Galileo Asia, LLC-Philippine Branch v. Commissioner of Internal Revenue

FIRST DIVISION [C.T.A. CASE NO. 8868. January 18, 2017.] For: Refund GALILEO ASIA, LLC-PHILIPPINE BRANCH , petitioner , vs. COMMISSIONER OF INTERNAL REVENUE , respondent . DECISION MINDARO-GRULLA , J p : This Petition for Review filed by Galileo Asia, LLC-Philippine Branch seeks the refund or issuance of tax credit certificate (TCC) in the amount of Six Million Eighty Thousand Thirty-Five Pesos and 23/100 (6,080,035.23), representing petitioner's alleged excess and unutilized input value-added tax (VAT) on its domestic purchases of goods and services attributable to its zero-rated sales of services for the period covering February 1, 2012 to December 31, 2012. 1 Petitioner Galileo Asia, LLC-Philippine Branch is a branch office in the Philippines of Galileo Asia, LLC which is a foreign corporation organized and existing under the laws of the State of Delaware, United States of America (USA). 2 It is licensed by the Securities and Exchange Commission (SEC) to do business and is actually doing business in the Philippines at 18th Floor, Pacific Star Building, Makati Ave., Makati City. Petitioner is established in the Philippines to provide travel reservations, products and services to travel agencies and to foreign and domestic airlines using a global computer reservation system (CRS). 3 It is a VAT-registered taxpayer with Taxpayer Identification No. (TIN) 004-460-118-000. 4 On the other hand, respondent is the duly appointed Commissioner of the Bureau of Internal Revenue (BIR), empowered to perform the duties of the said office, including, among others, the power to decide, approve, and grant refunds or tax credits of erroneously or excessively paid taxes as provided by law. He holds office at the BIR National Office Building, BIR Road, Diliman, Quezon City. Petitioner and Travelport Global Distribution System B.V. ("Travelport" for brevity) entered into a Marketing Services Agreement on January 1, 2009. 5 Petitioner filed its 1st, 2nd, 3rd, and 4th Quarterly VAT Returns for taxable year (TY) 2012 on April 25, 2012, July 25, 2012, October 25, 2012, and January 25, 2013, respectively. 6 cEaSHC On March 19, 2014, petitioner filed its administrative claim for refund with respondent. 7 However, respondent failed to act on petitioner's administrative claim, prompting petitioner to file the present Petition for Review 8 before this Court on August 14, 2014. In the Answer 9 filed through registered mail on October 10, 2014 and received by the Court on October 22, 2014, respondent interposed the following special and affirmative defenses: "1. Respondent reiterates and repleads the preceding paragraphs of the answer as part of his Special and Affirmative Defenses; 2. Petitioner's claim for refund is still subject to investigation by the Bureau of Internal Revenue; 3. Petitioner failed to demonstrate that the tax, which is the subject of this case, was erroneously or illegally collected; 4. Taxes paid and collected are presumed to be made in accordance with the laws and regulations, hence, not refundable; 5. It is incumbent upon the Petitioner to show that it has complied with the provision of Section 204(C) in relation to Section 229 of the 1997 Tax Code, as amended; 6. Petitioner's claim for refund or issuance of tax credit certificate in the amount of Php6,080,035.23 as alleged unutilized input VAT paid on purchases of goods and services attributable to its zero-rated sales for the period February 1, 2012 to December 31, 2012 was not fully substantiated by proper documents, such as sales invoices, official receipts and others; 7. 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 (Emmanuel & Zenaida Aguilar v. Commissioner, CA-GR No. Sp. 16432, March 30, 1990 cited in Aban, Law of Basic Taxation in the Philippines, 1st Edition, p. 206) ; 8. Claims for refund are construed strictly against the claimant, the same partake the nature of exemption from taxation (Commissioner of Internal Revenue vs. Ledesma, 31 SCRA 95) and as such, they are looked upon with disfavor. (Western Minolco Corp. vs. Commissioner of Internal Revenue, 124 SCRA 121) ." Petitioner filed its Pre-Trial Brief 10 on January 13, 2015; while respondent's Pre-Trial Brief 11 was filed through registered mail on January 5, 2015 and received by this Court on January 14, 2015. On January 22, 2015, the Court granted petitioner's Urgent Motion to Take Deposition of Ms. Sheiryll Soldevilla. 12 Accordingly, the deposition of Ms. Sheiryll Soldevilla was taken on January 28, 2015. 13 Thereafter, the Pre-Trial Conference was held on March 19, 2015. 14 On even date, the Court granted petitioner's Motion for the Appointment of an Independent Certified Public Accountant. 15 The parties then submitted their Joint Stipulation of Facts and Simplification of Issues 16 on March 31, 2015. Consequently, the Court issued a Pre-Trial Order 17 on May 6, 2015. As trial ensued, petitioner presented Mr. Jerome Antonio B. Constantino as its witness. Thereafter, petitioner formally offered its pieces of documentary evidence which were later admitted by the Court. 18 Petitioner's documentary evidence are as follows: Exhibit Description P-1 The First Binder consisting of the Administrative Claim with annexes "A" to "N". P-2 The Second Binder labeled Exhibit "M-001" to "N-172". P-3 The Third Binder labeled Exhibit "N-173" to "N-314". P-4 The Fourth Binder labeled Exhibit "N-315" to "N-461". P-5 The Fifth Binder labeled Exhibit "N-462" to "N-615". P-6 The Sixth Binder labeled Exhibit "N-616" to "N-765". P-7 The Seventh Binder labeled Exhibit "N-766" to "N-939". P-8 The Eighth Binder labeled Exhibit "N-940" to "N-1079". P-9 The Ninth Binder labeled Exhibit "N-1080" to "N-1234". P-10 The Tenth Binder labeled Exhibit "N-1235" to "N-1270". P-11 The Eleventh Binder labeled "N-1271" to "N-1380". P-12 The Twelfth Binder labeled Exhibit "N-1381" to "N-1527". P-13 The Thirteenth Binder labeled Exhibit "N-1528" to "N-1647". P-14 The Administrative Claim dated March 19, 2014 addressed to the BIR Revenue District Office No. 49, to the attention of the Revenue District Officer, consisting of 5 pages found in the first binder (Exh. P-1). P-14-1 The name and signature of Mr. Richard R. Lapres appearing on page 5 of the Administrative Claim. P-15 Application for Tax Credit/Refunds (BIR Form No. 1914) signed by Sheiryll Soldevilla attached as Annex F to the first binder (Exh. P-1). P-15-1 The stamp "Received" by the Administrative Section of the BIR Revenue District Office No. 49 with an initial of a receiving officer and date "March 19, 2014." P-15-2 The name Sheiryll Soldevilla and her signature appearing in the lower left portion in the Application. P-16 Notarized Certification of Ms. Sheiryll Soldevilla dated February 24, 2014 attached as Annex L to the Administrative Claim found in the first binder (Exh. P-1). P-16-1 The name Sheiryll Soldevilla and her signature appearing in the lower left portion in the Certification. P-17 Amended SEC License No. AFO94-000080 of Petitioner dated 26 April 2002 with attached Petition for Amendment of License consisting of 41 pages, certified as a true copy by the Securities and Exchange Commission (SEC). P-18 A copy of the "Amendment of the Articles of Association" of Travelport Global Distribution System B.V. together with the English translation, notarized and authenticated by the Philippine Embassy in the Netherlands. P-19 A copy of the "Informal Translation of the Articles of Travelport Global Distribution System B.V." with the English translation, notarized and authenticated by the Philippine Embassy in the Netherlands. P-20 The SEC Certification of Non-Registration of Travelport Global Distribution System B.V. dated September 23, 2014. P-21 A copy of the Marketing Services Agreement between Travelport Global Distribution System B.V. and Galileo Asia LLC-Philippine Branch notarized and authenticated by the Philippine Embassy in the U.S. P-22 The Certificate of Inward Remittance issued by Bank of America and notarized on October 28, 2014. P-22-1 The name and signature of Ms. Eilee G. Canillas appearing in the lower left hand corner of the Certificate. P-23 Official Receipt No. 0592 dated February 14, 2012 for the amount of USD269,061.00. P-23-1 Signature of Ms. Sheiryll Soldevilla. P-24 Official Receipt No. 0593 dated March 12, 2012 in the amount of USD223,048.00. P-24-1 Signature of Ms. Sheiryll Soldevilla. P-25 Official Receipt No. 0609 dated April 23, 2012 for the amount of USD146,627.00. P-25-1 Signature of Ms. Sheiryll Soldevilla. P-26 Official Receipt No. 0716 dated May 21, 2012 for the amount of USD128,275.00. P-26-1 Signature of Ms. Sheiryll Soldevilla. P-27 Official Receipt No. 0758 dated June 11, 2012 for the amount of USD215,477.00. P-27-1 Signature of Ms. Sheiryll Soldevilla. P-28 Official Receipt No. 0782 dated July 9, 2012 for the amount of USD176,620.00. P-28-1 Signature of Ms. Sheiryll Soldevilla. P-29 Official Receipt No. 0851 dated August 13, 2012 for the amount of USD207,203.00. P-29-1 Signature of Ms. Sheiryll Soldevilla. P-30 Official Receipt No. 0001 dated September 17, 2012 in the amount of USD149,931.00. P-30-1 Signature of Ms. Sheiryll Soldevilla. P-31 Official Receipt No. 0004 dated December 10, 2012 in the amount of USD297,506.00. P-31-1 Signature of Ms. Sheiryll Soldevilla. P-32 Sworn Statement of Ms. Sheiryll Soldevilla. P-32-1 The name Sheiryll Soldevilla and her signature appearing in the lower right portion of the Sworn Statement. P-33 Monthly VAT Return (BIR Form 2550M) for January 2012 consisting of two (2) pages in the First Binder (Exh. P-1). P-33-1 BIR stamp "Received" and the date February 17, 2012. P-33-2 The name Sheiryll Soldevilla and signature appearing in the lower left portion on the first page. P-34 Monthly VAT Return (BIR Form 2550M) for February 2012 consisting of two (2) pages in the First Binder (Exh. P-1). P-34-1 BIR stamp "Received" and the date March 20, 2012. P-34-2 The name Sheiryll Soldevilla and signature appearing in the lower left portion on the first page. P-35 Quarterly VAT Return (BIR Form 2550Q) for the first Quarter of 2012 consisting of four (4) pages in the First Binder (Exh. P-1). P-35-1 BIR stamp "Received" and the date April 25, 2012. P-35-2 The name Sheiryll Soldevilla and signature appearing in the lower left portion on the first page. P-36 Monthly VAT Return (BIR Form 2550M) for April 2012 consisting of two (2) pages in the First Binder (Exh. P-1). P-36-1 BIR stamp "Received" and the date May 21, 2012. P-36-2 The name Sheiryll Soldevilla and signature appearing in the lower left portion on the first page. P-37 Monthly VAT Return (BIR Form 2550M) for May 2012 consisting of three (3) pages in the First Binder (Exh. P-1). P-37-1 BIR stamp "Received" and the date June 20, 2012. P-37-2 The name Sheiryll Soldevilla and signature appearing in the lower left portion on the first page. P-38 Quarterly VAT Return (BIR Form 2550Q) for the second quarter 2012 consisting of four (4) pages in the First Binder (Exh. P-1). P-38-1 BIR stamp "Received" and the date July 25, 2012. P-38-2 The name Sheiryll Soldevilla and signature appearing in the lower left portion on the first page. P-39 Monthly VAT Return (BIR Form 2550M) for July 2012 consisting of three (3) pages in the First Binder (Exh. P-1). P-39-1 BIR stamp "Received" and the date August 22, 2012. P-39-2 The name Sheiryll Soldevilla and signature appearing in the lower left portion on the first page. P-40 Monthly VAT Return (BIR Form 2550M) for August 2012 consisting of three (3) pages in the First Binder (Exh. P-1). P-40-1 BIR stamp "Received" and the date September 20, 2012. P-40-2 The name Sheiryll Soldevilla and signature appearing in the lower left portion on the first page. P-41 Quarterly VAT Return (BIR Form 2550Q) for the third quarter 2012 consisting of four (4) pages in the First Binder (Exh. P-1). P-41-1 BIR stamp "Received" and the date October 25, 2012. P-41-2 The name Sheiryll Soldevilla and signature appearing in the lower left portion on the first page. P-42 Monthly VAT Return (BIR Form 2550M) for October 2012 consisting of three (3) pages in the First Binder (Exh. P-1). P-42-1 BIR stamp "Received" and the date November 20, 2012. P-43 Monthly VAT Return (BIR Form 2550M) for November 2012 consisting of three (3) pages in the First Binder (Exh. P-1). P-43-1 BIR stamp "Received" and the date December 20, 2012. P-43-2 The name Sheiryll Soldevilla and signature appearing in the lower left portion on the first page. P-44 Quarterly VAT Return (BIR Form 2550Q) for the fourth quarter 2012 consisting of one (1) page in the First Binder (Exh. P-1). P-44-1 BIR stamp "Received" and the date January 25, 2013. P-44-2 The name Sheiryll Soldevilla and signature appearing in the lower left portion on the first page. P-45 Petitioner's BIR Certificate of Registration (BIR Form No. 2303) OCN 9RC0000345327. P-45-1 Petitioner's TIN 004-460-118-000. P-46 PLDT's Permit to use computerized accounting system, with Permit No. 0909-116-00012-CAS issued on September 9, 2009 by the BIR Large Taxpayers Service consisting of eleven (11) pages, certified as a true copy by the BIR Large Taxpayers Assistant Division. P-47 Judicial Affidavit of Sheiryll Soldevilla dated December 16, 2014. P-47-1 Name and signature of Ms. Soldevilla appearing on page 22 of Ms. Soldevilla's Judicial Affidavit. P-48 Judicial Affidavit of Mr. Richard R. Lapres dated December 10, 2014. P-48-1 Name and signature of Mr. Lapres appearing in the last page of Mr. Lapres' Judicial Affidavit. P-49 Part 1 of Mr. Jerome Antonio B. Constantino's (ICPA) Report dated April 20, 2015. P-49-1 Part 2 of the ICPA Report. P-49-2 The name Jerome Antonio B. Constantino and signature on page 27, Part 1 of the ICPA Report. P-50 Official Receipt No. 0002 dated October 9, 2012 for the amount of USD340,134.00. P-51 Petitioner's BIR Certificate of Registration with RDO Control No. 9RC0000063092. P-52 Petitioner's Application for Registration Information Update-Change in Registered Address. P-53 Official Receipt No. 0003 dated November 21, 2012 for the amount of USD219,431.00. P-54 Petitioner's general ledger of marketing fees. P-55 Summary of zero-rated sales prepared by Petitioner. P-56 Petitioner's general ledger of asset clearing. P-57 Certificate of Inward Remittances issued by Bank of America notarized on February 7, 2014. P-58 Petitioner's general ledger of input tax. P-59 Petitioner's 2012 Audited Trial Balance Sheet. P-60 Petitioner's 2012 Audited Financial Statements. P-61 Summary List of local sales prepared by Petitioner. P-62.1 to VAT Official Receipts. P-62.409 P-63 Summary List of input tax prepared by Petitioner. P-64.1 Petitioner's Monthly VAT Declaration for the month ended January 31, 2013. P-64.2 Petitioner's Monthly VAT Declaration for the month ended February 28, 2013. P-64.3 Petitioner's Quarterly VAT return for the quarter ended March 31, 2013. P-64.4 Petitioner's Monthly VAT Declaration for the month ended April 30, 2013. P-64.5 Petitioner's Monthly VAT Declaration for the month ended May 31, 2013. P-64.6 Petitioner's Quarterly VAT Return for the quarter ended June 30, 2013 (2nd Quarter). P-64.7 Petitioner's Monthly VAT Declaration for the month ended July 31, 2013. P-64.8 Petitioner's Monthly VAT Declaration for the month ended August 31, 2013. P-64.9 Petitioner's Quarterly VAT Return for the quarter ended September 30, 2013 (3rd Quarter). P-64.10 Petitioner's Monthly VAT Declaration for the month ended October 31, 2013. P-64.11 Petitioner's Monthly VAT Declaration for the month ended November 30, 2013. P-64.12 Petitioner's Quarterly VAT Return for the quarter ended December 31, 2013 (4th Quarter). P-65.1 Petitioner's Monthly VAT Declaration for the month ended January 31, 2014. P-65.2 Petitioner's Monthly VAT Declaration for the month ended February 29, 2014. P-65.3 Petitioner's Quarterly VAT Return for the quarter ended March 31, 2014 (1st Quarter). P-65.4 Petitioner's Monthly VAT Declaration for the month ended April 30, 2014. P-65.5 Petitioner's Monthly VAT Declaration for the month ended May 31, 2014. P-65.6 Petitioner's Quarterly VAT Return for the quarter ended June 30, 2014 (2nd Quarter). P-65.7 Petitioner's Monthly VAT Declaration for the month ended July 31, 2014. P-65.8 Petitioner's Monthly VAT Declaration for the month ended August 31, 2014. P-65.9 Petitioner's Quarterly VAT Return for the quarter ended September 30, 2014 (3rd Quarter). P-65.10 Petitioner's Monthly VAT Declaration for the month ended October 31, 2014. P-65.11 Petitioner's Monthly VAT Declaration for the month ended November 30, 2014. P-65.12 Petitioner's Quarterly VAT Return for the quarter ended December 31, 2014 (4th Quarter). P-66.1 to Documents supporting input taxes for the 1st quarter of P-66.205 2012 (excluding January) i.e., sales invoices, official receipts, billing statements (Part 1 of 2). P-66.206 to Documents supporting input taxes for the 1st Quarter of P-66.360 2012 (excluding January) i.e., sales invoices, official receipts, billing statements (Part 2 of 2). P-67.1 to Documents supporting the input taxes for the 2nd quarter P-67.263 of 2012 i.e., sales invoices, official receipts, billing statements (Part 1 of 3). P-67.264 to Documents supporting the input taxes for the 2nd quarter P-67.316 of 2012 i.e., sales invoices, official receipts, billing statements (Part 2 of 3). P-67.317 to Documents supporting the input taxes for the 2nd quarter P-67.528 of 2012 i.e., sales invoices, official receipts, billing statements (Part 3 of 3). P-68.1 to Documents supporting the input taxes for the 3rd quarter P-68.248 of 2012 i.e., sales invoices, official receipts, billing statements (Part 1 of 4). P-68.249 to Documents supporting the input taxes for the 3rd quarter P-68.317 of 2012 i.e., sales invoices, official receipts, billing statements (Part 2 of 4). P-68.318 to Documents supporting the input taxes for the 3rd quarter P-68.405 of 2012 i.e., sales invoices, official receipts, billing statements (Part 3 of 4). P-68.406 to Documents supporting the input taxes for the 3rd quarter P-68.508 of 2012 i.e., sales invoices, official receipts, billing statements (Part 4 of 4). P-69.1 to Documents supporting the input taxes for the 4th quarter P-69.205 of 2012 i.e., sales invoices, official receipts, billing statements (Part 1 of 3). P-69.206 to Documents supporting the input taxes for the 4th quarter P-69.249 of 2012 i.e., sales invoices, official receipts, billing statements (Part 2 of 3). P-69.250 to Documents supporting the input taxes for the 4th quarter P-69.441 of 2012 i.e., sales invoices, official receipts, billing statements (Part 3 of 3). P-70 PLDT's Permit to use computerized accounting system, with Permit No. 0909-116-00012-CAS issued on September 9, 2009 by the BIR Large Taxpayers Service, certified as a true copy by the BIR Large Taxpayers Assistant Division. P-71 Petitioner's Monthly VAT Declaration for the month ended January 31, 2015. P-72 Certificate of Inward Remittance issued by Bank of America by order of Travelport Finance Ltd. Notarized on October 28, 2014. P-73 Mr. Jerome Antonio B. Constantino's Judicial Affidavit dated May 6, 2015. P-73-1 Name and signature of Mr. Constantino appearing in page 14 of Mr. Constantino's Judicial Affidavit. On the other hand, respondent's counsel manifested that she would not be presenting evidence on the ground that there is no report of investigation. 19 CTIEac On February 10, 2016, the case was deemed submitted for decision after petitioner filed its Memorandum 20 on January 13, 2016 and the Judicial Records Division of this Court issued a Records Verification 21 on February 2, 2016, stating that respondent failed to file a Memorandum. 22 As stipulated by the parties, the sole issue submitted for this Court's resolution is whether petitioner is entitled to a refund or issuance of TCC in the amount of P6,080,035.23, representing its alleged unutilized input VAT on purchases of goods and services attributable to its VAT zero-rated sales of services for the period covering February 1, 2012 to December 31, 2012. 23 Petitioner contends that it is entitled to a refund or issuance of a TCC in the amount of P6,080,035.23 when it incurred total accumulated input VAT from its domestic purchases of goods and services attributable to its VAT zero-rated sales of services to its foreign affiliate during the period of February 1, 2012 to December 31, 2012. Petitioner also states that the said amount was paid in the ordinary course of business. Petitioner further avers that its input VAT was neither applied against any output VAT, nor utilized, nor carried forward to the succeeding taxable quarters subsequent to the filing of petitioner's administrative claim for refund or issuance of TCC. Petitioner points out that it is a registered VAT taxpayer since January 1, 1997 up to the present, including the period within which petitioner is claiming tax refund or issuance of TCC. Petitioner also asserts that it was engaged in zero-rated sales during the claimed period under Section 108 (B) (2) of the National Internal Revenue Code (NIRC) of 1997, as amended. Petitioner likewise insists that it has filed its administrative claim within the two-year prescriptive period, and in support thereof, petitioner has allegedly submitted pertinent documents. Section 112 (A) and (C) of the NIRC of 1997, as amended, provides the basis for administrative and judicial claims for refund or tax credit of input tax attributable to zero-rated or effectively zero-rated sales, quoted hereunder for easy reference: "SEC. 112. Refunds or Tax Credits of Input Tax. (A) Zero-Rated or Effectively Zero-Rated Sales. Any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however , That in the case of zero-rated sales under Section 106(A)(2)(a)(1), (2) and (b) and Section 108(B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further , That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods of properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales: Provided, finally , That for a person making sales that are zero-rated under Section 108(B)(6), the input taxes shall be allocated ratably between his zero-rated and non-zero-rated sales. xxx xxx xxx (C) Period within which Refund or Tax Credit of Input Taxes shall be Made. In proper cases, the Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in accordance with Subsection (A) hereof. In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty-day period, appeal the decision or the unacted claim with the Court of Tax Appeals." Pursuant to the afore-quoted provisions, and as laid down by the Supreme Court in a number of cases, 24 a taxpayer may claim a refund or tax credit certificate for input taxes paid on purchases of goods and services attributable to zero-rated sales upon compliance with the following requisites: 1. the taxpayer-claimant must be VAT-registered; 2. there must be zero-rated or effectively zero-rated sales; 3. input taxes were incurred or paid; 4. the input taxes incurred or paid must be attributable to zero-rated or effectively zero-rated sales; 5. the input taxes were not applied against any output VAT liability; and 6. the claim for refund must be timely filed both in the administrative and judicial levels. Petitioner's administrative and judicial claims were filed within the period prescribed by law. The Court shall determine first the timeliness of the filing of petitioner's claim. Pursuant to Section 112 (A) of the NIRC of 1997, as amended, the application for tax credit certificate or 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. SaCIDT The present claim covers the four quarters of taxable year 2012. Counting from the close of the said taxable quarters, petitioner had until the following dates to file its administrative claim for refund or issuance of TCC of unutilized input VAT attributable to its zero-rated sales: Quarter Close of Taxable 2-year Quarter Prescriptive Period 1st March 31, 2012 March 31, 2014 2nd June 30, 2012 June 30, 2014 3rd September 30, 2012 September 30, 2014 4th December 31, 2012 December 31, 2014 Clearly, petitioner's administrative claim for refund or issuance of TCC, together with the supporting documents, was seasonably filed on March 19, 2014. 25 On the other hand, Section 112 (C) of the NIRC of 1997, as amended, states the time requirements for filing of a judicial claim for the refund or tax credit of input VAT. 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 the CTA. 26 Note that the 120-day period begins to run from the date of submission of complete documents supporting the administrative claim. If there is no evidence showing that the taxpayer was required to submit or actually submitted additional documents after the filing of the administrative claim, it is presumed that the complete documents accompanied the claim when it was filed. 27 Applying the foregoing to the instant case, the 120-day period provided for respondent to act on petitioner's administrative claim expired on July 17, 2014. Without petitioner receiving any decision from respondent on the said claim, petitioner had thirty (30) days from July 17, 2014, or until August 16, 2014, to appeal such inaction by respondent before this Court. Thus, the Petition for Review filed on August 14, 2014 fell within the "120+30"-day period. The Court shall now proceed to determine petitioner's compliance with the other requisites. Petitioner is a VAT- registered entity. Petitioner is registered with the Bureau of Internal Revenue as a VAT taxpayer with TIN 004-460-118-000. 28 Petitioner has zero- rated sales. Petitioner avers that it rendered services in the Philippines to Travelport Global Distribution System, B.V. that is doing business outside the Philippines for the period February 1, 2012 to December 31, 2012. Petitioner posits that such services which were paid for in acceptable foreign currency and duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas are subject to zero percent (0%) VAT pursuant to Section 108 (B) (2) of the NIRC of 1997, as amended, which states: "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 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. 29 (Burmeister case) , the Supreme Court held that in order for the sale 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 by a VAT-registered person must be other than processing, manufacturing or repacking of goods; 2. the payment for such services must be in acceptable foreign currency accounted for in accordance with the BSP rules and regulations; and 3. the recipient of such services is doing business outside the Philippines. It is undisputed that petitioner is a branch office in the Philippines of Galileo Asia, LLC, a foreign corporation organized and existing under the laws of the State of Delaware, USA. Petitioner is licensed by the SEC to do business and is actually doing business in the Philippines. 30 cHECAS Pursuant to the Marketing Services Agreement 31 executed on January 1, 2009, petitioner was appointed by Travelport as its distributor for the marketing, promotion, distribution supply and support of Travelport Global Distribution Systems (TGDS) in the Philippines. The TGDS enables travel agencies and other organizations to make bookings with participating companies, such as airlines and other providers of travel-related services. Petitioner's services clearly fall within the scope of "services other than processing, manufacturing or repacking of goods" as contemplated in Section 108 (B) (2) of the NIRC of 1997, as amended. Furthermore, Travelport is a corporation established in Amstelveen, Netherlands as evidenced by its Amended Articles of Association 32 with the corresponding Informal Translation 33 in English, and is not registered in the Philippines as a corporation or partnership as certified by the SEC. 34 With the foregoing, the Court finds that petitioner sufficiently proved that Travelport, as recipient of petitioner's services, is doing business outside the Philippines. Moreover, 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, provides 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" (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) Based on 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. Records show that for the period covering February 1, 2012 to December 31, 2012, petitioner's sales of services to Travelport amounted to US$2,373,313.00 or equivalent to P100,552,650.29. 35 The said amount is duly supported by VAT zero-rated official receipts 36 (in US dollar denomination) that are compliant with the invoicing requirements. These US dollar receipts can also be traced to the inward remittances to petitioner's bank account as certified by the Bank of America. 37 AHDacC Evidently, petitioner's sales of services for the claimed period in the amount of P100,552,650.29, which was duly reported in its 2012 Quarterly VAT Returns, 38 would qualify for VAT zero-rating under Section 108 (B) (2) of the NIRC of 1997, as amended. Input taxes were incurred or paid. Petitioner's total input VAT credits for taxable year 2012, excluding the month of January 2012, amounted to P7,125,127.22, computed as follows: 39 4th Quarter 1st Quarter 3rd Quarter covering covering 2nd Quarter covering July October to January to covering April to September December March 2012 to June 2012 2012 2012 Consolidated DESCRIPTION (Exhibit P-35) (Exhibit P-38) (Exhibit P-41) (Exhibit P-44) Total Input tax on domestic purchases of capital goods exceeding P1M P- P142,714.27 P- P- P142,714.27 Add: Input tax deferred on capital goods exceeding P1M from previous quarter 1,376,348.43 1,179,978.55 1,118,394.39 919,260.82 Less: Input tax on domestic purchases of capital goods exceeding P1M deferred to the succeeding period 1,179,978.55 1,118,394.39 919,260.82 741,119.43 (a) Amortized portion of the input tax on domestic purchases of capital goods exceeding P1M 196,369.88 204,298.43 199,133.57 178,141.39 777,943.27 (b) Input tax on domestic purchases of capital goods not exceeding P1M 96,503.57 103,258.93 151,382.14 17,164.29 368,308.93 (c) Input tax on domestic purchases of goods other than capital goods 12,264.32 3,929.36 11,625.14 13,736.14 41,554.96 (d) Input tax on domestic purchases of services 1,283,102.43 1,570,109.75 1,328,863.74 2,300,289.58 6,482,365.50 Less: Input tax for the month of January (Exhibit P-33) 545,045.44 - - - 545,045.44 Total input VAT credits (a+b+c+d) P1,043,194.76 P1,881,596.47 P1,691,004.59 P2,509,331.40 P7,125,127.22 ============ ============ ============ ============ =========== Deducting the output tax liability of petitioner from these available input VAT yields an excess input VAT amounting to P6,713,052.06: Input tax credits per VAT returns P7,125,127.22 Less: Output VAT liability 412,075.16 40 Unutilized excess input VAT per VAT returns P6,713,052.06 ============ However, only the amount of P6,080,035.23 out of P6,713,052.06 is being claimed for refund by petitioner, as computed below: a) Input VAT on domestic purchases of services and goods other than capital goods P5,477,047.08 b) Input VAT on domestic purchases of capital goods not exceeding P1 Million 306,541.08 c) Amortization of input VAT on domestic purchases of capital goods exceeding P1 Million 708,522.23 Total input VAT per Summary List of Input Taxes 41 P6,492,110.39 Less: Output VAT liability 412,075.16 Excess Input VAT claimed for refund P6,080,035.23 ============ Petitioner was not able to account for the difference of P633,016.83 between the excess input VAT per VAT returns of P6,713,052.06 and the amount claimed for refund of P6,080,035.23. To prove that it incurred/paid the input VAT of P6,492,110.39 from February 1 to December 31, 2012, petitioner submitted various suppliers' invoices and official receipts which were examined by the Court-commissioned Independent Certified Public Accountant (ICPA), Mr. Jerome Antonio B. Constantino. a) Input VAT on domestic purchases of services and goods other than capital goods, and b) Input VAT on domestic purchases of capital goods not exceeding P1 Million Based on the ICPA Report 42 dated April 20, 2015, out of the P5,477,047.08 input VAT claim on domestic purchases of services and goods other than capital goods and P306,541.08 input VAT claim on domestic purchases of capital goods not exceeding P1 Million, totaling P5,783,588.16, only the amount of P1,185,686.34 was properly substantiated. With regard to the remaining input VAT claim of P4,597,901.82, 43 the ICPA noted the following findings: FINDINGS EXHIBIT P-49 ANNEX INPUT TAX 1 Input VAT on domestic purchase of services supported by VAT Reg. TIN/TIN No. VAT ORs but petitioner's TIN not indicated 5-A4, 5-B4, 5-C5, 5-D4 P137,516.10 2 Input VAT on domestic purchase of goods supported by TIN No. VAT invoices but petitioner's TIN not indicated 5-A5, 5-B5, 5-C6, 5-D5 17,562.14 3 Input VAT on domestic purchase of capital goods not exceeding P1M supported by TIN No. VAT invoices but petitioner's TIN not indicated 5-A6, 5-B6 75,101.80 4 Input VAT on domestic purchases of services supported by VAT Reg. TIN/TIN No. VAT ORs dated not within the quarter of claim but within the period of claim and petitioner's TIN not indicated 5-A7, 5-B7, 5-C7, 5-D6 15,158.30 5 Input VAT on domestic purchase of goods supported by TIN No. VAT invoices dated not within the quarter of claim but within the period of claim and petitioner's TIN not indicated 5-B8, 5-C8, 5-D7 6,083.81 6 Input VAT on domestic purchase of goods supported by TIN No. VAT invoices dated not within the quarter of claim but within the period of claim and petitioner's name and TIN not indicated 5-D8 938.57 7 Input VAT on domestic purchase of capital goods not exceeding P1M supported by TIN No. VAT dated not within the quarter of claim but within the period of claim and petitioner's TIN not indicated 5-B9, 5-C9 121,178.57 8 Input VAT on domestic purchase of services supported by VAT Reg. TIN/TIN No. VAT ORs but no VAT breakdown 5-A8, 5-B10, 5-C10, 5-D9 985,968.61 9 Input VAT on domestic purchase of services supported by VAT Reg. TIN/TIN No. VAT ORs but no VAT breakdown and dated not within the quarter of claim but within period of claim 5-A9, 5-C11 17,500.66 10 Input VAT on domestic purchase of services supported by VAT Reg. TIN/TIN No. VAT ORs but no VAT breakdown and petitioner's TIN not indicated 5-A10, 5-B-11, 5-C12, 5-D10 2,596,439.00 11 Input VAT on domestic purchase of services supported by VAT Reg. TIN/TIN No. VAT ORs but no VAT breakdown and petitioner's TIN is altered but with countersignature 5-B12, 5-C13 6,964.17 12 Input VAT on domestic purchase of services supported by VAT Reg. TIN/TIN No. VAT ORs but no VAT breakdown and petitioner's TIN is altered but without countersignature 5-B13, 5-C14 13,432.29 13 Input VAT on domestic purchase of services supported by VAT Reg. TIN/TIN No. VAT ORs but no VAT breakdown, dated not within the quarter of claim but within the period of claim and petitioner's TIN not indicated 5-A11, 5-B14, 5-C15, 5-D11 189,458.82 14 Input VAT on domestic purchase of services supported by VAT Reg. TIN/TIN No. VAT ORs but no VAT breakdown , dated not within the quarter of claim but within the period of claim and wrong petitioner's TIN 5-A12 119.35 15 Input VAT on domestic purchase of services supported by VAT Reg. TIN/TIN No. VAT ORs but no VAT breakdown, no date indicated and petitioner's TIN not indicated 5-B15 908.54 16 Input VAT on domestic purchase of services supported by VAT Reg. TIN/TIN No. VAT ORs but wrong petitioner's TIN 5-B16, 5-C16 61,175.91 17 Input VAT on domestic purchase of services supported by documents other than VAT OR 5-A13, 5-B17, 5-C17, 5-D12 129,273.43 18 Input VAT on domestic purchase of services supported by photocopied ORs 5-B18, 5-C18, 5-D13 82,983.67 19 Input VAT on domestic purchase of goods supported by photocopied invoices 5-D14 1,894.93 20 Input VAT on domestic purchase of services supported by photocopied ORs and petitioner's TIN not indicated 5-B19 1,826.79 21 Input VAT on domestic purchase of goods supported by photocopied invoices but petitioner's TIN not indicated 5-A14, 5-C19 1,528.50 22 Input VAT on domestic purchase of goods supported by photocopied invoices but incomplete petitioner's TIN 5-B20 744.00 23 Input VAT on domestic purchase of goods supported by photocopied invoices dated not within the quarter of claim but within the period of claim 5-B21, 5-C20 644.25 24 Input VAT on domestic purchase of services supported by VAT Reg. TIN/TIN No. VAT ORs but not within the period of claim 5-A15 1,714.29 25 Input VAT on domestic purchase of services where documents are still being located by petitioner 5-A16, 5-B22, 5-C21, 5-D15 183,269.50 26 Overclaimed input VAT 5-A17, 5-B23, 5-C22, 5-D16 2,934.18 44 Underclaimed input VAT (54,418.28) 45 Total P4,597,901.90 46 For not being properly substantiated by VAT invoices or official receipts 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, the above input taxes shall be disallowed. IDSEAH However, it must be noted that in arriving at the above total input VAT of P4,597,901.90, the ICPA deducted the amount of P54,418.28 representing petitioner's underclaimed input VAT, i.e. , the excess of the input VAT reflected per petitioner's supporting invoices/official receipts over the input VAT shown per petitioner's summary list and VAT Returns. In effect, the deduction of the amount of P54,418.28 has reduced the input VAT disallowances and has increased the input VAT which may be refunded. The Court finds such deduction of P54,418.28 improper since petitioner cannot be allowed to refund more than what it declared in the VAT Returns. Likewise, it is erroneous to disallow input taxes which are more than those reflected per summary list/VAT Returns. Thus, the amount of P19,880.16, detailed below, representing the excess of the input VAT per supporting VAT invoices/official receipts as found by the ICPA over the input VAT reported per summary list/VAT Returns shall be taken out from the total amount of P4,597,901.90: Exhibit P-49 Annex Exhibit No. Supplier Input VAT per VAT Returns Input VAT per ICPA Findings Difference 5-A4, 5A-17 P-66.189 PRO FLIGHTS TRAVEL P555.10 P555.11 P0.01 5-B16, 5-B23 P-67.388 PLDT 960.00 977.14 17.14 P-67.389 PLDT 900.00 916.07 16.07 P-67.392 PLDT 600.00 610.71 10.71 P-67.393 PLDT 480.00 488.57 8.57 P-67.394 PLDT 960.00 977.14 17.14 P-67.395 PLDT 1,080.00 1,099.29 19.29 P-67.396 PLDT 2,496.00 2,540.57 44.57 P-67.397 PLDT 160.71 163.58 2.87 P-67.398 PLDT 160.71 163.58 2.87 P-67.399 PLDT 160.71 163.59 2.88 P-67.400 PLDT 160.71 163.58 2.87 P-67.401 PLDT 160.71 163.58 2.87 5-B10, 5-B23 P-67.268 CENTURY PROPERTIES MGT., INC. 24,424.54 25,565.87 1,141.33 5-B17, 5-B23 P-67.453 GLOBE TELECOM 380.65 832.54 451.89 5-B17, 5-B23 P-67.454 GLOBE TELECOM 222.69 225.68 2.99 5-C4, 5-C22 P-68.253 PLDT 5,029.20 5,031.06 1.86 5-C10, 5-C22 P-68.281 CENTURY PROPERTIES MGT., INC. 25,242.54 25,565.87 323.33 5-C17, 5-C22 P-68.428 GLOBE TELECOM 259.00 259.62 0.62 P-68.431 INSTONE PHILIPPINES, INC. 50.76 2,106.99 2,056.23 P-68.434 SIM COMPUTER SALES, INC. 261.16 375.00 113.84 5-D9, 5-D16 P-69.224 EASTERN TELECOM 2,488.12 3,108.75 620.63 P-69.189 STARS TRAVEL, INC. 480.00 830.46 350.46 5-D10, 5-D16 P-69.244 MARSMAN DRYSDALE TRAVEL, INC. 697,155.49 711,810.84 14,655.35 5-D13, 5-D16 P-69.349 PLDT 7,510.74 7,512.67 1.93 P-69.350 PLDT 4,974.00 4,975.29 1.29 P-69.357 PLDT 168.32 168.39 0.07 P-69.358 PLDT 960.00 968.57 8.57 5-D12, 5-D16 P-69.417 INNOVE COMMUNICATIONS 104.70 106.61 1.91 P19,880.16 In addition, petitioner's claimed input VAT in the amount of P394,540.80, as detailed below, shall also be disallowed for non-compliance with the substantiation requirements as provided by law and revenue regulations: ICPA EXHIBIT SUPPLIER INVOICE/OR NO. DATE INPUT VAT REPORT NO. ANNEX No description of service indicated in OR 5-C1 P-68.251 GOLDEN WORLD TRAVEL AND TOURS 0182 8/24/2012 P277.00 5-C1 P-68.252 GOLDEN WORLD TRAVEL AND TOURS 0179 7/26/2012 505.47 5-D1 P-69.167 GOLDEN WORLD TRAVEL AND TOURS 0188 12/21/2012 152.90 SUBTOTAL P935.37 Overclaimed input VAT 5-A1 P-66.178 WI-TRIBE TEELCOM 15724-BR1 2/7/2012 P22.93 5-B1 P-67.179 PLDT PBMOR000938619 6/21/2012 8.57 5-B1 P-67.190 PLDT PBMOR000938627 6/21/2012 17.14 5-B1 P-67.223 PLDT PBMOR000938687 6/21/2012 17.14 5-B1 P-67.231 PLDT PBMOR000938668 6/21/2012 2.87 5-C1 P-68.160 PLDT PQGOR033778766 8/16/2012 0.01 PELOR000662374 8/15/2012 5-C1 P-68.188 PLDT PBMOR000957038 7/12/2012 0.01 PELOR000637529 7/6/2012 SUBTOTAL P68.67 Petitioner's address incomplete and no description of service in OR 5-C1 P-68.3 BAYANTEL 896734 7/23/2012 P7,135.14 5-C1 P-68.4 BAYANTEL 904850 9/18/2012 7,345.83 5-D1 P-69.1 BAYANTEL 917109 10/23/2012 7,345.83 SUBTOTAL P21,826.80 Petitioner's address not indicated and VAT not separately shown in OR 5-B1 P-67.1 CENTURY PROPERTIES MGMT., INC. 81462 6/11/2012 P25,715.87 5-C1 P-68.2 TRAVEL HIGH TOURS CORP. 0625 7/18/2012 466.80 5-D1 P-69.112 STARS TRAVEL, INC. 88053A 11/29/2012 5,777.22 5-D16 P-69.112 STARS TRAVEL, INC. 88053A 11/29/2012 818.38 SUBTOTAL P32,778.27 Petitioner's address not indicated in OR 5-A1 P-66.174 CAREER PHILIPPINES 22936 2/28/2012 P1,375.70 SHIPMANAGEMENT, INC. 5-A1 P-66.175 CLASSIC TRAVELHAUS, INC. 95158 2/21/2012 550.69 5-A1 P-66.176 PHILIPPINE GLOBAL 12678 2/29/2012 432.01 COMMUNICATIONS, INC. 5-A1 P-66.177 PROFLIGHTS TRAVEL 3547A 2/23/2012 368.26 5-A1 P-66.178 WI-TRIBE TELECOM 15724-BR1 2/7/2012 1,261.28 5-A1 P-66.179 CAREER PHILIPPINES 22923 2/7/2012 5,295.27 SHIPMANAGEMENT, INC. 5-A1 P-66.180 PROFLIGHTS TRAVEL 3540A 2/7/2012 1,807.61 5-A1 P-66.181 CLASSIC TRAVELHAUS, INC. 95401 3/16/2012 257.70 5-A1 P-66.182 RG FINANCIAL SERVICES LTD. 0815 3/2/2012 300.00 5-A1 P-66.183 TRAVELEXPERTS, INC. 0976 3/1/2012 320.91 5-B1 P-67.2 SURE TRAVEL, INC. 0248 5/23/2012 1,296.84 5-B1 P-67.3 RG FINANCIAL SERVICES LTD. 0854 5/31/2012 300.00 5-B1 P-67.4 ROYAL BARGE TRAVEL AND TOURS 5116 4/2/2012 2,655.44 5-B1 P-67.5 CLASSIC TRAVELHAUS, INC. 95963 4/20/2012 6,225.62 5-B1 P-67.6 BUDGET TRAVEL AND TOURS 77101 6/22/2012 60,717.60 5-B1 P-67.7 CAREER PHILIPPINES 23023 5/18/2012 1,473.17 SHIPMANAGEMENT, INC. 5-B1 P-67.8 CAREER PHILIPPINES 23001 4/27/2012 818.25 SHIPMANAGEMENT, INC. 5-B1 P-67.239 INTELLICARE 15734400 5/24/2012 9,009.50 5-B1 P-67.240 INTELLICARE 16014800 6/29/2012 359.49 5-B2 P-67.264 CENTURY PROPERTIES MANAGEMENT, 81342 5/16/2012 150.00 INC. 5-C1 P-68.5 SURE TRAVEL, INC. 0403 7/13/2012 1,848.61 5-C1 P-68.6 SURE TRAVEL, INC. 0423 7/24/2012 919.74 5-C1 P-68.7 QUISUMBING TORRES 13972 7/25/2012 5,515.72 5-C1 P-68.8 QUISUMBING TORRES 13973 7/25/2012 53,250.00 5-C1 P-68.9 QUISUMBING TORRES 13974 7/25/2012 1,693.18 5-C1 P-68.10 RG FINANCIAL SERVICES LTD. 0896 9/10/2012 300.00 5-C1 P-68.13 CLASSIC TRAVELHAUS, INC. 96687 9/7/2012 126.90 5-C1 P-68.14 CLASSIC TRAVELHAUS, INC. 96742 9/14/2012 127.35 5-C1 P-68.15 BUDGET TRAVEL AND TOURS 77327 8/3/2012 264.00 5-C1 P-68.16 CAREER PHILIPPINES 23158 9/27/2012 2,819.81 SHIPMANAGEMENT, INC. 5-C1 P-68.17 CAREER PHILIPPINES 23125 8/23/2012 2,651.67 SHIPMANAGEMENT, INC. 5-C1 P-68.249 INTELLICARE 16157500 7/26/2012 338.71 5-D1 P-69.113 SURE TRAVEL, INC. 0631 10/10/2012 1,927.79 5-D1 P-69.114 TRAVELEXPERTS, INC. 1418 10/8/2012 480.00 5-D1 P-69.115 PROFLIGHTS TRAVEL 3635 11/28/2012 40,935.00 5-D1 P-69.116 PROFLIGHTS TRAVEL 3636 11/28/2012 1,894.69 5-D1 P-69.118 SAFARI RENT-A-CAR, INC. 26005 11/9/2012 3,840.00 5-D1 P-69.119 CAREER PHILIPPINES 23230 11/22/2012 4,897.11 SHIPMANAGEMENT, INC. 5-D1 P-69.120 CAREER PHILIPPINES 23215 11/6/2012 2,384.98 SHIPMANAGEMENT, INC. 5-D1 P-69.121 TRAVEL HIGH TOURS CORP. 067 12/12/2012 320.79 SUBTOTAL P221,511.39 Petitioner's address not indicated in sales invoice 5-C2 P-68.501 SIM COMPUTER SALES, INC. 27331 7/11/2012 P32,625.00 5-C2 P-68.502 SIM COMPUTER SALES, INC. 27340 7/13/2012 15,133.93 5-C2 P-68.503 SIM COMPUTER SALES, INC. 27427 7/31/2012 18,423.21 5-C2 P-68.504 SIM COMPUTER SALES, INC. 27486 8/17/2012 1,821.43 5-C2 P-68.505 SIM COMPUTER SALES, INC. 24324 8/24/2012 13,339.29 5-C2 P-68.506 SIM COMPUTER SALES, INC. 24353 9/17/2012 14,566.07 5-D2 P-69.438 SIM COMPUTER SALES, INC. 24505 10/11/2012 12,235.71 5-D2 P-69.439 SIM COMPUTER SALES, INC. 24452 10/4/2012 787.50 5-D3 P-69.440 SIM COMPUTER SALES, INC. 24377 9/19/2012 155.36 5-D3 P-69.441 SIM COMPUTER SALES, INC. 24414 9/27/2012 1,173.21 SUBTOTAL P110,260.71 Petitioner's address and description of service not indicated in OR 5-D1 P-69.117 ROYAL BARGE TRAVEL AND TOURS 5291 10/22/2012 P1,662.28 Petitioner's TIN and address and description of service not indicated in OR 5-C4 P-68.254 TRAVEL HIGH TOURS CORP. 0666 10/12/2012 P320.06 5-D1 P-69.184 SKYCABLE 930640 10/4/2012 278.46 SUBTOTAL P598.52 Petitioner's TIN not indicated in OR 5-C1 P-68.164 PLDT PBMOR000971385 7/31/2012 P900.00 PBMOR000949152 7/10/2012 5-C1 P-68.165 PLDT PBMOR000971836 7/31/2012 960.00 PBMOR000949153 7/10/2012 5-D1 P-69.165 PLDT PBMOR001039576 10/1/2012 883.93 5-D1 P-69.166 PLDT PBMOR001039577 10/1/2012 942.86 SUBTOTAL P3,686.79 Wrong TIN of petitioner in OR 5-C1 P-68.1 EASTERN COMMUNICATIONS EHOCM0000018059 7/25/2012 P1,212.00 TOTAL P394,540.80 =========== In sum, out of petitioner's input VAT claim of P5,783,588.16 arising from domestic purchases of services and goods other than capital goods and domestic purchases of capital goods not exceeding P1 Million, a total amount of P5,026,980.82 shall be disallowed, computed as follows: aCIHcD Input VAT Not Property Substantiated per ICPA Report P4,597,901.90 Add: Underclaimed Input VAT Erroneously Deducted 54,418.28 Additional Input VAT Not Properly Substantiated per the Court's Verification 394,540.80 Less: Input VAT Disallowed by ICPA in Excess of the Input VAT per Return 19,880.16 Input VAT Not Properly Substantiated Per ICPA Report, as Adjusted P5,026,980.82 =========== c) Amortization of input VAT on domestic purchases of capital goods exceeding P1 Million With reference to the claimed P708,522.23 amortization of input VAT on domestic purchases of capital goods exceeding P1 Million, records show that the amount of P680,772.27 47 arose from purchases prior to 2012, while the amount of P27,749.96 48 pertains to purchases in May 2012 with the related input VAT of P142,714.27. 49 However, petitioner failed to submit before this Court VAT invoices/official receipts in support of its claimed amortization of input tax on purchases prior to 2012 in the amount of P680,772.27. As to the claimed P27,749.96 amortization of input VAT on May 2012 purchases, the ICPA found that petitioner's TIN was not reflected in the supporting invoices. 50 As such, the entire claimed P708,522.23 amortization of input VAT on domestic purchases of capital goods exceeding P1 Million must be disallowed. To recapitulate, out of the P6,492,110.39 total input VAT per petitioner's summary list, only the amount of P756,607.34 represents petitioner's valid input tax, as computed below: Input tax per Summary List of Input Taxes: Input VAT on domestic purchases of services and goods other than capital goods P5,477,047.08 Input VAT on domestic purchases of capital goods not exceeding P1Million 306,541.08 Amortization of input VAT on domestic purchases of capital goods exceeding P1Million 708,522.23 Total input VAT per Summary List of Input Taxes P6,492,110.39 Less: Disallowances 1) Input VAT on domestic purchases of services and goods other than capital goods and domestic purchases of capital goods not exceeding P1Million P5,026,980.82 2) Amortization of input VAT on domestic purchases of capital goods exceeding P1Million 708,522.23 Total Disallowances P5,735,503.05 Valid Input VAT P756,607.34 =========== Petitioner's excess input taxes were attributable to its zero-rated sales and remained unutilized in the succeeding quarters. A portion of the P756,607.34 valid input VAT shall be applied against petitioner's reported output VAT liability for the four taxable quarters of 2012 in the amount of P412,075.16. Hence, only the remaining input VAT of P344,532.18 can be attributed to petitioner's zero-rated sales for taxable year 2012, as shown below: Valid Input VAT P756,607.34 Less: Output VAT Due 412,075.16 Excess Input VAT Attributable to Zero-Rated Sales P344,532.18 ========== Even though the input VAT claimed herein for refund or issuance of TCC amounting to P6,080,035.23 was carried over to petitioner's VAT Returns subsequent to December 2012, 51 the same remained unutilized until it was deducted as "VAT Refund/TCC Claimed" in the November 2014 VAT Return. 52 Thus, it can be ascertained that it will no longer be utilized as credit for any future VAT liability. WHEREFORE , premises considered, this Petition for Review is PARTIALLY GRANTED . Accordingly, respondent is ORDERED TO REFUND or TO ISSUE A TAX CREDIT CERTIFICATE in the amount of P344,532.18 in favor of petitioner, representing the latter's unutilized excess input VAT attributable to its zero-rated sales of services for the period covering February 1, 2012 to December 31, 2012. SO ORDERED. (SGD.) CIELITO N. MINDARO-GRULLA Associate Justice Roman G. del Rosario, P.J. and Erlinda P. Uy, J. , concur. Footnotes 1. Par. 1.1, Brief Statement of the Case, Joint Stipulation of Facts and Simplification of Issues (JSFSI), Docket, vol. I, p. 446. 2. Exhibit "P-17", Docket, vol. I, p. 187. 3. Par. 2.3, Admitted Facts/Documents, JSFSI, Docket, vol. I, p. 447. 4. Exhibit "P-45", Docket, vol. I, p. 295. 5. Exhibit "P-21", Docket, vol. I, pp. 262 to 284. 6. Exhibits "P-35", "P-38", "P-41", and "P-44". 7. Exhibits "P-14" and "P-15". 8. Docket, vol. I, pp. 17-30. 9. Docket, vol. I, pp. 152 to 154. 10. Docket, vol. I, pp. 327 to 364. 11. Docket, vol. I, pp. 366 to 369. 12. Resolution, Docket, vol. I, pp. 378 to 381. 13. Resolution, Docket, vol. I, pp. 385 to 386. 14. Resolution, Docket, vol. I, pp. 438 to 441. 15. Docket, vol. I, pp. 395 to 398. 16. Docket, vol. I, pp. 446 to 471. 17. Docket, vol. I, pp. 484 to 500. 18. Resolution dated August 28, 2015, Docket, vol. II, pp. 623 to 625; Resolution dated December 11, 2015, Docket, vol. II, pp. 668 to 671. 19. Resolution dated May 19, 2015, Docket, vol. I, pp. 525 to 526. 20. Docket, vol. II, pp. 672 to 716. 21. Docket, vol. II, p. 717. 22. Resolution, Docket, vol. II, p. 719. 23. Simplification of Issues, JSFSI, Docket, vol. I, p. 449. 24. Commissioner of Internal Revenue vs. Toledo Power Company , G.R. Nos. 195175 & 199645, August 10, 2015; Luzon Hydro Corporation vs. Commissioner of Internal Revenue , G.R. No. 188260, November 13, 2013; Southern Philippines Power Corporation vs. Commissioner of Internal Revenue , G.R. No. 179632, October 19, 2011; Silicon Philippines, Inc. (Formerly Intel Philippines Manufacturing, Inc.) vs. Commissioner of Internal Revenue , G.R. No. 172378, January 17, 2011; AT&T Communications Services Philippines, Inc. vs. Commissioner of Internal Revenue , G.R. No. 182364, August 3, 2010; San Roque Power Corporation vs. Commissioner of Internal Revenue , G.R. No. 180345, November 25, 2009; Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue , G.R. No. 166732, April 27, 2007. 25. Exhibits "P-14" and "P-15". 26. ROHM Apollo Semiconductor Philippines vs. Commissioner of Internal Revenue , G.R. No. 168950, January 14, 2015. 27. Silicon Philippines, Inc. (Formerly Intel Philippines Manufacturing, Inc.) vs. Commissioner of Internal Revenue , G.R. No. 182737, March 2, 2016. 28. Par. 2.4, Admitted Facts/Documents, JSFSI, docket, vol. I, p. 447; Exhibit "P-45", Docket, vol. I, p. 295. 29. G.R. No. 153205, January 22, 2007. 30. Par. 2.1, Admitted Facts/Documents, JSFSI, Docket, vol. I, p. 447; Exhibit "P-17", Docket, vol. I, p. 187. 31. Exhibit "P-21", Docket, vol. I, pp. 262 to 284. 32. Exhibit "P-18", Docket, vol. I, pp. 228 to 238. 33. Exhibit "P-19", Docket, vol. I, pp. 239 to 260. 34. Exhibit "P-20", Docket, vol. I, p. 261. 35. Exhibit "P-49", Findings and Observations, No. 3, p. 8; Exhibit "P-55". 36. Exhibits "P-23" to "P-31", Docket, vol. I, pp. 286 to 294; Exhibits "P-50" and "P-53". 37. Exhibit "P-57". 38. Exhibit CY 2012 Zero-Rated Sales/Receipts P-35 1st Quarter P21,336,512.44 P-38 2nd Quarter 20,863,762.02 P-41 3rd Quarter 22,629,400.94 P-44 4th Quarter 35,722,974.89 Total P100,552,650.29 ============= 39. Exhibit "P-49", Annex 1. 40. Exhibit CY 2012 Output Tax Due P-35 1st Quarter P35,918.41 P-38 2nd Quarter 94,528.90 P-41 3rd Quarter 116,362.43 P-44 4th Quarter 165,265.42 Total P412,075.16 ========== 41. Exhibit "P-63". 42. Exhibit "P-49", pp. 16 to 20. 43. P5,783,588.16 less P1,185,686.34. 44. Exhibit P-49 Annex Quarter Overstatement 5-A17 1st Quarter P933.48 5-B23 2nd Quarter 1,309.23 5-C22 3rd Quarter 49.16 5-D16 4th Quarter 642.31 P2,934.18 ======== 45. Exhibit P-49 Annex Quarter Understatement 5-A17 1st Quarter P(4,410.84) 5-B23 2nd Quarter (3,306.34) 5-C22 3rd Quarter (4,440.67) 5-D16 4th Quarter (42,260.43) P(54,418.28) ========== 46. Difference of P.08 due to rounding off. 47. P708,522.23 less P27,749.96; Exhibit "P-49", Findings and Observations No. 1, p. 22. 48. Monthly amortization of P3,964.28 x 7 months (May, July to Dec. 2012); Exhibit "P-49", Findings and Observations No. 1, p. 22. 49. Exhibit "P-49", Findings and Observations No. 3, p. 23. 50. Exhibit "P-49", Annex 6. 51. Exhibits "P-64.1" to "P-65.11". 52. Exhibit "P-65.11", Line 20D.