AIG Shared Services Corporation (Philippines) v. Commissioner of Internal Revenue

THIRD DIVISION [C.T.A. CASE NO. 8850. June 29, 2020.] AIG SHARED SERVICES CORPORATION (PHILIPPINES) [Formerly: CHARTIS TECHNOLOGY AND OPERATIONS MANAGEMENT CORPORATION (PHILIPPINES)] , petitioner , vs. COMMISSIONER OF INTERNAL REVENUE , respondent . DECISION UY , J p : This is a Petition for Review 1 filed on July 23, 2014 by AIG Shared Services Corporation (Philippines) [Formerly: Chartis Technology and Operations Management Corporation (Philippines)], Petitioner , against the Commissioner of Internal Revenue (CIR), Respondent . Petitioner seeks the refund or issuance of tax credit certificates (TCC) in the total amount of P79,682,086.49 representing excess and unutilized input VAT paid for the first to fourth quarters of fiscal year (FY) 2012. THE FACTS Petitioner is a foreign corporation duly registered and authorized by the Securities and Exchange Commission (SEC) under Amended SEC License No. FM00000152 to operate as Regional Operating Headquarters (ROHQ), with principal office address at 46th Floor, 6795 Ayala Avenue corner Rufino St., Makati City, and an extension office at iHub2 Building, North Bridgeway Avenue, Northgate Cyberzone, Filinvest Corporate City, Alabang, Muntinlupa City. 2 Petitioner's former corporate names were American International Underwriters Corporation-Regional Operating Headquarters, AIU Technology and Operations Management Corporation, Chartis Technology and Operations Management Corporation (Philippines). 3 Petitioner is duly registered with the Bureau of Internal Revenue as a VAT-registered entity with Certificate of Tax Registration No. OCN8RC0000059749 and Tax Identification Number (TIN) 001-218-732-000. 4 On the other hand, respondent is the Commissioner of Internal Revenue, who holds office at the 5th Floor, Bureau of Internal Revenue (BIR) National Office Building, Agham Road, Diliman, Quezon City. Respondent is represented in this case by the Legal Division of Revenue Region No. 8 which holds office at the 2/F BIR Regional Office Building, 313 Sen. Gil Puyat Avenue, Makati City, where this Honorable Court's legal processes may be served. 5 Respondent is vested with the power to decide tax cases, including claims for refunds and/or tax credits pursuant to Section 4 of the 1997 National Internal Revenue Code, as amended. 6 For FY 2012, petitioner filed its original and amended quarterly VAT returns on the following dates: Period VAT Return Date of Filing 1st Quarter 2012 Orig. Quarterly VAT Return 7 March 23, 2012 Amended Quarterly VAT Return 8 August 2, 2013 2nd Quarter 2012 Orig. Quarterly VAT Return 9 June 22, 2012 Amended Quarterly VAT Return 10 January 13, 2014 3rd Quarter 2012 Orig. Quarterly VAT Return 11 September 25, 2012 Amended Quarterly VAT Return 12 February 12, 2014 4th Quarter 2012 Orig. Quarterly VAT Return 13 December 21, 2012 Amended Quarterly VAT Return 14 February 20, 2014 On February 27, 2014, petitioner filed with the BIR an administrative claim for refund/tax credit of its excess and unutilized input Value-Added Tax (VAT) for the 1st to 4th quarters of FY ended November 30, 2012 in the amount of P79,682,086.49. 15 It submitted all supporting documents when it filed its administrative claim for refund. There being no action taken by respondent on petitioner's application for VAT refund for its excess/unutilized input VAT for the 1st to 4th quarters of FY 2012, petitioner filed the instant Petition for Review on July 23, 2014. 16 Respondent filed her Answer on September 11, 2014, 17 interposing the following special and affirmative defenses: 1) petitioner's claim for refund is still subject to investigation by the BIR; 2) petitioner failed to demonstrate that the tax was erroneously or illegally collected; 3) taxes paid and collected are presumed to be made in accordance with the laws and regulations, hence, not refundable; 4) it is incumbent upon the petitioner to show that it has complied with Section 204 (C) in relation to Section 229 of the 1997 Tax Code, as amended; 5) petitioner's claim for refund or issuance of tax credit certificate in the amount of P79,682,086.49 as alleged excess and unutilized input VAT paid on purchases of goods and services attributable to its zero-rated sales for the 1st to 4th quarters of FY 2012 was not fully substantiated by proper documents, such as sales invoices, official receipts and others; 6) in an action for tax credit or refund, the burden is upon the taxpayer to prove that he is entitled thereto, and failure to discharge the said burden is fatal to the claim and that claims for refund are construed strictly against the claimant. After the Pre-Trial Conference held on June 11, 2015, 18 the parties filed their Joint Stipulation of Facts and Issues on June 25, 2015. 19 The same was approved by the Court on July 8, 2015. 20 Thereafter, a Pre-Trial Order was issued on August 11, 2015. 21 During trial, petitioner presented Pradeep Bhanotha, 22 Mary Cris Barayuga 23 and the court commissioned Independent Certified Public Accountant (ICPA) Mary Ann C. Capuchino 24 as its witnesses. On February 20, 2017, petitioner filed a Motion [(a) To Admit Supplemental Joint Stipulation of Facts and Exhibit "P-4-a"; and (b) To Remark Exhibits] . 25 Petitioner's Motion was granted on March 9, 2017 and the Supplemental Joint Stipulation of Facts was admitted. 26 For his part, respondent manifested that he will no longer present evidence since there was no report of investigation. 27 Thereafter, petitioner filed its Memorandum 28 on April 12, 2019, without respondent's memorandum despite notice. 29 Hence, the instant case was submitted for Decision on May 9, 2019. 30 Hence, this Decision. THE ISSUE The parties stipulated a sole issue for this Court's resolution, to wit: 31 "Whether petitioner is entitled to the refund/issuance of a tax credit certificate for its input VAT payments for the 1st to 4th quarters of Fiscal Year 2012 in the amount of Seventy-Nine Million Six Hundred Eighty-Two Thousand Eighty-Six Pesos and 49/100 (P79,682,086.49)." Petitioner's arguments: Petitioner argues that it has the requirements and has discharged its burden of proving its entitlement to refund/tax credit of its unutilized input VAT by providing documentary and testimonial evidence to fully support its claim. Hence, petitioner contends that it is entitled to its claim for refund/issuance of tax credit certificate for its excess and unutilized input VAT for the first to fourth quarters of FY 2012. According to petitioner, its sales of services for FY 2012 were VAT-zero rated. Petitioner rendered services to non-resident foreign affiliate-clients engaged in business outside the Philippines; and its services were paid for in US Dollars inwardly remitted to the Philippines and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP). Furthermore, petitioner contends that its output VAT only comprises 0.85% of its total sales. Allegedly, 99.15% of petitioner's sales of services for FY 2012 were VAT zero-rated from which no output VAT can be generated. Petitioner also contends that it paid input VAT for the first to fourth quarters of FY 2012 resulting from its domestic purchases of goods and services and that petitioner's input VAT is directly attributable to its VAT zero-rated sales for the first to fourth quarters of FY 2012. Lastly, petitioner claims that the amount of input VAT claimed for refund/tax credit remains unutilized. Respondent's counter-arguments: In his Answer, respondent counter-argues that petitioner's claim for refund is still subject to investigation by the BIR. Allegedly, petitioner failed to demonstrate that the tax was erroneously or illegally collected. Taxes paid and collected are presumed to be made in accordance with the laws and regulations, hence, not refundable and that it is incumbent upon the petitioner to show that it has complied with Section 204 (C) in relation to Section 229 of the 1997 Tax Code, as amended; Further, respondent contends that petitioner's claim for refund or issuance of tax credit certificate in the amount of P79,682,086.49 as alleged excess and unutilized input VAT paid on purchases of goods and services attributable to its zero-rated sales for the 1st to 4th quarters of FY 2012 was not fully substantiated by proper documents, such as sales invoices, official receipts and others. Finally, respondent stresses that in an action for tax credit or refund, the burden is upon the taxpayer to prove that he is entitled thereto, and failure to discharge the said burden is fatal to the claim. Claims for refund are construed strictly against the claimant, the same partake the nature of exemption from taxation and as such, they are looked upon with disfavor. THE COURT'S RULING After careful and thorough evaluation of the evidence presented by petitioner, the pertinent laws, rules and regulations in the instant case, the Court finds the instant Petition for Review partially meritorious. Requisites for the grant of the refund or issuance of a TCC under the law. Relative to petitioner's claim for refund or tax credit of excess input VAT attributable to zero-rated or effectively zero-rated sales, the provisions of Section 112 of the NIRC of 1997, as amended by RA No. 9337, 32 is instructive, to wit: "SEC. 112. Refunds or Tax Credits of Input Tax . (A) Zero-Rated or Effectively Zero-Rated Sales . Any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however , That in the case of zero-rated sales under Section 106(A)(2)(a)(1), (2) and (b) and Section 108 (B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further , That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods of properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales: Provided, finally , That for a person making sales that are zero-rated under Section 108 (B)(6), the input taxes shall be allocated ratably between his zero-rated and non-zero-rated sales. xxx xxx xxx (C) Period within which Refund or Tax Credit of Input Taxes shall be Made . In proper cases, the Commissioner shall grant a refund or issue a 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." Pursuant to the foregoing provisions, jurisprudence established certain requisites which must be complied with by the taxpayer-applicant to successfully obtain a credit/refund of input VAT. These requisites are categorized as follows: Timeliness of the filing of the administrative and judicial claims : 1. the claim is filed with the BIR within two years after the close of the taxable quarter when the sales were made; 33 2. that in case of full or partial denial of the refund claim, or the failure on the part of the Commissioner to act on the said claim within a period of 120 days, the judicial claim must be filed with this Court, within 30 days from receipt of the decision or after the expiration of the said 120-day period; 34 Taxpayer's registration with the BIR : 3. the taxpayer is a VAT registered person; 35 Taxpayer's output VAT : 4. the taxpayer is engaged in zero-rated or effectively zero-rated sales; 36 5. for zero-rated sales under Section 106(A)(2)(1) and (2); 106(B); and 108(B)(1) and (2), the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with BSP rules and regulations; 37 Taxpayer's input VAT being refunded : 6. the input taxes are not transitional input taxes; 38 7. the input taxes are due or paid; 39 8. the input taxes have not been applied against output taxes during and in the succeeding quarters; 40 and 9. the input taxes claimed are attributable to zero-rated or effectively zero-rated sales. However, where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes cannot be directly and entirely attributable to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume. 41 We shall now proceed to determine petitioner's compliance with the foregoing requisites. Petitioner's administrative and judicial claims were timely filed The first requisite pertains to the filing of the refund claim for credit or refund of input VAT before the BIR. Pursuant to Section 112 (A) of the NIRC of 1997, as amended, the administrative claim for the issuance of a TCC or refund of input VAT must be filed within two (2) years after the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made. In the instant case, petitioner's claims cover four (4) quarters of FY 2012. Counting two years from the end of each quarter for the same year, petitioner had until February 28, 2014, May 31, 2014, August 31, 2014 and November 30, 2014, respectively, within which to file its administrative claims for refund or issuance of tax credit certificate for its input VAT. Thus, petitioner's administrative claims for the said quarters filed on February 27, 2014 were timely filed, as shown below: Taxable Quarter Close of the Taxable Quarter Last Day of Filing of Administrative Claim Date of filing of Administrative Claim 1st Quarter (Dec 2011 to Feb 2012) Feb 29, 2012 February 28, 2014 Feb 27, 2014 2nd Quarter (Mar 2012 to May 2012) May 31, 2012 May 31, 2014 Feb 27, 2014 3rd Quarter (Jun 2012 to Aug 2012) Aug 31, 2012 Aug 31, 2014 Feb 27, 2014 4th Quarter (Sep 2012 to Nov 2012) Nov 30, 2012 Nov 30, 2014 Feb 27, 2014 The second requisite pertains to the timeliness of the judicial claim and is taken from Section 112 (C) of the NIRC of 1997, as amended. The legal provision speaks of two periods: the period of 120 days, which serves as a waiting period to give time for the BIR Commissioner to act on the administrative claim for refund or tax credit; and the period of 30 days which refers to the period for filing a judicial claim with this Court. 42 In this case, counting from the filing of petitioner's administrative claim, together with the supporting documents, on February 27, 2014, respondent had 120 days or until June 27, 2014 to act on the said claim. Considering that respondent did not act on petitioner's claim on or before June 27, 2014, petitioner had until July 27, 2014, the last day of the 30-day period, within which to file its appeal before this Court. Here, petitioner's judicial claim filed on July 23, 2014, was well within the period prescribed by law. Thus, petitioner's administrative and judicial claims were timely filed. Petitioner is VAT registered. The third requisite pertains to the taxpayer's VAT registration. As stipulated by both parties' counsels, petitioner is a VAT-registered taxpayer. 43 Notably, petitioner presented its Certificate of Registration issued by BIR with TIN 001-218-732-000, indicating that it is liable for VAT. 44 Thus, the third requisite has also been complied with. Petitioner's zero-rated or effectively zero-rated sales receipts for FY 2012 amounts to P69,569,626.68 only The Court shall now proceed to determine compliance with the fourth and fifth requisites in the claim for refund of input VAT. In its Amended Quarterly VAT Returns for the four quarters of FY 2012, petitioner declared total sales/receipts P2,259,718,427.90, which included zero-rated sales/receipts of P2,240,430,657.47, to wit: 1st Quarter (Exhibit "P-10") 2nd Quarter (Exhibit "P-12") 3rd Quarter (Exhibit "P-14") 4th Quarter (Exhibit "P-16") Total Vatable Sales/Receipts 6,025,096.20 3,211,974.79 5,075,328.49 4,975,370.95 19,287,770.43 Zero-rated receipts 417,165,029.78 632,957,904.53 636,141,233.77 554,166,489.39 2,240,430,657.47 Total Sales/Receipts 423,190,125.98 636,169,879.32 641,216,562.26 559,141,860.34 2,259,718,427.90 Petitioner avers that its sales of services for FY 2012 were VAT-zero rated. Petitioner submits that as a Regional Operating Headquarters (ROHQ) it is only allowed to perform qualifying services to its non-resident foreign affiliates in the Asia-Pacific Region and in other foreign markets. Allegedly, petitioner rendered services to its non-resident foreign affiliate-clients engaged in business outside the Philippines. Section 108 (B) (1) and (2) of the NIRC of 1997, as amended by RA 9337, provides as follows: "SEC. 108. Value-Added Tax on Sale of Services and Use or Lease of Properties . xxx xxx xxx (B) Transactions Subject to Zero Percent (0%) Rate. The following services performed in the Philippines by VAT-registered persons shall be subject to zero percent (0%) rate: (1) Processing, manufacturing or repacking goods for other persons doing business outside the Philippines which goods are subsequently exported, where the services are paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP); (2) Services other than those mentioned in the preceding paragraph rendered to a person engaged in business conducted outside the Philippines or to a non-resident 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); " (Emphases supplied) Based on the foregoing provision, in order to subject a sale or supply of services to zero (0%) percent VAT, certain requirements must be met under Section 108 (B) (2) of the NIRC of 1997, as amended. First, the recipient of the services must not merely be a foreign corporation, but more importantly, it must be a "nonresident foreign corporation," i.e. , a foreign corporation not engaged in trade or business within the Philippines. 45 Second, the payment for such services should be in acceptable foreign currency accounted for in accordance with BSP rules. 46 Third, the services rendered should be other than "processing, manufacturing or repacking goods" 47 as mentioned under Section 108 (B) (2) of the NIRC of 1997, as amended. Lastly, the services must be performed in the Philippines 48 by a VAT-registered person. Petitioner failed to prove that all of its clients for FY 2012 are non-resident foreign corporations doing business outside the Philippines. Petitioner alleges that it rendered services to non-resident foreign affiliate-clients engaged in business outside the Philippines. And to prove that petitioner's clients are non-resident foreign corporations doing business outside the Philippines for FY 2012, petitioner presented the related Certifications of Non-Registration of Company issued by the Philippine Securities and Exchange Commission (SEC), 49 printed screenshot of the Website of U.S. Securities and Exchange Commission, 50 Certificate of Authentication, 51 Certificate of Business Registration, etc. 52 In Commissioner of Internal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc. (Burmeister case) , 53 the Supreme Court held that the service-recipient must also be not doing business in the Philippines. Otherwise, the transaction will be subject to the VAT at the then rate of 10%, 54 and not at the 0% VAT rate. Thus, in order to sufficiently prove that the service-recipient is a non-resident foreign corporation doing business outside the Philippines, each service-recipient must be supported, at the very least , by both a certificate of non-registration of corporation/partnership issued by the Philippine Securities and Exchange Commission (SEC); and a certificate/articles of foreign incorporation/association. The said basic documents are necessary. This is so because the Philippine SEC's negative certification establishes that the service-recipient has no registered business in the Philippines and that it is not engaged in trade or business within the Philippines. As for the said certificate/articles of incorporation/association, this will prove that the said service-recipient is indeed foreign, and is determinative of whether the same service-recipient is engaged in business at all. Of petitioners List of Zero Rated Customers , 55 only the following alleged service-recipients complied with the above-stated two (2) basic documents, to wit: Foreign Client Name SEC Certificate of Non-Registration Certificate of Registration, Incorporation, Associations, etc. 1 AIG Employee Services, Inc. "P-46" "P-119(a)" 2 AIG General Insurance (Vietnam) Co. Ltd. (Chartis Vietnam Insurance Co. Ltd.) "P-50" "P-122(c)" 3 AIG Global Services (M) SDN BHD "P-51" "P-123(b)" 4 AIG Global Services, Inc. "P-52" "P-124(b)" 5 AIG Kenya Insurance Co. Limited (Chartis Kenya Insurance Co. Ltd.) "P-87" "P-180(a)" 6 AIG Metropolitana CIA De Seguros Y Reaseguros SA "P-56" "P-127(b)" "P-127(c)" "P-127(e)" 7 Chartis UK Services Ltd. (AIG UK Services Ltd.) "P-98" "P-157(c)" 8 American Home Assurance Company, Dubai "P-60" "P-129(b)" 9 American Home Assurance Singapore (Chartis Singapore Insurance PTE Ltd.) "P-62" "P-131(b)" to "P-131(c)" 10 Chartis Europe SA "P-65" "P-134(b) to "P-134(d)" and "P-134(h)" 11 Chartis Insurance Limited Sri Lanka "P-84" "P-147(b)" 12 Chartis Insurance UK Limited "P-85" "P-134(e)" 13 AIG Europe Limited-Ireland (Chartis Europe SA-Ireland) "P-47" "P-134(e)" 14 Chartis New Hampshire Insurance Co. (Pakistan Branch) "P-46" "P-169(d)" "P-169(e)" 15 Chartis Sigorta A.S. "P-92" "P-153(b)" 16 Chartis South Africa Limited "P-93" "P-154(b)" 17 AIG Insurance (Thailand) Public Co. Limited (Chartis Thailand & Universal Insurance Broker) "P-96" "P-182" 18 Chartis Uganda Insurance Co. "P-97" "P-156(a)(c)" 19 Guam Insurance Adjusters, Inc. "P-103" "P-162(a)" 20 Lexington Insurance Co. "P-108" "P-167(b)" 21 TATA AIG Gen. Insurance Co. Ltd. India "P-114" "P-172(b)" to "P172(d)" 22 Chartis Global Services Co. "P-79" "P-178" 23 AIG Shared Services SDN BHD (Chartis Technology & Operations Mgmt SDN BHD) "P-95" "P-155(a)" 24 AIG Japan Holdings Kabushi Kaisha (Chartis Far East Holdings KK) "P-77" "P-477" 25 AIG Southeast Asia Limited (Chartis Southeast Asia Limited) "P-94" "P-181(a)" 26 Chartis International O&S HO "P-86" "P-179" 27 Chartis Asia Pacific PTE LTD. "P-42" "P-176 (a)" to "P-176(f)" Notably, the Court cannot give credence or probative value to the following printed screenshots of foreign government websites database, considering that these can be easily manipulated and that none from the foreign governments attested to the authenticity of the said websites and to the registration of the purported petitioner's foreign clients found therein, to wit: Foreign Client Name SEC Certificate of Non-Registration Entry in the Screenshot of a Government Website 1 AIG Caspian Insurance Company (Chartis Azerbaijan Insurance Company) "P-44" "P-118(a)" 2 AIG Europe SA-Finland (Chartis Europe SA-Finland) "P-48" "P-120(a)" 3 AIG Insurance & Reinsurance Company (CJSC Chartis) "P-54" "P-125(a)" 4 AIG Kazakhstan Insurance Company (Chartis Kazakhstan Insurance Co. JSC) "P-55" "P-126(a)" 5 AIG Ukraine Insurance Company (Chartis Ukraine Insurance Company CJSC) "P-58" "P-128(a)" 6 Chartis Chile Compania Seguros Generales S.A. "P-64" "P-133(a)" can't locate in CD 7 Chartis Egypt Insurance Co. S.A.E. "P-63" "P-132(a)" 8 Chartis Europe SA-Czech Republic "P-66" "P-134(r)" 9 Chartis Europe SA-Denmark "P-68" "P-134(g)" 10 Chartis Europe SA-Italy "P-70" "P-134(n)" 11 Chartis Europe SA-Netherlands "P-74" "P-134(p)" 13 Chartis Europe SA-Sweden "P-75" "P-134(g)" 15 Chartis Insurance Hongkong Limited "P-83" "P-146(a)" can't locate in CD 16 Chartis Seguros Brasil S.A. "P-88" "P-149(a)" 17 Chartis Seguros Colombia S.A. "P-89" "P-150(a)" 18 Chartis Europe SA-Belgium "P-67" "P-134(k)" 19 Chartis Seguros Mexico SA DE C.V. (AIU Mexico) "P-90" "P-151" 20 Chartis Seguros, El Salvador S.A. "P-91" "P-152" 21 Direct DME, Inc. "P-102" "P-161(a)" 22 Health Direct, Inc. "P-104" "P-163(a)" can't locate in CD 23 La Meridional CIA ARG DE Seguros SA "P-106" "P-165(a)" can't locate in CD 24 La Seguridad De Centro America SA "P-107" "P-166(a)" can't locate in CD 25 UZ AIG/UZBEK American Insurance Company (Chartis Uzbekistan) "P-115" "P-173(a)" 26 Venezuela Casai "P-116" "P-174(a)" 27 Chartis Europe SA-France "P-69" "P-134(m)" 28 American Home Assurance Korea "P-61" "P-130(e)" 29 Chartis Insurance Company China Limited (Chartis China) "P-145(a)" can't locate in CD , "P-145(c)", can't locate in CD , "P-145(d)", "P-145(e)" 30 Chartis Europe SA-Spain "P-72" "P-134(o)" 31 Chartis Seguros Mexico SA DE C.V. (AIU Mexico) "P-90" "P-151(a)" 32 UZ AIG/UZBEK American Insurance Company (Chartis Uzbekistan) "P-115" "P-173(c)" 33 Venezuela Casai "P-116" "P-174(a)" The Court did not also consider the following entities as non-resident foreign corporations doing business outside the Philippines for failure of petitioner to submit an English translation of the documents presented before the court. Foreign Client Name SEC Certificate of Non-Registration Documents offered in Petitioner's Amended FOE (Without English Translation) 1 AIG Caspian Insurance Company (Chartis Azerbaijan Insurance Company) "P-44" Certification 56 and Stock certificate 57 2 Chartis Europe SA-Spain "P-72" Company Certification of AIG Europe Limited (Spain Branch) 58 and Company Registration of AIG Europe Limited (Spain Branch) 59 3 Chartis Seguros Mexico SA DE C.V. (AIU Mexico) "P-90" Registration Document 60 4 Chartis Seguros, El Salvador S.A. "P-91" Registration Document 61 5 La Meridional CIA ARG De Seguros SA "P-106" Tax Authorities Registration Form 62 and Annual Report 63 6 La Seguridad De Centro America SA "P-107" Articles of Incorporation 64 7 UZ AIG/UZBEK American Insurance Company (Chartis Uzbekistan) "P-115" License 65 8 Venezuela Casai "P-116" Registration Document 66 Section 33, Rule 132 of the Rules of Court reads as follows: "Section 33. Documentary evidence in unofficial language . Documents written in an unofficial language shall not be admitted as evidence, unless accompanied with a translation into English or Filipino. x x x" In this case, sans any translation in English or Filipino, the same should not have been admitted in evidence; thus their contents could not be given probative value, and deemed to constitute proof of the facts stated therein. 67 Moreover, the following entities cannot be considered as non-resident foreign corporations doing business outside the Philippines, for failure to submit proof of foreign registration and for being supported only by SEC Certification of Non-Registration of Company: Foreign Client Name SEC Certificate of Non-Registration Other Documents 1 AIG Business Partners Kabushi Kaisha (American International Group KK) "P-43" - 2 AIG Europe SA-Poland (Chartis Europe SA-Poland) "P-49" - 3 Chartis US Domestic A&H "P-100" - 4 Chartis US Insurance Company (Chartis US) "P-99" - 5 Private Client Group "P-111" - 6 Specialty Workers Compensation (SWC) "P-113" - 7 AIG Corp HRNY (Chartis Corp HRNY) "P-45" - 8 AIG Global Sourcing and E-Procurement Services "P-53" - 9 AIG Shared Services Corporation-Ireland (Chartis Technology & Operations MGMT-Ireland) "P-57" - 10 AIGT Finance "P-59" - 11 Chartis Insurance Claims "P-81" - 12 Chartis Insurance Operations & Systems "P-80" - 13 Sourcing and Procurement NY "P-112" - Similarly, the Court did not consider the following entities as non-resident foreign corporations doing business outside the Philippines for failure to submit SEC Certifications of Non-Registration of Company and were instead, supported solely by other documents as mentioned herein below: Foreign Client Name SEC Certificate of Non-Registration Documents offered in Petitioner's Amended FOE to prove foreign registration 1 Intercompany Clearing House NY Chartis INTL F&A - Master Service Agreement 68 2 National Union Fire Insurance Company - Entry in the Screenshot of the Website of US SEC 69 and Copy of the Tax Residency Certificate 70 3 Chartis Claims, Inc. - Entry in the Screenshot of the Website of US SEC 71 Furthermore, the following entities cannot be considered as non-resident foreign corporations doing business outside the Philippines because the name of petitioner's foreign client is different from the name indicated in the Philippine SEC Certificates of Non-Registration of Company and the respective document offered by petitioner in its Amended FOE to prove foreign registration: Foreign Client Name SEC Certificate of Non-Registration Documents offered in Petitioner's Amended FOE to prove foreign registration 1 American Home Assurance Korea "P-61" Copy of Certificate of Business Registration 72 2 Chartis Insurance Company China Limited (Chartis China) "P-82" Copy of Enterprise Legal Person Business License 73 and Consularized Certified True Copy of the Business License 74 Lastly, the following entities are not considered by the Court to be non-resident foreign corporations doing business outside the Philippines because petitioner's submitted documents cannot be considered as valid proof of foreign incorporation/registration as they are merely a request or application form prepared by a client-taxpayer and no issuance has been made as a response by the issuing authority. Foreign Client Name SEC Certificate of Non-Registration Documents offered in Petitioner's Amended FOE to prove foreign registration 1 Direct DME, Inc. "P-102" Copy of Form W-9 or Request for Taxpayer Identification Number and Certification 75 2 Health Direct, Inc. "P-104" Copy of Form W-9 or Request for Taxpayer Identification Number and Certification 76 Payment for services were in acceptable foreign currency accounted for in accordance with BSP Rules In relation to the second requirement and to the fifth requisite for the granting of input VAT refund, petitioner presented Certificates of Inward Remittances 77 issued by East West Banking Corporation for the period December 1, 2011 to November 30, 2012 purportedly showing the remittances of the service-recipients to it. The Court finds that the said certifications of inward remittances attests to the fact of payment "in acceptable foreign currency . . . and accounted for in accordance with the rules and regulations of the BSP." 78 Thus, petitioner is considered to have complied with the above-stated the requirement. Corollary thereto, the said foreign currency remittances pursuant to Section 108 (B) (2) of the NIRC, as amended, must be duly supported by VAT zero-rated official receipts (ORs) in accordance with Sections 113 (A) (2), (B) (1), (2) (c) and (3) of the NIRC of 1997, as amended, as implemented by Sections 4.113-1 (A) (2), (B) (1) and (2) (c) of Revenue Regulations ("RR") No. 16-05. The above-mentioned provisions provides that a VAT taxpayer 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, to wit: "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" (Emphasis supplied) "SECTION 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. 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;" (Emphasis supplied) In the instant case, petitioner submitted in evidence Schedule of Zero-Rated Sales, 79 the related VAT zero-rated official receipts (ORs) 80 issued to its alleged non-resident foreign clients and Certificate of Inward Remittances 81 issued by East West Bank. After careful perusal of the aforesaid documents, the Court finds that out of the total declared zero-rated sales/receipts for FY 2012 in the amount of 2,240,430,657.47 (P417,165,029.78 82 + P632,957,904.53 83 + P636,141,233.77 84 + P554,166,489.39), 85 only the amount of P616,305,934.70 (USD17,641,702.32) are duly supported by VAT zero-rated ORs and certification of bank inward remittances, broken down as follows: 1st Quarter of FY 2012 (December 1, 2011 to February 29, 2012) Name of Customer OR No. OR Date Amount in Pesos Amount in USD Exhibit Chartis Asia Pacific PTE LTD 0001295 13-Feb-12 900,270.00 20,995.00 "P-197-001" Chartis Far East Holdings 0001267 21-Dec-11 226,928.00 5,195.00 "P-197-026" AIG Employee Services, Inc. BPOOR-0000628 09-Dec-11 209,472.00 4,800.00 "P-198-004" BPOOR-00000629 09-Dec-11 418,944.00 9,600.00 "P-198-005" BPOOR-00000630 09-Dec-11 313,509.76 7,184.00 "P-198-006" BPOOR-00000670 19-Jan-12 315,648.00 7,200.00 "P-198-003" BPOOR-00000708 08-Feb-12 513,634.24 11,984.00 "P-198-007" AIG Global Services 0001294 10-Feb-12 6,919,003.65 190,353.00 "P-198-008" AIG Metropolitana CIA De Seguros Y Reaseguros SA 0001285 31-Jan-12 74,952.81 1,709.69 "P-198-014" 0001248 01-Dec-11 38,209.00 875.55 "P-198-012" American Home Assurance Company, UAE 0001247 01-Dec-11 3,061,984.89 70,164.64 "P-198-016" Chartis Far East Holdings KK 0001267 21-Dec-11 226,709.80 5,195.00 "P-197-026" 0001291 08-Feb-12 215,484.77 5,026.47 "P-198-062" Chartis Europe SA BPOOR-0000715 09-Feb-12 187,542.26 4,277.88 "P-198-047" BPOOR-0000716 09-Feb-12 191,219.56 4,361.76 "P-198-048" BPOOR-0000717 09-Feb-12 181,194.23 4,133.08 "P-198-049" BPOOR-0000759 29-Feb-12 194,693.25 4,541.48 "P-198-050" Chartis Global Services Company BPOOR-0000756 28-Feb-12 2,148,215.70 50,110.00 "P-198-066" BPOOR-0000642 19-Dec-11 1,051,789.46 24,101.50 "P-198-067" BPOOR-0000644 19-Dec-11 3,875,013.80 88,795.00 "P-198-068" BPOOR-0000645 19-Dec-11 2,186,800.40 50,110.00 "P-198-069" BPOOR-0000702 25-Jan-12 1,112,220.80 25,370.00 "P-198-070" BPOOR-0000703 25-Jan-12 3,892,772.80 88,795.00 "P-198-071" BPOOR-0000693 28-Jan-12 2,196,822.40 50,110.00 "P-198-072" BPOOR-0000749 28-Feb-12 1,386,705.17 32,346.75 "P-198-073" BPOOR-0000750 28-Feb-12 4,404,828.20 102,748.50 "P-198-074" BPOOR-0000651 06-Dec-11 50,110.00 2,186,800.40 "P-198-075" BPOOR-0000652 06-Dec-11 26,840.00 1,171,297.60 "P-198-076" Chartis Insurance UK Limited 0001308 29-Feb-12 4,512,402.74 105,257.82 "P-198-086" Chartis International O&S HO 0001275 25-Jan-12 18,777,670.24 428,322.77 "P-198-088" Chartis Sigorta A.S. 0001280 18-Jan-12 2,895,856.02 66,055.11 "P-198-103" 0001296 17-Feb-12 330,558.57 7,710.72 "P-198-107" Chartis South Africa Limited 0001264 22-Dec-11 2,656,526.52 60,873.66 "P-198-108" 0001269 22-Dec-11 4,335,124.28 99,338.32 "P-198-111" 0001287 31-Jan-12 4,392,823.41 102,492.38 "P-198-117" Chartis UK Services Limited BPOOR-0000741 24-Feb-12 1,740,179.04 40,592.00 "P-198-127" BPOOR-0000671 19-Jan-12 656,739.86 14,980.38 "P-198-128" BPOOR-0000672 19-Jan-12 1,133,406.48 25,853.25 "P-198-129" BPOOR-0000673 19-Jan-12 2,001,997.44 45,666.00 "P-198-130" BPOOR-0000674 19-Jan-12 2,001,997.44 45,666.00 "P-198-131" BPOOR-0000675 19-Jan-12 1,999,104.00 45,600.00 "P-198-132" BPOOR-0000676 19-Jan-12 1,999,104.00 45,600.00 "P-198-133" BPOOR-0000740 24-Feb-12 1,954,872.00 45,600.00 "P-198-134" BPOOR-0000742 24-Feb-12 52,740.39 1,230.24 "P-198-135" BPOOR-0000743 24-Feb-12 62,329.55 1,453.92 "P-198-136" BPOOR-0000744 24-Feb-12 43,663.95 1,018.52 "P-198-137" Chartis Vietnam Insurance Co. 0001260 16-Dec-11 1,131,244.81 25,922.20 "P-198-149" 0001273 05-Jan-12 1,187,489.70 27,086.90 "P-198-152" 0001293 09-Feb-12 605,329.12 14,120.11 "P-198-155" Lexington Insurance Company BPOOR-0000605 01-Dec-11 1,019,841.14 23,920.28 "P-198-167" BPOOR-0000606 01-Dec-11 1,916,065.93 44,941.15 "P-198-168" BPOOR-0000650 21-Dec-11 3,331,286.46 76,335.62 "P-198-169" BPOOR-0000655 29-Dec-11 1,604,664.62 36,770.50 "P-198-170" BPOOR-0000660 09-Jan-12 221,429.36 5,074.00 "P-198-171" BPOOR-0000661 09-Jan-12 575,018.10 13,176.40 "P-198-172" BPOOR-0000685 24-Jan-12 1,672,926.07 38,159.81 "P-198-173" BPOOR-0000745 22-Feb-12 1,630,731.93 38,039.00 "P-198-174" BPOOR-0000689 26-Jan-12 666,631.04 15,206.00 "P-198-175" BPOOR-0000690 26-Jan-12 355,805.44 81,168.00 "P-198-176" 103,987,078.60 5,851,412.36 2nd Quarter of FY 2012 (March 1 to May 31, 2012) Name of Customer OR No. OR Date Amount in Pesos Amount in USD Exhibit AIG Employees Services, Inc. 0000801 10-Apr-12 1,133,137.35 26,384.00 "P-198-178" 0000854 14-May-12 1,133,077.15 26,395.00 "P-198-037" 0000766 09-Mar-12 1,113,777.30 26,035.00 "P-198-038" AIG Global Services BPOOR-0001335 19-Apr-12 3,441,768.51 80,171.64 "P-198-199" 0001342 23-Apr-12 149,353.47 3,479.00 "P-198-201" AIG Metropolitana CIA De Seguros Y Reaseguros SA 0001323 20-Mar-12 42,823.64 1,001.02 "P-198-202" Chartis Sigorta A.S. 0001328 03-Apr-12 1,125,169.98 26,209.41 "P-198-205" 0001341 23-Apr-12 1,360,247.25 31,692.62 "P-197-303" Chartis Asia Pacific PTE LTD. 0001332 12-Apr-12 901,315.35 20,995.00 "P-198-207" Chartis Europe SA BPOOR-0000850 10-May-12 216,837.30 5,141.98 "P-198-228" BPOOR-0000800 10-Apr-12 202,141.06 4,708.62 "P-198-229" Chartis Far East Holdings KK 0001333 16-Apr-12 220,181.96 5,128.86 "P-198-246" Chartis Global Services Company BPOOR-0000784 19-Mar-12 1,832,481.13 43,835.00 "P-198-257" BPOOR-0000837 25-Apr-12 1,818,514.80 42,360.00 "P-198-258" Chartis Global Services BPOOR-0000789 19-Mar-12 1,627,992.90 38,055.00 "P-198-251" BPOOR-0000838 25-Apr-12 9,802,206.90 228,330.00 "P-198-252" BPOOR-0000839 25-Apr-12 1,633,701.15 38,055.00 "P-198-253" BPOOR-0000868 16-May-12 1,604,779.35 38,055.00 "P-198-254" BPOOR-0000869 16-May-12 9,628,676.10 228,330.00 "P-198-255" BPOOR-0000787 19-Mar-12 10,608,212.20 247,971.30 "P-198-256" Chartis Insurance UK Limited 0001345 24-Apr-12 1,221,358.50 28,450.00 "P-198-281" BPOOR-0000829 24-Apr-12 1,010,025.25 23,530.00 "P-197-060" Chartis Kenya Insurance Co. Ltd. 0001364 23-May-12 98,383.45 2,333.02 "P-197-285" Chartis South Africa Limited 0001325 29-Mar-12 7,703,805.11 180,121.70 "P-197-304" 0001350 11-May-12 11,654,939.30 276,445.43 "P-197-307" Chartis UK Services Limited BPOOR-0000855 14-May-12 18,298.28 434.02 "P-197-316" BPOOR-0000857 14-May-12 1,925,060.50 45,650.00 "P-197-317" BPOOR-0000819 23-Apr-12 37,236.62 867.38 "P-197-318" BPOOR-0000820 23-Apr-12 2,266,704.00 52,800.00 "P-197-319" BPOOR-0000821 23-Apr-12 1,959,754.50 45,650.00 "P-197-320" BPOOR-0000826 24-Apr-12 43,983.99 1,024.79 "P-197-321" BPOOR-0000827 24-Apr-12 1,957,608.00 45,600.00 "P-197-322" BPOOR-0000828 24-Apr-12 1,937,971.82 45,142.60 "P-197-323" BPOOR-0000856 14-May-12 2,226,576.00 52,800.00 "P-198-324" Chartis Vietnam Insurance Co. 0001314 14-Mar-12 361,806.40 8,459.35 "P-198-334" Guam Insurance Adjusters 0001370 17-May-12 72,616.74 1,722.00 "P-198-345" Lexington Insurance Company BPOOR-0000761 02-Mar-12 651,881.22 15,206.00 "P-198-349" BPOOR-0000762 07-Mar-12 3,479,672.16 81,168.00 "P-198-350" BPOOR-0000795 27-Mar-12 1,622,140.17 37,918.19 "P-198-351" BPOOR-0000794 27-Mar-12 650,512.68 15,206.00 "P-198-352" BPOOR-0000822 24-Apr-12 543,880.17 12,669.00 "P-198-353" BPOOR-0000823 24-Apr-12 1,677,569.60 39,076.86 "P-198-354" BPOOR-0000835 25-Apr-12 3,485,229.12 81,184.00 "P-198-355" BPOOR-0000860 16-May-12 641,237.02 15,206.00 "P-198-356" BPOOR-0000876 23-May-12 1,560,240.66 36,998.83 "P-198-357" TATA AIG Gen. Insurance Co. Ltd. India 0001327 02-Apr-12 173,950.64 4,051.96 "P-198-387" 98,578,836.75 2,312,048.58 3rd Quarter of FY 2012 (June 7 to August 31, 2012) Name of Customer OR No. OR Date Amount in Pesos Amount in USD Exhibit AIG Employees Services, Inc. BPOOR-0000891 6-Jun-12 1,042,102.85 23,995.00 "P-197-064" BPOOR-0000933 4-Jul-12 905,478.35 21,595.00 "P-197-065" BPOOR-0000983 7-Aug-12 600,963.52 14,384.00 "P-198-397" AIG Global Services Malaysia 0001390 14-Jun-12 619,478.57 14,263.34 "P-198-406" 0001396 25-Jun-12 1,214,215.94 27,958.00 "P-197-066" 0001431 27-Jul-12 3,542,097.97 84,476.46 "P-198-408" 0001456 16-Aug-12 4,068,257.31 97,373.32 "P-197-067" AIG Metropolitana CIA Seguros 0001404 14-Jun-12 73,317.66 1,688.18 "P-198-412" 0001432 17-Jul-12 36,194.40 863.21 "P-198-413" 0001441 10-Aug-12 54,928.17 1,314.70 "P-198-415" American Home Assurance Company, UAE 0001419 19-Jul-12 460,428.30 10,980.88 "P-198-419" 0601423 20-Jul-12 9,990,991.85 239,995.00 "P-197-068" Chartis Europe SA BPOOR-0000895 08-Jun-12 219,219.33 5,048.81 "P-198-463" BPOOR-0000945 10-Jul-12 203,960.52 4,864.31 "P-198-464" BPOOR-0000982 07-Aug-12 215,900.66 5,167.56 "P-198-465" Chartis Global Services BPOOR-0000921 20-Jun-12 9,916,371.90 228,330.00 "P-198-474" BPOOR-0000922 20-Jun-12 1,652,728.65 38,055.00 "P-198-475" BPOOR-0000962 17-Jul-12 1,595,646.15 38,055.00 "P-198-476" BPOOR-0000963 17-Jul-12 9,573,876.90 228,330.00 "P-198-477" BPOOR-0001005 22-Aug-12 1,589,937.90 38,055.00 "P-198-478" BPOOR-0001006 22-Aug-12 9,539,627.40 228,330.00 "P-198-479" Chartis Global Services Company BPOOR-0000923 20-Jun-12 3,679,389.60 84,720.00 "P-198-480" BPOOR-0000959 17-Jul-12 17,761,548.00 42,360.00 "P-198-481" BPOOR-0001013 22-Aug-12 1,769,800.80 42,360.00 "P-198-482" Chartis Insurance UK Limited 0001392 01-Jun-12 611,146.96 14,072.00 "P-198-496" 0001446 06-Aug-12 132,766.40 3,177.75 "P-198-497" BPOOR-0000908 18-Jun-12 857,047.62 19,734.00 "P-198-499" BPOOR-0000940 06-Jul-12 201,683.30 4,810.00 "P-198-500" Chartis Insurance Ltd. Sri Lanka 0001434 27-Jul-12 151,868.78 3,621.96 "P-198-493" Chartis Europe SA-Ireland BPOOR-0000948 11-Jul-12 8,065.65 192.36 "P-197-085" BPOOR-0000998 16-Aug-12 70,964.16 1,698.52 "P-197-086" Chartis Kenya Insurance Co. 0001398 27-Jun-12 154,630.78 3,560.46 "P-198-503" 0001408 06-Jul-12 152,288.08 3,631.96 "P-198-504 0001442 13-Aug-12 139,017.24 3,328.16 "P-198-505" Chartis New Hampshire Insurance, Pakistan 0001379 01-Jun-12 1,860,821.41 42,856.32 "P-198-506" 0001458 28-Aug-12 296,648.86 7,100.26 "P-198-509" Chartis Sigorta A.S. 0001424 20-Jul-12 3,029,555.29 72,252.69 "P-198-516" 0001445 16-Aug-12 3,112,114.37 74,505.97 "P-198-517" Chartis Singapore Insurance Pte Ltd. 0001467 31-Aug-12 13,567,795.50 324,743.79 "P-198-519" Chartis South Africa Limited 0001405 02-Jul-12 7,416,102.08 176,868.64 "P-198-535" 0001447 09-Aug-12 8,204,822.83 196,381.59 "P-198-541" 0001448 14-Aug-12 11,679,047.90 279,536.81 "P-198-548" Chartis Southeast Asia Limited 0001401 29-Jun-12 28,782,081.20 662,723.49 "P-198-556" Chartis Technology & Operations Mgmt. (M) SDN BHD BPOOR-0000953 17-Jul-12 1,536,162.99 36,636.37 "P-198-579" BPOOR-0000954 17-Jul-12 776,244.64 18,512.87 "P-198-580" BPOOR-0000977 27-Jul-12 174,428.80 4,160.00 "P-198-581" BPOOR-0000978 27-Jul-12 545,090.00 13,000.00 "P-198-582" Chartis Thailand & Universal Insurance 0001422 19-Jul-12 3,060.89 73.00 "P-198-583" Chartis Uganda Insurance Co. 0001453 22-Aug-12 119,317.68 2,856.54 "P-198-585" 0001429 27-Jul-12 111,845.76 2,667.44 "P-198-584" Chartis UK Services Limited LTD. BPOOR-0000944 09-Jul-12 1,808,398.97 43,129.99 "P-198-586" BPOOR-0000999 16-Aug-12 109,004.02 2,609.00 "P-198-587" BPOOR-0000905 18-Jun-12 22,895.86 527.19 "P-198-588" BPOOR-0000905 18-Jun-12 2,293,104.00 52,800.00 "P-198-589" BPOOR-0000907 18-Jun-12 1,982,579.50 45,650.00 "P-198-590" BPOOR-0000938 06-Jul-12 2,213,904.00 52,800.00 "P-198-591" BPOOR-0000939 06-Jul-12 29,841.16 711.69 "P-198-592" BPOOR-0000992 06-Aug-12 17,060.54 408.44 "P-198-593" BPOOR-0000993 06-Aug-12 2,205,984.00 52,800.00 "P-198-594" BPOOR-0000994 06-Aug-12 1,736,485.85 41,562.61 "P-198-595" Chartis Vietnam Insurance Co. 0001433 27-Jul-12 2,599,770.28 62,002.63 "P-198-605" 0001438 07-Aug-12 937,701.41 22,449.16 "P-198-607" 0001459 28-Aug-12 1,069,145.76 25,596.02 "P-198-608" Guam Insurance Adjusters 0001381 11-Jun-12 1,454.91 33.50 "P-198-614" 0001439 08-Aug-12 8,940.92 214.00 "P-198-616" Lexington Insurance Company BPOOR-0000899 13-Jun-12 660,396.58 15,206.00 "P-198-621" BPOOR-0000913 20-Jun-12 10,908,009.10 251,163.00 "P-198-622" BPOOR-0000925 21-Jun-12 1,652,033.77 38,039.00 "P-198-623" BPOOR-0000950 12-Jul-12 637,587.58 15,206.00 "P-198-624" BPOOR-0000961 17-Jul-12 3,510,421.53 83,721.00 "P-198-625" BPOOR-0000974 26-Jul-12 1,594,975.27 38,039.00 "P-198-626" BPOOR-0001004 16-Aug-12 3,285,871.66 78,647.00 "P-198-627" BPOOR-0001020 23-Aug-12 635,306.68 15,206.00 "P-198-628" BPOOR-0001022 28-Aug-12 1,589,269.42 38,039.00 "P-198-629" 205,457,906.98 4,471,825.95 4th Quarter of FY 2012 (September 1 to November 30, 2012) Name of Customer OR No. OR Date Amount in Pesos Amount in USD Exhibit AIG Employee Services, Inc. BPOOR-0001131 14-Nov-12 574,742.40 13,984.00 "P-198-659" BPOOR-0001132 14-Nov-12 574,742.40 13,984.00 "P-198-660" BPOOR-0001133 19-Nov-12 32,222.40 784.00 "P-198-661" BPOOR-0001028 06-Sep-12 605,997.92 14,384.00 "P-198-662" AIG Global Services 0001478 18-Sep-12 6,836,052.81 162,237.19 "P-198-663" 0001526 22-Oct-12 22,811,078.60 546,111.53 "P-198-665" 0001545 19-Nov-12 3,420,224.04 83,217.13 "P-198-686" AIG Global Services Malaysia 0001560 26-Nov-12 1,603,931.61 39,025.10 "P-198-687" 0001530 30-Oct-12 5,234,679.06 125,321.50 "P-197-104" 0001546 19-Nov-12 729,114.00 17,740.00 "P-197-105" 0001553 27-Nov-12 4,108,561.50 99,965.00 "P-197-106" 0001558 28-Nov-12 2,848,714.16 69,311.78 "P-198-691" American Home Assurance Company, UAE 0001482 11-Sep-12 4,418,323.93 104,873.58 "P-198-693" 0001483 11-Sep-12 60,245.90 1,430.00 "P-198-699" 0001484 11-Sep-12 317,112.51 7,527.00 "P-198-700" 0001485 11-Sep-12 165,402.38 3,926.00 "P-198-701" 0001486 11-Sep-12 3,852,049.22 91,454.16 "P-198-702" 0001536 08-Nov-12 11,393,248.80 277,208.00 "P-198-704" Chartis Asia Pacific Pte. Ltd. 0001548 19-Nov-12 863,100.00 21,000.00 "P-198-717" BPOOR-0001112 31-Oct-12 979,183.20 23,442.26 "P-197-107" Chartis Europe SA BPOOR-0001138 19-Nov-12 835,309.41 20,323.83 "P-198-758" BPOOR-0001031 07-Sep-12 206,045.19 4,890.70 "P-198-759" BPOOR-0001072 10-Oct-12 209,904.26 5,025.24 "P-198-760" BPOOR-0001126 15-Nov-12 213,715.07 5,199.88 "P-198-761" Chartis Europe SA-Ireland BPOOR-0001118 12-Nov-12 86,485.62 2,070.52 "P-198-763" Chartis Global Services BPOOR-0001049 21-Sep-12 1,603,257.15 38,055.00 "P-198-773" BPOOR-0001050 21-Sep-12 9,614,684.89 228,214.69 "P-198-774" BPOOR-0001085 18-Oct-12 1,589,557.35 38,055.00 "P-198-775" BPOOR-0001086 18-Oct-12 9,537,344.10 228,330.00 "P-198-776" BPOOR-0001152 29-Nov-12 9,250,739.21 225,793.00 "P-198-777" BPOOR-0001153 29-Nov-12 1,564,060.50 38,055.00 "P-198-778" Chartis Global Services Company BPOOR-0001053 21-Sep-12 1,784,626.80 42,360.00 "P-198-779" BPOOR-0001087 18-Oct-12 2,594,334.70 62,110.00 "P-198-780" BPOOR-0001157 29-Nov-12 2,355,441.00 57,310.00 "P-198-781" Chartis Insurance Ltd. Sri Lanka 0001494 25-Sep-12 326,365.10 7,746.62 "P-198-791" 0001540 06-Nov-12 135,718.78 3,302.16 "P-198-792" 0001551 27-Nov-12 287,017.74 6,983.40 "P-198-793" Chartis Kenya Insurance Company Limited 0001541 08-Nov-12 136,129.78 3,312.18 "P-198-796" Chartis New Hampshire Insurance Co., Pakistan 0001552 28-Nov-12 427,315.06 10,396.96 "P-198-797" Chartis Sigorta A.S. 0001496 27-Sep-12 3,483,202.23 82,677.48 "P-198-801" 0001538 05-Nov-12 2,666,654.31 64,882.10 "P-198-804" Chartis Singapore Insurance 0001495 27-Sep-12 5,466,160.22 129,745.08 "P-198-805" 0001547 19-Nov-12 3,707,143.14 90,198.13 "P-198-807" Chartis South Africa Ltd. 0001525 23-Oct-12 14,858,363.80 355,718.55 "P-198-812" Chartis Southeast Asia Limited 0001531 30-Oct-12 19,093,057.80 457,099.78 "P-198-821" 0001556 28-Nov-12 13,685,030.70 334,515.54 "P-198-837" Chartis Technology & Operations Mgmt. (M) SDN. HBD. BPOOR-0001034 11-Sep-12 125,187.19 2,971.45 "P-198-857" BPOOR-0001035 11-Sep-12 547,479.35 12,995.00 "P-198-858" BPOOR-0001146 26-Nov-12 534,094.50 12,995.00 "P-197-134" BPOOR-0001074 10-Oct-12 543,010.00 13,000.00 "P-198-866" Charis Uganda Insurance Co. 0001503 26-Sep-12 129,935.67 3,084.16 "P-198-867" Chartis UK Services Limited BPOOR-0001070 08-Oct-12 477,180.48 11,424.00 "P-198-868" BPOOR-0001134 19-Nov-12 470,184.00 11,440.00 "P-198-869" BPOOR-0001024 03-Sep-12 110,591.25 2,625.00 "P-198-870" BPOOR-0001026 03-Sep-12 1,923,908.58 45,666.00 "P-198-871" BPOOR-0001027 03-Sep-12 2,227,581.62 52,784.00 "P-198-872" BPOOR-0001068 08-Oct-12 409,646.25 2,625.00 "P-198-873" BPOOR-0001069 08-Oct-12 1,907,468.82 45,666.00 "P-198-874" BPOOR-0001137 19-Nov-12 1,876,872.60 45,666.00 "P-198-875" BPOOR-0001067 08-Oct-12 2,205,456.00 52,800.00 "P-198-876" BPOOR-0001105 25-Oct-12 22,336.93 534.76 "P-198-877" BPOOR-0001119 12-Nov-12 15,301.28 371.12 "P-198-878" BPOOR-0001135 19-Nov-12 2,170,080.00 52,800.00 "P-198-879" Chartis Vietnam Insurance Company Limited 0001519 12-Oct-12 1,024,959.36 24,538.17 "P-198-885" 0001559 28-Nov-12 1,139,150.62 27,716.56 "P-198-887" Guam Insurance Adjusters 0001487 12-Sep-12 33,114.18 786.00 "P-198-892" 0001515 12-Oct-12 64,868.81 1,553.00 "P-198-893" 0001550 27-Nov-12 6,925.35 168.50 "P-198-894" Lexington Insurance Company BPOOR-0001039 11-Sep-12 1,602,583.07 38,039.00 "P-198-898" BPOOR-0001059 24-Sep-12 640,628.78 15,206.00 "P-198-899" BPOOR-0001093 18-Oct-12 6,780,440.56 162,328.00 "P-198-900" BPOOR-0001095 18-Oct-12 635,154.62 15,206.00 "P-198-901" BPOOR-0001096 18-Oct-12 1,624,212.25 38,884.66 "P-198-902" BPOOR-0001127 15-Nov-12 1,563,402.90 38,039.00 "P-198-903" BPOOR-0001130 16-Nov-12 624,966.60 15,206.00 "P-198-904" 208,282,112.37 5,006,415.43 TOTAL 616,305,934.70 17,641,702.32 Services rendered by petitioner are "other than processing and manufacturing or repacking of goods" as mentioned under Section 108 (B) (2) of the NIRC, as amended Anent the third requirement, records show that petitioner is a ROHQ licensed 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 as well as, to the fifth requisite for the grant of the claim of refund. 86 Moreover, a perusal of the service agreements 87 between petitioner and its non-resident foreign client affiliates doing business outside the Philippines, shows that the services provided by petitioner for the subject period of claim, included among others, information (IT) technology services, administrative and other certain services to assist the AIG group of companies. Clearly, these services fall within the scope of "services other than processing, manufacturing or repacking of goods" pursuant to Section 108 (B) (2), in relation to Section 108 (B) (1), both of the NIRC of 1997, as amended. Not all of the service agreements presented by petitioner indicate that the services were performed in the Philippines A scrutiny of the service agreements and its attachments provided by petitioner, only the following have a provision as to where the services are to be performed by petitioner, to wit: Client Service Agreement Service Project Location Exhibit AIG Employee Services, Inc. Statement of Work Chartis Technology & Operations Management Corp. 9F Paragon Corporate Centre Industry Avenue, Madrigal Business Park, Alabang, Muntinlupa City, 1780 "P-119" AIG General Insurance (Vietname) Co. Ltd. (Chartis Vietname Insurance Co. Ltd.) Work Order No. 001 Production Support attached to the Master Agreement for Professional Services Manila Regional Technology Center (MRTC) "P-122" AIG Metropolitana CIA De Seguros Y Reaseguros SA Work Order No. 001 OPI Project Assignment attached to the Master Agreement for Professional Services Makati Office: located at the 46th Floor, PBCom Tower, 6795 Ayala Avenue cor. Rufino Street, Makati City Alabang Office: located at the 8th Floor, Paragon Corporate Center, Lot 6, Industry St., Madrigal Business Park, Ayala Alabang, Muntinlupa "P-127" Chartis Uganda Insurance Co. Work Order No. 001-OPI Project Assignment attached to the Master Agreement for Professional Services Makati Office: located at the 46th Floor, PBCom Tower, 6795 Ayala Avenue cor. Rufino Street, Makati City Alabang Office: located at the 8th Floor, Paragon Corporate Center, Lot 6, Industry St., Madrigal Business Park, Ayala Alabang, Muntinlupa "P-156" Lexington Insurance Company Statement of Work Chartis Technology and Operations Management Corporation (Philippines) Ground 6th, 7th, and 8th Floors, The Paragon Corporate Center, Madrigal Business Park, Alabang, Muntinlupa City, Philippines "P-167" In sum, out of the P2,240,430,657.47 zero-rated sales/receipts declared in petitioner's 2012 Quarterly VAT Returns, only P72,235,195.06 (US$2,080,247.89) qualifies for VAT zero-rating under Section 108 (B) (2), in relation to Section 112 (A) (2), (B) (1), (2) (c) and (3), of the NIRC of 1997, as amended, broken down as follows: Company Name AIG Employee Services, Inc. AIG General Insurance (Vietnam) Co. Ltd. AIG Metropolitana CIA De Seguros Y Reaseguro s SA Chartis Uganda Insurance Co. Lexington Insurance Co. Aggregate sales qualified for VAT-zero rating sales qualified for VAT-zero rating in PESO 1st Quarter 1,771,208.00 2,924,063.63 113,161.81 - 12,994,400.10 4,808,433.44 2nd Quarter 3,379,991.80 36,1806.40 n 42,823.64 - 14,212,362.80 17,445,103.42 3rd Quarter 2,548,544.72 4,606,617.45 91,122.57 231,163.44 24,473,871.59 31,951,319.77 4th Quarter 1,787,705.12 2,164,109.98 - 129,935.67 13.471,388.78 15,364,770.05 Total P72,235,195.06 Company Name AIG Employee Services, Inc. AIG General Insurance (Vietnam) Co. Ltd. AIG Metropolitana CIA De Seguros Y Co. Reaseguros SA Chartis Uganda Insurance Co. Lexington Insurance Co. Aggregate sales qualified for VAT-zero rating sales qualified for VAT-zero rating in US DOLLAR 1st Quarter 40,768.00 67,129.21 2,585.24 - 372,790.76 483,273.21 2nd Quarter 78,814.00 8,459.35 1,001.02 - 334,632.88 407,701.25 3rd Quarter 59,974.00 110,047.81 3,866.09 5,523.98 573,266 752,677.88 4th Quarter 43,136.00 52,254.73 - 3,084.16 322,908.66 368,138.55 Total $2,080,247.89 The claimed input VAT are not transitional input taxes The sixth requisite points out that the claimed input taxes should not be transitional input taxes. Pertinent thereto is Section 111 (A) of the NIRC of 1997, as amended, which provides as follows: "SEC. 111. Transitional/Presumptive Input Tax Credits . (A) Transitional Input Tax Credits . A person who becomes liable to value-added tax or any person who elects to be a VAT-registered person shall, subject to the filing of an inventory according to the rules and regulations prescribed by the Secretary of Finance, upon recommendation of the Commissioner, be allowed input tax on his beginning inventory of goods, materials and supplies equivalent to two percent (2%) of the value of such inventory or the actual value-added tax paid on such goods, materials and supplies, whichever is higher, which shall be creditable against the output tax." In the case of Fort Bonifacio Development Corporation vs. Commissioner of Internal Revenue, et al. , 88 the Supreme Court ruled that transitional input tax credit operates to benefit newly VAT-registered persons, whether or not they previously paid taxes in the acquisitions of their beginning inventory of goods, materials and supplies. During the period of transition from non-VAT to VAT status, the transitional input tax credit serves to alleviate the impact of the VAT on the taxpayer. In this case, there is no indication that the claimed input VAT are transitional input VAT. Thus, petitioner has complied with this requisite. The input VAT was due or paid up to the extent of P61,841,236.86 In its Quarterly VAT Return for FY 2012, petitioner declared an input VAT of P82,690,900.07 on its current purchases of goods and services, of which the amount of P79,682,086.49 is the subject of the present claim, as shown below: 1st Quarter "P-10" 2nd Quarter "P-12" 3rd Quarter "P-14" 4th Quarter "P-16" Total Input VAT on Cap Goods not Exceeding 1M 115,407.65 482,200.45 361,207.59 166,461.11 4,125,276.80 Input VAT on Cap Goods Exceeding 1M 966,463.49 1,401,684.13 1,224,224.92 1,685,851.88 5,278,224.42 Input VAT on Goods 2,408,312.18 1,757,632.90 1,451,393.27 1,401,048.55 7,018,386.90 Input VAT on Services 12,805,227.32 18,192,986.32 19,447,237.88 18,823,560.43 69,269,011.95 Sub-Total 16,295,410.64 21,834,503.80 22,484,063.66 22,076,921.97 82,690,900.07 Less: Output VAT 723,011.55 385,436.98 609,039.42 597,044.54 2,314,532.46 Total (A) 15,572,399.09 21,449,066.82 21,875,024.24 21,479,877.46 80,376,367.61 Vatable Sales 6,025,096.20 3,211,974.79 5,075,328.49 4,975,370.95 Zero-Rated Sales 417,165,029.78 632,957,904.53 636,141,233.77 554,166,489.39 Total Sales 423,190,125.98 636,169,879.32 641,216,562.26 559,141,860.34 % of Vatable sales to Total Sales 1.42% 0.50% 0.79% 0.89% 6,025,096.20 3,211,974.79 5,075,328.49 4,975,370.95 423,190,125.98 636,169,879.32 641,216,562.26 559,141,860.34 Input VAT Allocated to (B) Vatable Sales 221,709.34 108,294.76 173,144.21 191,132.82 694,281.12 15,572,399.09 21,449,066.82 21,875,024.24 21,479,877.46 1.42% 0.50% 0.79% 0.89% Amount Claimed (A-B) 15,350,689.75 21,340,772.06 21,701,880.03 21,288,744.64 78,682,086.49 ============ ============ ============ ============ ============ In support of the foregoing, petitioner presented various official receipts and invoices 89 issued by its suppliers, which were all examined by the Court-commissioned ICPA, Mary Ann C. Capuchino. As stated in her report, the Court agrees with the exceptions/findings noted by the ICPA, as follows: Findings Amount Reference (ICPA Report) Input VAT claimed on capital goods exceeding 1 million which are supported with VAT documents but the input VAT should be deferred and amortized in the subsequent quarters: 1. Domestic purchases of capital goods exceeding 1 million supported with original VAT invoices (amount of deferred input VAT) 872,280.34 Annex X 2. Domestic purchases of capital goods exceeding 1 million supported with VAT invoices (amount of deferred input VAT) (in USD) 1,755,366.85 Annex Y 3. Domestic purchases of capital goods exceeding 1 million supported with VAT invoices not dated within the quarter but dated within the taxable year (amount of deferred input VAT) 595,654.86 Annex Z 4. Domestic purchases of capital goods exceeding 1 million supported with original VAT invoices dated within the quarter but dated within the taxable year (amount of deferred input VAT) (in USD) 408,221.73 Annex AA Sub-Total 3,631,523.78 Input taxes claimed on purchases which are not properly supported with the required VAT documents: 1. Domestic purchases of goods supported with original VAT invoices but the amount of input VAT claimed was not separately indicated 123,399.59 Annex BB 2. Domestic purchases of services supported with original VAT ORs but has no authority to print (ATP) 299,972.95 Annex CC 3. Domestic purchases of services supported with original VAT OR but not named after the ROHQ (under employee name) 2,127.32 Annex DD 4. Domestic purchases of goods supported with original VAT invoices but the amount of input VAT claimed was overstated (amount of overstatement) (in USD) 27,928.41 Annex EE 5. Domestic purchases of services supported with original VAT ORs but the amount of input VAT claimed was overstated (amount of overstatement) 33,093.60 Annex FF 6. Domestic purchases of services supported with original VAT ORs but the amount of input VAT claimed was overstated (amount of overstatement) (in USD) 128,405.66 Annex GG 7. Domestic purchases of capital goods exceeding 1 million supported with original VAT invoices but the amount of input VAT claimed was overstated (amount of overstatement) (in USD) 5,538.90 Annex HH 8. Domestic purchases of goods supported with original VAT invoices not dated within the taxable Year 219,505.86 Annex II 9. Domestic purchases of services supported with original VAT ORs not dated within the taxable year 6,446,915.68 Annex JJ 10. Domestic purchases of capital goods exceeding 1 million supported with original VAT invoices not dated within the taxable year 529,814.54 Annex KK 11. Domestic purchases of goods supported with billing statement only 19,636.10 Annex LL 12. Domestic purchases of goods supported with proforma invoice only 1,764.00 Annex MM 13. Domestic purchases of services supported with provisional/transactional/acknowledgement/service receipts only 188,558.05 Annex NN 14. Domestic purchases of services supported with Statement of Account only 294,102.86 Annex OO 15. Domestic purchases of services supported with VAT ORS imprinted with "Not a valid source of input Tax" 27,447.65 Annex PP 16. Domestic purchases of goods supported with non-VAT invoices 10,331.49 Annex QQ 17. Domestic purchases of services supported with non-VAT official receipts 4,592.19 Annex RR 18. Domestic purchases of goods supported with VAT invoice which did not indicate invoice on the face of the document 11,462.39 Annex SS Input taxes claimed from purchases of goods and services without supporting documents 933,502.99 Annex TT Sub-total 9,308,100.23 Grand Total P12,939,624.01 The above-noted exceptions/findings found by the ICPA in the amount of P12,939,624.01 should be disallowed for not being properly substantiated by VAT invoices/official receipts for input VAT deferred to the succeeding period for amortization purposes as prescribed under Sections 110 (A) and 113 (A) and (B) of the NIRC of 1997, as amended, in relation to Sections 4.110-2, 4.110-3, 4.110-8, and 4.113-1 of RR No. 16-05, as amended. Upon further verification by the Court of the supporting documents, as well as the schedules of the ICPA report, the Court finds that the additional input VAT of P4,901,225.62 shall likewise be disallowed for the reasons stated therein: Name of Supplier Input VAT Exhibit Reason Abenson 5,977.71 "P-209-047" Invoice Without Signature Integrated Computer System 1,027.20 "P-209-071" Invoice not Dated Sanitary Care Products 803.57 "P-209-117" Invoice not Readable Carigin Enterprises 428.57 "P-209-126" Invoice Without Signature Integrated Computer System 1,057.32 "P-209-140" Invoice not Dated Automatic Centre 6,771.22 "P-209-192" VAT not separately Indicated Sanitary Care Products 10,446.43 "P-209-237" Invoice not Readable Sandz Solutions Philippines 54,583.87 "P-210-56" VAT amount not the same Philhealth Care, Inc. 638,656.54 "P-241-140" OR not readable RCG Information Tech. 1,471,760.34 "P-211-151" OR with erasures/alteration without authorized counter signature RCG Information Tech. 222.32 "P-211-152" OR with erasures/alteration without authorized counter signature Alpha Insurance 4,068.00 "P-211-185" VAT not separately indicated Jaguar Security 3,978.31 "P-211-249" OR not dated Majoliz Beauty & Development 530,526.34 "P-211-224" VAT not separately Indicated Marsman Drydale 216.00 "P-211-225" VAT amount not the same Marsman Drydale 108.00 "P-211-227" VAT amount not the same Metro Parking Management 2,887.50 "P-211-230" OR with erasures/alteration without authorized counter signature Metro Parking Management 7,425.00 "P-211-231" VAT not separately Indicated Metro Parking Management 1,650.00 "P-211-232" OR with erasures/alteration without authorized counter signature P&A Grant Thornton Outsourcing 331.20 "P-211-243" VAT amount not the same Philhealth Care, Inc. 997.43 "P-211-245" Handwritten details in a computerized OR Searchers & Staffers Corp. 22,096.80 "P-211-263" VAT amount not the same Spearace Solutions 15,069.60 "P-211-270" VAT not separately Indicated Superior Maintenance 37,441.91 "P-211-280" VAT amount not the same Tower Club 294.64 "P-211-295" VAT amount not the same King of Travel 176.79 "P-211-339" VAT amount not the same Manila Golf and Country Club. 1,426.29 "P-211-341" VAT amount not the same Manila Golf and Country Club. 1,426.29 "P-211-342" VAT amount not the same Philhealth Care, Inc. 2,355.63 "P-211-359" VAT not separately Indicated Ramon V. Ocampo 272,842.10 "P-211-366" VAT not separately Indicated RCG Information Tech. 21,420.00 "P-211-371" VAT amount not the same Marsman Drydale 2,230.55 "P-212-55" VAT amount not the same Sanitary Care Products 5,663.25 "P-212-62" VAT amount not the same Tata Consultancy 25,558.85 "P-212-63" VAT amount not the same People4U, Inc. 773,569.03 "P-212-82" VAT amount not the same Icon Interiors 2,276.10 "P-214-06" VAT not separately Indicated Icon Interiors 15,735.00 "P-214-10" VAT not separately Indicated One Opsis 6,825.24 "P-214-11" VAT not separately Indicated Reynaldo Master Key 6,428.57 "P-216-13" Supported by Billing Invoice Reynaldo Master Key 1,182.85 "P-216-24" Supported by Billing Invoice Reynaldo Master Key 42.86 "P-216-25" Supported by Billing Invoice Searchers & Staffers Corp. 15,141.60 "P-218-66" VAT amount not the same Specialized Cleaning 16,914.07 "P-218-68" OR with erasures/alteration without authorized counter signature Marsman Drysdale 367.78 "P-219-07" VAT amount not the same Tata Consultancy 483,062.23 "P-219-09" VAT amount not the same Gaza General Merchandise 1,148.84 "P-209-008" Invoice Without Signature Icon Interiors 2,228.00 "P-209-020" Invoice Without Signature Reynaldo Master Key 6,428.57 "P-209-035" Supported by Billing Invoice Integrated Computer System 47,893.28 "P-210-04" VAT not separately Indicated 8 Interconnectivities 12,857.14 "P-211-001" OR date not readable Metro Parking Management 2,475.00 "P-214-045" OR with erasures/alteration without authorized counter signature Phil. American Life 6,750.00 "P-211-047" OR with erasures/alteration without authorized counter signature Headstrong Philippines, Inc. 6,327.53 "P-212-001" VAT amount not the same SMJ Furnishing Phils. 2,332.32 "P-214-001" Invoice Without Signature SMJ Furnishing Phils. 19,950.00 "P-214-002" Invoice Without Signature Citimex 32,464.26 "P-214-003" Invoice Without Signature Integrated Computer System 112,045.47 "P-215-004" VAT not separately Indicated Integrated Computer System 32,954.47 "P-215-005" VAT not separately Indicated Integrated Computer System 139,688.20 "P-215-006" VAT not separately Indicated Philhealth Care, Inc. 1,446.72 "P-218-16" Handwritten details in a computerized OR Philhealth Care, Inc. 766.92 "P-218-17" Handwritten details in a computerized OR TOTAL 4,901,225.62 Therefore, in compliance with the seventh requisite for a claim of refund of input VAT, out of petitioner's input VAT claim for FY 2012 in the amount of P79,682,086.49, only the amount of P61,841,236.86 represents valid input tax, computed as follows: Claimed Input VAT P79,682,086.49 Less: Disallowances Per ICPA P12,939,624.01 Per Court's Verification 4,901,225.62 17,840,849.63 Valid Input VAT Due or Paid P61,841,236.86 The input VAT was not applied against any output taxes during and in the succeeding quarters As to eight h requisite on whether or not the said input VAT was applied against any output VAT and/or carried over to the succeeding taxable quarters, petitioner's Quarterly VAT Returns for the subject period of claim disclose that petitioner had an input tax of P82,690,900.07 90 and that petitioner had an output tax liability of P2,314,532.46 91 for FY 2012. It is noteworthy to mention that the said amount of P2,314,532.46, was already applied or formed part of the input VAT claim of P79,682,086.49, which was carried-over by petitioner in its succeeding quarters, the same remained unutilized as the said amount was deducted as "VAT Refund/TCC claimed" from the total available input tax in its First Quarterly VAT Return for CY 2014. 92 Consequently, the subject claim no longer form part of the excess input VAT of Php123,003,777.58 93 as of the end of the first quarter of CY 2014 that was to be carried over/applied to the succeeding quarters. This scenario removes the possibility that the present claim would be applied to future output VAT liability. Thus, in effect, petitioner is deemed to have complied with this requisite for the claim of refund/tax credit of input VAT. Petitioner's excess input tax due or paid attributable to valid zero-rated sales/ receipts amount Lastly, the Court shall now proceed to determine the amount of input taxes claimed that are attributable to zero-rated or effectively zero-rated sales. Pursuant to Section 112(A) of the NIRC, as amended, when the taxpayer is engaged in zero-rated or effectively zero-rated sales and taxable or exempt sales, and the amount of input taxes cannot be directly and entirely attributable to any of one of the transactions, the input taxes shall be proportionately allocated on the basis of sales volume. In the instant case, petitioner's reported total sales/receipts consisted of both zero-rated sales/receipts and Vatable sales/receipts. Hence, in order to identify petitioner's input VAT, the Court shall allocate the excess valid input VAT of P61,841,236.86 proportionately on the basis of the volume of its sales, as follows: Valid Zero-Rated Sales/Receipts per this Court's Verification P72,235,195.06 Divided by the Total Sales/Receipts per 2012 Quarterly VAT Return / 2,240,430,657.47 Multiplied by Valid Excess Input VAT Due or Paid x P61,841,236.86 Excess Valid Input VAT Due or Paid Allocated to Zero-Rated Sales/Receipts P1,993.863.90 Based on the foregoing, petitioner has refundable excess input VAT in the amount of P1,993,863.90 which can be attributed to its valid zero-rated sales/receipts amounting to P72,235,195.06. WHEREFORE , in light of the foregoing circumstances, the instant Petition for Review is hereby PARTIALLY GRANTED . Accordingly, respondent is ORDERED TO REFUND or TO ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner the amount of P1,993,863.90 , representing petitioner's unutilized excess input VAT attributable to its zero-rated sales/receipts for four quarters of FY 2012. SO ORDERED. (SGD.) ERLINDA P. UY Associate Justice Ma. Belen M. Ringpis-Liban and Maria Rowena Modesto-San Pedro, JJ. , concur. Footnotes 1. Docket Vol. 1, pp. 14 to 26. 2. Par. 1, Joint Stipulation of Facts (JSFI), Docket Vol. 1, p. 451. 3. Exhibit "P-1" to "P-3", refer to the CD attached to petitioner's FOE. 4. Exhibit "P-4-a", Certificate of Registration, Docket Vol. 3, p. 1392; Supplemental Joint Stipulation of Facts, Docket Vol. 3, p. 1390. 5. Par. 2, JSFI, Docket Vol. 1, pp. 451 to 452. 6. Par. 3, JSFI, Docket Vol. 1, p. 452. 7. Exhibit "P-9", refer to the CD attached to petitioner's Formal Offer of Evidence (FOE). 8. Exhibit "P-10", refer to the CD attached to petitioner's FOE. 9. Exhibit "P-11", refer to the CD attached to petitioner's FOE. 10. Exhibit "P-12", refer to the CD attached to petitioner's FOE. 11. Exhibit "P-13", refer to the CD attached to petitioner's FOE. 12. Exhibit "P-14", refer to the CD attached to petitioner's FOE. 13. Exhibit "P-15", refer to the CD attached to petitioner's FOE. 14. Exhibit "P-16", refer to the CD attached to petitioner's FOE. 15. Exhibit "P-8", refer to the CD attached to petitioner's FOE. 16. Docket Vol. 1, pp. 14 to 26. 17. Docket Vol. 1, pp. 276 to 277. 18. Minutes of the hearing and Resolution dated June 11, 2015, Docket Vol. 1, pp. 448 to 450. 19. Docket Vol. 1, pp. 451 to 472. 20. Resolution dated July 8, 2015, Docket Vol. 1, p. 560. 21. Docket Vol. 2, pp. 587 to 631. 22. Exhibit "P-248", Docket Vol. 1, pp. 477 to 557; Minutes of the hearing and Resolution dated January 19, 2016, Docket Vol. 2, pp. 806 to 812. 23. Exhibit "P-241", Docket Vol. 1, pp. 358 to 389; Exhibit "P-244", Docket Vol. 2, pp. 861 to 877; Exhibit "P-247", Docket Vol. 3, pp. 1119 to 1129; Minutes of the hearing and Order dated June 7, 2016, Docket Vol. 3, pp. 841 to 845. 24. Exhibit "P-242", Docket Vol. 2, pp. 749 to 763; Exhibit "P-243", Docket Vol. 2, pp. 824 to 829; Minutes of the hearing and Resolution dated July 23, 2015, Docket Vol. 2, pp. 574 to 578. 25. Docket Vol. 3, pp. 1386 to 1389. 26. Resolution dated March 9, 2017, Docket Vol. 3, pp. 1401 to 1402. 27. Minutes of the hearing and Resolution dated June 11, 2015, Docket Vol, 1, pp. 441 to 444; Pre-Trial Order dated August 11, 2015, Docket Vol. 2, p. 630. 28. Docket Vol. 4, pp. 1739 to 1758. 29. Records Verification Report dated May 2, 2019, Docket Vol. 4, p. 1760. 30. Resolution dated May 9, 2019, Docket Vol. 4, p. 1762. 31. Stipulation of Issue, JSFI, Docket Vol. 1, p. 452. 32. AN ACT AMENDING SECTIONS 27, 28, 34, 106, 107, 108, 109, 110, 111, 112, 113, 114, 116, 117, 119, 121, 148, 151, 236, 237 AND 288 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES. 33. Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue , G.R. No. 166732, April 27, 2007; San Roque Power Corporation vs. Commissioner of Internal Revenue , G.R. No. 180345, November 25, 2009; and AT&T Communications Services Philippines, Inc. vs. Commissioner of Internal Revenue , G.R. No. 182364, August 3, 2010. 34. Steag State Power, Inc. (Formerly State Power Development Corporation) vs. Commissioner of Internal Revenue , G.R. No. 205282, January 14, 2019; Rohm Apollo Semiconductor Philippines vs. Commissioner of Internal Revenue , G.R. No. 168950, January 14, 2015. 35. Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, supra ; San Roque Power Corporation vs. Commissioner of Internal Revenue, supra ; and AT&T Communications Services Philippines, Inc. vs. Commissioner of Internal Revenue, supra . 36. Id. 37. Id. 38. Id. 39. Id. 40. Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, supra ; and San Roque Power Corporation vs. Commissioner of Internal Revenue, supra ; and AT&T Communications Services Philippines, Inc. vs. Commissioner of Internal Revenue, supra . 41. Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, supra ; San Roque Power Corporation vs. Commissioner of Internal Revenue, supra ; n 42. Rohm Apollo Semiconductor Philippines vs. Commissioner of Internal Revenue , G.R. No. 168950, January 14, 2015. 43. Par. 1, Supplemental Joint Stipulation of Facts, Docket Vol. 3, pp. 1390 to 1391. 44. Exhibit "P-4-a", Docket Vol. 3, p. 1392. 45. Accenture, Inc. vs. Commissioner of Internal Revenue , G.R. No. 190102, July 11, 2012. 46. Commissioner of Internal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc. , G.R. No. 153205, January 22, 2007. 47. Ibid . 48. Commissioner of Internal Revenue vs. American Express International, Inc. (Philippine Branch), supra . 49. Exhibits "P-117" to "P-182", refer to the CD attached to petitioner's FOE. 50. Exhibits "P-118(a)" to "P-181(a)", refer to the CD attached to petitioner's FOE. 51. Exhibits "P-118(a)" to "P-181(a)", refer to the CD attached to petitioner's FOE. CD. 52. Exhibits "P-118(a)" to "P-181(a)", refer to the CD attached to petitioner's FOE. CD. 53. Commissioner of Internal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., supra. 54. Now the VAT rate is 12%. Refer to Revenue Memorandum Circular No. 7-2006 dated January 31, 2006. 55. Exhibit "P-240", Annex I, Supplemental ICPA Report, refer to the CD attached to petitioner's FOE. 56. Exhibit "P-118(b)", refer to the CD attached to petitioner's FOE. 57. Exhibit "P-118(c)", refer to the CD attached to petitioner's FOE. 58. Exhibit "P-134(f)", refer to the CD attached to petitioner's FOE. 59. Exhibit "P-134(h)", refer to the CD attached to petitioner's FOE. 60. Exhibit "P-151(b)", refer to the CD attached to petitioner's POE. 61. Exhibit "P-152(b)", refer to the CD attached to petitioner's FOE. 62. Exhibit "P-165(b)", refer to the CD attached to petitioner's FOE. 63. Exhibit "P-165(c)", refer to the CD attached to petitioner's FOE. 64. Exhibit "P-166(b)", refer to the CD attached to petitioner's FOE. 65. Exhibit "P-173(b)", refer to the CD attached to petitioner's FOE. 66. Exhibit "P-174(b)", refer to the CD attached to petitioner's FOE. 67. St. Martin Polyclinic, Inc., vs. LWV Construction Corporation , G.R. No. 217426, December 4, 2017. 68. Exhibit "P-164", refer to the CD attached to petitioner's FOE. 69. Exhibit "P-168(a)", refer to the CD attached to petitioner's FOE. 70. Exhibit "P-168(b)", refer to the CD attached to petitioner's FOE. 71. Exhibit "P-160(a)", refer to the CD attached to petitioner's FOE. 72. Exhibit "P-130(a)", refer to the CD attached to petitioner's FOE. 73. Exhibit "P-145(f)", refer to the CD attached to petitioner's FOE. 74. Exhibit "P-145(g)", refer to the CD attached to petitioner's FOE. 75. Exhibit "P-161(b)", refer to the CD attached to petitioner's FOE. 76. Exhibit "P-163(b)", refer to the CD attached to petitioner's FOE. 77. Exhibits "P-34" and "P-35", refer to the CD attached to petitioner's FOE. 78. Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue , G.R. No. 166732, April 27, 2007. 79. Exhibits "P-26", "P-27", "P-28", "P-29", refer to the CD attached to petitioner's FOE. 80. Exhibits "P-197-001" to "P-201-3", refer to the CD attached to petitioner's FOE. 81. Exhibits "P-34" to "P-35", refer to the CD attached to petitioner's FOE. 82. Exhibit "P-10", Line 17, refer to the CD attached to petitioner's FOE. 83. Exhibit "P-12", Line 17, refer to the CD attached to petitioner's FOE. 84. Exhibit "P-14", Line 17, refer to the CD attached to petitioner's FOE. 85. Exhibit "P-16", Line 17, refer to the CD attached to petitioner's FOE. 86. Exhibits "P1" to "P-3", Docket Vol. pp.; n refer to the CD attached to petitioner's FOE. 87. Exhibits "P-119", "P-122", "P-123", "P-124", "P-127", "P-129", "P-131", "P-134", "P-147", "P-148", "P-153", "P-154", "P-155", "P-156", "P-158", "P-162", "P-167", "P-169", "P-172", and "P-182", refer to the CD attached to petitioner's FOE. 88. G.R. Nos. 158885 and 170680, October 2, 2009. 89. Exhibits "P-209" to "P-239", with sub-markings. 90. Exhibits "P-10", "P-12", "P-14", "P-16", Lines 21B, 21D, 21F, 21J, refer to the CD attached to petitioner's FOE. 91. Exhibits "P-10", "P-12", "P-14", "P-16", all Line 15B, refer to the CD attached to petitioner's FOE. 92. Exhibit "P-21", Line 23D, refer to the CD attached to petitioner's FOE. 93. Exhibit "P-21", Line 29, refer to the CD attached to petitioner's FOE. n Note from the Publisher: Copied verbatim from the official copy. n Note from the Publisher: Copied verbatim from the official copy. n Note from the Publisher: Copied verbatim from the official copy.