Procter & Gamble Asia, Pte. Ltd. v. Commissioner of Internal Revenue

SPECIAL SECOND DIVISION [C.T.A. CASE NO. 7683. September 6, 2018.] PROCTER & GAMBLE ASIA, PTE. LTD. , petitioner , vs .COMMISSIONER OF INTERNAL REVENUE , respondent . AMENDED DECISION CASTAEDA, JR. , J p : STATEMENT OF THE CASE This is a case remanded by the Supreme Court involving a Petition for Review filed by Procter & Gamble, Pte. Ltd. ("PGAPL," for brevity) on September 27, 2007, seeking the refund or issuance of a tax credit certificate in the amount of FIFTY-THREE MILLION SIX HUNDRED TWENTY-FOUR THOUSAND FOUR HUNDRED TWENTY-SEVEN PESOS and 14/100 (P53,624,427.14),allegedly representing its input value-added tax (VAT) attributable to zero-rated sales for the periods of July 1 to September 30, 2005 and October 1 to December 31, 2005. HTcADC STATEMENT OF FACTS As culled from the Supreme Court's Decision 1 in G.R. No. 204277 entitled Procter & Gamble Asia Pte. Ltd. vs. Commissioner of Internal Revenue ,the facts of this case are as follows: "Petitioner PGAPL is a foreign corporation duly organized and existing under the laws of Singapore, with a Regional Operating Headquarters (ROHQ) in the Philippines. The ROHQ provides management, marketing, technical and financial advisory, and other qualified services to its related parties. PGAPL is registered as a Value Added Tax (VAT) taxpayer with the Bureau of Internal Revenue (BIR) .On the other hand, respondent is the duly appointed Commissioner of Internal Revenue (CIR) ,empowered to perform the duties of said office including, among others, the duty to act upon and approve claims for refunds or tax credits as provided by law. On October 24, 2005, and January 26, 2006, PGAPL filed with the BIR its Original Quarterly VAT returns for the Third and Fourth quarters of 2005, respectively. On April 4, 2007, PGAPL amended its Quarterly VAT returns for the last two quarters of 2005, reporting both sales subject to 10% VAT and zero-rated sales. For the last two quarters of 2005, PGAPL claimed it incurred unutilized input VAT amounting to P53,624,427.14. CAIHTE On August 21, 2007, PGAPL filed an administrative claim for tax refund with the BIR for input VAT attributable to its zero-rated sales covering the period July 2005 to September 2005 and October 2005 to December 2005. Claiming that the CIR has not acted on its application, PGAPL elevated the case to the CTA by filing a petition for review before the CTA division on September 27, 2007. The CTA Division dismissed PGAPL's petition. It ruled that the filing of the judicial claim for tax refund or credit before the CTA is premature, because the petitioner proceeded with its appeal even before the expiration of the 120-day period given to the CIR to decide on its claim for tax refund or credit of excess input VAT. Section 112 of the National Internal Revenue Code of 1997 (NIRC) provides that in case of denial of his claim for tax credit or refund or failure of the CIR to act on the application within 120 days, the taxpayer may, within 30 days from the receipt of the notice of denial or after the expiration of the 120-day period, appeal the decision or unacted claim with the CTA. The CTA Division emphasized that, as enunciated in Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc. , compliance with the aforesaid 120- and 30-day periods is crucial in filing an appeal before the CTA (Aichi Doctrine) . PGAPL moved for reconsideration, but the CTA denied its motion in a resolution dated March 7, 2011. The CTA Division struck down PGAPL's argument that respondent is already estopped from raising the issue of jurisdiction considering that it already actively participated in all stages of the proceedings and that the CTA has proceeded to try the case without bringing into petitioner's attention that it has no jurisdiction to do so. It ruled that parties are not barred from assailing the jurisdiction of the court, even when the case has already been tried and decided upon. Jurisdiction must exist as a matter of law and may not be conferred by the consent of the parties or by estoppel. Thereafter, petitioner filed a petition for review before the CTA en banc . aScITE In its decision dated June 18, 2012, the CTA en banc affirmed the decision and resolution of the CTA Division. It found that PGAPL's administrative claim for excess input VAT credit or refund was timely filed with the BIR on August 21, 2007. However, its judicial claim before the CTA was filed on September 27, 2007, or only 37 days after it had filed its administrative claim. Based on these timelines, the CTA en banc held that PGAPL's petition was prematurely filed. Thus, the CTA had no jurisdiction to hear and decide its appeal. The CTA en banc reiterated that, based on Aichi ,the premature filing of a taxpayer's claim for tax credit or refund on input VAT before the CTA warrants dismissal as the CTA did not acquire jurisdiction over the claim. DETACa The CTA en banc further held that, contrary to petitioner's claim, the Aichi Doctrine was not effectively abandoned by the Supreme Court in its rulings in Hitachi Global Storage Technologies Corp. v. Commissioner of Internal Revenue, Silicon Philippines, Inc. v. Commissioner of Internal Revenue ,and Kepco Philippines Corporation v. Commissioner of Internal Revenue . It observed that in PGAPL's cited cases, the issue of compliance with the 120- and 30-day periods under Section 112 of the NIRC was never squarely raised. Thus, Aichi remains the prevailing doctrine on the compliance with the 120- and 30-day periods. The CTA en banc further ruled that Hitachi , Silicon ,and Kepco could not have overturned Aichi .Such reversal would run counter to the constitutional mandate that no doctrine or principle of law laid down by the court in a decision rendered en banc or in division may be modified or reversed except by the Supreme Court sitting en banc . The CTA en banc also denied petitioner's motion for reconsideration. Hence, on December 28, 2010, PGAPL filed the present petition." Petitioner filed the Petition for Review on Certiorari with the Supreme Court entitled Procter & Gamble Asia Pte. Ltd. vs. Commissioner of Internal Revenue ,with docket no. G.R. No. 204277. 2 On May 30, 2016, the Supreme Court rendered a Decision granting the petition, the dispositive portion of which provides: " WHEREFORE ,premises considered, we GRANT the petition. The decision dated June 18, 2012, and the resolution dated November 8, 2012 of the CTA en banc in CTA EB Case No. 740 are hereby REVERSED and SET ASIDE .Accordingly, we REMAND the case to the CTA Second Division for the proper determination of the creditable or refundable amount due to the petitioner, if any. HEITAD SO ORDERED ." On July 7, 2017, this Court received the Entry of Judgment issued by the Supreme Court certifying that on July 8, 2016, the Decision has become final and executory. 3 Hence, the case was set for the presentation of evidence of petitioner 4 and respondent. 5 During the respective hearings conducted by this Court, petitioner manifested that it will no longer present any additional evidence, 6 while respondent averred that he is submitting the case for decision based on the pleadings. 7 The Supplemental Memorandum for the Respondent 8 was filed on October 4, 2017, while petitioner's Supplemental Memorandum 9 was filed on October 18, 2017. Accordingly, the case was submitted for decision on October 24, 2017. 10 ISSUES TO BE RESOLVED 11 The parties submitted the following issues to be resolved by this Court: aDSIHc 1. Whether or not petitioner's sales of services are zero-rated for VAT purposes under Section 108 (B) (2) of the 1997 Tax Code. 2. Whether or not petitioner has carried over to the succeeding taxable quarter or quarters the alleged unutilized input VAT paid on goods and services attributable to its zero-rated sales for the periods covering July 2005 to September 2005 and October 2005 to December 2005 and applied the same amount in full to its output VAT liability for the said period. 3. Whether or not the amounts of P19,496,365.57 and P34,128,061.57 being claimed by petitioner as unutilized input VAT for the periods covering July 2005 to September 2005 and October 2005 to December 2005, respectively, or a total of P53,624,427.14 pertains in full to its zero-rated sales of services. 4. Whether or not petitioner's sales of services to non-resident foreign corporations qualify as zero-rated sales. 5. Whether or not petitioner complied with the substantiation requirements prescribed under Revenue Regulations (RR) No. 7-95 in relation to Sections 113 and 237 of the 1997 Tax Code. 6. Whether or not petitioner is entitled to its claimed refund or tax credit in the amounts of P19,496,365.57 and P34,128,061.57, as alleged unutilized input VAT paid on goods and services attributable to its zero-rated sales, for the period covering July 2005 to September 2005 and October 2005 to December 2005, respectively. ATICcS THE COURT'S RULING Petitioner's claim is anchored on Section 110 (B) of the National Internal Revenue Code (NIRC) of 1997, as amended, which provides as follows: "SEC. 110. Tax Credits . xxx xxx xxx (B) Excess Output or Input Tax . If at the end of any taxable quarter the output tax exceeds the input tax, the excess shall be paid by the VAT-registered person. If the input tax exceeds the output tax, the excess shall be carried over to the succeeding quarter or quarters: Provided ,That the input tax inclusive of input VAT carried over from the previous quarter that may be credited in every quarter shall not exceed seventy percent (70%) of the output VAT: Provided, however ,That any input tax attributable to zero-rated sales by a VAT-registered person may at his option be refunded or credited against other internal revenue taxes, subject to the provisions of Section 112." Corollary to this, Section 112 (A) and (C) of the NIRC of 1997, as amended, states: ETHIDa "SEC. 112. Refunds or Tax Credits of Input Tax . (A) Zero-Rated or Effectively Zero-Rated Sales . Any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however ,That in the case of zero-rated sales under Section 106(A)(2)(a)(1),(2) and (b) and Section 108(B)(1) and (2),the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further ,That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods of properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales: Provided, finally ,That for a person making sales that are zero-rated under Section 108(B)(6),the input taxes shall be allocated ratably between his zero-rated and non-zero-rated sales. xxx xxx xxx (C) Period within which Refund or Tax Credit of Input Taxes shall be Made . In proper cases, the Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in accordance with Subsection (A) hereof. In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty-day period, appeal the decision or the unacted claim with the Court of Tax Appeals." TIADCc Pursuant to the above provisions, in order to be entitled to a refund or tax credit of unutilized input VAT attributable to zero-rated or effectively zero-rated sales, the following requisites must be satisfied: 1. the claimant must be a VAT-registered person; 2. there must be zero-rated or effectively zero-rated sales; 3. input taxes were incurred or paid; 4. such input taxes are attributable to zero-rated or effectively zero-rated sales; 5. said input taxes were not applied against any output VAT liability; and 6. the administrative and judicial claims for refund were filed within the prescribed period. The Court shall first determine the last requisite which is the timeliness of filing of the administrative and judicial claims. cSEDTC Petitioner's administrative and judicial claims were timely filed In accordance with the above-quoted Section 112 (A) of the NIRC of 1997, as amended, the administrative claim for the issuance of a tax credit certificate or refund of excess input VAT must be filed with the BIR within two (2) years after the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made. Thus, as the subject claim is for the periods covering July 1 to September 30, 2005 and October 1 to December 31, 2005, said administrative claim must be filed on or before September 30, 2007, and December 31, 2007, respectively. As held by the Court of Tax Appeals En Banc , 12 petitioner timely filed its administrative claim for the subject periods on August 21, 2007. As to whether petitioner timely filed its judicial claim, the Supreme Court had already settled the matter, when petitioner appealed this Court's En Banc Decision and Resolution dated June 18, 2012 and November 8, 2012, respectively, declaring that petitioner's case would fall under the exception in the observance of the period of filing judicial claims under Section 112. The High Court, in Procter & Gamble Asia Pte. Ltd. vs. Commissioner of Internal Revenue , 13 ruled that: " BIR Ruling No. DA-489-03 is an exception to the Aichi Doctrine Under Section 112 of the NIRC, if the administrative claim for tax credit or refund of input taxes is not acted upon by the CIR within 120 days from the date of submission of complete documents in support of the application, the taxpayer affected may appeal the unacted claim with the CTA within 30 days from the expiration of the 120-day period. AIDSTE In Aichi ,this Court ruled that observance of the 120- and 30-day periods is crucial in the filing of an appeal before the CTA. By 'crucial,' this Court meant that its observance is jurisdictional and mandatory, not merely permissive. xxx xxx xxx Indeed, Aichi is the prevailing doctrine on the matter of mandatory compliance with the 120- and 30-day periods in the filing of judicial claims of tax credit or refund before the CTA. However, in the manner of most rules, the Aichi Doctrine is also subject to exceptions. SDAaTC In accordance with the equitable estoppel principle under Section 246 of the NIRC, we ruled in San Roque-Taganito that there are exceptions to the strict rule that compliance with the Aichi Doctrine is mandatory and jurisdictional, one of which is BIR Ruling No. DA-489-03. If the CIR issues a ruling, either a specific one applicable to a particular taxpayer or a general interpretative rule applicable to all taxpayers, and, as a result, misleads the taxpayers affected by the rule, into filing prematurely judicial claims with the CTA, the CIR cannot be allowed to later on question the CTA's assumption of jurisdiction over such claim. Since then, this Court has consistently adopted the ruling in San Roque-Taganito in holding that BIR Ruling No. DA-489-03 is an exception to the Aichi Doctrine. We see no reason to disturb what is now a settled ruling. Therefore, as a general interpretative rule, all taxpayers may rely on BIR Ruling No. DA-489-03 from the time of its issuance on December 10, 2003, until its effective reversal by the Aichi Doctrine adopted on October 6, 2010. Thus, judicial claims for tax credit or refund instituted before the CTA should be given due course, despite their failure to comply with the 120- and 30-day periods. xxx xxx xxx PGAPL is presumed to have relied on BIR Ruling No. DA-489-03 in good faith Finally, the CIR questions PGAPL's good faith in relying on BIR Ruling No. DA-489-03. To the CIR, if PGAPL truly relied on the BIR ruling in good faith, it should have cited the ruling as basis as early as the proceedings before the CTA. The CIR claims that since PGAPL failed to establish that it acted in good faith, it cannot raise the exception set forth in BIR Ruling No. DA-489-03. We disagree with the CIR's reasoning. AaCTcI First ,good faith is always presumed and this presumption can only be overcome by clear and convincing evidence. Good faith, or its absence, is a question of fact that is better determined by the lower courts. This Court cannot, without sufficient reason, throw out a presumption that arises as a matter of law and is well-entrenched in our legal system. The mere allegation that the petitioner failed to raise BIR Ruling No. DA-489-03 before the CTA is insufficient to negate this presumption. Second ,even if petitioner did not raise the BIR ruling before the CTA, we can take cognizance of an official act emanating from the BIR, an executive department of the government. Judicial notice of BIR Ruling No. DA-489-03 is all the more mandatory especially when it has been applied consistently by this Court in its past rulings. Based on the foregoing, we rule that the judicial claim that PGAPL filed with the CTA on September 27, 2007 (during the effectivity of BIR Ruling No. DA-489-03) was timely filed." acEHCD Hence, petitioner timely filed both its administrative and judicial claims. We shall now proceed to determine petitioner's compliance with the other requisites. Petitioner is a VAT-registered entity and had zero-rated sales/receipts during the subject periods Petitioner complied with the first requisite considering that it is a VAT-registered taxpayer with BIR Certificate of Registration No. 9RC0000071787 14 dated October 8, 1999. 15 On the second requisite, i.e. ,the existence of zero-rated sales/receipts, petitioner claims that the services it rendered to its affiliates abroad, which were paid for in acceptable foreign currency and deposited with a Bangko Sentral ng Pilipinas (BSP) authorized agent bank and accounted for pursuant to the rules, circulars and regulations of the BSP, are transactions subject to zero percent (0%) VAT in accordance with Section 108 (B) (2) of the NIRC of 1997, as amended, which states that: "SEC. 108. Value-Added Tax on Sale of Services and Use or Lease of Properties . xxx xxx xxx (B) Transactions Subject to Zero Percent (0%) Rate . The following services performed in the Philippines by VAT-registered persons shall be subject to zero percent (0%) rate: (1) Processing, manufacturing or repacking goods for other persons doing business outside the Philippines which goods are subsequently exported, where the services are paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP); EcTCAD (2) Services other than those mentioned in the preceding paragraph rendered to a person engaged in business conducted outside the Philippines or to a nonresident person not engaged in business who is outside the Philippines when the services are performed, the consideration for which is paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);" In the case of Commissioner of Internal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc. , 16 the Supreme Court held that in order for the supply of services to be VAT zero-rated under Section 108 (B) (2) of the NIRC of 1997, as amended, the following requisites must be met: 1. the services must be other than processing, manufacturing or repacking of goods; SDHTEC 2. the payment for such services must be in acceptable foreign currency accounted for in accordance with the BSP rules and regulations; and 3. the recipient of such services is doing business outside the Philippines. Petitioner is a foreign corporation duly organized and existing under the laws of Singapore and is maintaining a Regional Operating Headquarters in the Philippines, with office address at the 18/F Petron Megaplaza, 358 Sen. Gil Puyat Ave.,Makati City, in accordance with the Certificate of Registration and License issued by the Securities and Exchange Commission (SEC),to provide management, marketing, technical and financial advisory and other qualified services to related companies. 17 Pursuant to the Business Services Agreements 18 entered into between petitioner and its client-affiliates, petitioner shall provide its client-affiliates with accounting and financial reporting services, employee services, customer logistics financial services, purchases, business intelligence services, information technology business solution, workplace and other services within an agreed period including the subject taxable quarters of July 1, 2005 to December 31, 2005. These services clearly fall within the scope of "services other than processing, manufacturing or repacking of goods" contemplated by the afore-mentioned provision. For services rendered to its affiliates abroad, petitioner received US dollar payments which were accounted for in accordance with the BSP rules and regulations as evidenced by the Certifications 19 of Inward Remittances issued by Citibank N.A.,Philippine Branch and attested to by Ms. Teresita Sugay, Citibank's representative, through her Judicial Affidavit 20 and duly supported by VAT zero-rated official receipts 21 and credit notes 22 issued by petitioner to its client-affiliates abroad. HSAcaE In its Quarterly VAT Returns for July 1, 2005 to December 31, 2005, petitioner reflected a total amount of P1,132,160,726.03 zero-rated sales/receipts (equivalent to USD20,564,346.40),broken down as follows: Exhibit Taxable Quarters (FY ended June 30, 2006) Zero-Rated Sales/Receipts In Phil. Pesos In US Dollars 23 "D" 1st Qtr. (July 1-Sept. 30, 2005) 675,481,646.57 12,349,143.32 "F" 2nd Qtr. (Oct. 1-Dec. 31, 2005) 456,679,079.46 8,215,203.08 Total 1,132,160,726.03 20,564,346.40 While the total amount of USD22,087,231.41 24 inward remittances reflected per the Certifications issued by Citibank N.A.,Philippine Branch is higher by USD1,522,885.01 when compared with the USD20,564,346.40 zero-rated sales/receipts per petitioner's Quarterly VAT Returns, the Court-commissioned Independent Certified Public Accountant (ICPA) firm, Constantino Guadalquiver & Co, through its Partner, Ms. Katherine O. Constantino, was able to account for such discrepancy as pertaining to the following: (1) outward remittance positive charges paid by customers; (2) non-VATable inward remittances; (3) June charges included in July outward remittances; (4) withholding taxes deducted from remittance; (5) bank fees; and (6) rounding-off difference, to wit: 25 AScHCD Particular Amount (in U.S. Dollars) Exhibit Reference Zero-rated sales/receipts per VAT return 1st quarter FY June 2006 (July-Sept.) 12,349,143.32 Exhibit "E" 2nd quarter FY June 2006 (Oct.-Dec.) 8,215,203.08 Exhibit "G" 20,564,346.40 Outward remittance positive charges paid by customers 1,564,379.38 Exhibits "HHH" to "HHH-3" Non vatable inward remittances 196,910.65 Exhibits "III" to "III-25" June charges included in July outward remittances (20,281.99) Withholding taxes deducted from remittance (218,063.14) Bank fees (602.00) Rounding off difference .11 Total Inward remittances per Certifications of Inward Remittances 22,087,231.41 To prove that its clients are non-resident foreign corporations doing business outside the Philippines, petitioner presented the following documents: 1. Certifications of Non-Registration of Corporation/Partnership issued by the SEC of the Republic of the Philippines; 26 HESIcT 2. Affidavits executed by petitioner's foreign affiliates' officers with attached Certificates of Tax Withheld at Source, certified copies of License, Certificates of All Current Registered Matters, Certificates of Incorporation, Company Register, Memorandum and Articles of Association, Certificate of All Closed Registered Matters, Certification of Incorporation on Change of Name, Certified Extract of Commercial Register duly authenticated by consuls of the Republic of the Philippines; 27 3. Hard Copy of Procter and Gamble Company and Subsidiaries report to the U.S. Securities and Exchange Commission; 28 and 4. Business Services Agreements. 29 However, each of the aforesaid documents, standing alone, is inadequate proof that petitioner's client is a non-resident foreign corporation doing business outside the Philippines. AcICHD While the SEC Certificates of Non-Registration of Corporation/Partnership show that the named entities therein are not registered corporations or partnerships in the Philippines, the same do not prove that such entities are non-resident foreign corporations doing business outside the Philippines. Also, the Certificates of Tax Withheld at Source, certified copies of License, Certificates of All Current Registered Matters, Certificates of Incorporation, Company Register, Memorandum and Articles of Association, Certificate of All Closed Registered Matters, Certification of Incorporation on Change of Name, Certified Extract of Commercial Register duly authenticated by consuls of the Republic of the Philippines, and hard copy of Procter and Gamble Company and Subsidiaries report to the U.S. SEC only prove that the named entities therein were incorporated/organized abroad but do not establish that such entities are not doing business in the Philippines. Likewise, the service agreements only indicate the names and addresses of petitioner's customers to whom it renders services but they do not establish that such customers are non-resident foreign corporations doing business outside the Philippines. In the case of Sitel Philippines Corporation (formerly Clientlogic Phils., Inc.) vs. Commissioner of Internal Revenue , 30 the Supreme Court held that while Sitel's documentary evidence, which included Certifications issued by the Securities and Exchange Commission and Agreements between Sitel and its foreign clients, may have established that Sitel rendered services to foreign corporations and received payment therefor through inward remittances, said documents failed to specifically prove that such foreign clients were doing business outside the Philippines or have a continuity of commercial dealings outside the Philippines. caITAC Therefore, in order to be considered as non-resident foreign corporation doing business outside the Philippines, each entity must be supported, at the very least, by both SEC Certificate of Non-Registration and proof of incorporation/registration in a foreign country and that there is no other indication which would disqualify said entity in being classified as a non-resident foreign corporation. A careful scrutiny of the documents submitted shows that petitioner failed to establish that the following entities are non-resident foreign corporations doing business outside the Philippines: Client Reason for Disallowance 1. P&G Maxfactor Godo Kaisha Without SEC Certification of Non-Registration of Corporation/Partnership 2. P&G KK 3. P&G GBS De Costa Rica Ltda Without proof of foreign incorporation/registration in a foreign country Hence, petitioner's declared zero-rated sales/receipts from the afore-mentioned entities for the subject taxable quarters in the total amount of P145,553,023.38 (with equivalent US$2,651,761.83),detailed below, shall be denied VAT zero-rating: 31 TAIaHE Amount of Sales/Receipts In USD in PHP 1st Quarter July 1, 2005 to Sept. 30, 2005 P&G Maxfactor Godo Kaisha 1,011,472.52 55,331,003.16 P&G KK 492,461.49 26,981,613.95 P&G GBS De Costa Rica Ltda 19,053.00 1,037,180.19 Subtotal 1,522,987.01 83,349,797.30 2nd Quarter Oct. 1, 2005 to Dec. 31, 2005 P&G Maxfactor Godo Kaisha 808,101.39 44,568,344.93 P&G KK 320,673.43 17,634,881.15 P&G GBS De Costa Rica Ltda - - Subtotal 1,128,774.82 62,203,226.08 Total 2,651,761.83 145,553,023.38 In sum, out of the P1,132,160,726.03 zero-rated sales/receipts reported by petitioner for the first and second quarters of FY ended June 30, 2006, only the amount of P986,607,702.65 represents its valid zero-rated sales/receipts, computed as follows: FY ended June 30, 2006 Total 1st Quarter (July 1 to Sept. 30, 2005) 2nd Quarter (Oct. 1 to Dec. 31, 2005) Zero-Rated Sales/Receipts per VAT Returns P675,481,646.57 P456,679,079.46 P1,132,160,726.03 Less: Sales/Receipts from Entities without SEC Certification of Non-Registration of Corporation/Partnership or Proof of Foreign Incorporation/Registration in a Foreign Country 83,349,797.30 62,203,226.08 145,553,023.38 Valid Zero-Rated Sales/Receipts P592,131,849.27 P394,475,853.38 P986,607,702.65 After having resolved that petitioner had VAT zero-rated sales/receipts for the subject periods in the total amount of P986,607,702.65, the Court proceeds to the determination of whether petitioner incurred input taxes in connection therewith and if said input taxes were not applied against any output VAT liability of petitioner. TCAScE Petitioner incurred/paid input taxes attributable to zero- rated sales/receipts and said input taxes were not applied against any output VAT liability In its Quarterly VAT Returns for the first and second quarters of FY ended June 30, 2006, petitioner reflected a total amount of P87,341,820.12 input VAT arising from current domestic purchases of capital goods, domestic purchases of goods other than capital goods and domestic purchases of services, broken down as follows: FY ended June 30, 2006 Total 1st Quarter (July to Sept. 2005) 2nd Quarter (Oct. to Dec. 2005) Domestic Purchases capital goods P872,916.35 P- P872,916.35 Domestic Purchases goods other than capital goods 586,248.76 1,936,816.11 2,523,064.87 Domestic Purchases services 32,922,990.23 51,022,848.67 83,945,838.90 Total P34,382,155.34 P52,959,664.78 P87,341,820.12 The ICPA compared petitioner's reported input VAT arising from current domestic purchases of goods other than capital goods and domestic purchases of services per VAT returns with that reflected per petitioner's schedules, and presented the following results: ASEcHI 1st Quarter July 2005 to September 2005 32 Input VAT on Domestic Purchases of Goods other than Capital Goods Input VAT on Domestic Purchases of Services Total Input VAT on Domestic Purchases of Goods and Services Exhibit Reference 1st Quarter FY June 2006 (July to September 2005) Per VAT return P586,248.76 P32,922,990.23 P33,509,238.99 Exhibit "D" to "D-2" Amount per segregated purchases of goods P536,679.77 Annex 19 Amount per Schedule of services Exhibit "I" July 2005 P8,005,002.62 August 2005 9,270,915.20 September 2005 15,625,002.09 Total per Schedule P536,679.77 P32,900,919.91 P33,437,599.68 Difference Amount per VAT return is over (under) P49,568.99 P22,070.32 P71,639.31 According to the ICPA, the P49,568.99 difference in the domestic purchases of goods other than capital goods represents importation of goods other than capital goods excluded from the Schedule of Goods Purchased (Exhibit "H") but included in the VAT return. Petitioner presented the broker's statement of account and supplier's commercial invoice (Exhibit "QQQ") . cTDaEH Moreover, the P22,070.32 difference in domestic purchases of services is comprised of: o Purchases of services from Veterans Philippine properly supported by VAT official receipts (VAT input amounting to P4,070.31) which was included in the VAT return (Annex 70) and omitted in the Schedule of Services (Exhibit "I") ,where the official receipt pertains to three purchases but only two services were included in the said Schedule; and o Purchase of Company service awards from Washington Jewelry supported by a VAT official receipt resulting in an input VAT amounting to P18,000.01 (Exhibit "PPP") . The Court examined the related supporting documents and found the foregoing findings in order except for the P49,568.99 input VAT on importation. The broker's statement of account and supplier's invoice presented by petitioner do not prove the fact of payment of the P49,568.99 input VAT to the Bureau of Customs. Section 4.104-5 (b) of Revenue Regulations No. 7-95 on "Substantiation of Claims for Input Tax Credit" requires the submission of import entry or other equivalent document showing actual payment of VAT on the imported goods. Thus, the input VAT claim of P49,568.99 shall be disallowed. ITAaHc 2nd Quarter October 2005 to December 2005 33 Input VAT on Domestic Purchases of Goods other than Capital Goods Input VAT on Domestic Purchases of Services Total Input VAT on Domestic Purchases of Goods and Services Exhibit Reference 2nd Quarter FY June 2005 (October to December 2005) Per VAT return P1,936,816.11 P51,022,848.67 P52,959,664.78 Exhibit "F" to "F-3" Amount per Schedule of services Exhibit "J" and "K",respectively July 2005 P445,633.82 P8,857,587.60 August 2005 1,234,048.68 3,855,733.52 September 2005 257,133.58 14,438,219.09 Total per Schedule P1,936,816.08 P27,151,540.21 P29,088,356.29 Difference Amount per VAT return is over (under) P0.03 P23,871,308.46 P23,871,308.49 Based on the ICPA's audit, the total difference of P23,871,308.49 is broken down as follows: The amounts of P17,682.50 and P17,831.00 pertain to the input VAT for October and December purchases which were included in the VAT return but omitted in the summary list (Exhibit "K") .The ICPA verified that this pertains to input VAT on stale checks (supported by system-generated journal voucher presented as Exhibit "XX" ). cSaATC The Court finds the aforesaid input VAT in the amounts of P17,682.50 and P17,831.00 totalling P35,513.50, which are merely supported by a system-generated journal voucher, shall be disallowed from petitioner's claim. Section 110 (A) (1) (b) and 110 (A) (2) (a) in relation to Section 4.104-5 (a) of RR No. 7-95 requires that the input VAT on domestic purchases of services must be substantiated by a VAT official receipt. Thus, without supporting VAT official receipts, the amount of P35,513.50 cannot be claimed by petitioner as input VAT. The amount of P6,938,599.91 represents deductible adjustments on the billings for service fees made by petitioner to Procter & Gamble Distributing (Philippines),Inc. as supported by Credit Notes Nos. 5530005883 and 5530005911 (Exhibits "YY" and "ZZ") .Petitioner represented that this amount should have been presented as a deduction from output tax. However, due to a system constraint with the BIR electronic filing and payment system (eFPS) summary list attachment, petitioner, instead of showing an adjustment (deduction) from output tax, presented the same as an addition to creditable input VAT. The ICPA has verified the initial cash receipt and the subsequent return and summarized the findings under Annex 72 of the ICPA report. o The ICPA has also verified that the amount formed part of the sales/receipts and output VAT reported in the months of: CHTAIc Month reported in the VAT return as sales/receipts and Output VAT Sales/Receipts Amount Output VAT Official Receipt Number September 2005 P8,227,835.91 P822,783.59 1866 October 2005 41,078,970.22 4,107,897.59 1886 November 2005 13,023,372.15 1,302,337.21 1916 December 2005 7,055,820.86 705,582.09 DN 3238 P69,385,999.14 n P6,938,599.91 n o The ICPA noted that there was no actual cash receipt from Procter & Gamble Distributing (Philippines),Inc. for the sales/receipts reported in December 2005 as the amount was applied/offset against the return of cash in December 2005. However, the amount of sales/receipt was verified to have formed part of the December 2005 VAT return. cHDAIS o The ICPA was also able to verify that the deductible adjustment to the sales/receipts were all reported as additional input VAT in the 2nd quarter FY June 2006 VAT return. Cash was subsequently returned to customer Procter & Gamble Distributing (Philippines),Inc. on December 21, 2005. The amount of P16,897,195.05 allegedly represents deductible adjustments on the billings for service fees made by petitioner to P&G Philippines, Inc. as supported by Credit Notes Nos. 5530005882 and 5530005910 (Exhibits "LLL" and "MMM") .Petitioner represented that said amount should have been presented as a deduction from output tax. However, due to a system constraint with the BIR eFPS, petitioner, instead of showing an adjustment (deduction) from output tax, presented the same as an addition to creditable input VAT. The ICPA has verified the initial cash receipt and the subsequent return and summarized the findings under Annex 73 of the ICPA report. o In line with this, the ICPA has also verified that the amount formed part of the sales/receipts and output VAT reported in the months of: Month reported in the VAT return as sales/receipts and Output VAT Sales/Receipts Amount Output VAT Official Receipt Number September 2005 P20,036,801.39 P2,003,680.14 1865 October 2005 100,037,382.25 10,003,738.22 1884 November 2005 31,175,110.00 3,171,511.00 1914 December 2005 17,182,656.88 1,718,265.69 DN 3239 P168,971,950.52 n P16,897,195.05 o The ICPA noted that there was no actual cash receipt from Procter & Gamble, Inc. reported in December 2005 as the amount was applied/offset against the return of cash in December 2005. However, the amount of sales/receipt was verified to form part of the December 2005 VAT return. EATCcI o The ICPA was also able to verify that the deductible adjustment to the sales/receipts were all reported as additional input VAT in the 2nd quarter FY June 2006 VAT return. Cash was subsequently returned to customer Procter & Gamble, Inc. on December 21, 2005. Upon scrutiny of the Credit Notes supporting the deductible adjustments on petitioner's billings for services fees to Procter & Gamble Distributing (Philippines),Inc. and P&G Philippines, Inc.,the Court found that the same accurately reflect the amounts of P6,938,599.91 and P16,897,195.05 as per the reconciliation below: 1st Quarter Sales Amount P69,385,999.14 10% VAT 6,938,599.91 Total Sales/Receipts P76,324,599.05 Less: Credit Notes No. 5530005883 (Exhibit "YY") 53,251,350.63 No. 5530005911 (Exhibit "ZZ") 21,685,528.45 Difference (2% EWT) P1,387,719.97 n 2nd Quarter Sales Amount P168,971,950.52 10% VAT 16,897,195.05 Total Sales/Receipts P185,869,145.57 Less: Credit Notes No. 5530005882 (Exhibit "LLL") 129,680,118.30 No. 5530005910 (Exhibit "MMM") 52,809,588.23 Difference (2% EWT) 3,379,439.04 n The Court agrees with the ICPA that the increase in input taxes to remedy the eFPS inability to adjust the Sales and Output Tax Payable amount for cancelled sales to Procter & Gamble Distributing (Philippines),Inc. and P&G Philippines, Inc. should be excluded from petitioner's creditable input tax. ISHCcT Moreover, the said cancelled sales to Procter & Gamble Distributing (Philippines),Inc. and P&G Philippines, Inc. should be deducted from the sales/receipts subject to ten percent (10%) output VAT, in order to properly reflect the correct amount of 10% output VAT due for the second quarter. We now proceed to the substantiation of petitioner's input VAT claim on current domestic purchases of capital goods, domestic purchases of goods other than capital goods, and domestic purchases of services for the subject taxable quarters as reflected per petitioner's schedules. Based on the ICPA report, 34 the Court disallows the input VAT of P2,785,360.39 for non-compliance with the substantiation requirements under Section 4.104-5 in relation to Section 4.104-1 of Revenue Regulations No. 7-95. Below is the breakdown of the input taxes of P2,785,360.39: FY ended June 30, 2006 Total 1st Quarter (July to Sept. 2005) 2nd Quarter (Oct. to Dec. 2005) Domestic Purchases of Capital Goods Input taxes claimed on purchases of capital goods which are supported by TIN VAT invoices not dated within the fiscal year (Annex 77) P305,875.40 P305,875.40 Domestic Purchases of Goods other than Capital Goods Input taxes claimed on purchases of goods which are not dated within the fiscal year: a. Supported by VAT REG invoices (Annex 26) 11,530.15 - 11,530.15 b. Supported by TIN VAT invoice (Annexes 27 and 28) 101,723.83 P2,896.73 104,620.56 Input taxes claimed on purchases of goods supported by TIN NON-VAT invoices (Annexes 31 and 32) 2,181.82 8,697.73 10,879.55 Input taxes claimed on purchases of goods supported by photocopied TIN VAT invoice not dated within the quarter but within the period of claim. The ICPA verified that the input VAT was not claimed within the quarter of the invoice date (Annex 33) - 5,090.92 5,090.92 Input taxes claimed on purchases of goods included in the Schedule of Domestic Purchase of Goods (Annex 19) and Schedule of Goods purchases (Exhibit I) which are not covered by sales invoices (Annexes 34 and 35) 11,758.15 7,040.77 18,798.92 Unallocated difference - 0.03 0.03 Domestic Purchases of Services Input taxes claimed on services where official receipts are not dated within the quarter or claim period but within the fiscal year: a. Supported by VAT REG TIN official receipts (Annex 47) - 288,157.63 288,157.63 b. Supported by TIN VAT official receipts (Annex 48) - 119,285.64 119,285.64 Input taxes claimed on purchase of services supported by VAT REG TIN official receipts which are not dated within the fiscal year (Annex 49) - 367,036.54 367,036.54 Input taxes claimed on purchase of services supported by NON-VAT official receipts (Annexes 52 and 53) 18.18 62,204.55 62,222.73 Input taxes claimed on purchases of supported by VAT official receipts with exceptions: a. Date of receipt not indicated (Annex 54) 144,637.39 - 144,637.39 b. Date of receipt has corrections (Annex 55) - 208,065.87 208,065.87 c. Official receipt number was handwritten (Annex 56) 2,512.29 - 2,512.29 d. BIR permit number not indicated (Annex 57) 87,321.82 - 87,321.82 e. Use of wrong TIN of petitioner (Annex 58) - 40.00 40.00 f. Not in the registered name of petitioner (Annexes 59 and 60) 179,736.49 52,431.70 232,168.19 g. There is correction in petitioner's name (Annex 61) 372,282.22 - 372,282.22 Input taxes claimed on purchase of services supported by VAT official receipts wherein "NON-VAT Transaction" was typed on the face of the receipts (Annexes 62 and 63) 64,726.41 161,325.43 226,051.84 Input taxes claimed on services supported by photocopied documents (Annexes 64 and 65) 65,065.89 2,860.80 67,926.69 Input taxes claimed on purchase of services supported by documents other than VAT official receipts (Annexes 66 and 67) 36,187.37 4,485.82 40,673.19 Input taxes claimed on purchase of services supported by documents other than VAT official receipts (Annexes 68 and 69) 93,728.27 16,454.55 110,182.82 TOTAL P1,479,285.68 P1,306,074.71 P2,785,360.39 In addition, the Court observed that certain invoices and official receipts supporting petitioner's input VAT claim for the months of November and December 2005 do not show the VAT component separately from the purchase amount, which is in violation of Section 113 (B) (2) (a) of the NIRC of 1997, as amended by Republic Act No. 9337, which became effective on November 1, 2005, 35 to wit: DHITCc "SEC. 113. Invoicing and Accounting Requirements for VAT-Registered Persons . xxx xxx xxx (B) Information Contained in the VAT Invoice or VAT Official Receipt . The following information shall be indicated in the VAT invoice or VAT official receipt: (1) A statement that the seller is a VAT-registered person, followed by his Taxpayer's Identification Number (TIN); (2) The total amount which the purchaser pays or is obligated to pay to the seller with the indication that such amount includes the value-added tax: Provided ,That: (a) The amount of the tax shall be shown as a separate item in the invoice or receipt ;" (Emphasis supplied) Therefore, the Court deems it proper to also disallow input VAT in the amount of P16,501,420.01 supported by VAT sales invoices and official receipts which are dated November 1, 2005 and onwards and do not separately indicate the amount of input VAT, tabulated hereunder: Reference Supplier Invoice/ OR Date Invoice/ OR Number Input Tax (Per Schedule) Domestic Purchases of Goods other than Capital Goods UU-33 MERCURY DRUG CORP. 11/18/2005 18703309 P1,021.73 UU-34 MERCURY DRUG CORP. 11/18/2005 18703308 370.93 UU-35 MERCURY DRUG CORP. 12/9/2005 18703457 986.59 UU-101 ARMVET COMMERCIAL PRESS 12/13/2005 48353 3,470.90 UU-125 PHILIPPINE VENDING CO. 11/8/2005 020670 10,538.55 UU-126 PHILIPPINE VENDING CO. 11/9/2005 020691 4,702.00 UU-141 HMK PARTY PACKAGERS, INC. 11/17/2005 0053 560.00 UU-150 OTT LOUIE PHILS.,INC. 12/19/2005 5014 6,811.82 Subtotal P28,462.52 Domestic Purchases of Services WW-1 CENTER FOR LEADERSHIP AND CHANGE 12/2/2005 8845 P9,395.46 WW-3 DIGITELONE 12/12/2005 008856 95.24 WW-5 EASTERN TELECOMMUNICATIONS 11/18/2005 E 313345 2,310.00 WW-6 EASTERN TELECOMMUNICATIONS 11/29/2005 E 312796 987.76 WW-7 EASTERN TELECOMMUNICATIONS 11/29/2005 E 312797 134.76 WW-8 EASTERN TELECOMMUNICATIONS 12/16/2005 E 314207 2,310.00 WW-8 EASTERN TELECOMMUNICATIONS 2,147.23 WW-9 EASTERN TELECOMMUNICATIONS 12/29/2005 E 314567 136.35 WW-10 GLOBE TELECOM 11/9/2005 M 1983606 103.92 WW-11 GLOBE TELECOM 11/10/2005 M 1983405 5,600.58 WW-11 GLOBE TELECOM 5,500.00 WW-11 GLOBE TELECOM 5,433.56 WW-11 GLOBE TELECOM 5,500.00 WW-11 GLOBE TELECOM 1,368.97 WW-11 GLOBE TELECOM 832.08 WW-11 GLOBE TELECOM 554.76 WW-11 GLOBE TELECOM 1,520.79 WW-12 GLOBE TELECOM 11/15/2005 M 1983451 242.00 WW-13 GLOBE TELECOM 11/17/2005 M 1983496 1,427.27 WW-13 GLOBE TELECOM 993.42 WW-13 GLOBE TELECOM 242.31 WW-13 GLOBE TELECOM 335.64 WW-14 GLOBE TELECOM 12/1/2005 M 1984415 6,490.71 WW-14 GLOBE TELECOM 5,500.00 WW-14 GLOBE TELECOM 503.26 WW-14 GLOBE TELECOM 2,547.40 WW-14 GLOBE TELECOM 2,750.00 WW-14 GLOBE TELECOM 442.02 WW-14 GLOBE TELECOM 7,039.55 WW-14 GLOBE TELECOM 2,620.21 WW-14 GLOBE TELECOM 690.60 WW-14 GLOBE TELECOM 681.98 WW-19 GLOBE TELECOM 11/7/2005 M 1983302 1,043.01 WW-20 GLOBE TELECOM 12/6/2005 M 198742 751.23 WW-20 GLOBE TELECOM 5,710.84 WW-20 GLOBE TELECOM 583.36 WW-21 GLOBE TELECOM 12/9/2005 M 1986719 640.01 WW-21 GLOBE TELECOM 148.56 WW-21 GLOBE TELECOM 238.28 WW-21 GLOBE TELECOM 4.22 WW-21 GLOBE TELECOM 121.00 WW-22 GLOBE TELECOM 12/13/2005 M 1986558 1,667.31 WW-23 GLOBE TELECOM 12/15/2005 M 1986833 589.84 WW-23 GLOBE TELECOM 391.89 WW-23 GLOBE TELECOM 242.00 WW-24 GLOBE TELECOM 12/21/2005 M 1987349 1,508.59 WW-24 GLOBE TELECOM 285.13 WW-25 GLOBE TELECOM 12/28/2005 M 1987601 564.62 WW-25 GLOBE TELECOM 121.00 WW-25 GLOBE TELECOM 9.55 WW-25 GLOBE TELECOM 164.77 WW-25 GLOBE TELECOM 150.21 WW-27 GLOBE TELECOM 11/24/2005 M 1983897 242.91 WW-27 GLOBE TELECOM 248.73 WW-27 GLOBE TELECOM 163.86 WW-27 GLOBE TELECOM 235.72 WW-27 GLOBE TELECOM 288.42 WW-27 GLOBE TELECOM 547.92 WW-27 GLOBE TELECOM 324.30 WW-28 GLOBE TELECOM 11/7/2005 M 1983303 795.51 WW-28 GLOBE TELECOM 425.07 WW-28 GLOBE TELECOM 75.53 WW-28 GLOBE TELECOM 360.25 WW-28 GLOBE TELECOM 201.90 WW-28 GLOBE TELECOM 211.44 WW-28 GLOBE TELECOM 365.91 WW-28 GLOBE TELECOM 26.48 WW-28 GLOBE TELECOM 0.95 WW-28 GLOBE TELECOM 313.41 WW-28 GLOBE TELECOM 1,501.57 WW-28 GLOBE TELECOM 104.00 WW-28 GLOBE TELECOM 261.21 WW-28 GLOBE TELECOM 421.73 WW-28 GLOBE TELECOM 242.00 WW-28 GLOBE TELECOM 152.07 WW-28 GLOBE TELECOM 15.65 WW-28 GLOBE TELECOM 46.19 WW-33 HEWLETT PACKARD PHILIPPINES CO. 12/14/2005 62153 7,133.34 WW-34 HEWLETT PACKARD PHILIPPINES CO. 12/14/2005 62154 53,909.07 WW-34 HEWLETT PACKARD PHILIPPINES CO. 31,208.40 WW-34 HEWLETT PACKARD PHILIPPINES CO. 8,916.60 WW-34 HEWLETT PACKARD PHILIPPINES CO. 35,869.20 WW-34 HEWLETT PACKARD PHILIPPINES CO. 59,662.50 WW-34 HEWLETT PACKARD PHILIPPINES CO. 17,934.60 WW-34 HEWLETT PACKARD PHILIPPINES CO. 59,999.50 WW-34 HEWLETT PACKARD PHILIPPINES CO. 319,742.50 WW-34 HEWLETT PACKARD PHILIPPINES CO. 190,861.00 WW-34 HEWLETT PACKARD PHILIPPINES CO. 17,833.30 WW-34 HEWLETT PACKARD PHILIPPINES CO. 898,005.78 WW-34 HEWLETT PACKARD PHILIPPINES CO. 1,349,226.81 WW-35 HEWLETT PACKARD PHILIPPINES CO. 12/23/2005 62310 514,927.40 WW-36 HEWLETT PACKARD PHILIPPINES CO. 12/28/2005 410,122.40 WW-36 HEWLETT PACKARD PHILIPPINES CO. 166,701.40 WW-36 HEWLETT PACKARD PHILIPPINES CO. 28,600.00 WW-36 HEWLETT PACKARD PHILIPPINES CO. 1,790,048.30 WW-36 HEWLETT PACKARD PHILIPPINES CO. 4,423,554.10 WW-36 HEWLETT PACKARD PHILIPPINES CO. 89,430.00 WW-36 HEWLETT PACKARD PHILIPPINES CO. 44,196.40 WW-36 HEWLETT PACKARD PHILIPPINES CO. 26,750.00 WW-36 HEWLETT PACKARD PHILIPPINES CO. 10,396.10 WW-36 HEWLETT PACKARD PHILIPPINES CO. 165,550.00 WW-36 HEWLETT PACKARD PHILIPPINES CO. 109,390.90 WW-36 HEWLETT PACKARD PHILIPPINES CO. 59,662.50 WW-36 HEWLETT PACKARD PHILIPPINES CO. 41,908.40 WW-36 HEWLETT PACKARD PHILIPPINES CO. 80,209.60 WW-36 HEWLETT PACKARD PHILIPPINES CO. 41,018.40 WW-37 HEWLETT PACKARD PHILIPPINES CO. 11/23/2005 60879 77,003.00 WW-37 HEWLETT PACKARD PHILIPPINES CO. 4,458.30 WW-37 HEWLETT PACKARD PHILIPPINES CO. 59,662.50 WW-37 HEWLETT PACKARD PHILIPPINES CO. 71,325.20 WW-37 HEWLETT PACKARD PHILIPPINES CO. 56,175.10 WW-37 HEWLETT PACKARD PHILIPPINES CO. 136,196.50 WW-37 HEWLETT PACKARD PHILIPPINES CO. 28,600.00 WW-37 HEWLETT PACKARD PHILIPPINES CO. 17,833.30 WW-37 HEWLETT PACKARD PHILIPPINES CO. 77,003.00 WW-37 HEWLETT PACKARD PHILIPPINES CO. 54,659.00 WW-38 HEWLETT PACKARD PHILIPPINES CO. 12/9/2005 61540 1,759.22 WW-38 HEWLETT PACKARD PHILIPPINES CO. 1,759.22 WW-39 IBM PHILIPPINES, INC. 12/12/2005 189163 160,019.34 WW-40 IBM PHILIPPINES, INC. 12/15/2005 189168 430,636.80 WW-41 IBM PHILIPPINES, INC. 11/8/2005 188497 149,827.30 WW-50 INFORMATION PROFESSIONALS, INC. 11/3/2005 10822 8,448.00 WW-50 INFORMATION PROFESSIONALS, INC. 408.02 WW-50 INFORMATION PROFESSIONALS, INC. 11.29 WW-51 INFORMATION PROFESSIONALS, INC. 11/8/2005 10839 16.94 WW-51 INFORMATION PROFESSIONALS, INC. 896.47 WW-51 INFORMATION PROFESSIONALS, INC. 130.24 WW-52 INFORMATION PROFESSIONALS, INC. 11/10/2005 10841 1,219.59 WW-52 INFORMATION PROFESSIONALS, INC. 1,589.98 WW-52 INFORMATION PROFESSIONALS, INC. 1,562.89 WW-52 INFORMATION PROFESSIONALS, INC. 5,478.00 WW-53 INFORMATION PROFESSIONALS, INC. 11/17/2005 10883 1,371.18 WW-53 INFORMATION PROFESSIONALS, INC. 1,987.14 WW-53 INFORMATION PROFESSIONALS, INC. 1,568.29 WW-53 INFORMATION PROFESSIONALS, INC. 1,792.05 WW-53 INFORMATION PROFESSIONALS, INC. 1,447.25 WW-53 INFORMATION PROFESSIONALS, INC. 8,448.00 WW-54 INFORMATION PROFESSIONALS, INC. 11/22/2005 10908 3,364.80 WW-54 INFORMATION PROFESSIONALS, INC. 306.55 WW-55 INFORMATION PROFESSIONALS, INC. 11/24/2005 10918 1,271.28 WW-56 INFORMATION PROFESSIONALS, INC. 12/8/2005 10975 16.94 WW-56 INFORMATION PROFESSIONALS, INC. 276.06 WW-56 INFORMATION PROFESSIONALS, INC. 450.27 WW-56 INFORMATION PROFESSIONALS, INC. 1,589.93 WW-56 INFORMATION PROFESSIONALS, INC. 104.69 WW-56 INFORMATION PROFESSIONALS, INC. 1,562.89 WW-56 INFORMATION PROFESSIONALS, INC. 128.10 WW-56 INFORMATION PROFESSIONALS, INC. 173.48 WW-57 INFORMATION PROFESSIONALS, INC. 12/12/2005 10990 71.44 WW-58 INFORMATION PROFESSIONALS, INC. 12/15/2005 11009 106.79 WW-58 INFORMATION PROFESSIONALS, INC. 1,589.93 WW-59 INFORMATION PROFESSIONALS, INC. 12/22/2005 11042 1,987.14 WW-59 INFORMATION PROFESSIONALS, INC. 1,445.38 WW-60 MANDARIN ORIENTAL MANILA 12/9/2005 1414311 11,454.55 WW-61 PHILIPPINE LONG DISTANCE 11/22/2005 AB 375700 755.23 WW-62 RAF INTERNATIONAL FORWARDING 12/15/2005 162638 100.14 WW-63 THE PENINSULA MANILA 12/9/2005 312462 348.55 WW-64 THE PENINSULA MANILA 12/16/2005 312763 581.82 WW-64 THE PENINSULA MANILA 244.73 WW-70 THE PENINSULA MANILA 11/3/2005 311422 127.27 WW-71 THE PENINSULA MANILA 11/3/2005 311420 155.00 WW-72 THE PENINSULA MANILA 11/3/2005 311421 209.09 WW-73 THE PENINSULA MANILA 11/10/2005 311447 710.00 WW-74 THE PENINSULA MANILA 11/11/2005 311602 3,053.45 WW-75 THE PENINSULA MANILA 12/6/2005 311840 402.73 WW-75 THE PENINSULA MANILA 1,315.18 WW-75 THE PENINSULA MANILA 248.55 WW-75 THE PENINSULA MANILA 181.82 WW-75 THE PENINSULA MANILA 104.55 WW-75 THE PENINSULA MANILA 272.73 WW-75 THE PENINSULA MANILA 240.91 WW-77 TNT EXPRESS WORLDWIDE PHILS.,INC. 12/27/2005 436121 316.16 WW-78 TRIBIZINC 12/22/2005 123 4,057.73 WW-78 TRIBIZINC 16,599.91 WW-79 U-BIX CORP. 11/11/2005 A 124642 5,447.37 WW-262 6750 AYALA AVENUE JOINT VENTURE 12/19/2005 15074 18,331.20 WW-262 6750 AYALA AVENUE JOINT VENTURE 23,240.45 WW-262 6750 AYALA AVENUE JOINT VENTURE 6,428.73 WW-87 AIRFREIGHT 2100, INC. 11/10/2005 061595 5.75 WW-87 AIRFREIGHT 2100, INC. 860.50 WW-87 AIRFREIGHT 2100, INC. 673.04 WW-90 ASIA SELECT, INC. 11/10/2005 1942 144.92 WW-90 ASIA SELECT, INC. 317.07 WW-90 ASIA SELECT, INC. 115.32 WW-91 ASIA SELECT, INC. 1,204.41 WW-91 ASIA SELECT, INC. 1,262.22 WW-91 ASIA SELECT, INC. 2,048.61 WW-92 ASIA SELECT, INC. 12/16/2005 2067 13.31 WW-92 ASIA SELECT, INC. 2,011.51 WW-93 BAYANTEL INTERNATIONAL 11/14/2005 349227 E 2,447.70 WW-93 BAYANTEL INTERNATIONAL 3,083.64 WW-95 BUSINESS PROCESS OUTSOURCING 11/9/2005 12055 2,864.00 WW-95 BUSINESS PROCESS OUTSOURCING 2,092.00 WW-95 BUSINESS PROCESS OUTSOURCING 2,107.09 WW-95 BUSINESS PROCESS OUTSOURCING 3,099.18 WW-95 BUSINESS PROCESS OUTSOURCING 1,799.55 WW-95 BUSINESS PROCESS OUTSOURCING 1,756.36 WW-95 BUSINESS PROCESS OUTSOURCING 1,599.09 WW-95 BUSINESS PROCESS OUTSOURCING 1,599.09 WW-95 BUSINESS PROCESS OUTSOURCING 1,676.18 WW-95 BUSINESS PROCESS OUTSOURCING 11,394.73 WW-96 BUSINESS PROCESS OUTSOURCING 12/9/2005 12469 1,961.64 WW-96 BUSINESS PROCESS OUTSOURCING 2,493.09 WW-96 BUSINESS PROCESS OUTSOURCING 2,922.91 WW-96 BUSINESS PROCESS OUTSOURCING 2,288.91 WW-96 BUSINESS PROCESS OUTSOURCING 1,280.73 WW-96 BUSINESS PROCESS OUTSOURCING 2,158.55 WW-96 BUSINESS PROCESS OUTSOURCING 1,830.00 WW-96 BUSINESS PROCESS OUTSOURCING 11,881.00 WW-96 BUSINESS PROCESS OUTSOURCING 1,720.00 WW-97 BUSINESS PROCESS OUTSOURCING 12/16/2005 12496 1,676.18 WW-97 BUSINESS PROCESS OUTSOURCING 1,676.18 WW-97 BUSINESS PROCESS OUTSOURCING 1,950.00 WW-97 BUSINESS PROCESS OUTSOURCING 1,811.00 WW-97 BUSINESS PROCESS OUTSOURCING 1,800.00 WW-97 BUSINESS PROCESS OUTSOURCING 2,350.00 WW-97 BUSINESS PROCESS OUTSOURCING 1,720.00 WW-97 BUSINESS PROCESS OUTSOURCING 1,602.09 WW-97 BUSINESS PROCESS OUTSOURCING 1,617.00 WW-97 BUSINESS PROCESS OUTSOURCING 1,461.00 WW-97 BUSINESS PROCESS OUTSOURCING 1,483.00 WW-97 BUSINESS PROCESS OUTSOURCING 1,641.00 WW-97 BUSINESS PROCESS OUTSOURCING 1,572.00 WW-97 BUSINESS PROCESS OUTSOURCING 1,641.00 WW-97 BUSINESS PROCESS OUTSOURCING 1,404.00 WW-97 BUSINESS PROCESS OUTSOURCING 1,717.00 WW-97 BUSINESS PROCESS OUTSOURCING 1,760.00 WW-97 BUSINESS PROCESS OUTSOURCING 1,717.00 WW-97 BUSINESS PROCESS OUTSOURCING 1,409.00 WW-97 BUSINESS PROCESS OUTSOURCING 1,760.00 WW-98 BUSINESS PROCESS OUTSOURCING 12/16/2005 12495 2,026.00 WW-98 BUSINESS PROCESS OUTSOURCING 1,950.00 WW-98 BUSINESS PROCESS OUTSOURCING 1,771.00 WW-98 BUSINESS PROCESS OUTSOURCING 1,455.00 WW-99 BUSINESS PROCESS OUTSOURCING 11/11/2005 12063 24.73 WW-99 BUSINESS PROCESS OUTSOURCING 1,720.00 WW-100 BUSINESS PROCESS OUTSOURCING 11/23/2005 12207 1,800.00 WW-100 BUSINESS PROCESS OUTSOURCING 1,800.00 WW-100 BUSINESS PROCESS OUTSOURCING 1,800.00 WW-100 BUSINESS PROCESS OUTSOURCING 1,720.00 WW-100 BUSINESS PROCESS OUTSOURCING 1,950.00 WW-100 BUSINESS PROCESS OUTSOURCING 1,800.00 WW-100 BUSINESS PROCESS OUTSOURCING 1,681.00 WW-100 BUSINESS PROCESS OUTSOURCING 1,539.09 WW-100 BUSINESS PROCESS OUTSOURCING 1,695.00 WW-100 BUSINESS PROCESS OUTSOURCING 1,482.73 WW-100 BUSINESS PROCESS OUTSOURCING 1,482.73 WW-100 BUSINESS PROCESS OUTSOURCING 1,640.91 WW-100 BUSINESS PROCESS OUTSOURCING 1,567.18 WW-100 BUSINESS PROCESS OUTSOURCING 1,557.64 WW-100 BUSINESS PROCESS OUTSOURCING 1,501.73 WW-100 BUSINESS PROCESS OUTSOURCING 1,640.91 WW-100 BUSINESS PROCESS OUTSOURCING 1,711.82 WW-100 BUSINESS PROCESS OUTSOURCING 1,599.09 WW-100 BUSINESS PROCESS OUTSOURCING 1,815.55 WW-100 BUSINESS PROCESS OUTSOURCING 2,080.15 WW-100 BUSINESS PROCESS OUTSOURCING 1,958.79 WW-100 BUSINESS PROCESS OUTSOURCING 1,677.71 WW-100 BUSINESS PROCESS OUTSOURCING 1,881.10 WW-101 COMFACCORP. 12/22/2005 30583 251,499.99 WW-104 COMPUTER PROFESSIONALS, INC. 11/10/2005 2293 813.45 WW-104 COMPUTER PROFESSIONALS, INC. 2,831.93 WW-105 BUSINESS PROCESS OUTSOURCING 12/9/2005 12468 1,634.55 WW-106 COMPUTER PROFESSIONALS, INC. 11/15/2005 2301 6,900.00 WW-107 COMPUTER PROFESSIONALS, INC. 11/17/2005 2305 2,500.00 WW-107 COMPUTER PROFESSIONALS, INC. 2,200.00 WW-107 COMPUTER PROFESSIONALS, INC. 2,200.00 WW-107 COMPUTER PROFESSIONALS, INC. 2,800.00 WW-107 COMPUTER PROFESSIONALS, INC. 16,034.48 WW-107 COMPUTER PROFESSIONALS, INC. 1,037.24 WW-107 COMPUTER PROFESSIONALS, INC. 2,270.11 WW-108 COMPUTER PROFESSIONALS, INC. 11/30/2005 2326 131.03 WW-109 COMPUTER PROFESSIONALS, INC. 12/8/2005 2339 161.38 WW-109 COMPUTER PROFESSIONALS, INC. 1,717.24 WW-109 COMPUTER PROFESSIONALS, INC. 1,631.90 WW-109 COMPUTER PROFESSIONALS, INC. 53.79 WW-109 COMPUTER PROFESSIONALS, INC. 53.79 WW-109 COMPUTER PROFESSIONALS, INC. 1,717.24 WW-110 COMPUTER PROFESSIONALS, INC. 12/16/2005 2403 203.45 WW-110 COMPUTER PROFESSIONALS, INC. 2,417.88 WW-110 COMPUTER PROFESSIONALS, INC. 448.16 WW-110 COMPUTER PROFESSIONALS, INC. 1,920.00 WW-110 COMPUTER PROFESSIONALS, INC. 15,906.93 WW-110 COMPUTER PROFESSIONALS, INC. 2,800.00 WW-111 COMPUTER PROFESSIONALS, INC. 12/22/2005 2409 2,200.00 WW-111 COMPUTER PROFESSIONALS, INC. 2,500.00 WW-111 COMPUTER PROFESSIONALS, INC. 2,200.00 WW-111 COMPUTER PROFESSIONALS, INC. 2,500.00 WW-112 COMPUTER PROFESSIONALS, INC. 12/28/2005 2418 17,281.62 WW-113 CONGLOW-THAILAND MARKETING 11/11/2005 1394 5,388.81 WW-114 CORNERSTEEL SYSTEMS CORP. 12/8/2005 Part of 18044 540,975.47 WW-115 CUSTOMER TOUCHPOINT RESOURCES 11/11/2005 0266 267.48 WW-117 CUSTOMER TOUCHPOINT RESOURCES 11/11/2005 0268 158.67 WW-118 CUSTOMER TOUCHPOINT RESOURCES 12/14/2005 0015 253.61 WW-118 CUSTOMER TOUCHPOINT RESOURCES 366.30 WW-118 CUSTOMER TOUCHPOINT RESOURCES 156.29 WW-119 CUSTOMER TOUCHPOINT RESOURCES 12/21/2005 0018 1,352.55 WW-119 CUSTOMER TOUCHPOINT RESOURCES 2,022.54 WW-121 CUSTOMER TOUCHPOINT RESOURCES 11/11/2005 0267 1,207.85 WW-121 CUSTOMER TOUCHPOINT RESOURCES 1,352.55 WW-121 CUSTOMER TOUCHPOINT RESOURCES 106.68 WW-121 CUSTOMER TOUCHPOINT RESOURCES 278.96 WW-121 CUSTOMER TOUCHPOINT RESOURCES 71.82 WW-123 CUSTOMER TOUCHPOINT RESOURCES 11/18/2005 0002 1,352.55 WW-123 CUSTOMER TOUCHPOINT RESOURCES 2,022.54 WW-123 CUSTOMER TOUCHPOINT RESOURCES 2,022.54 WW-123 CUSTOMER TOUCHPOINT RESOURCES 1,654.81 WW-123 CUSTOMER TOUCHPOINT RESOURCES 275.80 WW-125 DESTINY, INC. 12/2/2005 0018034 227.09 WW-126 DESTINY, INC. 12/2/2005 0018035 214.55 WW-127 DNS SHUTTLE SERVICE, INC. 11/29/2005 5189 545.45 WW-128 DP CASTILLAR MAINTENANCE SERVICES 11/10/2005 0460 5,486.36 WW-130 DP CASTILLAR MAINTENANCE SERVICES 12/8/2005 0462 3,636.36 WW-130 DP CASTILLAR MAINTENANCE SERVICES 1,850.00 WW-131 DP CASTILLAR MAINTENANCE SERVICES 12/27/2005 0463 421.49 WW-132 ELITE TRANSPORT INTERNATIONAL CORP. 12/15/2005 5531 116.55 WW-133 F. B. CONSUMER RESEARCH SERVICES 11/25/2005 3504 2,200.00 WW-135 GLOBAL STAFF RECRUITMENT SEARCH, INC. 12/12/2005 0206 32.31 WW-136 GLOBAL ALLIANCE MANPOWER, INC. 11/10/2005 0426 836.97 WW-136 GLOBAL ALLIANCE MANPOWER, INC. 5,746.11 WW-136 GLOBAL ALLIANCE MANPOWER, INC. 788.28 WW-138 JETS TROPHY, INC. 12/16/2005 84990 272.73 WW-139 JETS TROPHY, INC. 12/16/2005 84991 2,690.91 WW-140 LINK WORTH INTERNATIONAL, INC. 11/18/2005 25648 54.55 WW-141 M.R. GUBATUN CUSTOMS BROKERAGE 11/9/2005 0009 39.00 WW-142 M.R. GUBATUN CUSTOMS BROKERAGE 12/23/2005 0020 644.38 WW-144 MAXIBUILD, INC. 11/30/2005 639 814,654.55 WW-144 MAXIBUILD, INC. 1,117,781.82 WW-148 NEEMDIRECT HOLDINGS, INC. 1/10/2006 0002 118,506.00 WW-151 NIPPON HOUSING PHILIPPINES, INC. 11/21/2005 2730 1,140.00 WW-152 NIPPON HOUSING PHILIPPINES, INC. 11/21/2005 2730 2,280.00 WW-153 NIPPON HOUSING PHILIPPINES, INC. 11/21/2005 2730 654.21 WW-154 NIPPON HOUSING PHILIPPINES, INC. 11/26/2005 2731 960.00 WW-155 NIPPON HOUSING PHILIPPINES, INC. 11/21/2005 2732 124.75 WW-156 NIPPON HOUSING PHILIPPINES, INC. 11/21/2005 2732 8,120.70 WW-157 NIPPON HOUSING PHILIPPINES, INC. 11/21/2005 2733 880.17 WW-158 NIPPON HOUSING PHILIPPINES, INC. 12/13/2005 2775 2,192.88 WW-159 NIPPON HOUSING PHILIPPINES, INC. 12/13/2005 2775 30.42 WW-160 NIPPON HOUSING PHILIPPINES, INC. 12/13/2005 2775 875.21 WW-161 NIPPON HOUSING PHILIPPINES, INC. 12/13/2005 2775 1,052.88 WW-162 NIPPON HOUSING PHILIPPINES, INC. 12/13/2005 2774 960.00 WW-163 NIPPON HOUSING PHILIPPINES, INC. 12/13/2005 2776 547.31 WW-164 PLDT 11/30/2005 AB 376365 1,424.94 WW-164 PLDT 18,300.00 WW-164 PLDT 2,400.00 WW-165 PLDT 11/22/2005 AB 375699 5,702.72 WW-165 PLDT 1,951.72 WW-165 PLDT 341.72 WW-165 PLDT 6,884.94 WW-185 PRONTO EXPRESS DISTRIBUTION, INC. 11/3/2005 61552 90.91 WW-185 PRONTO EXPRESS DISTRIBUTION, INC. 90.91 WW-186 PRONTO EXPRESS DISTRIBUTION, INC. 12/9/2005 62133 211.81 WW-186 PRONTO EXPRESS DISTRIBUTION, INC. 159.09 WW-186 PRONTO EXPRESS DISTRIBUTION, INC. 147.91 WW-186 PRONTO EXPRESS DISTRIBUTION, INC. 147.91 WW-186 PRONTO EXPRESS DISTRIBUTION, INC. 90.91 WW-186 PRONTO EXPRESS DISTRIBUTION, INC. 249.55 WW-187 PRONTO EXPRESS DISTRIBUTION, INC. 12/28/2005 62397 90.91 WW-187 PRONTO EXPRESS DISTRIBUTION, INC. 136.36 WW-187 PRONTO EXPRESS DISTRIBUTION, INC. 119.41 WW-187 PRONTO EXPRESS DISTRIBUTION, INC. 513.08 WW-187 PRONTO EXPRESS DISTRIBUTION, INC. 128.91 WW-187 PRONTO EXPRESS DISTRIBUTION, INC. 63.64 WW-188 PRONTO EXPRESS DISTRIBUTION, INC. 11/10/2005 61596 316.50 WW-188 PRONTO EXPRESS DISTRIBUTION, INC. 406.20 WW-188 PRONTO EXPRESS DISTRIBUTION, INC. 300.00 WW-188 PRONTO EXPRESS DISTRIBUTION, INC. 136.36 WW-188 PRONTO EXPRESS DISTRIBUTION, INC. 526.79 WW-188 PRONTO EXPRESS DISTRIBUTION, INC. 95.45 WW-188 PRONTO EXPRESS DISTRIBUTION, INC. 238.37 WW-189 PRONTO EXPRESS DISTRIBUTION, INC. 11/11/2005 61654 93.61 WW-190 PRONTO EXPRESS DISTRIBUTION, INC. 11/25/2005 61849 195.50 WW-190 PRONTO EXPRESS DISTRIBUTION, INC. 198.15 WW-190 PRONTO EXPRESS DISTRIBUTION, INC. 432.15 WW-190 PRONTO EXPRESS DISTRIBUTION, INC. 646.88 WW-190 PRONTO EXPRESS DISTRIBUTION, INC. 123.79 WW-191 PRONTO EXPRESS DISTRIBUTION, INC. 11/25/2005 61891 90.91 WW-192 PTS CORP. 11/11/2005 12785 35.00 WW-192 PTS CORP. 35.00 WW-193 REUTERS LITD 11/9/2005 28927 31,428.90 WW-198 R.M. ENGINEERING SERVICES CO. 12/27/2005 1337 1,344.00 WW-202 TELECOMMUNICATION & COMPUTER TECHNOLOGIES, INC. 12/8/2005 17588 3,769.09 WW-203 TNT EXPRESS WORLDWIDE PHILS.,INC. 11/30/2005 433657 246.86 WW-206 VETERANS PHILIPPINE SCOUT SECURITY AGENCY 11/7/2005 51583 4,070.23 WW-206 VETERANS PHILIPPINE SCOUT SECURITY AGENCY 4,070.23 WW-207 VETERANS PHILIPPINE SCOUT SECURITY AGENCY 11/7/2005 51583 4,070.23 WW-208 VETERANS PHILIPPINE SCOUT SECURITY AGENCY 11/8/2005 51584 4,070.23 WW-209 VETERANS PHILIPPINE SCOUT SECURITY AGENCY 11/16/2005 51851 246.17 WW-210 VETERANS PHILIPPINE SCOUT SECURITY AGENCY 12/7/2005 52024 4,070.23 WW-210 VETERANS PHILIPPINE SCOUT SECURITY AGENCY 4,070.23 WW-210 VETERANS PHILIPPINE SCOUT SECURITY AGENCY 4,070.23 WW-211 VETERANS PHILIPPINE SCOUT SECURITY AGENCY 12/16/2005 52066 4,070.23 WW-212 VETERANS PHILIPPINE SCOUT SECURITY AGENCY 12/23/2005 52154 376.09 WW-213 VETERANS PHILIPPINE SCOUT SECURITY AGENCY 12/29/2005 52163 1,603.45 WW-213 VETERANS PHILIPPINE SCOUT SECURITY AGENCY 1,603.45 WW-213 VETERANS PHILIPPINE SCOUT SECURITY AGENCY 21.78 WW-213 VETERANS PHILIPPINE SCOUT SECURITY AGENCY 1,603.45 WW-214 VINTEL LOGISTICS, INC. 11/9/2005 852 875.35 WW-215 YUTIVO CORP. 11/24/2005 D 53477 2,250.00 WW-216 JONES LANG LASALLE PHILS.,INC. 12/20/2005 2060 2,442.63 WW-217 JONES LANG LASALLE PHILS.,INC. 12/19/2005 2056 19,135.24 WW-218 JONES LANG LASALLE PHILS.,INC. 12/7/2005 2049 2,870.30 WW-219 JONES LANG LASALLE PHILS.,INC. 12/7/2005 2048 19,135.24 WW-220 JONES LANG LASALLE PHILS.,INC. 11/23/2005 2032 189.20 WW-221 JONES LANG LASALLE PHILS.,INC. 11/23/2005 2033 9,863.24 WW-222 JONES LANG LASALLE PHILS.,INC. 12/29/2005 2070 19,135.25 WW-223 JONES LANG LASALLE PHILS.,INC. 12/29/2005 2071 2,382.63 WW-224 JONES LANG LASALLE PHILS.,INC. 12/29/2005 2074 2,352.63 WW-225 JONES LANG LASALLE PHILS.,INC. 12/29/2005 2072 9,863.24 WW-226 JONES LANG LASALLE PHILS.,INC. 12/29/2005 2075 189.20 WW-227 JONES LANG LASALLE PHILS.,INC. 12/19/2005 2055 144,271.90 WW-228 JONES LANG LASALLE PHILS.,INC. 12/29/2005 2073 131,154.94 WW-229 YUTIVO CORP. 12/6/2005 53493 2,250.00 WW-230 YUTIVO CORP. 12/28/2005 53426 2,250.00 WW-231 YUTIVO CORP. 12/28/2005 53426 1,800.00 VV-59 PLDT 11/22/2005 AB 375697 18,572.20 VV-236 PLDT 11/22/2005 AB 375696 21,582.47 VV-237 PLDT 11/22/2005 AB 375698 16,600.00 VV-240 BASES CONVERSION DEVELOPMENT 11/10/2005 8119683 D 137,192.73 VV-160 KALAYAAN ENGINEERING CO.,INC. 11/11/2005 12145 1,174.05 VV-160 KALAYAAN ENGINEERING CO.,INC. 1,893.47 Subtotal P16,472,957.49 Total P16,501,420.01 Considering all the aforesaid disallowances, out of petitioner's reported input tax of P87,341,820.12 arising from current domestic purchases of capital goods, domestic purchases of goods other than capital goods and domestic purchases of services, only the amount of P44,134,162.27 represents petitioner's valid input VAT, computed as follows: CAacTH FY ended June 30, 2006 Total 1st Quarter (July to Sept. 2005) 2nd Quarter (Oct. to Dec. 2005) Input Tax from Current Purchases Per VAT Returns Domestic Purchases Capital Goods P872,916.35 P872,916.35 Domestic Purchases Goods other than Capital Goods 586,248.76 P1,936,816.11 2,523,064.87 Domestic Purchases Services 32,922,990.23 51,022,848.67 83,945,838.90 Total P34,382,155.34 P52,959,664.78 P87,341,820.12 Less: Output VAT adjustments added to input VAT a. Deductible adjustment to sales/receipts to Procter & Gamble Distributing (Philippines),Inc. (6,938,599.91) (6,938,599.91) b. Deductible adjustment to sales/receipts to Procter & Gamble Philippines, Inc. (16,897,195.05) (16,897,195.05) Input VAT from Current Purchases Per VAT Returns, as Adjusted P34,382,155.34 P29,123,869.82 P63,506,025.16 Less: Disallowances Per ICPA report: Input VAT not included per schedule but included in the return a. Input VAT on importation supported only by broker's statement of account and supplier's commercial invoice (49,568.99) (49,568.99) b. Input VAT on stale checks supported only by system-generated journal voucher (35,513.50) (35,513.50) Input VAT per petitioner's schedule but not properly supported by VAT invoices (in cases of purchases of goods) or official receipts (in cases of purchases of services) (1,479,285.68) (1,306,074.71) (2,785,360.39) Per this Court's further verification: Input VAT supported by VAT invoices or official receipts which are dated November 1, 2005 and onwards and do not separately show the input VAT (16,501,420.01) (16,501,420.01) Valid Input VAT P32,853,300.67 P11,280,861.60 P44,134,162.27 However, considering that petitioner is engaged both in taxable sales subject to zero percent (0%) and ten percent (10%) rates, and its input VAT cannot be directly or entirely attributed to specific sales, the Court shall allocate the valid input VAT proportionately on the basis of the volume of petitioner's sales pursuant to Section 112 (A) of the NIRC of 1997, as amended, computed as follows: cEaSHC FY ended June 30, 2006 Total 1st Quarter (July 1, 2005 to Sept. 30, 2005) 2nd Quarter (Oct. 1, 2005 to Dec. 31, 2005) (Exhibit "D") (Exhibit "F") VATable Sales/Receipts Per Returns P134,148,561.30 P249,187,466.40 P383,336,027.70 Less: Adjustments for cancelled sales to: Procter & Gamble Distributing (Philippines),Inc. (8,227,835.91) (61,158,163.23) (69,385,999.14) P&G Philippines, Inc. (20,036,801.39) (148,935,149.13) (168,971,950.52) VATable Sales/Receipts, as adjusted P105,883,924.00 P39,094,154.04 P144,978,078.04 Zero-Rated Sales/Receipts 675,481,646.57 456,679,079.46 1,132,160,726.03 Total Sales/Receipts, as adjusted P781,365,570.57 P495,773,233.50 P1,277,138,804.07 Allocation Factor (Percentage of each type of sales to total sales): VATable Sales 13.551138% 7.885491% Zero-Rated Sales 86.448862% 92.114509% Total 100.000000% 100.000000% Valid Input VAT P32,853,300.67 P11,280,861.60 P44,134,162.27 Input VAT Allocation Per Each Type of Sales (Allocation Factor multiplied by Valid Input VAT): VATable Sales P4,451,996.11 P889,551.33 P5,341,547.33 Zero-Rated Sales 28,401,304.56 10,391,310.27 38,792,614.94 Total P32,853,300.67 P11,280,861.60 P44,134,162.27 Since the input VAT allocated to VATable sales/receipts is not enough to cover petitioner's output tax due for each quarter, the input VAT allocated to zero-rated sales/receipts for the period July 1, 2005 to September 30, 2005 shall be utilized to pay for the remaining output tax, as shown below: IAETDc 1st Quarter July 1, 2005 to Sept. 30, 2005 VATable Sales/Receipts, as adjusted P105,883,924.00 Output VAT due, as adjusted P10,588,392.40 Less: Input VAT allocated to VATable sales/receipts 4,451,996.00 Balance of Output VAT due P6,136,396.40 Less: Input VAT allocated to zero-rated sales/receipts 28,401,304.56 Excess Input VAT allocated to zero-rated sales/receipts P22,264,908.16 Less: Amount being claimed 19,496,365.57 Excess Input VAT not claimed P2,768,542.59 2nd Quarter Oct. 1, 2005 to Dec. 31, 2005 VATable Sales/Receipts, as adjusted P39,094,154.04 Output VAT due P3,909,415.40 Less: Payment during the quarter (Exhibit "O") 2,215,225.66 Input VAT that needed to be applied P1,694,189.74 Input VAT carry-over from previous quarter input VAT allocable to zero-rated sales/receipts not claimed for refund P2,768,542.59 Input VAT allocated to VATable sales/receipts for the quarter 889,551.33 Less: Amount applied this quarter 1,694,189.74 1,694,189.74 Input VAT carry-over to next quarter P1,963,904.18 P- Excess Input VAT allocated to zero-rated sales/receipts P10,391,310.27 It must be noted that while petitioner reported in its Quarterly VAT Return for the first quarter of FY ended June 30, 2006 an input tax carried over from previous quarter in the amount of P2,400,984.13, 36 petitioner failed to present VAT invoices or official receipts to prove the existence of such amount. Hence, the input tax carry-over of P2,400,984.13 cannot be applied against petitioner's output tax for the first quarter of FY ended June 30, 2006 pursuant to Section 110 (A) and (B) of the NIRC of 1997, as amended, which states: CTIEac "SEC. 110. Tax Credits . (A) Creditable Input Tax . (1) Any input tax evidenced by a VAT invoice or official receipt issued in accordance with Section 113 hereof on the following transactions shall be creditable against the output tax: xxx xxx xxx (B) Excess Output or Input Tax . If at the end of any taxable quarter the output tax exceeds the input tax, the excess shall be paid by the VAT-registered person. If the input tax exceeds the output tax, the excess shall be carried over to the succeeding quarter or quarters: x x x." Consequently, petitioner's refundable excess input VAT for the first and second quarters of FY ended June 30, 2006 amounted to P26,066,581.28, computed as follows: Particulars FY ended June 30, 2006 Total 1st Quarter (July 1 to Sept. 30, 2005) 2nd Quarter (Oct. 1 to Dec. 31, 2005) Excess Input VAT P19,496,365.57 P10,391,310.27 P29,887,675.84 Valid Zero-Rated Sales P592,131,849.27 P394,475,853.38 P986,607,702.65 Total Declared Zero-Rated Sales P675,481,646.57 P456,679,079.46 P1,132,160,726.03 % of Valid Zero-Rated Sales to Total Declared Zero-Rated Sales 87.660687% 86.379226% Excess Input VAT Attributable to Valid Zero-Rated Sales P17,090,647.92 P8,975,933.36 P26,066,581.28 Finally, it was established that the aforesaid excess input VAT was not carried over in the succeeding quarters. Records show that petitioner's entire excess input VAT claims for the periods July 1, 2005 to September 30, 2005 and October 1, 2005 to December 31, 2005 in the respective amounts of P19,496,365.57 37 and P34,128,061.57 38 were deducted as "VAT Refund/TCC claimed" in the Quarterly VAT Returns for the same taxable quarters preventing the carry-over or application of such input taxes in the next taxable quarters. DcHSEa In fine, petitioner has sufficiently proven its entitlement to a refund or issuance of tax credit certificate in the amount of P26,066,581.28 representing its unutilized excess input VAT for the periods covering July 1, 2005 to September 30, 2005 and October 1, 2005 to December 31, 2005, which is attributable to its zero-rated sales/receipts for the same period. WHEREFORE ,premises considered, the instant Petition for Review is PARTIALLY GRANTED .Accordingly, respondent is ORDERED TO REFUND OR ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner in the reduced amount of P26,066,581.28 representing its unutilized excess input VAT attributable to zero-rated sales/receipts for the periods of July 1, 2005 to September 30, 2005 and October 1, 2005 to December 31, 2005. SaCIDT SO ORDERED. (SGD.) JUANITO C. CASTAEDA, JR. Associate Justice Caesar A. Casanova and Cielito N. Mindaro-Grulla, JJ. ,concur. Footnotes 1. Docket, vol. IV, pp. 2649-2658. 2. Docket, vol. IV, pp. 2155-2198. 3. Docket, vol. IV, p. 2662. 4. Resolution dated July 24, 2017, docket, vol. IV, pp. 2676-2678. 5. Order dated August 14, 2017, docket, vol. IV, p. 2680. 6. Minutes of the Hearing dated August 14, 2017, docket, vol. IV, p. 2679. 7. Minutes of the Hearing dated September 18, 2017, docket, vol. IV, p. 2681. 8. Docket, vol. IV, pp. 2683-2691. 9. Docket, vol. IV, pp. 2692-2695. 10. Resolution dated October 24, 2017, docket, vol. IV, p. 2696. 11. Joint Stipulation of Facts and Issues (JSFI),docket, vol. I, p. 221. 12. Decision dated June 18, 2012, p. 18, docket, vol. IV, p. 2290. 13. G.R. No. 204277, May 30, 2016, docket, vol. IV, pp. 2654-2657. 14. Par. 3, Admitted Facts by Petitioner and Respondent, JSFI, docket, vol. I, p. 220. 15. Exhibit "B". 16. G.R. No. 153205, January 22, 2007. 17. Par. 1, Admitted Facts by Petitioner and Respondent, JSFI, docket, vol. I, p. 219. 18. Exhibits "C1" to "C29",inclusive of sub-markings. 19. Exhibits "FF","GG","GG-1",and "FFF". 20. Exhibits "MM" and "MM-1". 21. Exhibits "PP-1" to "PP-142". 22. Exhibits "GGG-1" to "GGG-56". 23. Exhibit "V",Annex 1. 24. Exhibit "OOO",p. 6. 25. Exhibit "V",p. 8. 26. Exhibits "DD" and "DD-1" to "D-32". 27. Exhibits "XXX" to "ZZZZ". 28. Exhibit "VVV". 29. Exhibits "C1" to "C29",inclusive of sub-markings. 30. G.R. No. 201326, February 8, 2017. 31. Exhibit "V",Annex 1. 32. Exhibit "V",p. 16. 33. Exhibit "V",p. 17. 34. Exhibit "V",pp. 19-26 and 29. 35. R.A. No. 9337 was supposed to take effect on July 1, 2005 but due to constitutionality issues, it became effective only on November 1, 2005 upon the finality of the Supreme Court's September 1, 2005 Decision upholding the said law's validity. 36. Exhibit "D",Line 23C. 37. Exhibit "D",Line 25A. 38. Exhibit "F",Line 23D. n Note from the Publisher: Copied verbatim from the official copy.