Macquarie Offshore Services Pty Ltd.-Philippine Branch v. Commissioner of Internal Revenue

THIRD DIVISION [C.T.A. CASE NO. 8337. June 2, 2016.] MACQUARIE OFFSHORE SERVICES PTY LTD.-PHILIPPINE BRANCH , petitioner , vs. COMMISSIONER OF INTERNAL REVENUE , respondent . AMENDED DECISION FABON-VICTORINO , J p : In the Decision dated July 15, 2015, the Court denied petitioner's claim for refund of excess and unutilized input value-added tax (VAT) for the fiscal year covering the period April 1, 2009 to March 31, 2010, in the amount of P10,359,678.44. The ruling was based on the Court's finding that petitioner failed to prove that the services it rendered to Macquarie Financial Holdings Limited (MFHL) qualified as VAT zero-rated transactions under Section 108 (B) (2) of the National Internal Revenue Code (NIRC) of 1997, as there was no evidence presented showing that MFHL was doing business outside the Philippines. On July 31, 2015, petitioner filed a Motion for New Trial to allegedly rectify the excusable lapses observed by the Court and indicated in the assailed Decision of July 15, 2015. Petitioner explained that the Securities and Exchange Commission (SEC), in issuing the Certification of Non-Registration of Company, inadvertently omitted the word "Limited" from the name of its foreign client Macquarie Financial Holdings Limited or MFHL. As a result thereof, the Court concluded that the said Certification was referring to another company not licensed to do business in the Philippines but not to petitioner's client MFHL. Annexed to the Motion for New Trial were the Affidavits of Merit attesting that the law firm's paralegal applied for a Certificate of Non-Registration of MFHL upon instruction and that the SEC issued the requested Certification but omitted the word "Limited" in the name of the Company. The said omission was learned only after petitioner received its copy of the adverse Decision on July 16, 2015. Also attached to the Motion was the SEC Certificate of Non-Registration dated July 30, 2015 indicating that Macquarie Financial Holdings Limited is a non-resident foreign corporation not engaged in business in the Philippines. Petitioner prayed that the adverse Decision be set aside and a new trial be conducted for the presentation of the Certificate of Non-Registration dated July 30, 2015 for MFHL. CAIHTE In the Resolution dated September 22, 2015, 1 the Court granted petitioner's motion to which respondent interposed no objection, despite notice. Consequently, a new trial was conducted on November 23, 2015, during which petitioner presented and the Court admitted, among others, the formally offered Certificate of Non-Registration of MFHL issued by the SEC bearing the correct name of its foreign client MFHL. Hence, this Amended Decision. In the assailed Decision of July 15, 2015, the Court ruled that both the administrative and the judicial claims for refund/tax credit were seasonably instituted by petitioner, pursuant to Section 112 (A) and (C) of the NIRC, as amended. The evidence as found by the Court also prove that petitioner is a duly registered VAT taxpayer, 2 which rendered services in the Philippines for the exclusive benefit of its non-resident foreign client, MFHL. The services rendered during the Fiscal Year 2010 were not in the same category as "processing, manufacturing or repacking of goods" for which petitioner was paid in Australian Dollars (AUD) 3 duly accounted for in accordance with the BSP rules and regulations. 4 Hence, the subject sales are VAT zero-rated pursuant to Section 108 (B) (2) of the NIRC of 1997. In fine, petitioner was able to meet the requisites mandated under Section 112 (A) and (C) of the NIRC, as amended. However, the Court found petitioner unable to establish that MFHL, a non-resident foreign corporation is not doing business in the Philippines. The documents it presented at most showed that MFHL is registered and does business in Australia but they do not conclusively prove that MFHL does not do business in the Philippines. Moreover, the document that could have saved the day for petitioner, namely, the SEC Certificate of Non-registration of Company, was not considered by the Court as it referred to Macquarie Financial Holdings and not to Macquarie Financial Holdings, Limited (MFHL). To remedy the belatedly detected lapses, the Court, at the instance of petitioner and in the interest of justice, allowed the presentation of the Certification of Non-Registration of MFHL dated July 30, 2015 5 which sufficiently proved that MFHL, a foreign corporation, is not doing business in the Philippines. With the foregoing finding, the Court shall now determine whether petitioner was able to substantiate its zero-rated sales for the four quarters of FY 2010. In its VAT Returns for the four quarters of FY 2010, petitioner reflected the following zero-rated sales: Period Covered (FY Exhibit 2010) Amount C 1st Quarter P61,913,339.95 D 2nd Quarter 74,958,221.29 E 3rd Quarter 97,514,333.46 F 4th Quarter 147,984,025.89 TOTAL P382,369,920.59 ============= To prove that it generated zero-rated sales and that the corresponding foreign currency payments it received were accounted for in accordance with the rules and regulations of the BSP, petitioner offered in evidence its service invoices 6 official receipts 7 and debit memos 8 issued to its client MFHL, as well as the bank certifications of inward remittances. 9 The said amount consists of the following: Service Official Amount Amount Invoice Receipt Client in Php in AUD No. Date Exhibit No. Date Exhibit First Quarter MFHL 15,991,248.29 457,644.73 000010 5/26/2009 XX-1Q.1 000005 6/11/2009 XX-2.1 MFHL 21,042,562.71 556,865.67 000011 6/30/2009 XX-1Q.2 000006 7/17/2009 XX-2.2 MFHL 24,879,528.95 640,404.05 000013 8/10/2009 XX-1Q.3 000007 8/24/2009 XX-2.3 subtotal 61,913,339.95 1,654,914.45 Second Quarter MFHL 27,581,893.12 687,226.31 000014 9/4/2009 XX-2Q.1 000008 9/14/2009 XX-2.4 MFHL 24,629,437.62 596,780.09 000015 9/4/2009 XX-2Q.2 MFHL 22,746,890.56 541,522.03 000016 10/30/2009 XX-2Q.3 000009 11/25/2009 XX-2.5 subtotal 74,958,221.30 1,825,528.43 Third Quarter MFHL 30,217,972.33 707,328.40 000017 11/13/2009 XX-3Q.1 000009 11/25/2009 XX-2.5 MFHL 30,438,755.02 706,022.66 000018 12/29/2009 XX-3Q.2 000010 3/28/2010 XX-2.6 MFHL 36,857,606.12 882,048.95 000019 1/29/2009 XX-3Q.3 subtotal 97,514,333.47 2,295,400.01 Fourth Quarter MFHL 29,896,949.51 721,773.05 000020 2/22/2010 XX-4Q.1 000010 3/28/2010 XX-2.6 MFHL 39,471,287.73 951,927.86 000021 3/31/2010 XX-4Q.2 000013 5/18/2010 XX-2.7 MFHL 3,186,584.79 76,930.63 000022 1/31/2010 XX-4Q.3 000014 8/8/2010 XX-2.8 MFHL 1,981,059.72 47,777.16 000023 2/28/2010 XX-4Q.4 MFHL 46,456,810.09 1,123,052.04 000024 4/30/2010 XX-4Q.5 000013 5/18/2010 XX-2.7 MFHL 27,779,085.54 671,534.67 000025 3/31/2010 XX-4Q.6 000014 8/8/2010 XX-2.8 MFHL (787,751.49) (19,043.19) 000029 6/30/2010 XX-4Q.7 000015 8/23/2010 XX-2.9 subtotal 147,984,025.89 3,573,952.22 Total 382,369,920.61 10 9,349,795.11 ============== ============== However, petitioner's zero-rated receipts in the total amount of P45,669,058.60 declared in the fourth quarter of FY 2010 and supported by zero-rated Service Invoice Nos. 000024 and 000029 are dated outside the period of claim, hence, must be disallowed. Thus, out of the P382,369,920.59 zero-rated receipts reported by petitioner, only the amount of P336,700,861.99 qualifies for VAT zero-rating under Section 108 (B) (2) of the NIRC of 1997, as determined below: DETACa 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr TOTAL Zero-Rated Receipts Per Returns P61,913,339.95 P74,958,221.29 P97,514,333.46 P147,984,025.89 P382,369,920.59 Less: Zero-Rated Receipts supported by VAT service invoices dated outside the period of claim SI No. 000024 46,456,810.09 46,456,810.09 SI No. 000029 (787,751.49) (787,751.49) Valid Zero-Rated Receipts P61,913,339.95 P74,958,221.29 P97,514,333.46 P102,314,967.29 P336,700,861.99 ============= ============= ============= ============= ============= After finding that petitioner had zero-rated receipts for the four quarters of FY 2010 in the total amount of P336,700,861.99, the Court must determine whether petitioner incurred or paid input taxes in connection therewith. In its Quarterly VAT Returns for the four quarters of FY 2010, petitioner declared input VAT on its purchases of services and goods other than capital goods in the aggregate amount P9,217,810.79, broken down as follows: 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr TOTAL Domestic Purchase of Goods other than Capital Goods P148,822.92 P223,987.72 P567,274.27 P1,115,035.99 P2,055,120.90 Domestic Purchase of Services 1,134,201.71 1,766,288.59 1,754,315.98 2,494,889.80 7,149,696.08 Services Rendered by Non- residents - - - 12,993.81 12,993.81 Total P1,283,024.63 P1,990,276.31 P2,321,590.25 P3,622,919.60 P9,217,810.79 ============ ============ ============ ============ ============ To prove the foregoing, petitioner offered in evidence BIR Form 1600 with bank payment slips, various sales invoices and official receipts 11 issued by its various suppliers. All these were examined by Independent Certified Public Accountant (ICPA) Jerome Antonio B. Constantino, whose findings are summarized in his two (2) separate reports dated January 2, 2013 12 and July 10, 2013, 13 to wit: Ref. (Annexed Findings to Exhibit 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total XX & ZZ) I. PROPERLY SUPPORTED BY VAT INVOICES, OFFICIAL RECEIPTS AND BIR FORM 1600 A. Input tax on domestic purchases of goods other than capital goods 1 Supported by "TIN 2-1Q-1; P27,628.49 P10,638.82 P4,012.77 P27,795.32 P70,075.40 VAT" invoices 2-2Q-1; 2-3Q-3; 2-4Q-1 2 Supported by "TIN 2-1Q-2; 121,194.43 77,910.51 216,519.79 930,182.59 1,345,807.32 VAT" invoices with 2-2Q-4; corrections on 2-3Q-4; Petitioner's name 2-4Q-3 and/or TIN and/or address and/or VAT amount but with countersignature of the supplier according to the Petitioner 3 Supported by "VAT 2-2Q-3; 14,036.81 14,450.05 15,617.59 44,104.45 REG TIN" invoices 2-3Q-1, 2-4Q-2 4 Supported by "VAT 2-3Q-5; 55,082.82 36,892.50 91,975.32 REG TIN" invoices 2-4Q-5 with corrections on Petitioner's name and/or address but with countersignature of the supplier according to the Petitioner 5 Supported by "VAT 2-3Q-7; 36,825.00 11,937.54 48,762.54 REG TIN" invoices 2-4Q-13 with corrections on Petitioner's name and/or TIN with countersignature of the supplier according to the Petitioner and not dated within the taxable quarter but dated within the period of claim 6 Supported by "TIN 2-2Q-5; 72,437.14 146,984.90 42,182.14 261,604.18 VAT" invoices with 2-3Q-8; corrections on 2-4Q-11 Petitioner's name and/or TIN with countersignature of the supplier according to the Petitioner but not dated within the taxable quarter but dated within the period of claim 7 Supported by "TIN 2-3Q-14; 2,197.61 14,051.14 16,248.75 VAT" invoices not 2-4Q-12 dated within the taxable quarter but 1-3Q-3; dated within the 1-4Q-4 2,104.73 5,300.51 7,405.24 period of claim 8 Supported by "VAT 2-4Q-14 2,171.95 2,171.95 REG TIN" invoices not dated within the 1-3Q-2; taxable quarter but 1-4Q-7 3,966.41 9,023.75 12,990.16 dated within the period of claim 9 Supported by "TIN 2-4Q-9 94,002.00 94,002.00 VAT invoices with corrections on Petitioner's name with countersignature of the supplier according to the Petitioner and not dated within the taxable quarter but dated within the period of claim B. Input tax on domestic purchases of services 1 Supported by "TIN 2-1Q-4; 7,200.00 1,961.21 34,835.33 19,365.85 63,362.39 VAT" ORS 2-2Q-2, 2-3Q-2; 2-4Q-4 1-1Q-2; 25.50 316.72 58.92 401.14 1-2Q-1; 1-3Q-1 2 Supported by "VAT 2-1Q-3; 74,341.08 107,836.97 209,904.24 563,664.24 955,746.53 REG TIN" ORs 2-2Q-6; 2-3Q-1; 2-4Q-6 1-2Q-3; 1-4Q-1 19,442.40 3,680.14 23,122.54 3 Supported by "TIN 2-1Q-5; 36,120.42 40,182.12 2,883.48 16,492.93 95,678.95 VAT" ORs with 2-2Q-8; corrections on 2-3Q-13; Petitioner's name, 2-4Q-8; and/or TIN and/or address and/or VAT 1-1Q-3; 51.21 381.33 842,489.31 842,921.85 amount but with 1-3Q-5; countersignature 1-4Q-3 of the supplier according to the Petitioner 4 Supported by "VAT 2-1Q-6; 718,309.91 507,120.04 1,023,303.69 95,035.46 2,343,769.10 REG TIN" ORs with 2-2Q-7; corrections on 2-3Q-6; Petitioner's name 2-4Q-7 and/or address and/or TIN and/or 1-1Q-1; 3,744.41 60,000.00 170,238.16 233,982.57 date and/or VAT 1-2Q-4; amount but with 1-4Q-2 countersignature of the supplier according to the Petitioner 5 Supported by "VAT 2-3Q-9 27,215.33 27,215.33 REG TIN" ORs not dated within the 1-3Q-7; taxable quarter but 1-4Q-6 70,311.31 2,209.82 72,521.13 dated within the period of claim 6 Supported "TIN VAT" 2-3Q-10 101.36 101.36 ORs with corrections on Petitioner's name 1-2Q-2 19,339.80 19,339.80 and/or address and/or TIN and/or VAT amount with countersignature of the supplier according to the Petitioner and not dated within the taxable quarter but dated within the period of claim 7 Supported "VAT REG 2-1Q-7; 61,800.00 51,810.98 133,119.36 246,730.34 TIN" ORs with 2-2Q-9; corrections on 2-3Q-11 Petitioner's name and/or address with 1-2Q-5; 5,160.00 10,061.23 316.82 15,538.05 countersignature 1-3Q-6; of the supplier 1-4Q-8 according to the Petitioner but not dated within the taxable quarter but dated within the period of claim 8 Supported by "TIN 1-3Q-4; 106,347.47 1,194.86 107,542.33 VAT" ORs not dated 1-4Q-5 within the taxable quarter but dated within the period of claim C. Input tax on services rendered by non-residents 1 Supported by BIR 2-4Q-10 12,993.81 12,993.81 form 1600 Subtotal 1,050,415.45 988,193.52 2,100,667.13 2,916,838.43 7,056,114.53 II. OTHER FINDINGS A. Input tax on domestic purchases of goods other than capital goods 1 Supported by "VAT 2-4Q-17 2,256.70 2,256.70 TIN" sales invoices 2 Supported by "VAT 2-3Q-15; 45,652.80 7,090.18 52,742.98 REG TIN" invoices 2-4Q-15 with incomplete Petitioner's name ( e.g. , Macquarie Offshore Services PTY LTD) 3 Supported by "TIN 2-4Q-16 4,144.80 4,144.80 VAT" invoices but with incomplete name ( e.g. , Macquarie Offshore Phils., Macquarie Offshore Services, Macquarie Offshore Services PTY LTD, Macquire Offshore Services, Macquarie Offshore Services) 4 Supported by VAT 2-4Q-29 1,283.15 1,283.15 invoices not in the name of the Petitioner ( e.g. , Macquarie Capital Securities Phils., Inc. and Macquarie Office) and not dated within the taxable quarter ( e.g. , first, second and third quarter) but dated within the period of claim 5 Supported by VAT 2-2Q-21; 600.00 17,583.46 2,710.71 20,894.17 invoices with 2-3Q-17; corrections on 2-4Q-19 Petitioner's name without countersignature and/or VAT amount not shown separately 6 Supported by VAT 2-3Q-19; 6,825.75 101,171.36 107,997.11 invoices but not an 2-4Q-28 original copy 7 Supported by "TIN 2-4Q-18 840.00 840.00 VAT" without invoice date 8 Supported by 2-2Q-10; 112.50 466.07 14,572.23 15,150.80 document other than 2-3Q-18; sales invoice ( e.g. , 2-4Q-20 OR, service receipt) 9 Supported by "TIN 2-3Q-30 13,071.43 13,071.43 VAT" invoice with incomplete Petitioner's name and VAT amount not shown separately 10 Supported by "VAT 1-2Q-9; 18,255.29 24,101.72 42,357.01 REG TIN" invoices 1-4Q-9 with incomplete Petitioner's name ( e.g. , Macquarie Offshore Services PTY LTD) but not dated within the taxable quarter but dated within the period of claim 11 Supported by "TIN 1-2Q-10 28,957.06 28,957.06 VAT" invoices but with incomplete petitioner's name ( e.g. , Macquarie Offshore Services LTD only) but not dated within the taxable quarter but dated within the period of claim B. Input tax on domestic purchases of services 1 Supported by "TIN 2-1Q-8; 30,280.30 19,672.26 49,952.56 VAT" ORs but with 2-2Q-11 incomplete Petitioner's name 1-3Q-8 28,872.97 28,872.97 ( e.g. , Macquarie Offshore Services PTY LTD, Macquarie Offshore Services and Macquarie Offshore) and/or without Petitioner's TIN and incomplete/no address and/or VAT amount not shown separately 2 Supported by tape 2-1Q-9; 2,643.73 3,098.48 10,627.91 9,302.52 25,672.64 receipts with 2-2Q-15; incomplete 2-3Q-22; Petitioner's name 2-4Q-22 ( e.g. , Macquarie Offshore Services 1-1Q-6; 479.21 309.26 788.47 PTY LTD, Macquarie 1-2Q-11 Offshore and Macquarie Offshore Services, Macquarie Securities) and/or without Petitioner's TIN and/or address 3 Supported by "VAT 2-1Q-10; 765.48 709.18 1,383.54 3,688.39 6,546.59 REG" ORs 2-2Q-17; 2-3Q-23; 2-4Q-25 4 Supported by "TIN 2-1Q-11; 24,641.40 287,436.57 47,613.18 30,047.39 389,738.54 ONLY", "TIN NON- 2-2Q-18; VAT", with stamped 2-3Q-24; TIN VAT and "NON- 2-4Q-24 VAT REG TIN" ORs 5 Supported by "VAT 2-2Q-12; 1,872.86 4,242.85 6,115.71 REG TIN" ORs but 2-3Q-21 with incomplete Petitioner's name ( e.g. , Macquarie Offshore Services PTY and Macquarie Offshore) 6 Supported by VAT OR 2-2Q-14; 385.72 85.71 471.43 not in the name of 2-3Q-27 the Petitioner ( e.g. , Macquarie Securities 1-3Q-9 203.14 203.14 Philippines Incorporated) 7 Supported by "VAT 2-2Q-13 1,059.49 1,059.49 REG TIN" OR but with incomplete Petitioner's name ( e.g. , Macquarie Offshore) and VAT amount not shown separately 8 Supported by VAT 2-3Q-16; 465.53 180.00 645.53 OR not in the name 2-4Q-26 of the Petitioner and not dated within the taxable quarter but dated within the taxable year of claim 9 Supported by VAT 2-3Q-25; 7,601.27 189,119.09 196,720.36 ORs but dated 2-4Q-27 outside the taxable period of claim ( e.g. , FY March 2009) 10 Supported by "VAT 2-2Q-16 9,811.61 9,811.61 REG TIN" OR without date 11 Supported by VAT 2-2Q-20; 533,150.15 51.54 533,201.69 ORs but not an 2-3Q-29 original copy 12 Supported by 2-1Q-12; 6,895.56 2,958.21 12,537.90 385.71 22,777.38 document other than 2-2Q-19; ORs ( e.g. , bank 2-3Q-28; deposit slip, 2-4Q-23 collection receipt, tape receipt, sales invoice, cash invoice, advertising contract and statement of account) 13 Supported by VAT 2-3Q-26 6,586.91 6,586.91 ORs with incomplete Petitioner's name ( e.g. , Macquarie Offshore Services) without Petitioner's TIN and/or address and VAT amount is not shown separately and not dated within the taxable quarter ( e.g. , second and fourth quarter) but dated within the period of claim 14 Supported by "TIN 2-1Q-14; 2,580.00 26,640.00 136,184.73 165,404.73 VAT" ORs but with 2-3Q-20; incomplete 2-4Q-21 Petitioner's name and/or without Petitioner's TIN and/or address ( e.g. , Macquarie Offshore Services PTY LTD, Macquarie Offshore Services and Macquarie Offshore) 15 Supported by "TIN 2-1Q-13 52.18 52.18 VAT" OR with corrections on Petitioner's name with countersignature of the supplier according to the Petitioner but VAT amount not shown separately 16 Supported by VAT 2-3Q-32 202.62 202.62 ORs but VAT amount not shown separately 1-4Q-11 1,270.04 1,270.04 and not dated within the taxable quarter 17 Supported by VAT 2-3Q-31 3,278.20 3,278.20 ORs but VAT amount is not shown 1-2Q-8 44.69 44.69 separately 18 Supported by tape 2-3Q-33 257.14 257.14 receipts but not BIR registered 19 Supported by tape 1-4Q-14 321.43 321.43 receipts with incomplete Petitioner's name ( e.g. , Macquarie only) and not dated within the taxable quarter but dated within the period of claim 20 Supported by "VAT 1-4Q-10 175.71 175.71 REG TIN" ORs but with incomplete Petitioner's name ( e.g. , Macquarie Offshore only) and/or incorrect Petitioner's tin ( e.g. , 850) and/or with corrections in the amounts and/or not dated within the taxable quarter ( e.g. , third quarter) but dated within the period of claim 21 Supported by "VAT 1-1Q-4 64.29 64.29 REG TIN" OR but without petitioner's TIN and/or address 22 Supported by "TIN 1-1Q-5 26.14 26.14 VAT" OR but without petitioner's TIN and/or address 23 Supported by "TIN 1-3Q-10 102.32 102.32 VAT" OR with corrections on Petitioner's address with countersignature of the supplier according to the Petitioner but with incorrect petitioner's TIN 24 Supported by "VAT 1-2Q-7; 16.80 11,742.91 11,759.71 REG TIN" ORs but 1-4Q-13 VAT amount not shown separately and not dated within the taxable quarter ( e.g. , first quarter) but dated within the period of claim 25 Supported by "VAT 1-4Q-12 39,859.64 39,859.64 REG TIN" ORs with corrections on Petitioner's TIN without countersignature and/or not dated within the taxable quarter ( e.g. , third quarter) but dated within the period of claim 26 Supported by "VAT 1-4Q-16 594.60 594.60 REG TIN" ORs with corrections on Petitioner's name without countersignature and not dated within the taxable quarter ( e.g. , third quarter) but dated within the period of claim 27 Supported by "TIN 1-2Q-6 7,227 60 7,227.60 VAT" ORs but not BIR registered 28 Supported by "TIN 1-4Q-15 49.82 49.82 VAT" OR but with incorrect Petitioner's TIN C. Overclaimed Input VAT 2-1Q-15; 61,248.73 3,794.21 434.45 986.88 66,464.27 2-2Q-22; 2-3Q-34; 2-4Q-30 1-2Q-12; 8.38 214.28 891.96 1,114.62 1-3Q-11; 1-4Q-17 D. Underclaimed Input 1-3Q-12; (1,166.39) (10,338.46) (11,504.85) VAT 1-4Q-18 1-4Q-18 E. The supporting 1-1Q-7; 102,932.16 82,602.46 (12,911.43) 133,447.84 306,071.03 documents not available 1-2Q-13; at the time of 1-3Q-13; verification 1-4Q-19 Subtotal 232,609.18 1,002,082.78 220,923.15 706,081.05 2,161,696.16 Total P1,283,024.63 P1,990,276.30 P2,321,590.28 P3,622,919.48 P9,217,810.69 14 =========== =========== =========== =========== =========== From the foregoing, the total amount of P2,161,696.16 (under Item II. Other Findings) shall be disallowed outright for not being properly substantiated by proper supporting documents such as VAT invoices or official receipts prescribed under Sections 110 (A), 113 (A) and (B), 237 and 238 of the NIRC of 1997, as amended, and as implemented by Sections 4.110-1, 4.110-2, 4.110-8, 4.113-1 of RR No. 16-2005, as amended. In addition, the input VAT claim in the total amount of P3,767,195.26, as presented below, shall be disallowed for petitioner's failure to meet the substantiation requirements prescribed under the cited laws and regulations: Findings Exhibit 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total A. Input tax on domestic purchases of goods other than capital goods 1. Supported by invoices with corrections on petitioner's name, and/or TIN, and/or address, and/or VAT amount but it cannot be ascertained whether the countersignatures thereon were made by the issuer Imavision Corporation XX-5-1Q.3 P2,160.00 P2,160.00 Ultra Modular Concepts, Inc. XX-5-1Q.4 9,072.00 9,072.00 Integrated Computer Systems, Inc. XX-5-1Q.5 86,924.57 86,924.57 Integrated Computer Systems, Inc. XX-5-1Q.6 18,996.43 18,996.43 Creative Trends, Inc. XX-5-1Q.63 1,320.00 1,320.00 Integrated Computer Systems, Inc. XX-5-1Q.7 2,721.43 2,721.43 Integrated Computer Systems, Inc. XX-5-2Q.10 P72,437.14 72,437.14 Integrated Computer Systems, Inc. XX-5-2Q.5 1,392.86 1,392.86 West Woods Marketing Corp. XX-5-2Q.6 376.71 376.71 Integrated Computer Systems, Inc. XX-5-2Q.7 72,437.14 72,437.14 Creative Trends, Inc. XX-5-2Q.76 820.80 820.80 Minuteman Printers, Inc. XX-5-2Q.77 1,671.43 1,671.43 Creative Trends, Inc. XX-5-2Q.78 108.00 108.00 Integrated Computer Systems, Inc. XX-5-2Q.8 717.86 717.86 West Woods Marketing Corp. XX-5-2Q.9 385.71 385.71 Integrated Computer Systems, Inc. XX-5-3Q.1 P1,011.96 1,011.96 Integrated Computer Systems, Inc. XX-5-3Q.10 2,667.86 2,667.86 Integrated Computer Systems, Inc. XX-5-3Q.11 2,023.93 2,023.93 Integrated Computer Systems, Inc. XX-5-3Q.12 75,924.64 75,924.64 Integrated Computer Systems, Inc. XX-5-3Q.13 11,923.71 11,923.71 West Woods Marketing Corp. XX-5-3Q.14 753.16 753.16 West Woods Marketing Corp. XX-5-3Q.15 2,258.71 2,258.71 West Woods Marketing Corp. XX-5-3Q.16 921.43 921.43 Great Year Industries Corp. XX-5-3Q.17 8,410.71 8,410.71 West Woods Marketing Corp. XX-5-3Q.2 1,211.14 1,211.14 West Woods Marketing Corp. XX-5-3Q.3 3,471.11 3,471.11 Integrated Computer Systems, Inc. XX-5-3Q.4 10,821.21 10,821.21 Integrated Computer Systems, Inc. XX-5-3Q.5 11,923.71 11,923.71 Integrated Computer Systems, Inc. XX-5-3Q.52 18,996.43 18,996.43 Integrated Computer Systems, Inc. XX-5-3Q.53 72,437.14 72,437.14 Integrated Computer Systems, Inc. XX-5-3Q.54 45,554.79 45,554.79 Integrated Computer Systems, Inc. XX-5-3Q.6 171.43 171.43 Imavision Corporation XX-5-3Q.62 5,314.29 5,314.29 Great Year Industries Corp. XX-5-3Q.64 6,728.57 6,728.57 Datacraft Phils., Inc. XX-5-3Q.7 62,843.19 62,843.19 Great Year Industries Corp. XX-5-3Q.8 16,339.29 16,339.29 Integrated Computer Systems, Inc. XX-5-3Q.9 1,796.25 1,796.25 Integrated Computer Systems, Inc. XX-5-4Q.10 P37,992.86 37,992.86 Integrated Computer Systems, Inc. XX-5-4Q.11 42,182.14 42,182.14 Integrated Computer Systems, Inc. XX-5-4Q.12 60,000.00 60,000.00 Integrated Computer Systems, Inc. XX-5-4Q.13 42,026.79 42,026.79 Integrated Computer Systems, Inc. XX-5-4Q.14 42,026.79 42,026.79 Integrated Computer Systems, Inc. XX-5-4Q.15 42,026.79 42,026.79 Integrated Computer Systems, Inc. XX-5-4Q.16 2,023.93 2,023.93 Integrated Computer Systems, Inc. XX-5-4Q.17 679.29 679.29 Integrated Computer Systems, Inc. XX-5-4Q.18 8,035.71 8,035.71 Integrated Computer Systems, Inc. XX-5-4Q.19 535.73 535.73 West Woods Marketing Corp. XX-5-4Q.20 301.07 301.07 West Woods Marketing Corp. XX-5-4Q.21 216.96 216.96 West Woods XX-5-4Q.22 510.54 510.54 Marketing Corp. Innovend Corp. XX-5-4Q.223 700.71 700.71 Innovend Corp. XX-5-4Q.224 668.57 668.57 West Woods Marketing Corp. XX-5-4Q.23 917.14 917.14 Ace Hardware Phils., XX-5-4Q.232 80.36 80.36 Inc. West Woods Marketing Corp. XX-5-4Q.24 214.29 214.29 West Woods Marketing Corp. XX-5-4Q.25 102.27 102.27 West Woods Marketing Corp. XX-5-4Q.26 407.15 407.15 West Woods Marketing Corp. XX-5-4Q.27 171.64 171.64 Integrated Computer Systems, Inc. XX-5-4Q.28 2,405.36 2,405.36 Integrated Computer Systems, Inc. XX-5-4Q.29 8,405.36 8,405.36 Integrated Computer Systems, Inc. XX-5-4Q.30 112.50 112.50 Integrated Computer Systems, Inc. XX-5-4Q.31 112.50 112.50 Integrated Computer Systems, Inc. XX-5-4Q.32 225.00 225.00 Integrated Computer Systems, Inc. XX-5-4Q.33 16,810.71 16,810.71 Integrated Computer Systems, Inc. XX-5-4Q.34 36,666.96 36,666.96 Integrated Computer Systems, Inc. XX-5-4Q.35 112.50 112.50 Integrated Computer Systems, Inc. XX-5-4Q.36 42,026.79 42,026.79 Integrated Computer Systems, Inc. XX-5-4Q.37 1,202.68 1,202.68 Integrated Computer Systems, Inc. XX-5-4Q.38 2,405.36 2,405.36 Integrated Computer Systems, Inc. XX-5-4Q.39 26.79 26.79 Integrated Computer Systems, Inc. XX-5-4Q.40 9,498.21 9,498.21 Integrated Computer Systems, Inc. XX-5-4Q.41 12,222.32 12,222.32 Integrated Computer Systems, Inc. XX-5-4Q.42 42,026.79 42,026.79 Integrated Computer Systems, Inc. XX-5-4Q.43 75,648.21 75,648.21 Integrated Computer Systems, Inc. XX-5-4Q.44 1,350.00 1,350.00 Integrated Computer Systems, Inc. XX-5-4Q.45 67,242.86 67,242.86 Integrated Computer Systems, Inc. XX-5-4Q.46 16,810.71 16,810.71 Integrated Computer Systems, Inc. XX-5-4Q.47 8,405.36 8,405.36 West Woods Marketing Corp. XX-5-4Q.48 1,675.71 1,675.71 West Woods Marketing Corp. XX-5-4Q.49 2,458.55 2,458.55 West Woods Marketing Corp. XX-5-4Q.50 257.46 257.46 Datacraft Phils., Inc. XX-5-4Q.51 96,768.00 96,768.00 Audio 4 Design N Technology XX-5-4Q.52 8,657.14 8,657.14 Integrated Computer Systems, Inc. XX-5-4Q.78 246,105.00 246,105.00 Integrated Computer Systems, Inc. XX-5-4Q.89 21,679.29 21,679.29 Integrated Computer Systems, Inc. XX-5-4Q.9 1,011.96 1,011.96 Integrated Computer Systems, Inc. XX-5-4Q.90 37,460.36 37,460.36 Integrated Computer Systems, Inc. XX-5-4Q.91 1,639.29 1,639.29 Integrated Computer Systems, Inc. XX-5-4Q.92 8,548.39 8,548.39 Integrated Computer Systems, Inc. XX-5-4Q.94 24,053.57 24,053.57 Sub-total 121,194.43 150,347.65 363,504.66 1,075,852.42 1,710,899.16 2. Overclaimed Input VAT Rustan's Supercenter, Inc. (P221.91-P91.88) XX-5-2Q.87 130.03 130.03 Sub-total - 130.03 - - 130.03 B. Input tax on domestic purchases of services 1. Supported by official receipts with corrections on petitioner's name, and/or TIN, and/or address, and/or VAT amount but it cannot be ascertained whether the countersignatures thereon were made by the issuer Jobstreet.com Philippines, Inc. XX-5-1Q.13 7,200.00 7,200.00 John Clements Consultants, Inc. XX-5-1Q.19 18,720.00 18,720.00 Business Process Outsourcing International, Inc. XX-5-1Q.20 403.80 403.80 John Clements Consultants, Inc. XX-5-1Q.21 7,800.00 7,800.00 Lantro Phils., Inc. XX-5-1Q.22 7,698.00 7,698.00 Lantro Phils., Inc. XX-5-1Q.23 8,995.46 8,995.46 Manila Bulletin Publishing Corp. XX-5-1Q.24 9,811.61 9,811.61 Manila Bulletin Publishing Corp. XX-5-1Q.25 9,811.61 9,811.61 Manila Bulletin Publishing Corp. XX-5-1Q.26 9,811.61 9,811.61 Manila Bulletin Publishing Corp. XX-5-1Q.27 9,811.61 9,811.61 Manila Bulletin Publishing Corp. XX-5-1Q.28 9,811.61 9,811.61 Manila Bulletin Publishing Corp. XX-5-1Q.29 9,811.61 9,811.61 Manila Bulletin Publishing Corp. XX-5-1Q.30 9,811.61 9,811.61 Quest Highlands, Inc. XX-5-1Q.31 60,000.00 60,000.00 Quest Highlands, Inc. XX-5-1Q.32 29,700.00 29,700.00 Quest Highlands, Inc. XX-5-1Q.33 5,160.00 5,160.00 Skope Technology XX-5-1Q.70 1,339.29 1,339.29 Headstrong Phils., Inc. XX-5-1Q.73 74,928.00 74,928.00 King of Travel, Inc. XX-5-1Q.74 52.18 52.18 Galang Jovina Munez & Associates Law Offices XX-5-1Q.78 1,800.00 1,800.00 Galang Jovina Munez & Associates Law Offices XX-5-1Q.79 1,800.00 1,800.00 Galang Jovina Munez & Associates Law Offices XX-5-1Q.80 1,800.00 1,800.00 Regus Centres, Inc. XX-5-2Q.101 45,632.35 45,632.35 Regus Centres, Inc. XX-5-2Q.103 2,091.62 2,091.62 BT Communications XX-5-2Q.107 32,530.72 32,530.72 Phils., Inc. I-ZAPP Cebu Corp. XX-5-2Q.114 19,339.80 19,339.80 Quest Highlands, Inc. XX-5-2Q.118 60,000.00 60,000.00 Quest Highlands, Inc. XX-5-2Q.119 5,160.00 5,160.00 Lantro Phils., Inc. XX-5-2Q.23 722.40 722.40 Manila Bulletin Publishing Corp. XX-5-2Q.27 9,811.61 9,811.61 Manila Bulletin Publishing Corp. XX-5-2Q.28 9,811.61 9,811.61 Quest Highlands, Inc. XX-5-2Q.29 46,800.00 46,800.00 Quest Highlands, Inc. XX-5-2Q.30 5,160.00 5,160.00 Quest Highlands, Inc. XX-5-2Q.31 32,370.00 32,370.00 Quest Highlands, Inc. XX-5-2Q.32 60,000.00 60,000.00 Quest Highlands, Inc. XX-5-2Q.33 5,160.00 5,160.00 Headstrong Phils., Inc. XX-5-2Q.34 109,610.88 109,610.88 John Clements Consultants, Inc. XX-5-2Q.35 20,280.00 20,280.00 King of Travel, Inc. XX-5-2Q.66 52.07 52.07 King of Travel, Inc. XX-5-2Q.67 52.07 52.07 Galang Jovina Munez & Associates Law Offices XX-5-2Q.69 1,800.00 1,800.00 Galang Jovina Munez & Associates Law Offices XX-5-2Q.70 1,800.00 1,800.00 I-ZAPP Cebu Corp. XX-5-2Q.89 4,868.69 4,868.69 Regus Centres, Inc. XX-5-2Q.95 2,934.24 2,934.24 Bernardo Maintenance XX-5-3Q.148 1,378.81 1,378.81 Services Bernardo Maintenance XX-5-3Q.149 1,350.06 1,350.06 Services King of Travel, Inc. XX-5-3Q.159 104.36 104.36 King of Travel, Inc. XX-5-3Q.160 50.25 50.25 PhiIStar Daily, Inc. XX-5-3Q.163 6,998.39 6,998.39 Forte Showroom Corp. XX-5-3Q.19 9,551.39 9,551.39 Ascott Makati XX-5-3Q.212 8,109.25 8,109.25 Regus Centres, Inc. XX-5-3Q.213 1,951.98 1,951.98 Headstrong Phils., Inc. XX-5-3Q.25 131,534.40 131,534.40 Headstrong Phils., Inc. XX-5-3Q.26 137,550.24 137,550.24 Headstrong Phils., Inc. XX-5-3Q.27 91,030.08 91,030.08 Quest Highlands, Inc. XX-5-3Q.31 96,000.00 96,000.00 Quest Highlands, Inc. XX-5-3Q.32 5,160.00 5,160.00 Asalus Corp. XX-5-3Q.34 2,362.30 2,362.30 Santa Fe Moving & Relocation Services Phils., Inc. XX-5-3Q.43 3,000.00 3,000.00 Asalus Corp. XX-5-3Q.44 1,061.00 1,061.00 Asalus Corp. XX-5-3Q.45 289.77 289.77 Quest Highlands, Inc. XX-5-3Q.47 75,000.00 75,000.00 Quest Highlands, Inc. XX-5-3Q.48 60,000.00 60,000.00 Quest Highlands, Inc. XX-5-3Q.49 60,000.00 60,000.00 Quest Highlands, Inc. XX-5-3Q.50 5,160.00 5,160.00 King of Travel, Inc. XX-5-3Q.56 101.36 101.36 Headstrong Phils., Inc. XX-5-3Q.57 110,619.36 110,619.36 Quest Highlands, Inc. XX-5-3Q.58 11,700.00 11,700.00 Manila Bulletin Publishing Corp. XX-5-3Q.72 9,811.61 9,811.61 Avanti People XX-5-4Q.239 14,040.00 14,040.00 Partnership International Avanti People XX-5-4Q.245 17,550.00 17,550.00 Partnership International Pest Away Corp. XX-5-4Q.248 600.00 600.00 SPI Parking Services, XX-5-4Q.249 530.36 530.36 Inc. SPI Parking Services, XX-5-4Q.250 5,303.57 5,303.57 Inc. I-ZAPP Cebu Corp. XX-5-4Q.253 12,180.34 12,180.34 Ksearch Asia XX-5-4Q.262 28,080.00 28,080.00 Consulting, Inc. Oracle (Philippines) Corp. XX-5-4Q.56 16,434.00 16,434.00 Canon Marketing (Phils.), Inc. XX-5-4Q.66 4,526.93 4,526.93 Canon Marketing (Phils.), Inc. XX-5-4Q.67 4,526.93 4,526.93 Canon Marketing (Phils.), Inc. XX-5-4Q.68 4,526.93 4,526.93 Canon Marketing (Phils.), Inc. XX-5-4Q.69 454.55 454.55 Canon Marketing (Phils.), Inc. XX-5-4Q.70 525.48 525.48 Canon Marketing (Phils.), Inc. XX-5-4Q.71 2,417.68 2,417.68 Canon Marketing (Phils.), Inc. XX-5-4Q.72 2,772.43 2,772.43 Asalus Corp. XX-5-4Q.76 1,345.08 1,345.08 Lantro Phils., Inc. XX-5-4Q.77 5,764.29 5,764.29 Quest Highlands, Inc. XX-5-4Q.82 60,000.00 60,000.00 Santa Fe Moving & Relocation Services Phils., Inc. XX-5-4Q.84 377.14 377.14 Sub-total 296,078.00 475,988.06 829,874.61 181,955.71 1,783,896.38 2. Supported by official receipts with corrections/insertions on petitioner's name, and/or TIN, and/or address, and/or VAT without countersignature of the issuer Regus Centres, Inc. XX-5-3Q.183 153.60 153.60 BT Communications XX-5-3Q.150 857.16 857.16 Phils., Inc. Quest Highlands, Inc. XX-5-4Q.60 9,750.00 9,750.00 Quest Highlands, Inc. XX-5-4Q.61 158,850.00 158,850.00 Sub-total - - 1,010.76 168,600.00 169,610.76 3. Supported by official receipt not in the complete name of petitioner Sybase Solutions Corp. XX-5-1Q.41 28,928.57 28,928.57 Sub-total 28,928.57 - - - 28,928.57 4. Supported by undated official receipt Rustan Coffee Corp. XX-5-2Q.109 80.36 80.36 Sub-total - 80.36 - - 80.36 5. Supported by documents other than VAT ORs Audio 4 Design N Technology Corp. XX-5-3Q.18 29,460.00 29,460.00 Audio 4 Design N Technology Corp. XX-5-3Q.51 36,825.00 36,825.00 Audio 4 Design N Technology Corp. XX-5-4Q.88 7,365.00 7,365.00 Sub-total - - 66,285.00 7,365.00 73,650.00 TOTAL P446,201.00 P626,546.10 P1,260,675.03 P1,433,773.13 P3,767,195.26 ============ ============ ============ ============ ============ Hence, out of the claimed input VAT on domestic purchases of goods other than capital goods and services in the total amount of P9,217,810.79, only the input VAT of P3,288,919.37, as computed below, represents petitioner's valid input VAT on the said purchases: 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr TOTAL Input VAT Claim P1,283,024.63 P1,990,276.31 P2,321,590.25 P3,622,919.60 P9,217,810.79 Less: Disallowances per ICPA Report 232,609.18 1,002,082.78 220,923.15 706,081.05 2,161,696.16 per this Court's verification 446,201.00 626,546.10 1,260,675.03 1,433,773.13 3,767,195.26 Substantiated Input VAT P604,214.45 P361,647.43 P839,992.07 P1,483,065.42 P3,288,919.37 ============ ============ ============ ============ ============ Next, the substantiation of the amortized portion of the input VAT on capital goods purchases exceeding P1 Million in the amount of P1,142,296.21, arose from the input tax deferred from the previous quarter in the amount of P475,083.86 and input VAT of P9,056,539.18 from purchases of capital goods during the four quarters of FY 2010, as shown below: aDSIHc Input Tax Deferred on Capital Goods exceeding P1 Million from Previous Quarter P475,083.86 Add: Input Tax on Capital Goods exceeding P1 Million Purchased this Quarter 1st Quarter P188,588.20 2nd Quarter 688,252.50 3rd Quarter 6,216,325.32 4th Quarter 1,963,373.16 9,056,539.18 Total: Unamortized Input Tax on Capital Goods exceeding P1 Million P9,531,623.04 Less: Input Tax on Purchases of Capital Goods exceeding P1 Million deferred for the succeeding period 8,389,326.83 Amortization of Input Tax on Capital Goods exceeding P1 Million P1,142,296.21 =========== Based on the ICPA findings, the unamortized input VAT on capital goods from previous quarters amounts to P662,114.98, to wit: Reference to ICPA Report (Exhibit Findings XX) Input VAT I. PROPERLY SUPPORTED Supported by "TIN-VAT" Official Receipts Annex 5-A P486,177.10 II. OTHER FINDINGS Supported by Invoices not registered with the BIR Annex 5-B 115,082.14 Supported by VAT OR dated in the FY ended March 31, 2010 Annex 5-C 30,427.87 Supported by VAT OR dated outside the period of claim (FY March 2011) Annex 5-D 30,427.87 Subtotal 175,937.88 Total P662,114.98 ========== Per the schedule of VAT amortization, 15 the input VAT of P115,082.14 was amortized over 5 years (60 months), while the remaining amount of P547,032.86 was amortized over 2 years and 5 months (29 months) from July 2008. Thus, as of the beginning of April 2009, the unamortized portion or the deferred input tax on capital goods from previous quarter amounts to P475,083.85, computed as follows: Amortization Reference from July to ICPA Est. Life 2008 to Report (in Monthly March 2009 Deferred Findings (Exh. XX) Input VAT months) Amort. (9 mos.) Input Tax I. PROPERLY SUPPORTED Supported by "TIN-VAT" Annex 5-A P486,177.10 29 P16,764.73 P150,882.55 P335,294.55 Official Receipts II. OTHER FINDINGS Supported by Invoices not registered with the Annex 5-B 115,082.14 60 1,918.04 17,262.32 97,819.82 BIR Supported by VAT OR dated in the FY ended Annex 5-C 30,427.87 29 1,049.24 9,443.13 20,984.74 March 31, 2010 Supported by VAT OR dated outside the period Annex 5-D 30,427.87 29 1,049.24 9,443.13 20,984.74 of claim (FY March 2011) Subtotal 175,937.88 4,016.51 36,148.59 139,789.30 Total P662,114.98 P20,781.24 P187,031.13 P475,083.85 ========== ========== ========== ========== However, a second look at the invoices and official receipts related to the foregoing input taxes shows that the input VAT of P28,770.54 (P239,754.50 x 12%) supported by Invoice No. 08-06-144, 16 which is part of the input VAT of P115,082.14, is also duly supported by Official Receipt No. 1091. 17 Hence, the substantiated input VAT amounts to P514,947.64 (P486,177.10 + P28,770.54). Accordingly, the allowable input VAT for the four quarters of FY 2010 amounts to P206,930.84 (P51,732.71 per quarter), computed as follows: ETHIDa Allowable Estimated input VAT Inv No. Exhibit OR No. Exhibit Input VAT Life for FY 2010 08-06-143 XX-10.1 1091 XX-10.1 P136,758.21 29 P56,589.60 08-06-144 XX-10.4 28,770.54 60 5,754.11 08-08-145 XX-10.3 1093 XX-10.2/ 191,461.50 29 79,225.45 08-08-148 XX-10.2 1094 XX-10.3 157,957.39 29 65,361.68 Total P514,947.64 P206,930.84 ========== ========== As to the input VAT on purchases of capital goods exceeding P1 million for the four quarters of FY 2010 in the amount of P9,056,539.18, the ICPA summarized his findings as follows: Findings Reference 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total I. PROPERLY SUPPORTED 1 Supported by "TIN VAT" 4-2Q-1; P96,428.57 P2,083,651.63 P2,180,080.20 invoices 4-3Q-1 2-3Q-2 77,142.86 77,142.86 2 Supported by "VAT REG 4-4Q-4 P1,022.40 1,022.40 TIN" invoices 2-2Q-1; 19,437.17 75,165.74 94,602.91 2-3Q-1 3 Supported by "VAT REG 4-2Q-2; 29,035.54 49,607.14 10,092.65 88,735.33 TIN" ORs 4-3Q-3; 4-4Q-1 2-2Q-3; 2-3Q-3; 57,456.00 100,800.00 19,152.00 177,408.00 2-4Q-1 4 Supported by "TIN VAT" 4-3Q-4; 2,068,182.00 52,167.85 2,120,349.85 ORs 4-4Q-3 2-2Q-2; 265,414.29 369,293.42 153,750.00 788,457.71 2-3Q-4; 2-4Q-2 5 Supported by "TIN VAT" 4-2Q-4; invoices with corrections 4-3Q-2 9,409.50 9,409.50 18,819.00 on the Petitioner's name but with countersignature of the supplier according to the Petitioner 6 Supported by "TIN VAT" 4-4Q-6 1,369,343.16 1,369,343.16 and "VAT REG TIN" ORs with corrections on Petitioner's TIN but without countersignature of the supplier according to the petitioner 7 Supported by "TIN VAT" 4-2Q-3 211,071.43 211,071.43 ORs with corrections on the amount but with countersignature of the supplier according to the Petitioner 8 Supported by "VAT REG 4-3Q-5 33,835.68 33,835.68 TIN" OR not dated within the taxable quarter ( e.g. , 4th quarter) but within the period of claim 9 Supported by "TIN VAT" 4-3Q-6; 75,084.12 15,016.82 90,100.94 invoices not dated 4-4Q-2 within the taxable quarter but within the period of claim 10 Supported by "VAT REG 4-4Q-5 9,201.60 9,201.60 TIN" invoices not dated within the taxable quarter ( e.g ., 2nd quarter) but within the period of claim 11 Supported by "VAT REG 4-3Q-7 80,740.51 80,740.51 TIN" OR with correction on amount but with countersignature of the supplier according to the Petitioner and not dated within the taxable quarter ( e.g ., 4th quarter) but within the period of claim subtotal - 688,252.50 5,022,912.60 1,629,746.48 7,340,911.58 II. OTHER FINDINGS 1 Supported by "TIN VAT" 4-1Q-1; 188,588.20 72,144.00 260,732.20 invoice but not an 4-4Q-7 original copy 2 Supported by "VAT REG 4-3Q-8; 67,200.00 6,000.00 73,200.00 TIN" OR but not an 4-4Q-8 original copy 3 Supported by "TIN VAT" 2-3Q-5 206,250.00 206,250.00 OR but with incorrect Petitioner's TIN ( e.g. , 484) 4 The supporting 2-3Q-6; 919,962.72 255,482.68 1,175,445.40 documents are not 2-4Q-3 available at the time of verification subtotal 188,588.20 - 1,193,412.72 333,626.68 1,715,627.60 TOTAL P188,588.20 P688,252.50 P6,216,325.32 P1,963,373.16 P9,056,539.18 =========== =========== =========== =========== =========== With the foregoing, the input VAT of P1,715,627.60 should be disallowed as it is not supported by proper documents. In addition, the input VAT claim in the total amount of P3,091,768.09, as presented below, should as well be disallowed for petitioner's failure to meet the substantiation requirements prescribed under the pertinent laws and regulations: Findings Exhibit 2nd Qtr 3rd Qtr 4th Qtr Total 1. Supported by ORs and/or invoices the input VAT amount was not separately shown Barrington Carpets, Inc. XX-9.4 P428.40 P428.40 Alecto General Technology Corp. XX-9.56 P78,214.29 78,214.29 Sub-total 428.40 - 78,214.29 78,642.69 2. Supported by invoice with correction on petitioner's name without countersignature of the issuer Barrington Carpets, Inc. XX-9.4 9,409.50 9,409.50 Sub-total 9,409.50 - - 9,409.50 3. Supported by official receipts and/or invoices with corrections on petitioner's name and/or VAT amount but it cannot be ascertained whether the countersignatures thereon were made by the issuer Barrington Carpets, Inc. XX-9.24 P7,527.60 7,527.60 Barrington Carpets, Inc. XX-9.25 1,881.90 1,881.90 Alecto General Technology Corp. XX-9.30 156,428.57 156,428.57 Alecto General Technology Corp. XX-9.31 109,741.06 109,741.06 Alecto General Technology Corp. XX-9.32 69,717.86 69,717.86 Lantro Phils., Inc. XX-9.33 16,352.32 16,352.32 Lantro Phils., Inc. XX-9.34 2,094.64 2,094.64 Alecto General Technology Corp. XX-9.35 547,500.00 547,500.00 Lantro Phils., Inc. XX-9.36 242,221.52 242,221.52 Lantro Phils., Inc. XX-9.37 242,221.52 242,221.52 Lantro Phils., Inc. XX-9.38 242,221.52 242,221.52 Lantro Phils., Inc. XX-9.39 1,816.92 1,816.92 Lantro Phils., Inc. XX-9.45 80,740.51 80,740.51 Salemaire Industries Corp. XX-9.53 P442,500.00 442,500.00 Salemaire Industries Corp. XX-9.54 281,437.50 281,437.50 Alecto General Technology Corp. XX-9.55 384,093.71 384,093.71 Alecto General Technology Corp. XX-9.57 54,870.53 54,870.53 Salemaire Industries Corp. XX-9.58 14,812.50 14,812.50 Salemaire Industries Corp. XX-9.59 63,214.29 63,214.29 Salemaire Industries Corp. XX-9.60 42,321.43 42,321.43 Sub-total - 1,720,465.94 1,283,249.96 3,003,715.90 TOTAL P9,837.90 P1,720,465.94 P1,361,464.25 P3,091,768.09 =========== =========== =========== =========== Thus, out of the input tax of P9,056,539.18 on purchases of capital goods exceeding P1 Million for the four quarters of FY 2010, only the amount of P4,249,143.49, as detailed below, was properly substantiated by VAT invoices/official receipts, computed as follows: cSEDTC 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total Input VAT on purchases of Capital P188,588.20 P688,252.50 P6,216,325.32 P1,963,373.16 P9,056,539.18 Goods exceeding P1M Less: Disallowances Per ICPA Report 188,588.20 - 1,193,412.72 333,626.68 1,715,627.60 Per this Court's verification 9,837.90 1,720,465.94 1,361,464.25 3,091,768.09 Total 188,588.20 9,837.90 2,913,878.66 1,695,090.93 4,807,395.69 Total substantiated input VAT on - P678,414.60 P3,302,446.66 P268,282.23 P4,249,143.49 capital goods exceeding P1M ============ ============ ============ ============ ============ Supplier Exhibit 2nd Qtr 3rd Qtr 4th Qtr Total Cornersteel Systems Corp. XX-9.2 96,428.57 96,428.57 Walls in Motion XX-9.3 16,607.14 16,607.14 Automatic Fire Sprinkler System Co. Ltd. XX-9.5 12,000.00 12,000.00 Salemaire Industries Corp. XX-9.6 84,642.86 84,642.86 Salemaire Industries Corp. XX-9.7 126,428.57 126,428.57 Cornersteel Systems Corp. XX-9.8 209,046.65 209,046.65 Cornersteel Systems Corp. XX-9.9 97,480.29 97,480.29 Cornersteel Systems Corp. XX-9.10 181,314.82 181,314.82 Cornersteel Systems Corp. XX-9.11 360,720.00 360,720.00 Cornersteel Systems Corp. XX-9.12 60,067.29 60,067.29 Cornersteel Systems Corp. XX-9.13 145,051.86 145,051.86 Cornersteel Systems Corp. XX-9.14 41,809.32 41,809.32 Cornersteel Systems Corp. XX-9.15 36,262.97 36,262.97 Cornersteel Systems Corp. XX-9.16 19,496.06 19,496.06 Cornersteel Systems Corp. XX-9.17 77,984.23 77,984.23 Cornersteel Systems Corp. XX-9.18 288,576.00 288,576.00 Cornersteel Systems Corp. XX-9.19 167,237.28 167,237.28 Cornersteel Systems Corp. XX-9.20 19,285.71 19,285.71 Emerson Network Power (Phils.), Inc. XX-9.21 102,180.00 102,180.00 Emerson Network Power (Phils.), Inc. XX-9.22 251,853.43 251,853.43 Emerson Network Power (Phils.), Inc. XX-9.23 25,285.72 25,285.72 Walls in Motion XX-9.26 13,285.71 13,285.71 Automatic Fire Sprinkler System Co. Ltd. XX-9.27 33,000.00 33,000.00 Walls in Motion XX-9.28 3,321.43 3,321.43 RCW Construction & Development Corp. XX-9.29 117,857.14 117,857.14 Emerson Network Power (Phils.), Inc. XX-9.40 3,750.00 3,750.00 Powergear Electrical Sales XX-9.41 128,571.43 128,571.43 RCW Construction & Development Corp. XX-9.42 187,687.50 187,687.50 Emerson Network Power (Phils.), Inc. XX-9.43 33,750.00 33,750.00 Barrington Carpets, Inc. XX-9.25 85.68 85.68 Cornersteel Systems Corp. XX-9.44 75,084.12 75,084.12 Lantro Phils., Inc. XX-9.47 10,092.65 10,092.65 Cornersteel System XX-9.48 15,016.82 15,016.82 RCW Construction & Development Corp. XX-9.49 38,775.00 38,775.00 RCW Construction & Development Corp. XX-9.50 13,392.85 13,392.85 Functionsmith Sales & Services XX-9.51 1,022.40 1,022.40 Functionsmith Sales & Services XX-9.52 9,201.60 9,201.60 Lantro Phils., Inc. XX-9.61 7,878.91 7,878.91 Functionsmith Sales & Services XX-9.64 14,187.17 14,187.17 Functionsmith Sales & Services XX-9.65 5,250.00 5,250.00 DB & B Philippines, Inc. XX-9.66 112,200.00 112,200.00 RCW Construction & Development Corp. XX-9.67 153,214.29 153,214.29 Meinhardt Philippines, Inc. XX-9.68 57,456.00 57,456.00 Functionsmith Sales & Services XX-9.69 47,072.16 47,072.16 Functionsmith Sales & Services XX-9.70 2,625.00 2,625.00 Functionsmith Sales & Services XX-9.71 18,375.00 18,375.00 Functionsmith Sales & Services XX-9.72 7,093.58 7,093.58 Cornersteel System XX-9.73 77,142.86 77,142.86 Jones Lang Lasalle (Phils), Inc. XX-9.74 100,800.00 100,800.00 RCW Construction & Development Corp. XX-9.75 204,293.42 204,293.42 RCW Construction & Development Corp. XX-9.76 165,000.00 165,000.00 Meinhardt Philippines, Inc. XX-9.78 19,152.00 19,152.00 RCW Construction & Development Corp. XX-9.79 41,250.00 41,250.00 RCW Construction & Development Corp. XX-9.80 58,928.57 58,928.57 RCW Construction & Development Corp. XX-9.81 6,696.43 6,696.43 RCW Construction & Development Corp. XX-9.82 46,875.00 46,875.00 TOTAL P678,414.60 P3,302,446.66 P268,282.23 P4,249,143.49 ============ ============ ============ ============ However, pursuant to Section 110 (A) of the NIRC of 1997, as amended, as implemented by Section 4.110-3 of RR No. 16-2005, the input VAT claim on capital goods purchases attributable to zero-rated sales may be claimed either in full during the month of acquisition, or spread over a period of time, depending on the aggregate acquisition cost of the capital goods in the calendar month. If the aggregate acquisition cost exceeds P1 Million, the claim for input tax should be spread over 60 months or the estimated useful life of the capital goods, whichever is shorter. On the other hand, if the aggregate acquisition cost does not exceed P1 Million, the total input taxes shall be allowed as credit/refund in the month of acquisition. Thus, while petitioner was able to substantiate the amount of P4,249,143.49, only the amortization 18 of the foregoing input taxes in the amount of P379,410.13, as detailed below, may be claimed by petitioner as valid input tax credits for the FY 2010: Annex of Exh. Supplier XX & ZZ Exhibit 2nd Qtr 3rd Qtr 4th Qtr Total Cornersteel Systems Corp. 4-2Q-1 XX-9.2 P6,428.57 P6,428.57 Walls in Motion 4-2Q-2 XX-9.3 1,897.96 1,897.96 Automatic Fire Sprinkler System Co. Ltd. 4-2Q-2 XX-9.5 1,371.43 1,371.43 Salemaire Industries Corp. 4-2Q-3 XX-9.6 9,673.47 9,673.47 Salemaire Industries Corp. 4-2Q-3 XX-9.7 14,448.98 14,448.98 Cornersteel Systems Corp. 4-3Q-1 XX-9.8 P13,936.44 13,936.44 Cornersteel Systems Corp. 4-3Q-1 XX-9.9 6,498.69 6,498.69 Cornersteel Systems Corp. 4-3Q-1 XX-9.10 12,087.65 12,087.65 Cornersteel Systems Corp. 4-3Q-1 XX-9.11 24,048.00 24,048.00 Cornersteel Systems Corp. 4-3Q-1 XX-9.12 6,864.83 6,864.83 Cornersteel Systems Corp. 4-3Q-1 XX-9.13 9,670.12 9,670.12 Cornersteel Systems Corp. 4-3Q-1 XX-9.14 2,787.29 2,787.29 Cornersteel Systems Corp. 4-3Q-1 XX-9.15 2,417.53 2,417.53 Cornersteel Systems Corp. 4-3Q-1 XX-9.16 1,299.74 1,299.74 Cornersteel Systems Corp. 4-3Q-1 XX-9.17 5,198.95 5,198.95 Cornersteel Systems Corp. 4-3Q-1 XX-9.18 19,238.40 19,238.40 Cornersteel Systems Corp. 4-3Q-1 XX-9.19 11,149.15 11,149.15 Cornersteel Systems Corp. 4-3Q-1 XX-9.20 1,285.72 1,285.72 Emerson Network Power (Phils), Inc. 4-3Q-1 XX-9.21 11,677.72 11,677.72 Emerson Network Power (Phils), Inc. 4-3Q-1 XX-9.22 28,783.24 28,783.24 Emerson Network Power (Phils), Inc. 4-3Q-1 XX-9.23 2,889.80 2,889.80 Walls in Motion 4-3Q-3 XX-9.26 1,518.37 1,518.37 Automatic Fire Sprinkler System Co. Ltd. 4-3Q-3 XX-9.27 3,771.43 3,771.43 Walls in Motion 4-3Q-3 XX-9.28 379.59 379.59 RCW Construction & Development Corp. 4-3Q-4 XX-9.29 13,469.39 13,469.39 Emerson Network Power (Phils), Inc. 4-3Q-4 XX-9.40 428.57 428.57 Powergear Electrical Sales 4-3Q-4 XX-9.41 14,693.88 14,693.88 RCW Construction & Development Corp. 4-3Q-4 XX-9.42 21,450.00 21,450.00 Emerson Network Power (Phils), Inc. 4-3Q-5 XX-9.43 3,857.16 3,857.16 Barrington Carpets, Inc. 4-3Q-5 XX-9.25 9.79 9.79 Cornersteel Systems Corp. 4-3Q-6 XX-9.44 8,581.04 8,581.04 Lantro Phils., Inc. 4-4Q-1 XX-9.47 P946.20 946.20 Cornersteel System 4-4Q-2 XX-9.48 750.84 750.84 RCW Construction & Development Corp. 4-4Q-3 XX-9.49 3,421.32 3,421.32 RCW Construction & Development Corp. 4-4Q-3 XX-9.50 1,181.72 1,181.72 Functionsmith Sales & Services 4-4Q-4 XX-9.51 34.08 34.08 Functionsmith Sales & Services 4-4Q-5 XX-9.52 460.08 460.08 Lantro Phils., Inc. 4-4Q-6 XX-9.61 738.66 738.66 Functionsmith Sales & Services 2-2Q-1 XX-9.64 945.81 945.81 Functionsmith Sales & Services 2-2Q-1 XX-9.65 350.00 350.00 DB & B Philippines, Inc. 2-2Q-2 XX-9.66 12,822.86 12,822.86 RCW Construction & Development Corp. 2-2Q-2 XX-9.67 17,510.20 17,510.20 Meinhardt Philippines, Inc. 2-2Q-3 XX-9.68 6,566.40 6,566.40 Functionsmith Sales & Services 2-3Q-1 XX-9.69 3,138.14 3,138.14 Functionsmith Sales & Services 2-3Q-1 XX-9.70 175.00 175.00 Functionsmith Sales & Services 2-3Q-1 XX-9.71 1,225.00 1,225.00 Functionsmith Sales & Services 2-3Q-1 XX-9.72 472.91 472.91 Cornersteel System 2-3Q-2 XX-9.73 5,142.86 5,142.86 Jones Lang Lasalle (Phils), Inc. 2-3Q-3 XX-9.74 11,520.00 11,520.00 RCW Construction & Development Corp. 2-3Q-4 XX-9.75 23,347.82 23,347.82 RCW Construction & Development Corp. 2-3Q-4 XX-9.76 18,857.14 18,857.14 Meinhardt Philippines, Inc. 2-4Q-1 XX-9.78 598.50 598.50 RCW Construction & Development Corp. 2-4Q-2 XX-9.79 2,500.00 2,500.00 RCW Construction & Development Corp. 2-4Q-2 XX-9.80 1,841.52 1,841.52 RCW Construction & Development Corp. 2-4Q-2 XX-9.81 209.26 209.26 RCW Construction & Development Corp. 2-4Q-2 XX-9.82 2,840.91 2,840.91 TOTAL P72,015.68 P291,871.36 P15,523.09 P379,410.13 ========== ========== ========== ========== In sum, petitioner's total substantiated input VAT for the four quarters of FY 2010 amounts to P3,875,260.34, as computed below: 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr TOTAL Input VAT on domestic purchases of goods other than capital goods and services P604,214.45 P361,647.43 P839,992.07 P1,483,065.42 P3,288,919.37 Input VAT deferred on capital goods exceeding P1M 51,732.71 51,732.71 51,732.71 51,732.71 206,930.84 Input VAT on capital goods exceeding P1M 72,015.68 291,871.36 15,523.09 379,410.13 Total Substantiated Input VAT P655,947.16 P485,395.82 P1,183,596.14 P1,550,321.22 P3,875,260.34 =========== =========== =========== =========== =========== After applying petitioner's valid input VAT of P3,875,260.34 against its output VAT of P428.57 for the subject period of the claim, there remains an excess input VAT of P3,874,831.77, which can be attributed to the entire zero-rated sales/receipts declared by petitioner in the amount of P382,369,920.59. Accordingly, only the input VAT of P3,396,522.45 is attributable to the substantiated zero-rated sales of P336,700,861.99, as computed below: SDAaTC Substantiated input VAT P655,947.16 P485,395.82 P1,183,596.14 P1,550,321.22 P3,875,260.34 Less: Output VAT 428.57 428.57 Substantiated excess input VAT 655,947.16 485,395.82 1,183,596.14 1,549,892.65 3,874,831.77 Multiply by substantiated zero- rated sales 61,913,339.95 74,958,221.29 97,514,333.46 102,314,967.29 336,700,861.99 Divided by total declared zero- rated sales 61,913,339.95 74,958,221.29 97,514,333.46 147,984,025.89 382,369,920.59 Excess input VAT Allocated to zero-rated sales P655,947.16 P485,395.82 P1,183,596.14 P1,071,583.33 P3,396,522.45 ============ ============ ============ ============ ============ Although the claimed input VAT was carried-over by petitioner in its succeeding Quarterly VAT Returns, 19 it remained unutilized until it was deducted as "VAT Refund/TCC claimed" in its Quarterly VAT Return for the fourth quarter of FY 2011. 20 Thus, the excess input VAT of P20,711,496.12 21 as of the end of the fourth quarter of FY 2011 which was carried-over to the succeeding first quarter of FY 2012 22 no longer included the subject claim. In fine, petitioner has sufficiently established its entitlement to refund or issuance of tax credit certificate representing unutilized input VAT attributable to its zero-rated sales for the four quarters of Fiscal Year ended March 31, 2010 in the amount of P3,396,522.45. WHEREFORE , the Decision dated July 15, 2015 promulgated in the instant case is REVERSED and SET ASIDE . Consequently, the Petition for Review dated September 9, 2011 filed by Macquarie Offshore Services Pty Ltd.-Philippine Branch, is hereby PARTIALLY GRANTED . Respondent Commissioner of Internal Revenue is ORDERED TO REFUND to petitioner the amount of P3,396,522.45 representing its excess and unutilized input value-added tax (VAT) attributable to its zero-rated sales for the fiscal year covering the period of April 1, 2009 to March 31, 2010. SO ORDERED. (SGD.) ESPERANZA R. FABON-VICTORINO Associate Justice Lovell R. Bautista, J., concurs. Ma. Belen M. Ringpis-Liban, J., is on leave. Footnotes 1. Docket, Vol. 5, pp. 2561-2564. 2. Par. 3, Joint Stipulation of Facts and Issue, docket, p. 426; Exhibit B. 3. Exhibits BB, CC, DD, and EE. 4. Exhibits MM, NN, OO, PP, QQ, RR, SS, TT, UU, and VV. 5. Exhibit CCC. 6. Exhibits XX-1Q.1 to XX-1Q.3; XX-2Q.1 to XX-2Q.3; XX-3Q.1 to XX-3Q.3; XX-4Q.1 to XX-4Q.7. 7. Exhibits XX-2.1 to XX-2.9. 8. Exhibits XX-3.1 to XX-3.16. 9. Exhibits NN, OO, PP, QQ, RR, SS, TT, UU and VV. 10. Higher than P0.02 due to rounding off. 11. Exhibits XX-5-1Q.1 to XX-5-1Q.86; XX-5-2Q.1 to XX-5-2Q.125; XX-5-3Q.1 to XX-5-3Q.213; XX-5-4Q.1 to XX-5-4Q.315. 12. Exhibit XX. 13. Exhibit ZZ. 14. With P0.10 difference against per Returns due to rounding off. 15. Exhibit XX-6. 16. Exhibit XX-10.4. 17. Exhibit XX-10.1, 1 of 2. 18. Based on the estimated life in months as presented in Annex 3a of the ICPA Report (Exhibit XX). 19. First Quarter of FY 2011 (Exhibit "G"), Second Quarter of FY 2011 (Exhibit "H"), Third Quarter of FY 2011 (Exhibit "I") and Fourth Quarter of FY 2011 (Exhibit "J"). 20. Line 23D of Exhibit "J". 21. Line 29 of Exhibit "J". 22. Line 20A of Exhibit XX-11.