Emerson Electric (Asia) Limited-Rohq v. Commissioner of Internal Revenue

SECOND DIVISION [C.T.A. CASE NO. 8384. August 13, 2015.] EMERSON ELECTRIC (ASIA) LIMITED-ROHQ , petitioner, vs. COMMISSIONER OF INTERNAL REVENUE , respondent . AMENDED DECISION CASTAEDA, JR. , J p : Before this Court are (1) petitioner's Motion for Reconsideration (And to Reopen Trial for Reception of Additional Evidence) , filed on April 15, 2015, without respondent's comment despite due notice as per Records Verification dated May 20, 2015; and (2) respondent's Motion for Reconsideration , filed on April 16, 2015, with petitioner's Comment (To Respondent's Motion for Reconsideration dated 16 April 2015) , filed on May 19, 2015. Both petitioner and respondent seek reconsideration of the Court's Decision dated March 31, 2015, the dispositive portion of which reads as follows: " WHEREFORE , premises considered, the instant Petition for Review is hereby PARTIALLY GRANTED . Accordingly, respondent is hereby ORDERED TO REFUND or TO ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner in the amount of P852,298.76 representing its excess unutilized input taxes for the period covering October 1, 2009 to December 31, 2009 or the 1st quarter of fiscal year ending September 30, 2010." SO ORDERED ." 1 On petitioner's Motion for Reconsideration A. There is no cogent reason to re-open trial for reception of additional evidence. Petitioner prays that this case be re-opened for the purpose of submitting the properly issued certified true copies of official receipts and invoices, hence, it asks for the relaxation of the rules of procedure, citing the principle enunciated in the Philippine National Bank v. Commissioner of Internal Revenue 2 (Philippine National Bank case). We now re-examine the Philippine National Bank case, where the Supreme Court cited the ruling in Suarez v. Judge Villarama, Jr. , 3 to wit: "It is an accepted tenet that rules of procedure must be faithfully followed except only when, for persuasive and weighting reasons, they may be relaxed to relieve a litigant of an injustice commensurate with his failure to comply with the prescribed procedure. Concomitant to a liberal interpretation of the rules of procedure, however, should be an effort on the part of the party invoking liberality to adequately explain his failure to abide by the rules." 4 Based on the foregoing, the Court may only relax the rigid application of the rules of procedure upon showing of compelling and persuasive reasons. In the instant case, petitioner neither advanced any justifiable reason nor adequately explained the circumstances for its failure to submit the certified true copies of the official receipts and invoices. It simply invoked the liberal application of rules without providing any cogent reason for the application of the exception. ETHIDa While a party may believe that it has a meritorious legal defense, this must be weighed against the need to halt an abuse of the flexibility of procedural rules. It is well established that faithful compliance with the Rules of Court is essential for the prevention and avoidance of unnecessary delays and for the organized and efficient dispatch of judicial business. 5 In the case of Luzon Hydro Corporation v. Commissioner of Internal Revenue , 6 the Supreme Court denied the party's prayer to remand the case before the CTA to enable it to present evidence consisting of VAT official receipts. It held: . . . Verily, the Court has emphasized in Atlas Consolidated Mining and Development Corporation v. Commissioner of Internal Revenue that a judicial claim for tax refund or tax credit brought to the CTA is by no means an original action but an appeal by way of a petition for review of the taxpayer's unsuccessful administrative claim; hence, the taxpayer has to convince the CTA that the quasi-judicial agency a quo should not have denied the claim, and to do so the taxpayer should prove every minute aspect of its case by presenting, formally offering and submitting its evidence to the CTA, including whatever was required for the successful prosecution of the administrative claim as the means of demonstrating to the CTA that its administrative claim should have been granted in the first place . Nonetheless, on the proposition that we may relax the stringent rules of procedure for the sake of rendering justice, we still hold that the concept of newly discovered evidence may not apply herein. In order that newly discovered evidence may be a ground for allowing a new trial, it must be fairly shown that: (a) the evidence is discovered after the trial; (b) such evidence could not have been discovered and produced at the trial even with the exercise of reasonable diligence; (c) such evidence is material, not merely cumulative, corroborative, or impeaching; and (d) such evidence is of such weight that it would probably change the judgment if admitted. The first two requisites are not attendant. To start with, the proposed evidence was plainly not newly discovered considering the petitioner's admission that its former Finance and Accounting Manager had misplaced the VAT official receipts. If that was true, the misplaced receipts were forgotten evidence. And, secondly, the receipts, had they truly existed, could have been sooner discovered and easily produced at the trial with the exercise of reasonable diligence. But the petitioner made no convincing demonstration that it had exercised reasonable diligence. The Court cannot accept its tender of such receipts and return now, for, indeed, the non-production of documents as vital and material as such receipts and return were to the success of its claim for refund or tax credit was improbable, as it goes against the sound business practice of safekeeping relevant documents precisely to ensure their future use to support an eventual substantial claim for refund or tax credit . (Emphases supplied) Applying the foregoing, the Court cannot relax the rules of procedure for reasons discussed above. B. Petitioner was able to establish the twenty nine (29) foreign clients were indeed doing business outside the Philippines, hence, the refundable input VAT was accordingly adjusted. Petitioner posits that it rendered services to additional twenty-nine (29) clients considered as zero-rated transactions. Petitioner likewise avers that it submitted various documents that would establish that it rendered services to clients doing business outside the Philippines. Petitioner insists that its zero-rated sales amounted to P337,337,536.29, thus, the refundable input VAT should be recomputed into a total amount of P1,963,018.36. cSEDTC Petitioner enumerates the various exhibits, which the Court allegedly omitted in the assailed Decision, denominated as Certificates of Foreign Registration/Incorporation, Articles of Association/Incorporation, and Tax Residency/Payment Certificates that would establish that its twenty-nine (29) foreign clients are doing business outside the Philippines. Thus, petitioner prays that the sales made to these entities covered by eighty six (86) invoices be reconsidered as zero-rated sales. Upon careful re-examination of the records of the case, the Court reconsiders its earlier findings. We reiterate the requisites in order for the supply of services to be VAT zero-rated under Section 108 (B) (2) of the National Internal Revenue Code (NIRC) of 1997, as amended, to wit: (1) the services must be other than processing, manufacturing, or repacking of goods; (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 must be doing business outside the Philippines. 7 The Court found petitioner to have fully met the first and second requisites. However, with reference to the third requisite, it was ruled that only those clients of petitioner with Securities and Exchange Commission (SEC) Certificates of Non-registration and Certificates of Registration or Incorporation in a foreign country are considered to have complied with the said requisite. Based on the assailed Decision, out of the declared zero-rated sales/receipts for the first quarter of fiscal year (FY) ending September 30, 2010, i.e. , from October 1, 2009 to December 31, 2009, in the amount of P487,383,178.98, 8 only the amount of P215,816,767.89 may be considered as zero-rated. After considering petitioner's arguments and upon scrutiny of the records, petitioner was able to sufficiently establish that the additional twenty nine (29) foreign clients are indeed foreign entities doing business outside the Philippines. The supporting documents are as follows: Certificate of Foreign Registration/ SEC Incorporation; Articles of Certificate of Association/Incorporation; Non- Tax Residency Certificate/ Service Registration Tax Payment Certificate Contract Client Name (Exhibit) (Exhibit) (Exhibit) A . With SEC Certificate of Non-registration, Certificate of Registration or Incorporation in Foreign Country and Service Contract with petitioner 1 Emerson Climate Technologies (Hong Kong) U 5 Y 8 , Y 8 -1 KK 2 Emerson Network Power Connectivity Solutions M 6 G 9 , G 9 -1 TT 3 Emerson Japan Ltd. H 6 H 9 , H 9 -1 to H 9 -3 UU 4 Emerson Network Power S.R.L. N 6 I 9 , I 9 -1 VV 5 Emerson Network Power Ltd. (UK) O 6 J 9 , J 9 -1 to J 9 -6 WW 6 Emerson Power Transmission R 6 L 9 , L 9 -1 to L 9 -2 XX 7 Emerson Process Management (Australia) T 6 N 9 , N 9 -1 to N 9 -2 YY 8 Emerson Process Management Flow B.V. W 6 O 9 , O 9 -1 AAA 9 Emerson Process Management Shared Services Ltd. Z 6 Q 9 , Q 9 -1 to Q 9 -4 CCC 10 Emerson Tool Company C 7 F 10 , F 10 -1 DDD 11 Fisher Rosemount Systems, Inc. F 7 S 9 , S 9 -1 EEE 12 Fusite G 7 T 9 FFF 13 InSinkErator I 7 U 9 GGG 14 Instrument & Valve Services Company J 7 V 9 , V 9 -1 HHH 15 Intermetro K 7 W 9 , W 9 -1 III 16 Kato Engineering, Inc. L 7 X 9 , X 9 -1 JJJ 17 KNAACK L.L.C. M 7 Y 9 , Y 9 -1 to Y 9 -2 KKK 18 Liebert Corporation N 7 Z 9 , Z 9 -1 LLL 19 Liebert Services O 7 A 10 , A 10 -1 MMM 20 LLLP Corporate Headquarters P 7 B 10 , B 10 -1 NNN 21 Micro Motion, Inc. CCCCC C 10 , C 10 -1 OOO 22 Regulator Technologies, Inc. GGGGG H 10 , H 10 -1 PPP 23 Ridge Tool Company FFFFF D 10 , D 10 -1 QQQ 24 Therm-o-Disc BBBBB E 10 , E 10 -1 to E 10 -2 RRR 25 Emerson Network Power Energy Systems, N.A., Inc. P 6 K 9 , K 9 -1 SSS 26 Emerson Process Management Valve Automation, Inc. A 7 G 10 TTT B. With SEC Certificate of Non-registration and Certificate of Registration or Incorporation or Certification by Taxing Authority in Foreign Country 1 Emerson Process Management-Power & Water Solution S 6 M 9 , M 9 -1 2 Emerson Process Management GMBH & Co. OHG Argelsri X 6 P 9 , P 9 -1 3 EPM Process Systems & Solutions D 7 R 9 As such, petitioner's receipts derived from services rendered to the aforementioned entities in the amount of P121,107,993.70 may qualify for VAT zero-rating pursuant to Section 108 (B) (2) of the NIRC of 1997, as amended. Below is the breakdown of the amount of P121,107,993.70: SDAaTC Invoice Invoice Amount in Exchange Client No. Date USD Rate Amount in Php 1 Emerson Climate Technologies (HK) 1284 10/28/2009 6,177.15 47.61905 294,150.01 2 Emerson Power Transmission 1289 10/28/2009 3,308.96 47.61905 157,569.53 3 Emerson Tool Company 1290 10/28/2009 8,488.50 47.61905 404,214.31 4 Emerson Network Power Connectivity Solutions 1292 10/28/2009 9,443.93 47.61905 449,710.97 5 Emerson Network Power Energy Systems, N.A., Inc. 1293 10/28/2009 41,070.95 47.61905 1,955,759.62 6 Emerson Japan Ltd. 1296 10/28/2009 7,617.40 47.61905 362,733.35 7 Emerson Network Power SRL 1298 10/28/2009 4,058.09 47.61905 193,242.39 8 Emerson Network Power Ltd. (UK) 1301 10/28/2009 19,416.75 47.61905 924,607.19 9 Emerson Process Management (Australia) 1303 10/28/2009 21,489.11 47.61905 1,023,291.00 10 Emerson Process Management Flow B.V. 1305 10/28/2009 10,744.87 47.61905 511,660.50 11 Emerson Process Management GMBH & Co. OHG 1306 10/28/2009 1,877.90 47.61905 89,423.81 12 EPM Process Systems & Solutions 1308 10/28/2009 1,328.24 47.61905 63,249.53 13 Emerson Process Management Shared Services Ltd. 1309 10/28/2009 136,907.07 47.61905 6,519,384.61 14 Fisher Rosemount Systems, Inc. 1311 10/28/2009 2,340.82 47.61905 111,467.62 15 Fusite 1312 10/28/2009 4,555.57 47.61905 216,931.92 16 InSinkErator 1314 10/28/2009 4,955.26 47.61905 235,964.77 17 Instrument and Valve Services Company 1315 10/28/2009 27,420.57 47.61905 1,305,741.49 18 Intermetro 1316 10/28/2009 32,936.01 47.61905 1,568,381.51 19 Kato Engineering, Inc. 1317 10/28/2009 6,493.90 47.61905 309,233.35 20 Knaack LLC 1318 10/28/2009 14,799.51 47.61905 704,738.61 21 Liebert Corporation 1319 10/28/2009 145,531.46 47.61905 6,930,069.87 22 Liebert Services 1320 10/28/2009 82,432.16 47.61905 3,925,341.15 23 LLLP Corporate Headquarters 1321 10/28/2009 12,827.29 47.61905 610,823.36 24 Micro Motion, Inc. 1324 10/28/2009 38,852.23 47.61905 1,850,106.28 25 Regulator Technologies, Inc. 1325 10/28/2009 48,821.18 47.61905 2,324,818.21 26 Ridge Tool Company 1326 10/28/2009 16,749.99 47.61905 797,618.61 27 Therm-o-disc 1332 10/28/2009 36,045.62 47.61905 1,716,458.18 28 Emerson Climate Technologies (HK) 1350 11/24/2009 8,348.12 46.59832 389,008.37 29 Emerson Network Power Pty. Ltd. (Australia) 1358 11/24/2009 207,615.35 46.59832 9,674,526.52 30 Emerson Network Power Connectivity Solutions 1365 11/24/2009 9,559.83 46.59832 445,472.02 31 Emerson Japan Ltd. 1366 11/24/2009 6,390.84 46.59832 297,802.41 32 Emerson Network Power SRL 1368 11/24/2009 4,902.33 46.59832 228,440.34 33 Emerson Network Power Ltd. (UK) 1369 11/24/2009 26,812.47 46.59832 1,249,416.06 34 Emerson Network Power Energy Systems, N.A., Inc. 1370 11/24/2009 49,498.16 46.59832 2,306,531.10 35 Emerson Power Transmission 1371 11/24/2009 5,422.89 46.59832 252,697.56 36 Emerson Process Management- Power & Water Solution 1372 11/24/2009 (445.96) 46.59832 (20,780.99) 37 Emerson Process Management (Australia) 1373 11/24/2009 23,317.03 46.59832 1,086,534.43 38 Emerson Process Management Flow B.V. 1376 11/24/2009 11,261.75 46.59832 524,778.63 39 Emerson Process Management GMBH & Co. OHG 1377 11/24/2009 1,886.64 46.59832 87,914.25 40 Emerson Process Management Shared Services Ltd. 1379 11/24/2009 135,191.44 46.59832 6,299,693.98 41 Emerson Process Management Valve Automation, Inc. 1380 11/24/2009 12,078.08 46.59832 562,818.24 42 Emerson Tool Company 1382 11/24/2009 6,502.17 46.59832 302,990.20 43 EPM Process Systems & Solutions 1383 11/24/2009 1,822.89 46.59832 84,943.61 44 Fisher Rosemount Systems, Inc. 1384 11/24/2009 2,352.79 46.59832 109,636.06 45 Fusite 1385 11/24/2009 4,505.22 46.59832 209,935.68 46 InSinkErator 1388 11/24/2009 5,760.91 46.59832 268,448.73 47 Instrument and Valve Services Company 1389 11/24/2009 30,814.70 46.59832 1,435,913.25 48 Intermetro 1390 11/24/2009 35,590.82 46.59832 1,658,472.42 49 Kato Engineering, Inc. 1391 11/24/2009 7,137.22 46.59832 332,582.46 50 Knaack LLC 1392 11/24/2009 19,822.01 46.59832 923,672.37 51 Liebert Corporation 1393 11/24/2009 159,689.15 46.59832 7,441,246.11 52 Liebert Services 1394 11/24/2009 93,683.17 46.59832 4,365,478.33 53 LLLP Corporate Headquarters 1395 11/24/2009 14,380.19 46.59832 670,092.70 54 Micro Motion, Inc. 1398 11/24/2009 38,459.58 46.59832 1,792,151.82 55 Regulator Technologies, Inc. 1400 11/24/2009 54,701.30 46.59832 2,548,988.68 56 Ridge Tool Company 1401 11/24/2009 28,670.54 46.59832 1,335,999.00 57 Therm-o-disc 1406 11/24/2009 40,379.88 46.59832 1,881,634.57 58 Emerson Climate Technologies (HK) 1421 12/22/2009 8,606.50 46.94836 404,061.06 59 Emerson Network Power Connectivity Solutions 1435 12/22/2009 10,890.13 46.94836 511,273.74 60 Emerson Japan, Ltd. 1436 12/22/2009 5,278.82 46.94836 247,831.94 61 Emerson Network Power SRL 1438 12/22/2009 4,776.83 46.94836 224,264.33 62 Emerson Network Power Ltd. (UK) 1439 12/22/2009 19,452.77 46.94836 913,275.65 63 Emerson Network Power Energy Systems N.A., Inc. 1440 12/22/2009 47,711.74 46.94836 2,239,987.95 64 Emerson Power Transmission 1441 12/22/2009 7,789.63 46.94836 365,710.35 65 Emerson Process Management (Australia) 1442 12/22/2009 23,340.80 46.94836 1,095,812.28 66 Emerson Process Management Flow B.V. 1445 12/22/2009 10,861.57 46.94836 509,932.90 67 Emerson Process Management GMBH & Co. OHG 1446 12/22/2009 1,566.43 46.94836 73,541.32 68 Emerson Process Management Shared Services Ltd. 1448 12/22/2009 140,749.59 46.94836 6,607,962.42 69 Emerson Process Management Valve Automation, Inc. 1449 12/22/2009 12,636.18 46.94836 593,247.93 70 Emerson Tool Company 1451 12/22/2009 6,267.48 46.94836 294,247.91 71 EPM Process Systems & Solutions 1452 12/22/2009 1,281.09 46.94836 60,145.07 72 Fisher Rosemount Systems, Inc. 1456 12/22/2009 5,348.27 46.94836 251,092.51 73 Fusite 1457 12/22/2009 6,361.28 46.94836 298,651.66 74 InSinkErator 1459 12/22/2009 5,565.80 46.94836 261,305.18 75 Instrument and Valve Services Company 1460 12/22/2009 31,870.28 46.94836 1,496,257.38 76 Intermetro 1461 12/22/2009 9,925.24 46.94836 465,973.74 77 Kato Engineering, Inc. 1462 12/22/2009 7,836.92 46.94836 367,930.54 78 Knaack LLC 1463 12/22/2009 17,063.23 46.94836 801,090.66 79 Liebert Corporation 1464 12/22/2009 149,041.95 46.94836 6,997,275.12 80 Liebert Services 1465 12/22/2009 91,153.82 46.94836 4,279,522.36 81 LLLP Corporate Headquarters 1466 12/22/2009 12,261.18 46.94836 575,642.29 82 Micro Motion, Inc. 1467 12/22/2009 38,368.26 46.94836 1,801,326.88 83 Regulator Technologies, Inc. 1469 12/22/2009 50,194.54 46.94836 2,356,551.33 84 Ridge Tool Company 1470 12/22/2009 21,340.88 46.94836 1,001,919.32 85 Therm-o-disc 1475 12/22/2009 36,389.54 46.94836 1,708,429.22 TOTAL 2,576,732.75 121,107,993.70 =========== ============ The Court, in the assailed Decision, initially considered the amount of P215,816,767.89 9 as petitioner's zero-rated receipts for the first quarter of fiscal year (FY) ending September 30, 2010. However, after considering the foregoing, petitioner's aggregate receipts that may qualify for VAT zero-rating amount to P336,924,761.59 (P215,816,767.89 plus P121,107,993.70). However, petitioner must substantiate its zero-rated receipts by proper VAT zero-rated official receipts (ORs) in accordance with Sections 113 (A) (2) and (B) of the NIRC of 1997, as amended, which provide as follows: SEC. 113. Invoicing and Accounting Requirements for VAT-Registered Persons . (A) Invoicing Requirements . A VAT-registered person shall issue: (1) A VAT invoice for every sale, barter or exchange of goods or properties; and (2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services . (B) Information Contained in the VAT Invoice or VAT Official Receipt . The following information shall be indicated in the VAT invoice or VAT official receipt: (1) A statement that the seller is a VAT-registered person, followed by his Taxpayer's Identification Number (TIN); (2) The total amount which the purchaser pays or is obligated to pay to the seller with the indication that such amount includes the value-added tax: . . . xxx xxx xxx (3) The date of transaction, quantity, unit cost and description of the goods or properties or nature of the service; and (4) In the case of sales in the amount of One thousand pesos (P1,000) or more where the sale or transfer is made to a VAT-registered person, the name, business style, if any, address and Taxpayer Identification Number (TIN) of the purchaser, customer or client . (Emphases supplied) acEHCD The Court-commissioned Independent Certified Public Accountant (ICPA) reported the following findings with regard to petitioner's zero-rated receipts for the first quarter of FY ending September 30, 2010: Findings Amount a) Gross receipts from zero-rated sales supported by ORs and invoices 10 P394,950,723.28 b) Gross receipts from zero-rated sales supported by invoices 11 89,973,369.59 c) Gross VATable sales subject to 12% included in gross receipts from zero-rated sales 12 2,459,087.10 TOTAL P487,383,179.97 ============= An examination of the ICPA report 13 and the related supporting documents reveals that the following zero-rated receipts were not properly substantiated and should be disallowed: Invoice Invoice Amount in Exchange Client No. Date USD Rate Amount in Php 1. Found to be supported by invoices only, per ICPA Report, Annex B-2 Emerson Electric Asia-Pacific 1336 10/28/2009 429,310.32 47.61905 20,443,349.59 Air Comfort Products 1337 11/24/2009 2,534.90 46.59832 118,122.08 Emerson Electric Asia-Pacific 1352 11/24/2009 500,943.22 46.59832 23,343,112.47 Emerson Hermetic Motors 1357 11/24/2009 4,983.88 46.59832 232,240.44 Emerson Network Power (Malaysia) SDN BHD 1361 11/24/2009 39,260.63 46.59832 1,829,479.40 Emerson Network Power (Singapore) Pte. Ltd. 1363 11/24/2009 27,873.44 46.59832 1,298,855.48 Instrument and Valve Services Company 1315 10/28/2009 27,420.57 47.61905 1,305,741.49 Intermetro 1316 10/28/2009 32,936.01 47.61905 1,568,381.51 Knaack LLC 1318 10/28/2009 14,799.51 47.61905 704,738.61 LLLP Corporate Headquarters 1321 10/28/2009 12,827.29 47.61905 610,823.36 Micro Motion, Inc. 1324 10/28/2009 38,852.23 47.61905 1,850,106.28 Regulator Technologies, Inc. 1325 10/28/2009 48,821.18 47.61905 2,324,818.21 Emerson Japan, Ltd. 1366 11/24/2009 6,390.84 46.59832 297,802.41 Emerson Power Transmission 1371 11/24/2009 5,422.89 46.59832 252,697.56 Emerson Process Management Power & Water Solution 1372 11/24/2009 (445.96) 46.59832 (20,780.99) Emerson Process Management (Australia) 1373 11/24/2009 23,317.03 46.59832 1,086,534.43 Emerson Process Management Flow B.V. 1376 11/24/2009 11,261.75 46.59832 524,778.63 Emerson Process Management GMBH & Co. OHG 1377 11/24/2009 1,886.64 46.59832 87,914.25 Emerson Process Management Valve Automation, Inc. 1380 11/24/2009 12,078.08 46.59832 562,818.24 Fusite 1385 11/24/2009 4,505.22 46.59832 209,935.68 Instrument and Valve Services Company 1389 11/24/2009 30,814.70 46.59832 1,435,913.25 Kato Engineering, Inc. 1391 11/24/2009 7,137.22 46.59832 332,582.46 Knaack LLC 1392 11/24/2009 19,822.01 46.59832 923,672.37 Micro Motion, Inc. 1398 11/24/2009 38,459.58 46.59832 1,792,151.82 Knaack LLC 1463 12/22/2009 17,063.23 46.94836 801,090.66 Sub-total 1,358,276.41 63,916,879.69 2. As found by the Court, ORs were not issued in the name of the client in the corresponding invoice Alber Corporation 1271 10/28/2009 1,654.73 47.61905 78,796.67 ASCO Numatics 1272 10/28/2009 17,123.41 47.61905 815,400.52 Closetmaid 1276 10/28/2009 11,085.69 47.61905 527,890.03 EGS Electrical Group 1279 10/28/2009 2,676.33 47.61905 127,444.29 Electric Reliability Services 1280 10/28/2009 4,815.86 47.61905 229,326.68 Emerson Electric Co. 1335 10/28/2009 635,415.03 47.61905 30,257,860.08 Alber Corporation 1338 11/24/2009 2,777.27 46.59832 129,416.12 ASCO Numatics 1339 11/24/2009 19,914.86 46.59832 927,999.02 Closetmaid 1343 11/24/2009 13,821.27 46.59832 644,047.96 EGS Electrical Group 1346 11/24/2009 6,534.30 46.59832 304,487.40 Electric Reliability Services 1347 11/24/2009 5,897.30 46.59832 274,804.27 Emerson Electric Co. 1353 11/24/2009 731,760.23 46.59832 34,098,797.36 Alber Corporation 1409 12/22/2009 2,714.50 46.94836 127,441.32 ASCO Numatics 1410 12/22/2009 25,464.17 46.94836 1,195,501.02 EGS Electrical Group 1417 12/22/2009 4,901.51 46.94836 230,117.86 Electric Reliability Services 1418 12/22/2009 5,492.51 46.94836 257,864.34 Emerson Climate Technologies (HK) 1284 10/28/2009 6,177.15 47.61905 294,150.01 Emerson Power Transmission 1289 10/28/2009 3,308.96 47.61905 157,569.53 Emerson Tool Company 1290 10/28/2009 8,488.50 47.61905 404,214.31 Emerson Process Management Flow B.V. 1305 10/28/2009 10,744.87 47.61905 511,660.50 Emerson Process Management GMBH & Co. OHG 1306 10/28/2009 1,877.90 47.61905 89,423.81 EPM Process Systems & Solutions 1308 10/28/2009 1,328.24 47.61905 63,249.53 Emerson Process Management Shared Services Ltd. 1309 10/28/2009 136,907.07 47.61905 6,519,384.61 Fusite 1312 10/28/2009 4,555.57 47.61905 216,931.92 Liebert Corporation 1319 10/28/2009 145,531.46 47.61905 6,930,069.87 Liebert Services 1320 10/28/2009 82,432.16 47.61905 3,925,341.15 Emerson Climate Technologies (HK) 1350 11/24/2009 8,348.12 46.59832 389,008.37 EPM Process Systems & Solutions 1383 11/24/2009 1,822.89 46.59832 84,943.61 Liebert Corporation 1393 11/24/2009 159,689.15 46.59832 7,441,246.11 LLLP Corporate Headquarters 1395 11/24/2009 14,380.19 46.59832 670,092.70 Regulator Technologies, Inc. 1400 11/24/2009 54,701.30 46.59832 2,548,988.68 Emerson Climate Technologies (HK) 1421 12/22/2009 8,606.50 46.94836 404,061.06 Emerson Power Transmission 1441 12/22/2009 7,789.63 46.94836 365,710.35 Emerson Process Management Flow B.V. 1445 12/22/2009 10,861.57 46.94836 509,932.90 Emerson Process Management GMBH & Co. OHG 1446 12/22/2009 1,566.43 46.94836 73,541.32 Emerson Process Management Valve Automation, Inc. 1449 12/22/2009 12,636.18 46.94836 593,247.93 Emerson Tool Company 1451 12/22/2009 6,267.48 46.94836 294,247.91 EPM Process Systems & Solutions 1452 12/22/2009 1,281.09 46.94836 60,145.07 Fusite 1457 12/22/2009 6,361.28 46.94836 298,651.66 Instrument and Valve Services Company 1460 12/22/2009 31,870.28 46.94836 1,496,257.38 Liebert Corporation 1464 12/22/2009 149,041.95 46.94836 6,997,275.12 Liebert Services 1465 12/22/2009 91,153.82 46.94836 4,279,522.36 LLLP Corporate Headquarters 1466 12/22/2009 12,261.18 46.94836 575,642.29 Regulator Technologies, Inc. 1469 12/22/2009 50,194.54 46.94836 2,356,551.33 Sub-total 2,522,234.43 118,778,256.33 TOTAL 3,880,510.84 182,695,136.02 =========== ============ Moreover, the Court finds that the following zero-rated receipts in the amount of $114,544.14 were not supported by official receipts: Invoice Invoice Amount OR OR Amount Exhibit No. in USD Number in USD Difference DDDDDDDD-26 & DDDDDDDD-26a 1297 31,852.01 1250 21,438.70 10,413.31 DDDDDDDD-56 & DDDDDDDD-56a 1343 13,821.27 1724 11,896.00 1,925.27 DDDDDDDD-68 & DDDDDDDD-68a 1359 163,495.31 1599 163,345.96 149.35 DDDDDDDD-102 & 1605, DDDDDDDD-102a to -102b 1414 12,173.23 1574 10,170.82 2,002.41 DDDDDDDD-30 & DDDDDDDD-30a 1301 19,416.75 1522 13,663.56 5,753.19 DDDDDDDD-43 & DDDDDDDD-43a 1314 4,955.26 1319 1,930.44 3,024.82 DDDDDDDD-67 & DDDDDDDD-67a 1358 207,615.35 1589 207,595.73 19.62 DDDDDDDD-77 & DDDDDDDD-77a 1379 135,191.44 1565 125,160.20 10,031.24 DDDDDDDD-84 & DDDDDDDD-84a 1388 5,760.91 1782 88.82 5,672.09 DDDDDDDD-87 & DDDDDDDD-87a 1394 93,683.17 1547 50,273.00 43,410.17 DDDDDDDD-91 & DDDDDDDD-91a 1401 28,670.54 1608 12,117.26 16,553.28 DDDDDDDD-135 & DDDDDDDD-135b 1448 140,749.59 1565 125,160.20 15,589.39 TOTAL 857,384.83 742,840.69 114,544.14 ========= ========= ========= Using the foreign currency exchange rate on the invoice date per petitioner's Schedule of Zero-Rated Sales, 14 the foregoing zero-rated receipts which are not supported by VAT zero-rated ORs amounted to P5,363,311.47, thus: SDHTEC Invoice Amount in Exchange Amount in Client No. USD Rate PhP Emerson Network Power (Malaysia) SDN BHD 1297 10,413.31 47.61905 495,871.93 Closetmaid 1343 1,925.27 46.59832 89,714.35 Emerson Network Power (Hong Kong) Co. Ltd. 1359 149.35 46.59832 6,959.46 Closetmaid 1414 2,002.41 46.94836 94,009.87 Emerson Network Power Ltd. (UK) 1301 5,753.19 47.61905 273,961.44 InSinkErator 1314 3,024.82 47.61905 144,039.05 Emerson Network Power Pty. Ltd. (Australia) 1358 19.62 46.59832 914.26 Emerson Process Management Shared Services Ltd. 1379 10,031.24 46.59832 467,438.93 InSinkErator 1388 5,672.09 46.59832 264,309.86 Liebert Services 1394 43,410.17 46.59832 2,022,840.99 Ridge Tool Company 1401 16,553.28 46.59832 771,355.04 Emerson Process Management Shared Services Ltd. 1448 15,589.39 46.94836 731,896.29 TOTAL 114,544.14 5,363,311.47 ========= ========== Thus, petitioner's adjusted substantiated zero-rated receipts for the first quarter of FY ending September 30, 2010 is P148,866,314.10, computed as follows: Gross receipts considered to be zero-rated P336,924,761.59 Less: Disallowances Supported by invoices only P63,916,879.69 Official receipts not issued in the name of the client in the corresponding invoice 118,778,256.33 Not supported by official receipts 5,363,311.47 188,058,447.49 Substantiated zero-rated receipts P148,866,314.10 ============= Inasmuch as only a portion of petitioner's zero-rated receipts is substantiated, only the portion of the input tax claimed attributable thereto will be refunded. The rate to be applied is 30.5440%, computed as follows: Substantiated zero-rated receipts P148,866,314.10 Divided by total zero-rated receipts, per VAT returns P487,383,178.98 Rate of substantiated zero-rated receipts 30.5440% ============= In fine, petitioner has proven that it is entitled to a refund or an issuance of tax credit certificate for its excess unutilized input taxes for the first quarter of FY ending September 30, 2010 in the adjusted amount of P866,276.08, computed as follows: Substantiated input taxes P2,836,157.95 15 Portion of substantiated zero-rated sales x 30.5440% Refundable input taxes P866,276.08 ============ On respondent's Motion for Reconsideration Respondent, on the other hand, alleges that petitioner failed to prove the latter's submission of complete documents in support of the administrative claim for refund. As such, the period of 120 days will not commence to run. Respondent further asserts that petitioner failed to comply with the invoicing and accounting requirements. Respondent points out that the VAT invoices or official receipts should include not only the name of the taxpayer but also the TIN number, registered address, and business style. It is noteworthy that the issues regarding the timeliness of the filing of the Petition for Review and the invoicing requirements have already been passed upon extensively by the Court in the assailed Decision. WHEREFORE , petitioner's Motion to Reopen Trial for Reception of Additional Evidence is DENIED . Further, petitioner's Motion for Reconsideration of the Decision is PARTIALLY GRANTED and the assailed Decision promulgated on March 31, 2015 is MODIFIED . Accordingly, respondent is ORDERED TO REFUND OR ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner in the amount of P866,276.08 representing its excess unutilized input taxes for the period covering October 1, 2009 to December 31, 2009 or the 1st quarter of fiscal year ending September 30, 2010. Meanwhile, respondent's Motion for Reconsideration is DENIED . AScHCD SO ORDERED. (SGD.) JUANITO C. CASTAEDA, JR. Associate Justice Caesar A. Casanova and Amelia R. Cotangco-Manalastas, JJ., concur. Footnotes 1. Docket, p. 2324. 2. G.R. No. 172458, December 14, 2011, 662 SCRA 424. 3. G.R. No. 124512, June 27, 2006, 493 SCRA 74. 4. Ibid . 5. Philippine National Bank v. Commissioner of Internal Revenue , G.R. No. 172458, December 14, 2011. 6. G.R. No. 188260, November 13, 2013, 709 SCRA 462. 7. Page 12 of the Decision dated March 31, 2015, docket, p. 2310, citing Commissioner of Internal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc. , G.R. No. 153205, January 2, 2007, 512 SCRA 124. 8. Exhibit "J". 9. Page 19 of the Decision dated March 31, 2015, docket, p. 2317. 10. Exhibit Z 7 , Annex B-1. 11. Exhibit Z 7 , Annex B-2. 12. Exhibit Z 7 , Annex B-3. 13. Exhibit Z 7 . 14. Exhibit CCCCCCCC-1. 15. Page 26 of the Decision dated March 31, 2015, docket, p. 2324.