Manulife Data Services, Inc. v. Commissioner of Internal Revenue

SECOND DIVISION [C.T.A. CASE NO. 8701. October 28, 2015.] MANULIFE DATA SERVICES, INC. , petitioner , vs. COMMISSIONER OF INTERNAL REVENUE , respondent. DECISION CASANOVA , J p : This Petition for Review, filed by petitioner Manulife Data Services, Inc., seeks the refund or issuance of tax credit certificate of the amount of P29,406,541.23, representing petitioner's alleged excess and unutilized excess VAT payments attributable to its VAT and zero-rated sales for the 1st to the 4th quarters of Calendar Year (CY) 2011. HTcADC Petitioner is a foreign corporation duly registered with and authorized by the Securities and Exchange Commission ("SEC") to operate as a Regional Operating Headquarters ("ROHQ") with principal office address at Manulife Building, UP North Science and Technology Park, Commonwealth Avenue, Diliman, Quezon City. 1 Respondent is the Commissioner of Internal Revenue, presently in the person of the Honorable Kim Jacinto-Henares, who holds office at the 5th Floor BIR National Office Building, Agham Road, Diliman, Quezon City, vested with the power to decide tax cases, including claims for refund and/or tax credits pursuant to Section 4 of the 1997 National Internal Revenue Code, as amended. 2 Petitioner, as ROHQ, is engaged in performing qualifying services to its affiliates and related parties in the Asia-Pacific Region and other foreign markets. It is a VAT-registered entity as evidenced by its Certificates of Registration (BIR Form 2303) OCN 3RC0000330824 3 and OCN 3RC0000421626 4 both dated March 9, 2006, issued by the Bureau of Internal Revenue, Revenue Region No. 007, Revenue District No. 039 and Revenue Region No. 007, Revenue District No. 038, respectively. For the 1st to the 4th quarter of CY 2011, petitioner generated the following VAT-able sales and zero-rated sales which were directly attributable to services rendered to its affiliates doing business outside the Philippines, viz. : CY 2011 VAT-able Sales Zero-rated Sales 1st Quarter P123,879.72 P325,131,825.82 2nd Quarter 1,972,899.62 322,609,555.60 3rd Quarter 255,132.50 331,372,504.80 4th Quarter 1,070,390.25 456,579,564.39 Petitioner accumulated input VAT for CY 2011 from its domestic purchases of supplies and services as well as from purchase of capital goods which remained unutilized and is now the subject of the instant claim. Petitioner's input VAT 5 for 2011 is herein below summarized, to wit: Consolidated for CY 2011 Purchases Input VAT Purchase of capital goods not 17,916,693.81 2,150,003.26 exceeding P1M Domestic purchase of goods 7,117,654.20 7,610,074.36 other than capital goods Domestic purchase of services 158,783,956.18 1,003,315.98 Current portion of Input Tax 26,845,196.13 19,054,074.75 on purchases of capital goods exceeding Php1 Million Less: Output VAT -410,927.13 Total Current Purchases 210,663,500.32 29,406,541.23 =========== =========== Petitioner filed its VAT and Income Tax Returns, 6 which was duly received by respondent on the following dates: aScITE Date Filed Quarterly VAT Return, 25 April 2011 1st Quarter of 2011 Quarterly VAT Return, 25 July 2011 2nd Quarter of 2011 Amended Quarterly VAT Return, 22 August 2011 2nd Quarter of 2011 Quarterly VAT Return, 25 October 2011 3rd Quarter of 2011 Quarterly VAT Return, 25 January 2012 4th Quarter of 2011 Amended Quarterly VAT Return, 13 April 2012 4th Quarter of 2011 Quarterly VAT Return, 25 April 2012 1st Quarter of 2012 Amended Quarterly VAT Return, 10 September 2012 2nd Quarter of 2012 Quarterly VAT Return, 25 October 2012 3rd Quarter of 2012 Quarterly VAT Return, 25 January 2013 4th Quarter of 2012 Amended Monthly VAT Declaration 26 March 2013 for the month of February 2013 Income Tax Return for 2011 with 15 April 2013 attached Audited Financial Statement On March 27, 2013, petitioner filed with respondent, through the Revenue District Office No. 38 ("RDO 38"), its administrative application for refund or issuance of tax credit certificate for its excess/unutilized input for the 1st to 4th quarters of 2011. 7 Since no action has been taken by respondent on petitioner's administrative claim for refund/issuance of tax credit certificate, petitioner filed the instant Petition for Review. On September 17, 2013, respondent filed her Answer and interposed the following Special and Affirmative Defenses, to wit: "6. Petitioner contends that it is entitled for a tax refund or tax credit certificate in the amount of PESOS: TWENTY-NINE MILLION FOUR HUNDRED SIX THOUSAND FIVE HUNDRED FORTY-ONE AND 23/100 (Php29,406,541.23) of its excess and unutilized input VAT taxes for the 1st to 4th quarters of calendar year 2011. 7. Section 112 Paragraphs (A) and (C) of the National Internal Revenue Code has this to say on Refund or Tax Credits of Input Tax and the Period within which to file Refund of Input Taxes, to wit: 'Section 112. Refund 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 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: . . .' 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. HEITAD 8. Claims for refund are strictly construed against the taxpayer as the same partake of an exemption; 9. Petitioner has the burden to show proof that the taxes were erroneously or illegally paid, hence, failure on the part of the Petitioner to prove the same is fatal to its cause of action; 10. Petitioner should prove the legal basis in claiming the amount to be refunded; 11. In COMMISSIONER OF INTERNAL REVENUE VS. SAN ROQUE POWER CORPORATION, G.R. No. 187485 , the Honorable Supreme Court has this to say on undisputed excess input VAT, to wit: '. . . Well-established is the rule that tax refunds or credits, just like tax exemptions, are strictly construed against the taxpayer. The burden is on the taxpayer to show that he has strictly complied with the conditions for the grant of the tax refund or credit.' 12. In COMPAIGNIE FINCANCIERE SUCRES ET DENREES vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No. 133834, August 28, 2006 the Honorable Supreme Court ruled, to wit: '. . . Tax refunds are a derogation of the State's taxing power. Hence, like tax exemptions, they are construed strictly against the taxpayer and liberally in favor of the State. Consequently, he who claims a refund or exemption from taxes has the burden of justifying the exemption by words too plain to be mistaken and too categorical to be misinterpreted.' On December 27, 2013, petitioner filed a Motion to Commission an Independent Certified Public Accountant which motion was granted by the Court in the hearing on January 29, 2014. The parties filed their Joint Stipulation of Facts and Issue 8 on January 10, 2014 and the same was subsequently approved and adopted by the Court in its Pre-Trial Order 9 dated January 23, 2014. After presentation of its evidence, petitioner filed its Formal Offer of Exhibits 10 thru registered mail on May 23, 2014, without respondent's comment thereon. In a Resolution 11 promulgated on July 24, 2014, this Court resolved to admit petitioner's exhibits, except for the following which were denied admission, viz. : (a) Exhibits "P-2, P-57, P-58, P-59, P-60 and P-2206 to P-2217" for failure of petitioner to submit the originals for comparison; (b) Exhibits "P-32, P-33, P-34, P-2327, P-1200b, P-1211b, P-1219b, P-1482b, P-1504b, P-1512b, P-1783b, P-1797b, P-1803b, P-2093b, P-2096b and P-2115b to P-2122b" for not being found in the records of the case; and (c) Exhibits "P-2249 to P-2276" for not being identified during trial and for failure of petitioner to submit the originals for comparison. In the hearing on September 10, 2014, respondent's counsel manifested that she has no witness to present in this case, and, upon motion, the parties were granted thirty (30) days from September 10, 2014 or until October 10, 2014 to file their memoranda, after which the case shall be considered submitted for decision. ATICcS On September 26, 2014, respondent filed her Respondent's Memorandum while petitioner, after an extension of fifteen (15) days granted by the Court, filed its Memorandum for Petitioner on October 23, 2014. The case was considered submitted for decision per Resolution promulgated on October 28, 2014. As jointly stipulated by the parties, the sole issue to be resolved is "whether or not petitioner is entitled to the issuance of a tax credit certificate for its unutilized/excess input VAT payments for the 1st to 4th quarters of 2011 amounting to a total of Php29,406,541.23". Petitioner anchors its claim on Sections 110 (B) and 112 (A) of the National Internal Revenue Code (NIRC) of 1997, as amended, which, respectively, reads 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, however, that any input tax attributable to the purchase of capital goods or 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. 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 or properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales: 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." Under the afore-quoted provisions, in order to be entitled to a refund or tax credit of input VAT due or paid attributable to zero-rated or effectively zero-rated sales, the following requisites must be met/complied with, to wit: TIADCc (1) there must be zero-rated or effectively zero-rated sales; (2) that input taxes were incurred or paid; (3) that such input taxes are attributable to zero-rated or effectively zero-rated sales; (4) that the input taxes were not applied against any output VAT liability; and (5) that the claim for refund was filed within the two-year prescriptive period. For the four quarters of taxable year 2011, petitioner had duly filed its Quarterly VAT Returns with the BIR declaring the following: 1st Quarter 2nd Quarter Exhibit "P-35" Exhibit "P-36" Vatable Sales/Receipts P123,879.72 P1,972,899.62 Zero-Rated Sales/Receipts 325,131,825.82 322,609,555.60 Total Sales/Receipts P325,255,705.54 P324,582,455.22 Output Tax Due P14,865.57 P236,747.95 Less: Allowable Input Tax Input Tax Carried Over from Previous Quarter 43,285,603.64 52,327,649.41 12 Input Tax Deferred on Capital Goods Exceeding P1Million from Previous Quarter 18,266,771.54 16,717,259.31 Current Transactions Purchase of Capital Goods not exceeding P1Million 307,150.42 760,417.33 Purchase of Capital Goods exceeding P1Million 445,825.63 1,214,205.61 Domestic Purchases of Goods Other than Capital Goods 335,591.07 188,512.90 Domestic Purchase of Services 12,155,684.18 2,268,135.69 Total Allowable Input Tax 74,796,626.48 73,476,180.25 13 Less: Deductions from input tax Input tax deferred for the succeeding period 16,717,259.31 16,040,015.07 VAT Refund/TCC claimed 5,736,852.20 12,380,003.61 Total Allowable Input Tax 52,342,514.97 45,056,161.57 14 Net VAT Payable/(Overpayment) P52,327,649.41 15 P44,819,413.61 ============== ============== 3rd Quarter 4th Quarter Total Exhibit "P-38" Exhibit "P-39" Vatable Sales/Receipts P255,132.50 P1,072,480.88 P3,424,392.72 Zero-Rated Sales/Receipts 331,372,504.80 366,429,620.13 1,345,543,506.35 Total Sales/Receipts P331,627,637.31 16 P367,502,101.01 P1,348,967,899.07 Output tax due P30,615.90 P128,697.71 P410,927.13 Less: Allowable Input Tax Input Tax Carried Over from Previous Quarter 44,819,413.61 49,049,300.28 43,285,603.64 Input Tax Deferred on Capital Goods Exceeding P1Million from Previous Quarter 16,040,015.07 15,594,680.41 18,266,771.54 Current Transactions Purchase of Capital Goods not exceeding P1Million 720,852.71 361,582.78 2,150,003.24 Purchase of Capital Goods exceeding P1Million 1,423,402.19 137,990.12 3,221,423.55 Domestic Purchase of Goods Other than Capital Goods 174,007.79 156,006.75 854,118.51 Domestic Purchase of Services 1,496,905.22 3,133,349.65 19,054,074.74 Total Allowable Input Tax 64,674,596.59 68,432,909.99 86,831,995.22 Less: Deductions from input tax Input Tax on Purchases of Capital Goods exceeding P1Million deferred for the succeeding period 15,594,680.41 13,878,120.81 13,878,120.81 VAT Refund/TCC claimed - 11,997,999.50 30,114,855.31 Total Allowable Input Tax 49,079,916.18 42,556,789.68 42,839,019.11 Net VAT Payable/(Overpayment) P49,049,300.28 P42,428,091.98 P42,428,091.98 ============= ============= ============= As indicated in the returns, petitioner's excess input VAT arising from its domestic purchases of goods not exceeding P1Million, domestic purchases of goods other than capital goods, domestic purchases of services and amortization of input VAT on purchases of capital goods exceeding P1Million for the four quarters of 2011 amounted to P29,668,270.78, broken down as follows: 1st Quarter 2nd Quarter Input Tax Deferred on Capital Goods exceeding P1Million from P18,266,771.54 P16,717,259.31 Previous Quarter Add: Input Tax on Capital Goods exceeding P1Million Purchased 445,825.63 1,214,205.61 this Quarter Total Unamortized Input Tax on Capital Goods exceeding P1Million 18,712,597.17 17,931,464.92 Less: Input Tax on Purchases of Capital Goods exceeding P1Million 16,717,259.31 16,040,015.07 deferred for the succeeding period Amortization of Input Tax on Capital Goods exceeding P1Million 1,995,337.86 1,891,449.85 Add: Input Tax on Domestic Purchases of Capital Goods not Exceeding P1Million 307,150.42 760,417.33 Domestic Purchases of Goods Other than Capital Goods 335,591.07 188,512.90 Domestic Purchase of Services 12,155,684.18 2,268,135.69 Total Allowable Input Tax P14,793,763.53 P5,108,515.77 ============= ============= 3rd Quarter 4th Quarter Total Input Tax Deferred on Capital Goods exceeding P1Million from Previous Quarter P16,040,015.07 P15,594,680.41 P18,266,771.54 Add: Input Tax on Capital Goods exceeding P1Million Purchased this Quarter 1,423,402.19 137,990.12 3,221,423.55 Total Unamortized Input Tax on Capital Goods 17,463,417.26 15,732,670.53 21,488,195.09 exceeding P1Million Less: Input Tax on Purchases of Capital Goods 15,594,680.41 13,878,120.81 13,878,120.81 exceeding P1Million deferred for the succeeding period Amortization of Input Tax on Capital Goods 1,868,736.85 1,854,549.73 7,610,074.29 exceeding P1 Million Add: Input Tax on Domestic Purchases of Capital Goods not 720,852.71 361,582.78 2,150,003.24 Exceeding P1 Million Domestic Purchases of Goods Other than 174,007.79 156,006.75 854,118.51 Capital Goods Domestic Purchases of Services 1,496,905.22 3,133,349.65 19,054,074.74 Total Allowable Input Tax P4,260,502.57 P5,505,488.91 P29,668,270.78 ============= ============= ============= Out of the reported excess input VAT for the four quarters of 2011 in the amount of P29,668,270.78, petitioner is claiming refund in the amount of P29,406,541.23 alleging that the same is attributable to its zero-rated sales of services for the same period. AIDSTE We shall first determine petitioner's compliance with the fifth requisite, timeliness of the filing of the claim. Under Section 112 (A), the application for tax credit certificate/refund of unutilized excess input VAT must be filed within two years after the close of the taxable quarter when the zero rated or effectively zero-rated sales were made. The present claim covers the four taxable quarters of 2011 which closed on March 31, 2011; June 30, 2011; September 30, 2011 and December 31, 2011. Counting two years from the said dates, petitioner had until March 31, 2013; June 30, 2013; September 30, 2013 and December 31, 2013, respectively, within which to file its administrative claim for tax credit certificate/refund. Thus, petitioner's administrative claim for refund was seasonably filed on March 27, 2013, as shown below: Last Day to File Date of Filing of Close of the Administrative Administrative CY 2011 Taxable Quarter Claim Claim 1st Quarter March 31, 2011 March 31, 2013 March 27, 2013 17 2nd Quarter June 30, 2011 June 30, 2013 3rd Quarter September 30, 2011 September 30, 2013 4th Quarter December 31, 2011 December 31, 2013 As to the timeliness of petitioner's judicial appeal, Section 112 (C) of the NIRC of 1997, as amended, provides that: "SEC. 112. Refunds or Tax Credits of Input Tax . 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." Applying Section 112 (C) of the NIRC of 1997, as amended, petitioner's judicial claims for the first, second, third and fourth quarters of 2011 were timely filed within the "120-30" day period, as shown below: End of 120 days for the BIR End of 30 days Date of Filing of Commissioner to from the Administrative decide on the expiration of the Date of Filing of CY 2011 Claim claim 120 days Judicial Claim 1st Quarter March 27, 2013 July 25, 2013 August 24, 2013 August 23, 2013 18 2nd Quarter 3rd Quarter 4th Quarter Clearly from the above, petitioner's judicial claims for the four quarters of taxable year 2011 were timely filed within the "120-30" day period required under Section 112 (C) of the NIRC of 1997, as amended. Anent the first requisite, petitioner alleges that its sales of services to its foreign affiliates who are all engaged in business conducted outside the Philippines, and which services were paid for in United States Dollars inwardly remitted to the Philippines and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP) qualify for VAT zero rating under 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. AaCTcI 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); (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. , 19 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; 2. the recipient of such services is doing business outside the Philippines; and 3. payment for such services must be in acceptable foreign currency accounted for in accordance with the BSP rules and regulations. On the first requisite, it is undisputed that petitioner is a registered VAT taxpayer 20 with license issued by the Securities and Exchange Commission (SEC) to operate as a Regional Operating Headquarters (ROHQ) in the Philippines and to engage in general administration and planning; business planning and coordination; sourcing/procurement of raw materials and components; corporate finance advisory services; marketing control and sales promotion; training and personnel management; logistic services; research and development services and product development; technical support and maintenance; data processing and communication; and business development. 21 Such services are not the same category as "processing, manufacturing or repacking of goods". As to the second requisite of proving that its clients for the subject period of claim are non-resident foreign corporations doing business outside the Philippines, petitioner presented Certifications of Non-Registration of Corporation/Partnership issued by the Republic of the Philippines Securities and Exchange Commission (SEC), Service Agreements, Certificate/Articles of Incorporation and other documents, summarized as follows: EcTCAD Exhibit Documents John Hancock Life Insurance "P-3" Services Agreement "P-4" Addendum to the Service Agreement "P-19" Certification of Non-Registration of Company "P-18" Amended Articles of Redomestication (indicating the change of name of The Manufacturer's Life Insurance Company (USA) to John Hancock Articles of Redomestication of the Manufacturer's Life Insurance Company (USA) Manulife (International) Ltd. "P-1" Business Processing Services Agreement "P-15" Certification of Non-Registration of Company "P-14" Certificate of Incorporation Memorandum of Association First Schedule to the Companies Certificate of Deposit of Memorandum of Association and by Laws "P-14-a" Certificate of Registration of Change of Name of Overseas Company showing the change of name from Manulife (Bermuda) Limited to Manulife (International) Limited Manulife Asset Management (Hong Kong) Limited "P-8" Services Agreement "P-24" Certification of Non-Registration of Company "P-23-a" Business Registration Certificate "P-23-b" Assessment Demanding Final Tax/Notice for Payment of Provisional Tax "P-23-c" Notice of Refund of Tax "P-23-d" Articles of Association "P-23-e" Memorandum of Articles and Association (Hua Tse Enterprises Limited) Manulife Asset Management (Malaysia) Sdn. Bhd. "P-9" Master Administrative Services Agreement "P-25" Certification of Non-Registration of Company Manulife Asset Management (Singapore) Pte. Ltd. "P-10" Services Agreement "P-27" Certification of Non-Registration of Company Manulife Insurance Berhad "P-6" Service Agreement "P-20" Certification of Non-Registration of Company Manulife Singapore Pte. Ltd. "P-7" Master Services Agreement "P-22" Certification of Non-Registration of Company "P-21-a" Memorandum of Association Articles of Association "P-21-b" Certificate of Incorporation of Private Company "P-21-c" Certificate of Residence for the purpose of claiming VAT refund PT Asuransi Jiwa Manulife Indonesia "P-29" Certification of Non-Registration of Company The Manufacturer's Life Insurance Company "P-5" Master Administrative Services Agreement "P-31" Letters Patent "P-31-a" Patent of Amalgation "P-31-b" Certificate of Confirmation "P-31-c" Certificate of Good Standing In relation to the third requisite, Section 113 (A) (2), (B) (1), (2) (c) and (3) of the NIRC of 1997, as amended, as implemented by Section 4.113-1 (A) (2), B (1) and (2) (c) of Revenue Regulations (RR) No. 16-05, as amended, provide that a VAT taxpayer, like herein petitioner, shall for every lease of goods or properties, and for every sale, barter or exchange of services, issue a VAT official receipt which must contain the following information: " SEC. 113. Invoicing and Accounting Requirements for VAT-registered Persons. (A) Invoicing Requirements . A VAT-registered person shall issue: xxx xxx xxx (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: Provided, That: xxx xxx xxx (c) If the sale is subject to zero percent (0%) value-added tax, the term ' zero-rated sale ' shall be written or printed prominently on the invoice or receipt; xxx xxx xxx (3) The date of transaction, quantity, unit cost and description of the goods or properties or nature of the service; and . . . (underlining supplied) SEC. 4.113-1. Invoicing Requirements. (A) A VAT-registered person shall issue: xxx xxx xxx (2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services. HSAcaE Only VAT-registered persons are required to print their TIN followed by the word "VAT" in their invoice or official receipts. Said documents shall be considered as a "VAT Invoice" or VAT official receipt. All purchases covered by invoices/receipts other than VAT Invoice/VAT Official Receipt shall not give rise to any input tax. VAT invoice/official receipt shall be prepared at least in duplicate, the original to be given to the buyer and the duplicate to be retained by the seller as part of his accounting records. (B) Information contained in VAT invoice or VAT official receipt . The following information shall be indicated in VAT invoice or VAT official receipt : (1) A statement that the seller is a VAT-registered person, followed by his 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 VAT; Provided, That : xxx xxx xxx (c) If the sale is subject to zero percent (0%) VAT, the term ' zero-rated sale' shall be written or printed prominently on the invoice or receipt;" (underlining supplied) Pursuant to the foregoing provisions, the foreign currency remittances referred to under Section 108 (B) (2) of the NIRC of 1997, as amended, must likewise be supported by VAT zero-rated official receipts. To prove that it rendered services to its foreign affiliates and was paid in US dollars duly accounted for in accordance with the rules and regulations of the BSP for the four quarters of CY 2011, petitioner presented VAT zero-rated official receipts, 22 VAT zero-rated sales invoices, 23 Schedule of Zero-Rated Sales, 24 Summary of Bank Certifications of Inward Remittances for Payments Received from Foreign Clients 25 as well as bank statements 26 and bank credit advices 27 from Citibank, which were examined by the Court-commissioned Independent CPA firm, Constantino Guadalquiver & Co., through its Partner, Ms. Katherine O. Constantino. In her report dated February 28, 2014, Ms. Constantino noted the following findings: 28 Findings 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total In Philippine Pesos Properly Supported by Zero-Rated OR 29 The Manufacturer's Life Insurance Company 165,383,915.60 167,358,227.93 178,687,560.06 188,395,275.07 699,824,978.66 Manulife (International) Ltd. 23,274,875.95 24,714,955.33 25,100,064.72 21,585,679.24 94,675,575.24 Manulife Singapore Pte. Ltd. 8,903.04 7,446.83 - 82,078.13 98,428.00 Manulife Insurance Berhad 1,616,213.20 1,590,963.03 1,575,265.98 1,611,825.56 6,394,267.77 John Hancock Life Insurance 86,152,892.64 85,035,045.12 90,009,485.52 101,577,691.13 362,775,114.41 PT Asuransi Jiwa Manulife Indonesia - 452,509.02 - - 452,509.02 Manulife Asset Management (Singapore) Pte. Ltd. - 432,597.12 640,250.00 655,109.25 1,727,956.37 Manulife Asset Management (Malaysia) Sdn. Bhd. - 169,408.45 167,745.50 171,638.62 508,792.57 Manulife Asset Management (Hong Kong) Limited - 1,571,231.02 1,042,105.51 1,591,915.48 4,205,252.01 Subtotal 276,436,800.43 281,332,383.85 297,222,477.29 315,671,212.48 1,170,662,874.05 Supported by Zero- Rated OR issued in the name of the Customer's Department 30 The Manufacturer's Life Insurance Company 21,930,273.75 23,097,686.47 21,891,758.32 25,002,388.97 91,922,107.51 John Hancock Life Insurance 5,114,880.90 6,463,475.83 2,878,530.24 3,912,885.74 18,369,772.71 Subtotal 27,045,154.65 29,561,162.30 24,770,288.56 28,915,274.71 110,291,880.22 Zero-Rated Sales amounts not tie-up per Official Receipt 31 The Manufacturer's Life Insurance Company 14,631,601.43 7,204,088.49 8,556,910.15 13,058,473.22 43,451,073.29 John Hancock Life Insurance 7,018,269.31 5,553,762.67 243,411.38 4,364,968.62 17,180,411.98 Manulife Asset Management (Hong Kong) Limited - - 579,418.23 - 579,418.23 Manulife (International) Ltd. - - - 4,489,769.67 4,489,764.67 Subtotal 21,649,870.74 12,757,851.16 9,379,739.76 21,913,211.51 65,700,673.17 Zero-Rated Sales without supporting documents 32 Manulife Asset Management (Singapore) Pte. Ltd. - - - (50,565.67) (50,565.67) Manulife Asset Management (Malaysia) Sdn. Bhd. - - - (19,513.19) (19,513.19) Subtotal (70,078.86) (70,078.86) Total 325,131,825.82 323,651,397.31 331,372,505.61 366,429,619.84 1,346,585,348.58 Per Quarterly VAT Returns 325,131,825.82 322,609,555.60 331,372,504.80 366,429,620.13 1,345,543,506.35 Difference - 1,041,841.71 0.81 33 (0.29) 34 1,041,842.23 ============= ============= ============= ============= ============== As found by the ICPA, the difference in the amount of P1,041,842.23 between petitioner's zero-rated sales/receipts as reported in its Quarterly VAT Return for the second quarter of 2011 vis--vis the zero-rated sales reflected in its Schedule of Zero-Rated Sales for the same quarter pertains to two (2) VATable transactions which were erroneously included also in the Schedule of Zero-Rated Sales. The details are as follows: O.R. Transaction Local Exhibit Customer No. Currency Currency Output Tax P-2318 The Manufacturer's Life 2547 $6,803.57 P295,079.90 P35,409.59 Insurance Company (Phils.), Inc. P-2319 The Manufacturer's Life 2543 17,217.86 746,761.55 89,611.39 Insurance Company (Phils.), Inc. Total $24,021.43 P1,041,841.45 P125,020.98 ======== =========== ========== The ICPA was able to verify that the above VATable sales were included in the Schedule 35 of VATable Sales and were reported as VATable sales in the 2011 VAT returns. 36 In other words, in determining petitioner's valid zero-rated receipts for CY 2011, the amount of P1,041,841.71 shall be excluded and the amount of P1,345,543,506.35 declared by petitioner in its 2011 Quarterly VAT Returns shall be used as reference point. HESIcT This Court has consistently held that in order to be considered as non-resident foreign corporation doing business outside the Philippines, each entity must be supported, at the very least, by both SEC certificate of non-registration of company and proof of incorporation or registration in a foreign country. Thus, only the following client-affiliates of petitioner shall be considered as non-resident foreign corporations doing business outside the Philippines, namely: 1. John Hancock Life Insurance 2. Manulife (International) Ltd. 3. Manulife Asset Management (Hong Kong) Limited 4. Manulife Singapore Pte. Ltd. Consequently, only the following gross receipts in the total amount of P502,373,742.26 derived by petitioner from services rendered to the aforementioned entities shall be considered for VAT zero-rating pursuant to Section 108 (B) (2) of the NIRC of 1997, as amended: Amount in Amount in Exhibit Customer OR No. OR Date US$ PhP First Quarter of CY 2011 P-1211 Manulife (International) Ltd. 2075 2/28/2011 48,277.34 2,133,665.32 P-1212 Manulife (International) Ltd. 2076 2/28/2011 88,717.54 3,920,960.56 P-1213 Manulife (International) Ltd. 2077 2/28/2011 35,335.77 1,561,699.87 P-1214 Manulife (International) Ltd. 2164 3/31/2011 45,124.60 1,970,670.14 P-1215 Manulife (International) Ltd. 2165 3/31/2011 92,755.83 4,050,809.61 P-1216 Manulife (International) Ltd. 2166 3/31/2011 35,756.58 1,561,552.40 P-1217 Manulife (International) Ltd. 2255 4/29/2011 46,655.57 2,029,703.92 P-1218 Manulife (International) Ltd. 2256 4/29/2011 99,306.40 4,320,225.67 P-1219 Manulife (International) Ltd. 2257 4/29/2011 39,665.05 1,725,588.47 subtotal 531,594.68 23,274,875.96 P-1106 Manulife Singapore Pte. Ltd. 2081 2/28/2011 22.39 989.35 P-1107 Manulife Singapore Pte. Ltd. 2170 3/31/2011 76.98 3,362.04 P-1108 Manulife Singapore Pte. Ltd. 2261 4/29/2011 104.63 4,551.65 subtotal 204.00 8,903.04 P-1112 John Hancock Life Insurance 2106 2/28/2011 14,169.06 626,215.78 P-1113 John Hancock Life Insurance 2107 2/28/2011 14,338.75 633,715.40 P-1114 John Hancock Life Insurance 2108 2/28/2011 5,054.71 223,397.96 P-1115 John Hancock Life Insurance 2109 2/28/2011 2,641.70 116,752.57 P-1116 John Hancock Life Insurance 2117 2/28/2011 15,536.24 686,639.66 P-1117 John Hancock Life Insurance 2118 2/28/2011 49,412.23 2,183,822.92 P-1118 John Hancock Life Insurance 2119 2/28/2011 46,016.64 2,033,751.42 P-1119 John Hancock Life Insurance 2122 2/28/2011 5,286.83 233,656.74 P-1120 John Hancock Life Insurance 2123 2/28/2011 5,283.40 233,505.15 P-1121 John Hancock Life Insurance 2124 2/28/2011 25,957.31 1,147,209.27 P-1122 John Hancock Life Insurance 2125 2/28/2011 145,593.89 6,434,667.56 John Hancock Life Insurance 2125 2/28/2011 69,714.38 3,081,096.74 John Hancock Life Insurance 2125 2/28/2011 15,619.98 690,340.64 John Hancock Life Insurance 2125 2/28/2011 14,458.39 639,003.00 John Hancock Life Insurance 2125 2/28/2011 5,666.66 250,443.71 John Hancock Life Insurance 2125 2/28/2011 3,909.81 172,797.96 John Hancock Life Insurance 2125 2/28/2011 (2,183.33) (96,494.45) P-1123 John Hancock Life Insurance 2126 2/28/2011 16,812.43 743,042.16 P-1124 John Hancock Life Insurance 2127 2/28/2011 2,401.54 106,138.46 P-1125 John Hancock Life Insurance 2128 2/28/2011 19,285.33 852,334.44 P-1126 John Hancock Life Insurance 2130 2/28/2011 32,807.41 1,449,956.29 P-1127 John Hancock Life Insurance 2129 2/28/2011 13,217.51 584,161.07 P-1128 John Hancock Life Insurance 2131 2/28/2011 12,089.21 534,294.73 P-1129 John Hancock Life Insurance 2132 2/28/2011 8,885.70 392,712.40 P-1130 John Hancock Life Insurance 2133 2/28/2011 19,594.28 865,988.80 P-1131 John Hancock Life Insurance 2152 2/28/2011 12,968.28 573,146.10 P-1132 John Hancock Life Insurance 2139 2/28/2011 5,891.58 260,384.27 P-1133 John Hancock Life Insurance 2140 2/28/2011 5,923.80 261,808.26 P-1134 John Hancock Life Insurance 2144 2/28/2011 16,999.98 751,331.12 John Hancock Life Insurance 2144 2/28/2011 30.75 1,359.03 P-1135 John Hancock Life Insurance 2157 2/28/2011 15,579.92 688,570.14 P-1136 John Hancock Life Insurance 2196 3/31/2011 15,237.11 665,431.26 P-1137 John Hancock Life Insurance 2197 3/31/2011 13,802.56 602,781.95 P-1138 John Hancock Life Insurance 2198 3/31/2011 5,054.53 220,740.17 P-1139 John Hancock Life Insurance 2199 3/31/2011 2,641.70 115,367.66 P-1140 John Hancock Life Insurance 2207 3/31/2011 14,853.28 648,668.73 P-1141 John Hancock Life Insurance 747 3/31/2011 45,986.76 2,008,322.29 P-1142 John Hancock Life Insurance 2208 3/31/2011 57,606.21 2,515,764.00 P-1143 John Hancock Life Insurance 2211 3/31/2011 5,215.58 227,773.51 P-1144 John Hancock Life Insurance 2212 3/31/2011 5,283.40 230,735.32 P-1145 John Hancock Life Insurance 2213 3/31/2011 25,699.67 1,122,349.56 P-1146 John Hancock Life Insurance 2214 3/31/2011 146,447.82 6,395,632.58 John Hancock Life Insurance 2214 3/31/2011 71,597.77 3,126,799.91 John Hancock Life Insurance 2214 3/31/2011 16,040.25 700,505.79 John Hancock Life Insurance 2214 3/31/2011 14,392.31 628,537.36 John Hancock Life Insurance 2214 3/31/2011 5,666.66 247,472.96 John Hancock Life Insurance 2214 3/31/2011 3,834.81 167,472.86 John Hancock Life Insurance 2214 3/31/2011 (2,183.33) (95,349.84) P-1147 John Hancock Life Insurance 2215 3/31/2011 16,810.78 734,156.18 P-1148 John Hancock Life Insurance 2216 3/31/2011 2,401.81 104,891.25 P-1149 John Hancock Life Insurance 2217 3/31/2011 17,079.65 745,898.20 P-1150 John Hancock Life Insurance 2218 3/31/2011 12,582.45 549,497.61 P-1151 John Hancock Life Insurance 2219 3/31/2011 33,018.84 1,441,990.53 P-1152 John Hancock Life Insurance 2220 3/31/2011 16,389.53 715,759.46 P-1153 John Hancock Life Insurance 2221 3/31/2011 8,885.70 388,054.07 P-1154 John Hancock Life Insurance 2222 3/31/2011 18,580.34 811,435.96 P-1155 John Hancock Life Insurance 2241 3/31/2011 12,968.28 566,347.48 P-1156 John Hancock Life Insurance 2228 3/31/2011 5,203.34 227,238.96 P-1157 John Hancock Life Insurance 2229 3/31/2011 5,923.80 258,702.71 P-1158 John Hancock Life Insurance 2233 3/31/2011 16,999.98 742,418.88 John Hancock Life Insurance 2233 3/31/2011 1,617.67 70,646.48 P-1159 John Hancock Life Insurance 2246 3/31/2011 21,007.74 917,444.77 P-1160 John Hancock Life Insurance 2287 4/29/2011 15,609.98 679,096.57 P-1161 John Hancock Life Insurance 2288 4/29/2011 13,370.34 581,663.27 P-1162 John Hancock Life Insurance 2289 4/29/2011 5,054.72 219,900.54 P-1163 John Hancock Life Insurance 2290 4/29/2011 2,641.70 114,924.52 P-1164 John Hancock Life Insurance 2298 4/29/2011 14,858.59 646,408.10 P-1165 John Hancock Life Insurance 2299 4/29/2011 47,858.25 2,082,025.31 P-1166 John Hancock Life Insurance 2300 4/29/2011 58,314.74 2,536,924.45 P-1167 John Hancock Life Insurance 2303 4/29/2011 5,433.08 236,360.71 P-1168 John Hancock Life Insurance 2304 4/29/2011 5,291.66 230,208.38 P-1169 John Hancock Life Insurance 2305 4/29/2011 27,514.85 1,197,006.03 P-1170 John Hancock Life Insurance 2306 4/29/2011 143,719.76 6,252,384.44 John Hancock Life Insurance 2306 4/29/2011 69,577.80 3,026,912.61 John Hancock Life Insurance 2306 4/29/2011 16,666.74 725,069.86 John Hancock Life Insurance 2306 4/29/2011 14,537.11 632,422.43 John Hancock Life Insurance 2306 4/29/2011 5,666.66 246,522.38 John Hancock Life Insurance 2306 4/29/2011 3,962.31 172,376.33 John Hancock Life Insurance 2306 4/29/2011 (2,183.33) (94,983.59) P-1171 John Hancock Life Insurance 2307 4/29/2011 16,706.37 726,793.92 P-1172 John Hancock Life Insurance 2308 4/29/2011 2,401.54 104,476.60 P-1173 John Hancock Life Insurance 2309 4/29/2011 24,083.20 1,047,715.53 P-1174 John Hancock Life Insurance 2311 4/29/2011 33,965.86 1,477,650.77 P-1175 John Hancock Life Insurance 2310 4/29/2011 13,208.47 574,621.28 P-1176 John Hancock Life Insurance 2312 4/29/2011 14,118.63 614,216.88 P-1177 John Hancock Life Insurance 2313 4/29/2011 8,885.70 386,563.49 P-1178 John Hancock Life Insurance 2314 4/29/2011 16,810.78 731,336.17 P-1179 John Hancock Life Insurance 2333 4/29/2011 12,968.28 564,172.05 P-1180 John Hancock Life Insurance 2320 4/29/2011 5,873.33 255,513.35 P-1181 John Hancock Life Insurance 2321 4/29/2011 5,923.80 257,709.00 P-1182 John Hancock Life Insurance 2325 4/29/2011 14,166.65 616,305.94 John Hancock Life Insurance 2325 4/29/2011 27.69 1,204.63 P-1183 John Hancock Life Insurance 2338 4/29/2011 15,028.55 653,802.04 P-1220 John Hancock Life Insurance 2120 2/28/2011 19,562.57 864,587.34 P-1221 John Hancock Life Insurance 2121 2/28/2011 17,211.65 760,686.08 P-1222 John Hancock Life Insurance 2145 2/28/2011 2,500.00 110,490.00 P-1223 John Hancock Life Insurance 2209 3/31/2011 19,348.76 844,994.21 P-1224 John Hancock Life Insurance 2210 3/31/2011 15,856.19 692,467.57 P-1225 John Hancock Life Insurance 2234 3/31/2011 2,500.00 109,179.38 P-1226 John Hancock Life Insurance 2301 4/29/2011 18,281.55 795,320.55 P-1227 John Hancock Life Insurance 2302 4/29/2011 19,041.83 828,395.77 P-1228 John Hancock Life Insurance 2326 4/29/2011 2,500.00 108,760.00 P-1229 John Hancock Life Insurance 2163 2/28/2011 79,890.07 3,530,821.53 P-1230 John Hancock Life Insurance 2254 3/31/2011 79,855.92 3,487,447.77 P-1231 John Hancock Life Insurance 2347 4/29/2011 80,368.71 3,496,350.73 subtotal 2,244,592.43 98,286,042.83 Total First Quarter of CY 2011 2,776,391.11 121,569,821.83 Second Quarter of CY 2011 P-1504 Manulife (International) Ltd. 2348 5/30/2011 45,479.04 1,946,502.87 P-1505 Manulife (International) Ltd. 2349 5/30/2011 106,126.36 4,542,208.41 P-1506 Manulife (International) Ltd. 2350 5/30/2011 41,140.63 1,760,818.86 P-1507 Manulife (International) Ltd. 2445 6/30/2011 49,576.81 2,139,144.81 P-1508 Manulife (International) Ltd. 2446 6/30/2011 98,118.26 4,233,615.41 P-1509 Manulife (International) Ltd. 2447 6/30/2011 40,514.73 1,748,133.37 P-1510 Manulife (International) Ltd. 2549 7/29/2011 49,453.12 2,144,847.66 P-1511 Manulife (International) Ltd. 2550 7/29/2011 101,993.63 4,423,599.66 P-1512 Manulife (International) Ltd. 2551 7/29/2011 40,950.65 1,776,084.27 subtotal 573,353.23 24,714,955.32 P-1385 Manulife Singapore Pte. Ltd. 2354 5/30/2011 173.99 7,446.83 subtotal 173.99 7,446.83 P-1394 Manulife Asset Management 2417 5/30/2011 12,150.00 520,020.00 (Hong Kong) Limited P-1395 Manulife Asset Management 2512 6/30/2011 12,150.00 524,249.31 (Hong Kong) Limited P-1396 Manulife Asset Management 2617 7/29/2011 12,150.00 526,961.70 (Hong Kong) Limited subtotal 36,450.00 1,571,231.01 P-1397 John Hancock Life Insurance 2381 5/30/2011 15,609.98 668,107.14 P-1398 John Hancock Life Insurance 2382 5/30/2011 12,968.34 555,044.95 P-1399 John Hancock Life Insurance 2383 5/30/2011 5,054.67 216,339.88 P-1400 John Hancock Life Insurance 2384 5/30/2011 2,641.70 113,064.76 P-1401 John Hancock Life Insurance 2392 5/30/2011 16,092.78 688,770.98 P-1402 John Hancock Life Insurance 2394 5/30/2011 56,102.54 2,401,188.71 P-1403 John Hancock Life Insurance 2397 5/30/2011 4,968.08 212,633.82 P-1404 John Hancock Life Insurance 2398 5/30/2011 5,283.40 226,129.52 P-1405 John Hancock Life Insurance 2399 5/30/2011 25,699.03 1,099,918.48 P-1406 John Hancock Life Insurance 2400 5/30/2011 140,831.88 6,027,604.46 John Hancock Life Insurance 2400 5/30/2011 68,896.05 2,948,750.94 John Hancock Life Insurance 2400 5/30/2011 17,241.02 737,915.66 John Hancock Life Insurance 2400 5/30/2011 14,533.11 622,017.11 John Hancock Life Insurance 2400 5/30/2011 5,666.66 242,533.05 John Hancock Life Insurance 2400 5/30/2011 3,617.31 154,820.87 John Hancock Life Insurance 2400 5/30/2011 (2,183.33) (93,446.52) P-1407 John Hancock Life Insurance 2401 5/30/2011 16,812.29 719,566.01 P-1408 John Hancock Life Insurance 2402 5/30/2011 2,401.54 102,785.91 P-1409 John Hancock Life Insurance 2403 5/30/2011 23,844.87 1,020,560.44 P-1410 John Hancock Life Insurance 2404 5/30/2011 13,214.50 565,580.60 P-1411 John Hancock Life Insurance 2405 5/30/2011 31,895.39 1,365,122.69 P-1412 John Hancock Life Insurance 2406 5/30/2011 15,003.65 642,156.22 P-1413 John Hancock Life Insurance 2407 5/30/2011 8,885.70 380,307.96 P-1414 John Hancock Life Insurance 2408 5/30/2011 16,810.78 719,501.38 P-1415 John Hancock Life Insurance 2431 5/30/2011 12,968.28 555,042.38 P-1416 John Hancock Life Insurance 2414 5/30/2011 8,420.83 360,411.52 P-1417 John Hancock Life Insurance 2415 5/30/2011 5,923.80 253,538.64 P-1418 John Hancock Life Insurance 2422 5/30/2011 16,666.65 713,332.62 John Hancock Life Insurance 2422 5/30/2011 27.62 1,182.14 P-1419 John Hancock Life Insurance 2436 5/30/2011 15,696.74 671,820.47 P-1420 John Hancock Life Insurance 2476 6/30/2011 16,501.98 712,028.93 P-1421 John Hancock Life Insurance 2477 6/30/2011 13,663.74 589,564.30 P-1422 John Hancock Life Insurance 2478 6/30/2011 3,722.39 160,614.02 P-1423 John Hancock Life Insurance 2479 6/30/2011 3,081.98 132,981.55 P-1424 John Hancock Life Insurance 2487 6/30/2011 16,105.90 694,938.84 P-1425 John Hancock Life Insurance 2488 6/30/2011 54,614.18 2,356,497.60 P-1426 John Hancock Life Insurance 2489 6/30/2011 55,943.15 2,413,840.12 P-1427 John Hancock Life Insurance 2492 6/30/2011 4,803.08 207,243.73 P-1428 John Hancock Life Insurance 2493 6/30/2011 5,283.40 227,968.62 P-1429 John Hancock Life Insurance 2494 6/30/2011 24,839.86 1,071,792.54 P-1430 John Hancock Life Insurance 2495 6/30/2011 141,672.40 6,112,893.59 John Hancock Life Insurance 2495 6/30/2011 72,053.17 3,108,956.73 John Hancock Life Insurance 2495 6/30/2011 17,755.64 766,121.97 John Hancock Life Insurance 2495 6/30/2011 14,289.19 616,551.27 John Hancock Life Insurance 2495 6/30/2011 5,666.66 244,505.56 John Hancock Life Insurance 2495 6/30/2011 3,602.31 155,432.80 John Hancock Life Insurance 2495 6/30/2011 (2,183.33) (94,206.52) P-1431 John Hancock Life Insurance 2496 6/30/2011 16,467.70 710,549.82 P-1432 John Hancock Life Insurance 2497 6/30/2011 2,401.54 103,621.87 P-1433 John Hancock Life Insurance 2498 6/30/2011 17,411.19 751,259.61 P-1434 John Hancock Life Insurance 2500 6/30/2011 32,603.11 1,406,761.95 P-1435 John Hancock Life Insurance 2499 6/30/2011 15,031.48 648,579.67 P-1436 John Hancock Life Insurance 2501 6/30/2011 14,218.59 613,505.01 P-1437 John Hancock Life Insurance 2502 6/30/2011 8,885.70 383,400.99 P-1438 John Hancock Life Insurance 2503 6/30/2011 13,482.89 581,760.96 P-1439 John Hancock Life Insurance 2529 6/30/2011 12,831.05 553,635.31 P-1440 John Hancock Life Insurance 2509 6/30/2011 10,806.93 466,298.40 P-1441 John Hancock Life Insurance 2510 6/30/2011 5,923.80 255,600.66 P-1442 John Hancock Life Insurance 2517 6/30/2011 15,333.33 661,603.92 John Hancock Life Insurance 2517 6/30/2011 1,677.87 72,396.89 P-1443 John Hancock Life Insurance 2532 6/30/2011 19,527.53 842,575.64 P-1444 John Hancock Life Insurance 2580 7/29/2011 12,924.63 560,558.44 P-1445 John Hancock Life Insurance 2581 7/29/2011 14,529.34 630,156.85 P-1446 John Hancock Life Insurance 2582 7/29/2011 3,722.39 161,445.02 P-1447 John Hancock Life Insurance 2583 7/29/2011 4,028.63 174,727.05 P-1448 John Hancock Life Insurance 2592 7/29/2011 16,053.87 696,277.75 P-1449 John Hancock Life Insurance 2593 7/29/2011 54,537.45 2,365,361.92 P-1450 John Hancock Life Insurance 2594 7/29/2011 57,425.93 2,490,639.15 P-1451 John Hancock Life Insurance 2595 7/29/2011 18,427.80 799,238.26 P-1452 John Hancock Life Insurance 2596 7/29/2011 16,552.36 717,897.92 P-1453 John Hancock Life Insurance 2597 7/29/2011 4,803.08 208,315.98 P-1454 John Hancock Life Insurance 2598 7/29/2011 5,299.92 229,864.60 P-1455 John Hancock Life Insurance 2599 7/29/2011 24,589.93 1,066,498.05 P-1456 John Hancock Life Insurance 2600 7/29/2011 141,673.97 6,144,588.98 John Hancock Life Insurance 2600 7/29/2011 72,867.92 3,160,378.85 John Hancock Life Insurance 2600 7/29/2011 17,241.02 747,766.03 John Hancock Life Insurance 2600 7/29/2011 14,725.83 638,678.88 John Hancock Life Insurance 2600 7/29/2011 5,666.66 245,770.60 John Hancock Life Insurance 2600 7/29/2011 3,602.31 156,236.99 John Hancock Life Insurance 2600 7/29/2011 (2,183.33) (94,693.93) P-1457 John Hancock Life Insurance 2601 7/29/2011 15,610.01 677,026.95 P-1458 John Hancock Life Insurance 2602 7/29/2011 2,401.54 104,157.99 P-1459 John Hancock Life Insurance 2603 7/29/2011 17,049.88 739,476.03 P-1460 John Hancock Life Insurance 2604 7/29/2011 12,608.09 546,829.67 P-1461 John Hancock Life Insurance 2605 7/29/2011 33,874.27 1,469,172.26 P-1462 John Hancock Life Insurance 2606 7/29/2011 13,766.39 597,066.69 P-1463 John Hancock Life Insurance 2607 7/29/2011 8,885.70 385,384.66 P-1464 John Hancock Life Insurance 2608 7/29/2011 13,950.73 605,061.76 P-1465 John Hancock Life Insurance 2635 7/29/2011 14,540.19 630,627.43 P-1466 John Hancock Life Insurance 2614 7/29/2011 10,806.93 468,710.96 P-1467 John Hancock Life Insurance 2615 7/29/2011 5,923.80 256,923.10 P-1468 John Hancock Life Insurance 2622 7/29/2011 15,333.33 665,026.97 John Hancock Life Insurance 2622 7/29/2011 27.80 1,205.72 P-1469 John Hancock Life Insurance 2638 7/29/2011 17,790.72 771,607.25 P-1470 John Hancock Life Insurance 2540 6/30/2011 78,989.06 3,408,227.14 P-1471 John Hancock Life Insurance 2588 7/29/2011 4,317.46 187,254.00 P-1513 John Hancock Life Insurance 2395 5/30/2011 18,562.80 794,487.84 P-1514 John Hancock Life Insurance 2396 5/30/2011 16,351.90 699,861.32 P-1515 John Hancock Life Insurance 2490 6/30/2011 18,286.05 789,008.15 P-1516 John Hancock Life Insurance 2491 6/30/2011 16,566.98 714,833.56 P-1517 John Hancock Life Insurance 2644 7/29/2011 79,898.05 3,465,284.96 P-1520 John Hancock Life Insurance 2393 5/30/2011 46,689.27 1,998,300.76 P-1521 John Hancock Life Insurance 2444 5/30/2011 83,071.54 3,555,461.91 subtotal 2,251,406.47 97,052,283.61 Total Second Quarter of CY 2011 2,861,383.69 123,345,916.77 Third Quarter of CY 2011 P-1689 Manulife Asset Management 2650 8/31/2011 12,150.00 512,001.00 (Hong Kong) Limited P-1690 Manulife Asset Management 2852 10/30/2011 12,150.00 530,104.50 (Hong Kong) Limited P-1815 Manulife Asset Management 2749 9/30/2011 13,704.31 579,418.23 (Hong Kong) Limited subtotal 38,004.31 1,621,523.73 P-1691 Manulife (International) Ltd. 2645 8/31/2011 48,383.73 2,038,890.56 P-1692 Manulife (International) Ltd. 2645 8/31/2011 41,006.95 1,728,033.81 P-1693 Manulife (International) Ltd. 2647 8/31/2011 102,671.46 4,326,575.27 P-1798 Manulife (International) Ltd. 2744 9/30/2011 46,645.85 1,972,186.58 P-1799 Manulife (International) Ltd. 2745 9/30/2011 41,109.71 1,738,118.67 P-1800 Manulife (International) Ltd. 2746 9/30/2011 107,306.02 4,536,898.63 P-1801 Manulife (International) Ltd. 2847 10/30/2011 47,212.98 2,059,902.48 P-1802 Manulife (International) Ltd. 2848 10/30/2011 45,007.46 1,963,675.66 P-1803 Manulife (International) Ltd. 2849 10/30/2011 108,544.19 4,735,783.06 subtotal 587,888.35 25,100,064.72 P-1694 John Hancock Life Insurance 2715 8/31/2011 15,970.21 672,984.65 P-1695 John Hancock Life Insurance 2716 8/31/2011 14,949.62 629,976.99 P-1696 John Hancock Life Insurance 2717 8/31/2011 4,736.16 199,581.78 P-1697 John Hancock Life Insurance 2718 8/31/2011 3,962.55 166,981.86 P-1698 John Hancock Life Insurance 2719 8/31/2011 2,833.33 119,396.53 P-1699 John Hancock Life Insurance 2720 8/31/2011 17,060.95 718,948.43 P-1700 John Hancock Life Insurance 2721 8/31/2011 53,320.82 2,246,939.35 P-1701 John Hancock Life Insurance 2722 8/31/2011 54,184.62 2,283,339.89 P-1702 John Hancock Life Insurance 2725 8/31/2011 4,968.08 209,354.89 P-1703 John Hancock Life Insurance 2726 8/31/2011 5,945.21 250,531.15 P-1704 John Hancock Life Insurance 2727 8/31/2011 25,514.34 1,075,174.29 P-1705 John Hancock Life Insurance 2728 8/31/2011 140,321.14 5,913,132.84 John Hancock Life Insurance 2728 8/31/2011 65,932.68 2,778,403.14 John Hancock Life Insurance 2728 8/31/2011 13,158.40 554,494.98 John Hancock Life Insurance 2728 8/31/2011 14,469.13 609,729.14 John Hancock Life Insurance 2728 8/31/2011 5,666.66 238,793.05 John Hancock Life Insurance 2728 8/31/2011 3,602.31 151,801.34 John Hancock Life Insurance 2728 8/31/2011 (2,183.33) (92,005.53) P-1706 John Hancock Life Insurance 2730 8/31/2011 2,401.54 101,200.90 P-1707 John Hancock Life Insurance 2731 8/31/2011 24,528.11 1,033,614.56 P-1708 John Hancock Life Insurance 2732 8/31/2011 14,780.11 622,833.84 P-1709 John Hancock Life Insurance 2733 8/31/2011 31,039.90 1,308,021.39 P-1710 John Hancock Life Insurance 2734 8/31/2011 13,918.12 586,509.58 P-1711 John Hancock Life Insurance 2735 8/31/2011 8,885.70 374,443.40 P-1712 John Hancock Life Insurance 2736 8/31/2011 13,940.90 587,469.53 P-1713 John Hancock Life Insurance 2738 8/31/2011 5,923.80 249,628.93 P-1714 John Hancock Life Insurance 2739 8/31/2011 15,999.99 674,239.58 John Hancock Life Insurance 2739 8/31/2011 27.79 1,171.07 P-1715 John Hancock Life Insurance 2740 8/31/2011 13,688.74 576,843.50 P-1716 John Hancock Life Insurance 2741 9/30/2011 17,988.18 758,021.91 P-1717 John Hancock Life Insurance 2817 9/30/2011 15,609.98 659,989.95 P-1718 John Hancock Life Insurance 2818 9/30/2011 14,289.19 604,146.95 P-1719 John Hancock Life Insurance 2819 9/30/2011 6,255.87 264,498.31 P-1720 John Hancock Life Insurance 2820 9/30/2011 3,962.55 167,536.61 P-1721 John Hancock Life Insurance 2822 9/30/2011 17,050.94 720,913.74 P-1722 John Hancock Life Insurance 2823 9/30/2011 54,765.05 2,315,466.50 P-1723 John Hancock Life Insurance 2824 9/30/2011 54,861.07 2,319,526.10 P-1724 John Hancock Life Insurance 2827 9/30/2011 4,863.08 205,611.02 P-1725 John Hancock Life Insurance 2828 9/30/2011 6,317.11 267,087.36 P-1726 John Hancock Life Insurance 2829 9/30/2011 25,897.60 1,094,950.66 P-1727 John Hancock Life Insurance 2830 9/30/2011 139,094.40 5,880,911.20 John Hancock Life Insurance 2830 9/30/2011 68,075.97 2,878,252.05 John Hancock Life Insurance 2830 9/30/2011 14,839.48 627,413.21 John Hancock Life Insurance 2830 9/30/2011 14,289.19 604,146.95 John Hancock Life Insurance 2830 9/30/2011 5,666.66 239,586.38 John Hancock Life Insurance 2830 9/30/2011 2,401.54 101,537.11 John Hancock Life Insurance 2830 9/30/2011 (2,183.33) (92,311.33) P-1728 John Hancock Life Insurance 2831 9/30/2011 16,810.78 710,759.78 P-1729 John Hancock Life Insurance 2832 9/30/2011 2,401.54 101,537.11 P-1730 John Hancock Life Insurance 2833 9/30/2011 30,621.28 1,294,667.56 P-1731 John Hancock Life Insurance 2834 9/30/2011 15,617.98 660,328.28 P-1732 John Hancock Life Insurance 2835 9/30/2011 20,413.09 863,065.45 P-1733 John Hancock Life Insurance 2836 9/30/2011 27,898.84 1,179,562.95 P-1734 John Hancock Life Insurance 2837 9/30/2011 8,885.70 375,687.40 P-1735 John Hancock Life Insurance 2838 9/30/2011 26,364.73 1,114,700.89 P-1736 John Hancock Life Insurance 2839 9/30/2011 13,250.20 560,218.42 P-1737 John Hancock Life Insurance 2840 9/30/2011 9,606.16 406,148.44 P-1738 John Hancock Life Insurance 2841 9/30/2011 5,923.80 250,458.26 P-1739 John Hancock Life Insurance 2842 9/30/2011 15,333.33 648,293.19 John Hancock Life Insurance 2842 9/30/2011 28.14 1,189.76 P-1740 John Hancock Life Insurance 2843 9/30/2011 12,968.28 548,298.88 P-1741 John Hancock Life Insurance 2844 9/30/2011 20,074.72 848,759.21 P-1742 John Hancock Life Insurance 2918 10/30/2011 15,609.98 681,063.43 P-1743 John Hancock Life Insurance 2919 10/30/2011 14,289.19 623,437.36 P-1744 John Hancock Life Insurance 2920 10/30/2011 8,876.36 387,275.68 P-1745 John Hancock Life Insurance 2921 10/30/2011 7,148.20 311,875.98 P-1746 John Hancock Life Insurance 2923 10/30/2011 16,784.10 732,290.37 P-1747 John Hancock Life Insurance 2924 10/30/2011 51,517.23 2,247,696.64 P-1748 John Hancock Life Insurance 2925 10/30/2011 55,394.17 2,416,847.48 P-1749 John Hancock Life Insurance 2926 10/30/2011 18,018.98 786,167.91 P-1750 John Hancock Life Insurance 2927 10/30/2011 16,368.84 714,172.33 P-1751 John Hancock Life Insurance 2928 10/30/2011 5,103.08 222,647.38 P-1752 John Hancock Life Insurance 2929 10/30/2011 5,409.20 236,003.19 P-1753 John Hancock Life Insurance 2931 10/30/2011 136,125.87 5,939,171.69 John Hancock Life Insurance 2931 10/30/2011 71,245.59 3,108,445.10 John Hancock Life Insurance 2931 10/30/2011 14,689.42 640,899.39 John Hancock Life Insurance 2931 10/30/2011 14,289.19 623,437.36 John Hancock Life Insurance 2931 10/30/2011 5,666.66 247,236.38 John Hancock Life Insurance 2931 10/30/2011 3,111.09 135,736.68 John Hancock Life Insurance 2931 10/30/2011 (2,183.33) (95,258.83) P-1754 John Hancock Life Insurance 2932 10/30/2011 16,467.70 718,485.88 P-1755 John Hancock Life Insurance 2933 10/30/2011 2,401.54 104,779.19 P-1756 John Hancock Life Insurance 2934 10/30/2011 28,846.97 1,258,593.08 P-1757 John Hancock Life Insurance 2935 10/30/2011 15,769.43 688,020.36 P-1758 John Hancock Life Insurance 2936 10/30/2011 20,416.62 890,777.30 P-1759 John Hancock Life Insurance 2937 10/30/2011 26,225.09 1,144,200.61 P-1760 John Hancock Life Insurance 2938 10/30/2011 10,296.13 449,220.09 P-1761 John Hancock Life Insurance 2939 10/30/2011 37,566.95 1,639,045.90 P-1762 John Hancock Life Insurance 2940 10/30/2011 11,494.61 501,509.91 P-1763 John Hancock Life Insurance 2941 10/30/2011 8,405.39 366,727.17 P-1764 John Hancock Life Insurance 2942 10/30/2011 5,923.80 258,455.39 P-1765 John Hancock Life Insurance 2943 10/30/2011 15,095.23 658,605.09 John Hancock Life Insurance 2943 10/30/2011 28.04 1,223.36 P-1766 John Hancock Life Insurance 2944 10/30/2011 13,311.36 580,774.47 P-1767 John Hancock Life Insurance 2945 10/30/2011 23,547.17 1,027,362.85 P-1793 John Hancock Life Insurance 2723 8/31/2011 18,290.34 770,754.93 P-1794 John Hancock Life Insurance 2724 8/31/2011 15,725.17 662,658.66 P-1795 John Hancock Life Insurance 2825 9/30/2011 18,286.49 773,152.59 P-1796 John Hancock Life Insurance 2826 9/30/2011 15,893.19 671,964.06 P-1804 John Hancock Life Insurance 2729 8/31/2011 15,610.01 657,805.82 P-1805 John Hancock Life Insurance 2737 8/31/2011 10,686.85 450,343.86 P-1806 John Hancock Life Insurance 2821 9/30/2011 2,833.33 119,793.19 P-1807 John Hancock Life Insurance 2922 10/30/2011 2,833.33 123,618.19 P-1808 John Hancock Life Insurance 2950 10/30/2011 76,780.19 3,349,919.69 P-2322 John Hancock Life Insurance 2930 10/30/2011 26,174.61 1,141,998.19 P-2323 John Hancock Life Insurance 2946 10/30/2011 3,162.88 137,996.50 subtotal 2,179,326.92 93,131,427.16 Total Third Quarter of CY 2011 2,805,219.58 119,853,015.61 Fourth Quarter of CY 2011 P-1984 Manulife Singapore Pte. Ltd. 3227 1/31/2012 1,872.22 82,078.13 subtotal 1,872.22 82,078.13 P-1988 Manulife Asset Management 2959 11/30/2011 12,150.00 529,033.48 (Hong Kong) Limited P-1989 Manulife Asset Management 3116 12/30/2011 12,150.00 530,226.00 (Hong Kong) Limited P-1990 Manulife Asset Management 3229 1/31/2012 12,150.00 532,656.00 (Hong Kong) Limited subtotal 36,450.00 1,591,915.48 P-1991 Manulife (International) Ltd. 3222 12/30/2011 46,349.35 2,031,955.44 P-1992 Manulife (International) Ltd. 3216 12/31/2011 552.00 24,199.68 P-1993 Manulife (International) Ltd. 3217 1/1/2012 2,898.00 127,048.32 P-1994 Manulife (International) Ltd. 3218 1/2/2012 2,898.00 127,048.32 P-1995 Manulife (International) Ltd. 3219 1/3/2012 2,898.00 127,048.32 P-1996 Manulife (International) Ltd. 3220 1/4/2012 3,622.50 158,810.40 P-1997 Manulife (International) Ltd. 3221 1/5/2012 3,622.50 158,810.40 P-2117 Manulife (International) Ltd. 3109 12/30/2011 48,108.08 2,099,436.75 P-2118 Manulife (International) Ltd. 2954 11/30/2011 47,079.64 2,049,934.62 P-2119 Manulife (International) Ltd. 2955 11/30/2011 42,710.81 1,859,707.87 P-2120 Manulife (International) Ltd. 2956 11/30/2011 106,711.46 4,646,414.53 P-2121 Manulife (International) Ltd. 3223 1/31/2012 44,579.30 1,954,356.51 P-2122 Manulife (International) Ltd. 3224 1/31/2012 98,284.37 4,308,786.56 P-2130 Manulife (International) Ltd. 3110 12/30/2011 102,881.98 4,489,769.67 P-2131 Manulife (International) Ltd. 3111 12/30/2011 43,815.80 1,912,121.51 subtotal 597,011.79 26,075,448.90 P-1998 John Hancock Life Insurance 3075 11/30/2011 15,459.88 673,151.80 P-1999 John Hancock Life Insurance 3076 11/30/2011 15,387.88 670,016.96 P-2000 John Hancock Life Insurance 3077 11/30/2011 7,684.94 334,616.50 P-2001 John Hancock Life Insurance 3078 11/30/2011 3,962.55 172,536.76 P-2002 John Hancock Life Insurance 3079 11/30/2011 2,833.33 123,368.43 P-2003 John Hancock Life Insurance 3080 11/30/2011 15,641.45 681,057.50 P-2004 John Hancock Life Insurance 3081 11/30/2011 52,024.89 2,265,259.85 P-2005 John Hancock Life Insurance 3082 11/30/2011 53,254.13 2,318,783.15 P-2006 John Hancock Life Insurance 3083 11/30/2011 19,225.21 837,101.05 P-2007 John Hancock Life Insurance 3084 11/30/2011 14,784.60 643,748.72 P-2008 John Hancock Life Insurance 3085 11/30/2011 5,080.58 221,217.85 P-2009 John Hancock Life Insurance 3086 11/30/2011 5,409.20 235,526.37 P-2010 John Hancock Life Insurance 3087 11/30/2011 26,194.45 1,140,554.70 P-2011 John Hancock Life Insurance 3088 11/30/2011 147,090.75 6,404,603.33 John Hancock Life Insurance 3088 11/30/2011 74,649.65 3,250,384.05 John Hancock Life Insurance 3088 11/30/2011 14,689.42 639,604.52 John Hancock Life Insurance 3088 11/30/2011 14,289.19 622,177.77 John Hancock Life Insurance 3088 11/30/2011 5,666.66 246,736.86 John Hancock Life Insurance 3088 11/30/2011 3,602.31 156,851.24 John Hancock Life Insurance 3088 11/30/2011 (2,183.33) (95,066.37) P-2012 John Hancock Life Insurance 3089 11/30/2011 16,524.88 719,523.95 P-2013 John Hancock Life Insurance 3090 11/30/2011 2,401.54 104,567.49 P-2014 John Hancock Life Insurance 3091 11/30/2011 28,910.56 1,258,819.47 P-2015 John Hancock Life Insurance 3093 11/30/2011 20,413.09 888,823.70 P-2016 John Hancock Life Insurance 3094 11/30/2011 23,302.03 1,014,613.70 P-2017 John Hancock Life Insurance 3095 11/30/2011 10,366.65 451,383.12 P-2018 John Hancock Life Insurance 3096 11/30/2011 45,914.20 1,999,189.30 P-2019 John Hancock Life Insurance 3097 11/30/2011 12,808.21 557,693.30 P-2020 John Hancock Life Insurance 3098 11/30/2011 9,983.52 434,700.81 P-2021 John Hancock Life Insurance 3099 11/30/2011 8,119.49 353,537.72 P-2022 John Hancock Life Insurance 3100 11/30/2011 4,442.85 193,449.91 P-2023 John Hancock Life Insurance 3101 11/30/2011 15,968.24 695,286.90 John Hancock Life Insurance 3101 11/30/2011 27.94 1,216.58 P-2024 John Hancock Life Insurance 3102 11/30/2011 15,850.12 690,143.55 P-2025 John Hancock Life Insurance 3103 11/30/2011 24,961.90 1,086,887.30 P-2026 John Hancock Life Insurance 3104 11/30/2011 2,659.70 115,808.26 P-2027 John Hancock Life Insurance 3184 12/30/2011 16,322.94 712,333.01 P-2028 John Hancock Life Insurance 3185 12/30/2011 13,927.35 607,789.73 P-2029 John Hancock Life Insurance 3186 12/30/2011 7,577.52 330,683.15 P-2030 John Hancock Life Insurance 3187 12/30/2011 14,956.16 652,686.78 P-2031 John Hancock Life Insurance 3188 12/30/2011 4,587.30 200,189.61 P-2032 John Hancock Life Insurance 3189 12/30/2011 14,451.10 630,645.97 P-2033 John Hancock Life Insurance 3190 12/30/2011 51,914.84 2,265,563.66 P-2034 John Hancock Life Insurance 3191 12/30/2011 53,019.88 2,313,787.76 P-2035 John Hancock Life Insurance 3192 12/30/2011 21,871.36 954,466.10 P-2036 John Hancock Life Insurance 3193 12/30/2011 14,130.05 616,635.26 P-2037 John Hancock Life Insurance 3194 12/30/2011 5,163.08 225,316.81 P-2038 John Hancock Life Insurance 3195 12/30/2011 4,717.32 205,863.91 P-2039 John Hancock Life Insurance 3196 12/30/2011 25,862.10 1,128,622.26 P-2040 John Hancock Life Insurance 3197 12/30/2011 150,779.70 6,580,026.27 John Hancock Life Insurance 3197 12/30/2011 70,057.68 3,057,316.96 John Hancock Life Insurance 3197 12/30/2011 14,689.42 641,046.29 John Hancock Life Insurance 3197 12/30/2011 14,289.19 623,580.25 John Hancock Life Insurance 3197 12/30/2011 5,666.66 247,293.04 John Hancock Life Insurance 3197 12/30/2011 3,602.31 157,204.81 John Hancock Life Insurance 3197 12/30/2011 (2,183.33) (95,280.67) P-2041 John Hancock Life Insurance 3198 12/30/2011 16,810.78 733,622.44 P-2042 John Hancock Life Insurance 3199 12/30/2011 2,401.54 104,803.21 P-2043 John Hancock Life Insurance 3200 12/30/2011 29,053.20 1,267,881.75 P-2044 John Hancock Life Insurance 3201 12/30/2011 2,401.54 104,803.21 P-2045 John Hancock Life Insurance 3202 12/30/2011 20,788.59 907,214.21 P-2046 John Hancock Life Insurance 3203 12/30/2011 22,395.83 977,354.21 P-2047 John Hancock Life Insurance 3204 12/30/2011 10,366.65 452,400.61 P-2048 John Hancock Life Insurance 3205 12/30/2011 39,464.66 1,722,237.83 P-2049 John Hancock Life Insurance 3206 12/30/2011 18,345.29 800,588.24 P-2050 John Hancock Life Insurance 3207 12/30/2011 9,510.07 415,019.54 P-2051 John Hancock Life Insurance 3208 12/30/2011 8,405.39 366,811.22 P-2052 John Hancock Life Insurance 3209 12/30/2011 4,442.85 193,885.97 P-2053 John Hancock Life Insurance 3210 12/30/2011 15,333.33 669,146.52 John Hancock Life Insurance 3210 12/30/2011 124.04 5,412.95 P-2054 John Hancock Life Insurance 3211 12/30/2011 14,697.38 641,393.84 P-2055 John Hancock Life Insurance 3212 12/30/2011 24,057.41 1,049,865.20 P-2056 John Hancock Life Insurance 3213 12/30/2011 2,659.70 116,069.31 P-2057 John Hancock Life Insurance 3298 1/31/2012 14,905.89 653,474.36 P-2058 John Hancock Life Insurance 3299 1/31/2012 12,968.34 568,532.15 P-2059 John Hancock Life Insurance 3300 1/31/2012 7,464.93 327,262.49 P-2060 John Hancock Life Insurance 3301 1/31/2012 3,962.55 173,718.19 P-2061 John Hancock Life Insurance 3302 1/31/2012 5,666.66 248,426.37 P-2062 John Hancock Life Insurance 3303 1/31/2012 14,494.27 635,428.80 P-2063 John Hancock Life Insurance 3304 1/31/2012 53,234.19 2,333,786.89 P-2064 John Hancock Life Insurance 3305 1/31/2012 56,039.26 2,456,760.97 P-2065 John Hancock Life Insurance 3306 1/31/2012 20,749.07 909,639.14 P-2066 John Hancock Life Insurance 3307 1/31/2012 15,678.43 687,342.28 P-2067 John Hancock Life Insurance 3309 1/31/2012 5,283.40 231,624.26 P-2068 John Hancock Life Insurance 3310 1/31/2012 25,593.28 1,122,009.37 P-2069 John Hancock Life Insurance 3311 1/31/2012 157,370.77 6,899,134.59 John Hancock Life Insurance 3311 1/31/2012 72,534.25 3,179,901.41 John Hancock Life Insurance 3311 1/31/2012 15,890.19 696,625.93 John Hancock Life Insurance 3311 1/31/2012 15,484.24 678,829.29 John Hancock Life Insurance 3311 1/31/2012 5,666.66 248,426.37 John Hancock Life Insurance 3311 1/31/2012 3,602.31 157,925.27 John Hancock Life Insurance 3311 1/31/2012 (2,183.33) (95,717.33) P-2070 John Hancock Life Insurance 3312 1/31/2012 16,810.78 736,984.60 P-2071 John Hancock Life Insurance 3313 1/31/2012 2,401.54 105,283.51 P-2072 John Hancock Life Insurance 3314 1/31/2012 27,801.10 1,218,800.12 P-2073 John Hancock Life Insurance 3315 1/31/2012 2,401.54 105,283.51 P-2074 John Hancock Life Insurance 3316 1/31/2012 19,157.34 839,857.82 P-2075 John Hancock Life Insurance 3317 1/31/2012 31,255.10 1,370,223.46 P-2076 John Hancock Life Insurance 3318 1/31/2012 10,366.65 454,473.94 P-2077 John Hancock Life Insurance 3319 1/31/2012 43,659.87 1,914,048.55 P-2078 John Hancock Life Insurance 3320 1/31/2012 16,810.78 736,984.60 P-2079 John Hancock Life Insurance 3321 1/31/2012 8,645.52 379,019.60 P-2080 John Hancock Life Insurance 3322 1/31/2012 7,204.62 315,850.54 P-2081 John Hancock Life Insurance 3323 1/31/2012 4,442.85 194,774.54 P-2082 John Hancock Life Insurance 3324 1/31/2012 15,333.33 672,213.19 John Hancock Life Insurance 3324 1/31/2012 124.04 5,437.76 P-2083 John Hancock Life Insurance 3325 1/31/2012 14,147.21 620,213.89 P-2084 John Hancock Life Insurance 3326 1/31/2012 28,680.49 1,257,352.80 P-2085 John Hancock Life Insurance 3327 1/31/2012 4,508.89 197,669.74 P-2086 John Hancock Life Insurance 3215 12/30/2011 83,591.45 3,647,930.88 P-2123 John Hancock Life Insurance 3092 11/30/2011 2,401.54 104,567.49 P-2124 John Hancock Life Insurance 3108 11/30/2011 87,463.40 3,808,318.24 P-2133 John Hancock Life Insurance 3308 1/31/2012 6,228.85 273,072.78 P-2326 John Hancock Life Insurance 3011 1/31/2012 93,337.04 4,091,895.83 subtotal 2,515,242.83 109,855,545.54 Total Fourth Quarter of CY 2011 3,150,576.84 137,604,988.05 Grand Total CY 2011 11,593,571.21 502,373,742.26 ============ ============ However, the following gross receipts totaling P22,826,883.17, which were not properly supported by VAT zero-rated ORs as found by the ICPA, shall be deducted from the above gross receipts of P502,373,742.26: ICPA's Findings 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Supported by zero-rated OR issued in the name of the customer's department 37 John Hancock Life Insurance P5,114,880.90 P6,463,475.83 P2,878,530.24 P3,912,885.74 P18,369,772.71 Subtotal P5,114,880.90 P6,463,475.83 P2,878,530.24 P3,912,885.74 P18,369,772.71 Excess amount of the zero- rated receipts per petitioner's claim over the zero-rated receipts per OR 38 John Hancock Life Insurance P66,652.02 P1,478,050.49 P210,224.75 P58,818.81 P1,813,746.07 Manulife Asset Management - - 65,716.23 - 65,716.23 (Hong Kong) Limited Manulife (International) Ltd. - - - 2,577,648.16 2,577,648.16 Subtotal P66,652.02 P1,478,050.49 P275,940.98 P2,636,466.97 P4,457,110.46 Total Disallowances per ICPA's Findings P5,181,532.92 P7,941,526.32 P3,154,471.22 P6,549,352.71 P22,826,883.17 ============ ============ ============ ============ ============= In addition, the Court noted that OR Nos. 2540 and 3215, per schedule, in the amounts of US$78,989.06 and US$83,591.45, respectively, were not the ORs actually submitted by petitioner per marked exhibits. Further, OR No. 3111 in the amount of US$43,815.80 was issued not in the name of petitioner's client. Hence, the corresponding gross receipts shall also be denied VAT zero-rating, detailed as follows: Amount in Amount in OR No. US$ PhP Findings OR per schedule was not the OR actually submitted by petitioner per marked exhibit For the 2nd Quarter of CY 2011 John Hancock Life Insurance 2540 78,989.06 3,408,227.14 Payment received from (Exhibit No. P-1470) Manulife Canadian Division in the amount of US$38,950.47 per OR No. 2356 For the 4th Quarter of CY 2011 John Hancock Life Insurance 3215 83,591.45 3,647,930.88 Payment received from (Exhibit No. P-2086) Manulife Canadian Division in the amount of US$17,421.46 per OR No. 2953 OR issued was not in the name of petitioner's client For the 4th Quarter of CY 2011 Manulife (International) Ltd. 3111 43,815.80 1,912,121.51 Payment Received from (Exhibit No. P-2131) Hong Kong Operations in the amount of US$102,881.98 Total 206,396.31 8,968,279.53 =========== =========== Likewise, as per verification of the bank statements and credit advice, it was also noted that the following sales of petitioner to its non-resident foreign affiliates have no corresponding inward remittances, to wit: Amount in PhP of Zero- Rated Sales Bank without Zero-Rated Zero-Rated Inward Statement/ Corresponding Sales Sales Remittance Credit Difference Inward OR (in US$) (in PhP) (in US$) Advice (d) Remittance Customer No. (a) (b) (c) (Exh. No.) (a - c) [b x (d / a)] First Quarter of CY 2011 Manulife (International) Ltd. 2075 48,277.34 2,133,665.32 Manulife (International) Ltd. 2076 88,717.54 3,920,960.56 136,994.88 6,054,625.88 123,754.36 P-2135 13,240.52 585,178.20 Manulife (International) Ltd. 2077 35,335.77 1,561,699.87 31,900.93 P-2136 3,434.84 151,806.37 Manulife (International) Ltd. 2164 45,124.60 1,970,670.14 Manulife (International) Ltd. 2165 92,755.83 4,050,809.61 137,880.43 6,021,479.75 123,935.00 P-2137 13,945.43 609,021.34 Manulife (International) Ltd. 2166 35,756.58 1,561,552.40 32,345.46 P-2138 3,411.12 148,969.58 Manulife (International) Ltd. 2255 46,655.57 2,029,703.92 Manulife (International) Ltd. 2256 99,306.40 4,320,225.67 145,961.97 6,349,929.59 130,972.15 P-2139 14,989.82 652,117.13 Manulife (International) Ltd. 2257 39,665.05 1,725,588.47 - - 39,665.05 1,725,588.47 Subtotal 531,594.69 23,274,875.95 442,907.90 - 88,686.79 3,872,681.09 Manulife Singapore Pte. Ltd. 2081 22.39 989.35 Manulife Singapore Pte. Ltd. 2170 76.98 3,362.04 99.37 4,351.39 94.37 P-2279 5.00 218.95 Manulife Singapore Pte. Ltd. 2261 104.63 4,551.65 78.63 P-2139 26.00 1,131.06 Subtotal 204.00 8,903.04 173.40 31.00 1,350.01 Total First Qtr of CY 2011 531,798.69 23,283,778.99 443,080.90 88,717.79 3,874,031.10 Second Quarter of CY 2011 Manulife (International) Ltd. 2348 45,479.04 1,946,502.87 Manulife (International) Ltd. 2349 106,126.36 4,542,208.41 151,605.40 6,488,711.28 135,703.58 P-2142 15,901.82 680,597.91 Manulife (International) Ltd. 2445 49,576.81 2,139,144.81 Manulife (International) Ltd. 2446 98,118.26 4,233,615.41 Manulife (International) Ltd. 2447 40,514.73 1,748,133.37 188,209.80 8,120,893.59 132,313.32 P-2282 55,896.48 2,411,826.41 Manulife (International) Ltd. 2549 49,453.12 2,144,847.66 Manulife (International) Ltd. 2550 101,993.63 4,423,599.66 151,446.75 6,568,447.33 151,436.75 P-2283 10.00 433.71 Manulife (International) Ltd. 2551 40,950.65 1,776,084.27 37,027.46 P-2152 3,923.19 170,153.98 Subtotal 532,212.60 22,954,136.47 456,481.11 75,731.49 3,263,012.01 Manulife Singapore Pte. Ltd. 2354 173.99 7,446.83 147.99 P-2142 26.00 1,112.81 Subtotal 173.99 7,446.83 147.99 - 26.00 1,112.81 Total Second Qtr of CY 2011 532,386.59 22,961,583.30 456,629.10 75,757.49 3,264,124.82 Third Quarter of CY 2011 Manulife (International) Ltd. 2645 48,383.73 2,038,890.56 Manulife (International) Ltd. 2647 102,671.46 4,326,575.27 151,055.20 6,365,465.83 15,662.24 P-2153 135,392.96 5,705,459.06 Manulife (International) Ltd. 2849 108,544.19 4,735,783.06 37,108.47 P-2165 71,435.72 3,116,740.50 Total Third Qtr of CY 2011 259,599.39 11,101,248.89 52,770.71 206,828.68 8,822,199.56 Fourth Quarter of CY 2011 Manulife Singapore Pte. Ltd. 3227 1,872.22 82,078.13 - - 1,872.22 82,078.13 Subtotal 1,872.22 82,078.13 - - 1,872.22 82,078.13 Manulife Asset Management 2959 12,150.00 529,033.48 - - 12,150.00 529,033.48 (Hong Kong) Limited Manulife Asset Management 3116 12,150.00 530,226.00 - - 12,150.00 530,226.00 (Hong Kong) Limited Manulife Asset Management (Hong Kong) Limited 3229 12,150.00 532,656.00 - - 12,150.00 532,656.00 Subtotal 36,450.00 1,591,915.48 36,450.00 1,591,915.48 Manulife (International) Ltd. 3222 46,349.35 2,031,955.44 - - 46,349.35 2,031,955.44 Subtotal 46,349.35 2,031,955.44 46,349.35 2,031,955.44 John Hancock Life Insurance 3298 14,905.89 653,474.36 - - 14,905.89 653,474.36 John Hancock Life Insurance 3299 12,968.34 568,532.15 - - 12,968.34 568,532.15 John Hancock Life Insurance 3300 7,464.93 327,262.49 - - 7,464.93 327,262.49 John Hancock Life Insurance 3301 3,962.55 173,718.19 - - 3,962.55 173,718.19 John Hancock Life Insurance 3302 5,666.66 248,426.37 - - 5,666.66 248,426.37 John Hancock Life Insurance 3303 14,494.27 635,428.80 14,494.27 635,428.80 John Hancock Life Insurance 3304 53,234.19 2,333,786.89 - - 53,234.19 2,333,786.89 John Hancock Life Insurance 3305 56,039.26 2,456,760.97 - - 56,039.26 2,456,760.97 John Hancock Life Insurance 3306 20,749.07 909,639.14 - - 20,749.07 909,639.14 John Hancock Life Insurance 3307 15,678.43 687,342.28 - - 15,678.43 687,342.28 John Hancock Life Insurance 3308 6,228.85 273,072.78 - - 6,228.85 273,072.78 John Hancock Life Insurance 3309 5,283.40 231,624.26 - - 5,283.40 231,624.26 John Hancock Life Insurance 3310 25,593.28 1,122,009.37 - - 25,593.28 1,122,009.37 John Hancock Life Insurance 3311 157,370.77 6,899,134.59 - - 157,370.77 6,899,134.59 John Hancock Life Insurance 3311 72,534.25 3,179,901.41 - - 72,534.25 3,179,901.41 John Hancock Life Insurance 3311 15,890.19 696,625.93 - - 15,890.19 696,625.93 John Hancock Life Insurance 3311 15,484.24 678,829.29 - - 15,484.24 678,829.29 John Hancock Life Insurance 3311 5,666.66 248,426.37 - - 5,666.66 248,426.37 John Hancock Life Insurance 3311 3,602.31 157,925.27 - - 3,602.31 157,925.27 John Hancock Life Insurance 3311 (2,183.33) (95,717.33) - - (2,183.33) (95,717.33) John Hancock Life Insurance 3312 16,810.78 736,984.60 - - 16,810.78 736,984.60 John Hancock Life Insurance 3313 2,401.54 105,283.51 - - 2,401.54 105,283.51 John Hancock Life Insurance 3314 27,801.10 1,218,800.12 - - 27,801.10 1,218,800.12 John Hancock Life Insurance 3315 2,401.54 105,283.51 - - 2,401.54 105,283.51 John Hancock Life Insurance 3316 19,157.34 839,857.82 - - 19,157.34 839,857.82 John Hancock Life Insurance 3317 31,255.10 1,370,223.46 - - 31,255.10 1,370,223.46 John Hancock Life Insurance 3318 10,366.65 454,473.94 - - 10,366.65 454,473.94 John Hancock Life Insurance 3319 43,659.87 1,914,048.55 - - 43,659.87 1,914,048.55 John Hancock Life Insurance 3320 16,810.78 736,984.60 - - 16,810.78 736,984.60 John Hancock Life Insurance 3321 8,645.52 379,019.60 - - 8,645.52 379,019.60 John Hancock Life Insurance 3322 7,204.62 315,850.54 - - 7,204.62 315,850.54 John Hancock Life Insurance 3323 4,442.85 194,774.54 - - 4,442.85 194,774.54 John Hancock Life Insurance 3324 15,333.33 672,213.19 - - 15,333.33 672,213.19 John Hancock Life Insurance 3324 124.04 5,437.76 - - 124.04 5,437.76 John Hancock Life Insurance 3325 14,147.21 620,213.89 - - 14,147.21 620,213.89 John Hancock Life Insurance 3326 28,680.49 1,257,352.80 - - 28,680.49 1,257,352.80 John Hancock Life Insurance 3327 4,508.89 197,669.74 - - 4,508.89 197,669.74 Subtotal 764,385.86 33,510,675.71 - - 764,385.86 33,510,675.75 Total Fourth Qtr of CY 2011 849,057.43 37,216,624.76 849,057.43 37,216,624.80 Grand Total CY 2011 2,172,842.09 94,563,235.94 952,480.71 1,220,381.38 53,176,980.28 ============ ============ =========== =========== ============ In sum, petitioner's valid zero-rated receipts for the taxable year 2011 amounted only to P417,401,599.28, computed thus: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Zero-Rated Receipts in PhP John Hancock Life Insurance 98,286,042.83 97,052,283.61 93,131,427.16 105,490,576.90 393,960,330.50 Manulife (International) Ltd. 23,274,875.96 24,714,955.32 25,100,064.72 26,075,448.90 99,165,344.90 Manulife Asset Management - 1,571,231.01 1,621,523.73 1,591,915.48 4,784,670.22 (Hong Kong) Limited Manulife Singapore Pte. Ltd. 8,903.04 7,446.83 - 82,078.13 98,428.00 Total 121,569,821.83 123,345,916.77 119,853,015.61 137,604,988.05 502,373,742.26 Less: Disallowances Per ICPA's Findings Supported by Zero-Rated O.R. issued in the name of the Customer's Department John Hancock Life Insurance 5,114,880.90 6,463,475.83 2,878,530.24 3,912,885.74 18,369,772.71 Excess amount of the zero- rated receipts per petitioner's claim over the zero-rated receipts per OR 39 John Hancock Life Insurance 66,652.02 1,478,050.49 210,224.75 58,818.81 1,813,746.07 Manulife (International) Ltd. - - 65,716.23 - 65,716.23 Manulife Asset Management (Hong Kong) Limited - - - 2,577,648.16 2,577,648.16 subtotal 5,181,532.92 7,941,526.32 3,154,471.22 6,549,352.71 22,826,883.17 Per this Court's Findings OR per schedule was not the OR actual OR per marked Exhibits John Hancock Life Insurance - 3,408,227.14 - 3,647,930.88 7,056,158.02 O.R. issued was not in the name of the petitioner . Manulife (International) Ltd. - - - 1,912,121.51 1,912,121.51 subtotal - 3,408,227.14 - 5,560,052.39 8,968,279.53 Sales without corresponding Inward Remittance John Hancock Life Insurance - - - 33,510,675.75 33,510,675.75 Manulife (International) Ltd. 3,872,681.09 3,263,012.01 8,822,199.56 2,031,955.44 17,989,848.10 Manulife Asset Management - - - 1,591,915.48 1,591,915.48 (Hong Kong) Limited Manulife Singapore Pte. Ltd. 1,350.01 1,112.81 - 82,078.13 84,540.95 subtotal 3,874,031.10 3,264,124.82 8,822,199.56 37,216,624.80 53,176,980.28 Total Disallowances 9,055,564.02 14,613,878.28 11,976,670.78 49,326,029.90 84,972,142.98 Valid and Substantiated 112,514,257.81 108,732,038.49 107,876,344.83 88,278,958.15 417,401,599.28 Zero-Rated Sales ============= ============= ============= ============= ============= Considering that not all of petitioner's declared zero-rated receipts are properly substantiated, only a portion of the claimed input taxes attributable to the substantiated zero-rated receipts can be refunded using the following rate: caITAC Valid Zero-Rated Zero-Rated Rate of Valid Zero- 2011 Receipts Receipts Per VAT Rated Receipts Returns 1st 112,514,257.81 325,131,825.82 34.6057349% 2nd 108,732,038.49 322,609,555.60 33.7039113% 3rd 107,876,344.83 331,372,504.80 32.5544043% 4th 88,278,958.15 366,429,620.13 24.0916545% Total P417,401,599.28 P1,345,543,506.35 ============== =============== After having resolved that petitioner had VAT zero-rated receipts for the four taxable quarters of 2011 in the amount of P417,401,599.28, we shall ascertain the amount of input VAT incurred by petitioner in connection thereto. As stated earlier, petitioner reflected a total amount of P29,668,270.78 allowable input VAT in its Quarterly VAT Returns for taxable year 2011, to wit: Particulars Input VAT Amortization of Input Tax on Capital Goods exceeding P1Million P7,610,074.29 Purchase of Capital Goods not exceeding P1Million 2,150,003.24 Domestic Purchase of Goods (other than Capital Goods) 854,118.51 Domestic Purchase of Services 19,054,074.74 Total Available Input Tax P29,668,270.78 ============ In support of the aforesaid input VAT, petitioner submitted various suppliers' invoices and official receipts 40 which were examined by the ICPA. A review of the ICPA report together with the documents supporting the P22,058,196.49 41 input VAT claim on domestic purchases of goods other than capital goods, domestic purchases of services and capital goods not exceeding P1Million shows that input taxes amounting to P2,964,214.90 should be disallowed for not being properly substantiated by VAT invoices or receipts as prescribed under Sections 110 (A), 113 (A) and (B), 237 and 238 of the NIRC of 1997, as amended, in relation to Sections 4.110-1, 4.110-8 and 4.113-1 of Revenue Regulations (RR) No. 16-05, as amended. Below is the breakdown of the input taxes of P2,964,214.90: 1st 2nd 3rd 4th Findings Quarter Quarter Quarter Quarter Total Domestic purchases of goods other than capital goods 1. Input tax claimed on domestic purchases of goods other than capital goods supported by VAT registered invoices without date indicated 42 379.90 27,091.71 - - 27,471.61 2. Input tax claimed on domestic purchases of goods other than capital goods supported by VAT registered invoices but the amount of VAT is not shown separately in the invoice 43 20,468.99 223.23 158.79 - 20,851.01 3. Input tax claimed on domestic purchases of goods other than capital goods supported by VAT registered invoices dated outside the period of claim 44 116,619.97 - - - 116,619.97 4. Input tax claimed on domestic purchases of services erroneously classified as purchase of goods supported by VAT registered invoice or collection receipts with comment of "not valid as source of input tax" 45 675.00 - 135.00 12,820.39 13,630.39 5. Input tax claimed on domestic purchases of goods other than capital goods supported by other documents such as statement of account, delivery receipt, miscellaneous account charge 46 675.00 4,820.40 3,506.29 8,882.06 17,883.75 6. Input tax claimed on domestic purchases of goods other than capital goods with no supporting documents 47 663.21 - 40.50 2,239.29 2,943.00 subtotal 139,482.07 32,135.34 3,840.58 23,941.74 199,399.73 Domestic Purchases of Services 7. Input tax claimed on purchases of services supported by collection receipts and official receipts. Collection Receipt bore the BIR authority to print and the input VAT is separately shown in the official receipt 48 50,654.06 67,369.71 43,958.61 33,188.80 195,171.18 8. Input tax claimed on domestic purchases of services supported by VAT registered official receipts without date indicated 49 - - 193,310.01 - 193,310.01 9. Input tax claimed on domestic purchases of services supported by VAT registered official receipts but amount of VAT is not shown separately in the official receipt 50 442.37 615.49 5,745.54 316,812.29 323,615.69 10. Input tax claimed on domestic purchases of services supported by VAT registered official receipts dated outside the period of claim. 51 - - - 20,367.24 20,367.24 11. Input tax claimed on domestic purchases of services supported by VAT registered official receipt or collection receipts with comment "not a valid source of input tax" 52 212,793.85 29,745.37 30,821.25 51,959.06 325,319.53 12. Input tax claimed on domestic purchases of services supported by other documents such as statement of account, delivery receipt, miscellaneous account charge, tape receipt 53 1,199.99 - 18,332.62 12,493.27 32,025.88 13. Input tax claimed on domestic purchases of services supported by VAT registered official receipts with "VAT Exempt Sale" indicated in the official receipt 54 - 884.00 1,518.02 304,408.12 306,810.14 14. Input tax claimed on domestic purchases of services with no supporting documents 55 739,261.12 216,951.39 72,756.54 43,333.58 1,072,302.63 subtotal 1,004,351.39 315,565.96 366,442.59 782,562.36 2,468,922.30 Purchases of Capital Goods not exceeding P1Million 15. Input tax claimed on purchases of capital goods not exceeding P1 million supported by TIN VAT invoice but amount of VAT is not shown separately in the invoice 56 - - 3,600.00 - 3,600.00 16. Input tax claimed on purchases of capital goods not exceeding P1 million supported by VAT registered invoices dated outside the period of claim 57 116,541.60 - - - 116,541.60 17. Input tax claimed on purchases of capital goods not exceeding P1 million supported by VAT registered invoice/receipt or collection receipts with comment "not a valid source of input tax" 58 - 135,308.96 39,858.38 - 175,167.34 18. Input tax claimed on purchases of capital goods not exceeding P1 million without supporting documents 59 - - - 583.93 583.93 subtotal 116,541.60 135,308.96 43,458.38 583.93 295,892.87 TOTAL 1,260,375.06 483,010.26 413,741.55 807,088.03 2,964,214.90 =========== =========== =========== =========== =========== In addition to the foregoing exceptions found by the ICPA, this Court, likewise, found that petitioner's input VAT claim on purchase of goods other than capital goods in the amount of P805.71 must be disallowed because the corresponding invoice with serial no. 250235 60 dated November 30, 2010, is outside the period of claim. Hence, out of the P22,058,196.49 input VAT claim on domestic purchases of goods other than capital goods, domestic purchases of services and capital goods not exceeding P1Million, only the amount of P19,093,175.88, as computed below, is duly supported by valid VAT invoices or official receipts in accordance with the existing VAT law and regulations: Domestic Purchases of Purchases of Goods (other Domestic Capital Goods than Capital Purchases of not exceeding Goods) Services 1 million Total Input VAT per Quarterly VAT Returns P854,118.51 P19,054,074.74 P2,150,003.24 P22,058,196.49 Less: Disallowances Per ICPA's findings 199,399.73 2,468,922.30 295,892.87 2,964,214.90 Per this Court's findings 805.71 - - 805.71 Input VAT Properly Substantiated P653,913.07 P16,585,152.44 P1,854,110.37 P19,093,175.88 ============ ============ ============ ============ We now proceed to the substantiation of the P7,610,074.29 amortization of input VAT on capital goods purchases exceeding P1Million which originated from the P18,266,771.54 input tax deferred on capital goods exceeding P1Million from previous quarter and from the P3,221,423.55 input tax on capital goods exceeding P1Million purchased during the four quarters of CY 2011, as shown below: Input Tax Deferred on Capital Goods exceeding P1Million from Previous Quarter P18,266,771.54 Add: Input Tax on Capital Goods exceeding P1Million Purchased during the four quarters of CY 2011 3,221,423.55 Total Unamortized Input Tax on Capital Goods exceeding P1Million P21,488,195.09 Less: Input Tax on Purchases of Capital Goods exceeding P1Million deferred for the succeeding period 13,878,120.81 Amortization of Input Tax on Capital Goods exceeding P1Million P7,610,074.29 ============ Based on the ICPA's report, the P18,266,771.54 input tax deferred on capital goods exceeding P1Million from previous quarter pertains to petitioner's purchases in the years 2006, 2007, 2008, 2009 and 2010. 61 Petitioner failed to present supporting invoices and/or official receipts for the input taxes covering the years 2006 to 2008. 62 While there were invoices and official receipts submitted for the years 2009 and 2010, the same were denied admission by the Court for not being found in the records of the case and for petitioner's failure to submit the originals thereof for comparison. 63 Consequently, the claimed amortization of input VAT from the previous quarters of taxable years 2006 to 2010 shall be denied. As regards the substantiation of the P3,221,423.55 input taxes on purchases of capital goods exceeding P1Million for the taxable year 2011, the ICPA noted the following: 1st 2nd 3rd 4th Findings Quarter Quarter Quarter Quarter Total Input Tax from Purchases of Capital Goods exceeding P1 million For the year 2011 64 1. Input tax claimed on purchases of capital goods exceeding P1 million which are substantiated for VAT purposes: a. Properly supported by VAT REG TIN invoices/receipts 65 P136,014.80 - P907,830.76 - P1,043,845.56 b. Properly supported by TIN VAT invoices/receipts 66 153,091.45 P508,355.27 515,571.43 P137,990.12 1,315,008.27 2. Input tax claimed on purchases of capital goods exceeding P1 million supported by VAT registered invoices and official receipts not dated within the quarter but within the period of claim 67 - 573,772.96 - - 573,772.96 3. Input tax claimed on purchases of capital goods exceeding P1 million supported by VAT registered invoices and official receipts dated outside the period of claim 68 156,719.38 - - - 156,719.38 4. Input tax claimed on purchases of capital goods exceeding P1 million supported by VAT REG TIN invoice with comment of "not a valid source of input tax" 69 - 132,077.38 - - 132,077.38 Total P445,825.63 P1,214,205.61 P1,423,402.19 P137,990.12 P3,221,423.55 ============= ============= ============= ============= ============= From the above findings of the ICPA, the following input taxes in the amount of P288,796.76 shall be disallowed: Taxable Year 2011 1st 2nd 3rd 4th Findings Quarter Quarter Quarter Quarter Total 1. Input tax claimed on purchases of capital goods exceeding 1 million supported by VAT registered invoices and official receipts dated outside the period of claim 70 P156,719.38 - - - P156,719.38 2. Input tax claimed on purchases of capital goods exceeding 1 million supported by VAT REG TIN invoice with comment of "not a valid source of input tax" 71 - P132,077.38 - - 132,077.38 Total P156,719.38 P132,077.38 - - P288,796.76 =========== =========== ========== Thus, out of the P3,221,423.55 input taxes on purchases of capital goods exceeding P1Million for the taxable year 2011, only the amount of P2,932,626.79 was properly substantiated by VAT invoices and official receipts, computed as follows: ICHDca Taxable Year 2011 1st 2nd 3rd 4th Quarter Quarter Quarter Quarter Total Input VAT on capital goods purchases exceeding P1M for the year 2011 P445,825.63 P1,214,205.61 P1,423,402.19 P137,990.12 P3,221,423.55 Less: Disallowances 156,719.38 132,077.38 288,796.76 Properly Substantiated Input VAT on capital goods purchases exceeding P1M for the year 2011 P289,106.25 P1,082,128.23 P1,423,402.19 P137,990.12 P2,932,626.79 ============ ============ ============ =========== ============ Pursuant to Section 110 (A) (2) of the NIRC of 1997, as amended, 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 P1Million, 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 aggregate acquisition cost does not exceed P1 million, the total input taxes shall be allowed as credit/refund in the month of acquisition. Applying the above provisions in the present case, out of the P2,932,626.79 input VAT incurred by petitioner on capital goods exceeding P1Million for the year 2011, only the amount of P378,848.60 is creditable for the year 2011, computed as follows: Date Purchased per Schedules Attached to the Exhibit Allowable Quarterly of Amount of Est. Input Tax for VAT Invoice Purchase Useful Monthly the taxable Returns 72 Supplier /O.R. net of VAT Input Tax Life 73 Amortization period 2011 1st Quarter of 2011 1/25/2011 RDT Jr. Associates, P-954 1,133,456.67 136,014.80 60 2,266.91 27,202.96 Inc. 3/21/2011 Accent Micro P-955 1,275,762.05 153,091.45 48 3,189.41 31,894.05 Technologies, Inc. Subtotal 2,409,218.72 289,106.25 5,456.32 59,097.01 2nd Quarter of 2011 5/13/2011 Accent Micro P-958 4,781,441.31 573,772.96 48 11,953.60 95,628.83 Technologies, Inc. 5/3/2011 Teledatacom Phils., P-957 4,236,293.95 508,355.27 60 8,472.59 67,780.70 Inc. Subtotal 9,017,735.26 1,082,128.23 20,426.19 163,409.53 3rd Quarter of 2011 7/22/2011 Accent Micro P-960 5,298,342.97 635,801.16 48 13,245.86 79,475.14 Technologies, Inc. 7/8/2011 RDT Jr. Associates, P-965-A 2,266,913.33 272,029.60 60 4,533.83 27,202.96 Inc. 7/26/2011 Total Ventures, Inc. P-961-A 1,050,000.00 126,000.00 60 2,100.00 12,600.00 8/16/2011 Hoffsman P-962 1,146,428.58 137,571.43 60 2,292.86 11,464.29 Systematic Designs, Inc. 8/2/2011 Total Ventures, Inc. P-963-A 2,100,000.00 252,000.00 60 4,200.00 21,000.00 Subtotal 11,861,684.88 1,423,402.19 26,372.54 151,742.39 4th Quarter of 2011 11/11/2011 Teledatacom Phils., P-964 1,149,917.64 137,990.12 60 2,299.84 4,599.67 Inc. Subtotal 1,149,917.64 137,990.12 2,299.84 4,599.67 Total 24,438,556.50 2,932,626.78 54,554.89 378,848.60 ============ =========== =========== =========== Therefore, petitioner's properly substantiated input VAT for the four quarters of taxable year 2011 amounted only to P19,472,024.50, computed as follows: ATICcS Particulars 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total In Philippine Pesos Domestic Purchases of 190,608.83 625,108.37 677,394.35 360,998.84 1,854,110.39 Capital Goods not exceeding P1Million Domestic Purchases of 195,303.29 156,377.56 170,167.21 132,065.01 653,913.07 Goods (other than Capital Goods) Domestic Purchases of 11,151,332.79 1,952,569.73 1,130,462.63 2,350,787.29 16,585,152.44 Services Subtotal 11,537,244.91 2,734,055.66 1,978,024.19 2,843,851.14 19,093,175.90 Amortization of Input Tax on Capital Goods exceeding P1Million 59,097.01 163,409.53 151,742.39 4,599.67 378,848.60 Subtotal 59,097.01 163,409.53 151,742.39 4,599.67 378,848.60 Total Input Tax Properly Substantiated 11,596,341.92 2,897,465.19 2,129,766.58 2,848,450.81 19,472,024.50 ============ ============ ============ ============ ============ A portion, however, of the aforementioned substantiated input VAT shall be applied against petitioner's reported output VAT liability for the four taxable quarters of 2011 in the total amount of P410,927.13. Hence, only the remaining input VAT of P19,061,097.37 (P19,472,024.50 less P410,927.13) can be attributed to the entire zero-rated receipts declared by petitioner in the amount of P1,345,543,506.35 and only the input VAT of P6,243,220.30 is attributable to the valid zero-rated receipts of P417,401,599.28, as computed below: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Valid Input VAT P11,596,341.92 P2,897,465.19 P2,129,766.58 P2,848,450.81 P19,472,024.50 Less: Output VAT 14,865.57 236,747.95 30,615.90 128,697.71 410,927.13 Excess Input VAT P11,581,476.35 P2,660,717.24 P2,099,150.68 P2,719,753.10 P19,061,097.37 Multiply by Rate of Substantiated Zero-Rated Receipts 34.6057349% 33.7039113% 32.5544043% 24.0916545% Excess Input VAT Attributable to Valid Zero-Rated Receipts P4,007,855.00 P896,765.78 P683,366.00 P655,233.52 P6,243,220.30 ============ ============ ============ ============ ============ Although the claimed input VAT was carried-over by petitioner in its succeeding Quarterly VAT Returns, 74 the same remained unutilized until it was deducted as "VAT Refund/TCC Claimed" 75 in its Quarterly VAT Return for the first quarter of 2013. Thus, the excess input VAT of P54,288,135.91 76 as of the end of the first quarter of 2013 which was to be carried-over to the succeeding second quarter of 2013 77 no longer included the subject claim. In fine, petitioner has sufficiently proven its entitlement to the refund or issuance of tax credit certificate representing unutilized excess input VAT attributable to its zero-rated receipts for the four taxable quarters of CY 2011 in the amount of P6,243,220.30. cTDaEH 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 favour of petitioner in the reduced amount of SIX MILLION TWO HUNDRED FORTY THREE THOUSAND TWO HUNDRED TWENTY and 30/100 PESOS (P6,243,220.30) , representing petitioner's unutilized excess input VAT attributable to its zero-rated sales/receipts for the four (4) taxable quarters of CY 2011. SO ORDERED . (SGD.) CAESAR A. CASANOVA Associate Justice Juanito C. Castaeda, Jr., J. , concurs. Amelia R. Cotangco-Manalastas, J., is on leave. Footnotes 1. Par. 1, Petition for Review, Docket (Vol. I), p. 14. 2. Pars. 1.5 and 1.6, Stipulation of Facts, Joint Stipulation of Facts and Issues (JSFI), Docket (Vol. II), p. 714. 3. Annex "B" to Petition for Review, Docket (Vol. I), p. 39. 4. Annex "B-1" to Petition for Review, Ibid. , p. 40. 5. No. 13, Facts, Petition for Review, Docket (Vol. I), p. 18. 6. No. 1.8, JSFI, Stipulation of Facts, Docket (Vol. II), p. 714. 7. Par. 14, III. Facts, Petition for Review, Docket (Vol. I), p. 18. 8. Docket (Vol. II), pp. 713-717. 9. Ibid. , pp. 727-732. 10. Id. , pp. 803-830. 11. Id. , pp. 886-887. 12. Should be P52,327,649.40. 13. Should be P73,476,180.24. 14. Should be P45,056,161.56. 15. Should be P52,327,649.40. 16. Should be P331,627,637.30. 17. Petition for Review, Annex "H", Docket (Vol. 1), p. 75; Respondent's Pre-Trial Brief, Part II, Summary of Admitted Facts, par. 3, Docket (Vol. 1), p. 91. 18. Docket (Vol. 1), p. 14. 19. G.R. No. 153205, January 22, 2007. 20. JSFI, Stipulation of Facts, par. 1.4, Docket (Vol. II), p. 713. 21. Exhibit "P-12". 22. Exhibits P-966 to P-2133. 23. Exhibits P-966a to P-2133a. 24. Exhibits "P-45", "P-47", "P-49" and "P-51". 25. Exhibits "P-46", "P-48", "P-50" and "P-52". 26. Exhibits P-2134 to P-2143; P-2279 to P-2283, P-2328 to P-2329. 27. Exhibits P-2144 to P-2182. 28. Exhibit P-65. 29. Exhibit P-65, Annexes 5, 6, 7 and 8. 30. Exhibit P-65, Annexes 9, 10, 11 and 12. 31. Exhibit P-65, Annexes 13, 14, 15 and 16. 32. Exhibit P-65, Annex 17. 33. Difference is due to rounding-off. 34. Difference is due to rounding-off. 35. Exhibit P-2183. 36. Exhibit P-65, Findings and Observations No. 4, p. 7. 37. Exhibit P-65, Annexes 9 to 12. 38. Exhibit P-65, Annexes 13 to 16. 39. Exhibit P-65, Annexes 13 to 16. 40. Exhibits P-66 to P-322, P-66A to P-322A, P-2241, P-2241A, P-323 to P-894, P-323A to P-894A, P-954 to P-965, P-2249 to P-2276. 41. Purchase of Capital Goods not exceeding P1M P2,150,003.24 Domestic Purchase of Goods (other than Capital Goods) 854,118.51 Domestic Purchase of Services 19,054,074.74 Total P22,058,196.49 ============ 42. Exhibit P-65, Annexes 51 and 52. 43. Exhibit P-65, Annexes 53, 54 and 55. 44. Exhibit P-65, Annex 58. 45. Exhibit P-65, Annexes 59, 60 and 61. 46. Exhibit P-65, Annexes 62, 63, 64 and 65. 47. Exhibit P-65, Annexes 66, 67 and 68. 48. Exhibit P-65, Annexes 88, 89, 90 and 91. 49. Exhibit P-65, Annex 105. 50. Exhibit P-65, Annexes 106, 107, 108 and 109. 51. Exhibit P-65, Annex 112. 52. Exhibit P-65, Annexes 113, 114, 115 and 116. 53. Exhibit P-65, Annexes 117, 118 and 119. 54. Exhibit P-65, Annexes 120, 121 and 122. 55. Exhibit P-65, Annexes 123, 124, 125 and 126. 56. Exhibit P-65, Annex 146. 57. Exhibit P-65, Annex 147. 58. Exhibit P-65, Annexes 148 and 149. 59. Exhibit P-65, Annex 150. 60. Exhibit P-72. 61. Exhibit P-65, Findings and Observations No. 6, p. 28. 62. Exhibit P-65, Findings and Observations No. 6, p. 27. 63. Resolution dated July 24, 2014, Docket, Vol. II, pp. 886-887. 64. Exhibit P-65, Annex 151. 65. Exhibit P-65, Annexes 152 and 153. 66. Exhibit P-65, Annexes 154, 155, 156 and 157. 67. Exhibit P-65, Annex 158. 68. Exhibit P-65, Annex 159. 69. Exhibit P-65, Annex 160. 70. Exhibit P-65, Annex 159. 71. Exhibit P-65, Annex 160. 72. Exhibits "P-35", "P-36", "P-38" and "P-39". 73. Per Attached Schedule in the Quarterly VAT Returns. 74. Exhibits P-2218 to P-2222. 75. Exhibit P-2222, line 23D. 76. Exhibit P-2222, line 29, Total Amount Payable (Overpayment). 77. Exhibit P-2223, line 20A.