3611 Pilipinas Shell Petroleum Corp. 444904 10/13/2006 4,071.43 3631

Cebu Legacy Enterprises

1576 11/17/2006 2,142.86 3642 Beta Chemicals, Inc.

12707 12/8/2006 4,800.00 3643 Beta Chemicals, Inc.

12610 11/24/2006 4,800.00 3645 Beta Chemicals, Inc.

12603 11/17/2006 4,800.00 3647

Jetmar Industrial Sales

6527 11/17/2006 423.21 3655 Toolec Inc.

23341 11/3/2006 144.64 3997 Pilipinas Shell Petroleum Corp. 448369 11/14/2006 4,477.49 4005 Anrah I.T. Products, Inc.

4861 11/10/2006 2,427.86 4010 Tricorn Dynamics, Inc.

142010 11/3/2006 644.14 4011 Anrah LT. Products, Inc.

4619 11/27/2006 396.96 4034 Toolec Inc.

24335 11/30/2006 3,942.86 4036 Manila Fluid System, Inc.

4171 11/27/2006 119.30 v

Page 3 of 4

CTA EB No. 674 (7777)

Annex B

Pilipinas Total Gas vs. CIR Ref. No.

Supplier

OR/Invoice No.

Date

Amount (PhP)

4042

Genequipt Sales

2347 11/22/2006 385.71 4373 Pilipinas Shell Petroleum Corp. 1969 12/15/2006 3,999.23 4392 Anrah I.T. Products, Inc.

9024 12/8/2006 1,462.50 4409 Pacific Carbonic Corp.

4569 2/2/2007 18,723.94 4416 Beta Chemicals, Inc.

12901 2/2/2007 5,689.29 4420

Jetmar Industrial Sales

7356 5/18/2007 900.00 4424 Manila Fluid System, Inc.

4195 12/29/2006 60.99 4731 Pilipinas Shell Petroleum Corp. 6788 1/16/2007 4,138.24 4741

AXN Tyre Medic Center

540 1/5/2007 857.14

Sub-total

336,276.3S J. Purchase of setvices supported by official receipt with "Not a valid source of input tax" 2137 PCM Industrial Sales, Inc.

2535 8/11/2006 2138 PCM Industrial Sales, Inc.

2536 8/11/2006 2139 PCM Industrial Sales, Inc.

2621 7/28/2006 2140 PCM Industrial Sales, Inc.

2620 7/28/2006 2894 PCM Industrial Sales, Inc.

2581 10/3/2006 2895 PCM Industrial Sales, Inc.

2578 9/15/2006 3276 PCM Industrial Sales, Inc.

2596 10/27/2006 3277 PCM Industrial Sales, Inc.

2631 11/3/2006 3635 PCM Industrial Sales, Inc.

2600 11/24/2006 4025 PCM Industrial Sales, Inc.

2645 11/30/2006 4410 PCM Industrial Sales, Inc.

2710 2/2/2007

Sub-total

4. Purchase of goods supported by invoices which are not legible 1474 Ingasco, Inc.

211571 1790 1800 2012 Ingasco, Inc.

Ingasco, Inc.

Ingasco, Inc.

Sub-total

213626 213592 212524

5. Purchase of goods or setvices w1th overclaimed input tax 788 Ingasco, Inc.

191507 832

Manila Bulletin Publishing

5521667 4007 Toyota Balintawak Inc.

78425 4747 Insular Life Health Care, Inc. 131677

Sub-total

6. Purchase of goods or setvices w1th no supporting documents 1807 Ingasco, Inc.

213557 1853 3230 Ingasco, Inc.

Ingasco, Inc.

PLDT

Sub-total

213316 198145 58002208351

7. Importation of goods supported by IEIRD which is not validated 3650

Bureau of Customs

Sub-total

4/18/2009 5/27/2006 5/26/2006 5/6/2006 1/31/2006 2/19/2006 10/16/2006 12/21/2006 5/25/2006 5/22/2006 8/19/2006 907.20 2,867.64 2,396.64 3,407.52 1,021.92 651.60 1,916.26 817.32 136,390.02 1,500.19 787.96 6,855.01 7,067.57 6,823.86 7,311.28 28,057.72 1,169.59 160.85 43.39 18,838.44 7,554.99 5,754.63 7,351.11 1,128.19 71,766.00

8. Purchase of setvices supported by an official receipt which is dated outside the period of claim 4421 Best Value Trading Corp.

2929 1/5/2007 535.71

Sub-total

535.71

TOTAL

Page 4 of 4

1,126,013.41 1 _...

=========v

REPUBLIC OF THE PHILIPPINES

Court ofT ax Appeals

QUEZON CITY

PILIPINAS TOTAL GAS, INC., Petitioner, -versus-

COMMISSIONER OF INTERNAL

REVENUE,

En Bane

Respondent.

Present:

Acosta, P.J.

Castaneda, Jr.

Bautista, Uy, Casanova, Palanca-Enriquez, Fa bon-Victorino, Mindaro-Grulla, and Cotangco-Manalastas, JJ.

Promulgated:

fML. .. P'~

IAN 0 5 2012

711?f:;t!7 r.~ ~nov ~ x-------------------------------------------------------------------------------------------------------------x

SEPARATE CONCURRING OPINION

BAUTISTA, [.

A perusal of the relevant law and jurisprudence convinces me that at the time of the filing of the administrative claim on July 31, 2007, and the subsequent Petition for Review with this Court on April 24, 2008, relative to a claim for refund of input value-added tax ("VAT") attributable to zero-rated sales for the four quarters of the taxable year 2006, the prevailing jurisprudence then is that the two (2)-year prescriptive period is reckoned from the filing of the quarterly return, which this Court has ::;:::~:;o::~i:::. a long line of dec~ions, and has continued to guide mxpay?

SEPARATE CONCURRING OPINION

CT A EB CASE NO. 674 (CT A Case No. 7777)

Page 2 of4

Therefore, while I concur with the findings of the Court sitting En Bane that petitioner's administrative and judicial claims have been filed within the period allowed under Section 112(C) of the 1997 National Internal Revenue ("NIRC"), as amended, I, nonetheless, must point out my different view. The factual circumstances present in the case at bench should make this Court consider the principle which states that "where there has been justifiable reliance on Our decisions, and those who have so relied may be substantially harmed if retroactive effect is given, where the purpose of the new rule can be adequately effectuated without giving it retroactive operation, or where retroactive operation might greatly burden the administration of justice, then it is Our duty to apply the new rule prospectively."l This Court has been consistent that, even after the Petition for Review was filed on 2008, the Court has continued to invoke the rule that the reckoning of the two (2)-year prescriptive period for the filing of claims for VAT refund/ tax credit certificate starts from the date of filing of the corresponding quarterly VAT returns, in similar cases such as Takenaka Corp. Phil. Branch v. CIR, CTA Case No. 6762, March 20, 2006; Mirant (Navotas 11) Corporation v. CIR, CTA Case Nos. 7234 & 7295, October 2, 2008; and CE Luzon Geothermal Power Co. v. CIR, CTA Case Nos. 6792 & 68~ November 25, 2008.

1 Magtoto v. Manguera, et al., G.R. Nos. L-37201-02, L-37424, and L-38929, March 3, 1975, 63 SCRA 4, Concurring Opinion penned by Justice Felix Q. Antonio, with Justices Antonio P. Barredo and Cecilia Muii.oz-Palma, concurring.

SEPARATE CONCURRING OPINION

Cf A EB CASE NO. 674 (Cf A Case No. 7777)

Page 3 of 4

Thus, the rule that the reckoning of the two (2)-year period is the date of filing of the quarterly VAT return has become a well-established doctrine and adopted in numerous decisions of this Court, the Court of Appeals and even the Supreme Court until the latter issued a ruling wherein the two (2)-year period is reckoned, not from the filing of the return, but from the close of the taxable quarter when the sales were made.

Further, the use of the word "may" in Section 112(C) of the 1997 NIRC, as amended, indicates that the judicial recourse within thirty (30) days after the lapse of the one hundred twenty (120)-day period is directory and permissive, and not mandatory nor jurisdictional as long as the said period is within the two (2)-year prescriptive period under Sections 1122 and 2293 of the 1997 NIRC.4 Therefore, if the two (2)-year prescriptive period is about to expire, there is no need to wait for the 2 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, hawever, That in the case of zero-rated sales under Section 106(A)(2)(a)(1),(2) and (B) and Section 108 (B)(l) 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, fu rther, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods or properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales. 3 SEC. 229. Recoven; of Tax Erroneously or Illegally Collected. - No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessively or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress. In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment: Provided, however, That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid.

' Commi$ione< of lnt<mal R~enue v. Aiohi Fooging Company of M ia, Ino, CT A EB O.Se No. 416, Febouary) 2D09.

I

SEPARATE CONCURRING OPINION

CTA EB CASE NO. 674 (CIA Case No. 7777)

Page 4 of 4

denial of the claim by the Commissioner of Internal Revenue or its inaction after the expiration of the one hundred twenty (120)-day period before the taxpayer can lodge its appeal with this Court.S Otherwise, the Court will be deprived of jurisdiction to entertain the case.6 Based on the foregoing discussion, while I concur with the grant of the present Petition for Review, I maintain my view that the two (2) year prescriptive period should be reckoned from the filing of the relevant return, and that the period provided under Section 112(C) of the 1997 NIRC, as amended, is merely directory and not mandatory nor jurisdictional. Accordingly, I vote for the GRANT of the Petition for Review.

BAUTISTA

s Commissioner of Internal Revenue v. CE Cebu Geothermal Power Company, Inc., CT A EB No. 426, May 29, 2009.

6 Commissioner of Internal Revenue v. Accenture, Inc., CT A EB No. 410 (CT A Case No. 7387), March 18, 2009.

REPUBLIC OF THE PHILIPPINES

Court ofT ax Appeals

QUEZON CITY

ENBANC

PILIPINAS TOTAL GAS, INC., Petitioner, -versus-

COMMISSIONER OF INTERNAL

REVENUE, Respondent.

Present:

ACOSTA, Presiding Justice, CASTANEDA, JR., BAUTISTA, UY, CASANOVA, PALANCA-ENRIQUEZ, F ABON-VICTORINO, MINDARO-GRULLA, and COTANGCO-MANALASTAS, JJ.

Promulgated:

JAN 0 5 20~2 t!t~~~t{._/l~ ...... _= --=._....::......;;:...;:,..;.,:;;___...c...Z'-..:l ;;Jt.S;'.P -(, IV"\ • X ---------------------------------------------------------------------------------------- X

SEPARATE CONCURRING OPINION

PALANCA-ENRIQUEZ, J.:

This case is an appeal by Pilipinas Total Gas, Inc. from the Decision dated April 8, 2010 of the Second Division in C.T.A. Case No. 7777, which denied petitioner's claim for refund of unutilized input VAT on the ground (jfJJ

SEPARATE CONCURRING OPINION

2 that petitioner failed to sufficiently substantiate its zero-rated sales for taxable year 2006 considering that petitioner's official receipts, invoices and other supporting documents were not formally offered in evidence before the Second Division, docketed as C.T.A. EB No. 674. In C.T.A. EB No. 674, the Ponente, however, reversed said Decision dated April 8, 2010 of the Second Division on the ground that the invoices and official receipts in question were pre-marked and presented before the Second Division and formally offered in evidence. With due respect, after a careful examination of the records of the case, I agree with Justice Amelia R. Cotangco-Manalastas, the Ponente in C.T.A. EB No. 674, that the supporting documents, invoices and official receipts in question were formally offered in evidence before the Second Division, even if only the schedules bear the corresponding exhibit numbers. A perusal of petitioner's Formal Offer of Evidence filed before the Second Division shows that although only the "Summary Lists of Purchases" were marked as Exhibits "NNNN-5-1" to "NNNN-5-12", each exhibit, e.g. Exhibit "NNNN-5-1", includes a caption "Supporting Documents for Exhibit NNNN-5-1 per reference no. 1-438", below it, "@Jflsite it, the

SEPARATE CONCURRING OPINION

3 purpose for which said documents were being offered. This is true as regards the other NNNN-5 Exhibits.

The "Supporting Documents" referred to therein are copies of official receipts and sales/charge invoices for taxable year 2006, with corresponding reference numbers.

Therefore, it is evident that the "Supporting Documents" mentioned in petitioner's Formal Offer of Evidence are part and parcel of the mother Exhibits "NNNN-5-1" to "NNNN-5-12". Clearly, said invoices and official receipts, subject of said "Summary List of Purchases", were formally offered in evidence. Considering that said "Supporting Documents" were formally offered in evidence, it is my humble view that there is substantial compliance with Section 34, Rule 132 of the Revised Rules of Court.

In fact, in the case of Dizon vs. Court of Tax Appeals, 553 SCRA 128, citing the cases of People vs. Napat-a (179 SCRA 407) and People vs. Mate (1 03 SCRA 484), the Supreme Court ruled that documents not formally offered may be admitted and considered in evidence if ( 1) the documents have been duly identified by testimony duly recorded, and (2) the documents have been incorporated in the records of the case.

C.I.A. EB NO. 674 (C.I.A. CASE NO. 7777)

SEPARA IE CONCURRING OPINION

4 During the hearing held on January 13, 2009, the Court- Commissioned Independent CPA identified the official receipts and invoices issued by petitioner for the period January 2006 to December 2006 (TSN, Jan. 13, 2009, pp. 14-16).

Thus, it is clear that the official receipts and invoices in question were duly identified by the testimony of the ICP A. With more reasons, therefore, that petitioner's claim for refund of input VAT should not be denied on the ground that petitioner's official receipts, invoices and other supporting documents were not formally offered in evidence before the Second Division. In view hereof, I concur with Justice Amelia R. Cotangco-Manalastas, the Ponente in C.T.A. EB No. 674, to reverse and set aside the Amended Decision dated April 8, 2010 of the Second Division and accordingly, to grant the Petition For Review in C.T.A. Case No. 7777 in the reduced amount ofP14,455,440.70.

~,k~~~

OLGA PALANCA-ENRIQUEZ

Associate Justice