Deutsche Knowledge Services, Pte. Ltd. v. Commissioner of Internal Revenue

SECOND DIVISION [C.T.A. CASE NO. 9079. January 9, 2018.] DEUTSCHE KNOWLEDGE SERVICES, PTE. LTD. , petitioner , vs. COMMISSIONER OF INTERNAL REVENUE , respondent . DECISION CASANOVA , J p : This is a Petition for Review 1 filed on June 30, 2015 by petitioner Deutsche Knowledge Services Pte. Ltd. against respondent Commissioner of Internal Revenue to seek the refund or issuance of a Tax Credit Certificate (TCC) in the amount of P23,816,670.55, allegedly representing its excess and unutilized input Value Added Tax (VAT) on purchases of goods and services attributable to zero-rated sales for the second quarter of calendar year (CY) 2013. Petitioner is the Philippine branch of a multinational company organized and existing under and by virtue of the laws of Singapore, with registered office address at One Raffles Quay, #17-10 South Tower, Singapore 048583. 2 It was registered with the Bureau of Internal Revenue (BIR) on June 16, 2005 as a VAT-registered taxpayer with Taxpayer Identification No. (TIN) 238-763-115-000. 3 Petitioner is licensed to do business as a regional operating headquarters (ROHQ) in the Philippines by the Securities and Exchange Commission (SEC) on April 25, 2005, pursuant to the Omnibus Investment Code of 1987, as amended by Republic Act (RA) No. 8756 and its implementing rules and regulations, 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. 4 Respondent is the duly appointed Commissioner of the Bureau of Internal Revenue (BIR) who has the power to decide disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto or other matters arising under the National Internal Revenue Code (NIRC) or other laws or portions thereof administered by the BIR. He holds office at 5th Floor, BIR Building, Diliman, Quezon City. On February 27, 2015, petitioner filed with the BIR-Large Taxpayers Regular Audit Division 3, an application for tax credit/refund of its excess and unutilized input VAT for the second quarter of CY 2013 in the amount of P23,816,670.55. 5 There being no action taken by respondent on petitioner's administrative claim for refund or issuance of TCC, petitioner filed the present Petition for Review before the Court on June 30, 2015. On July 16, 2015, respondent filed his Answer 6 interposing the following Special and Affirmative Defenses: " SPECIAL AND AFFIRMATIVE DEFENSES 4. Petitioner's alleged claim for refund is subject to administrative routinary investigation/examination by the Bureau. 5. The amount of P23,816,670.55 allegedly representing excess and unutilized input VAT on alleged purchases of goods and services allegedly attributable to zero-rated sales for the 2nd quarter of CY 2013 was not properly documented. 6. In an action for refund, the burden of proof is on the taxpayer to establish its right to refund, and failure to sustain the burden is fatal to the claim for refund/credit. 7. Petitioner must show that it has complied with the provisions of Section 229 of the NIRC of 1997 on the prescriptive period for claiming tax refund/credit. 8. There is no record of petitioner ever submitting complete documents to substantiate its administrative claim for refund. Such is a requirement, otherwise, the administrative body will have sufficient reason to deny the claim. As held by the Honorable Supreme Court in the case of Atlas Consolidated Mining and Development Corporation vs. Commissioner of Internal Revenue, G.R. 145526, 16 March 2007 : 'Petitioner's contention that non-compliance with Revenue Regulations 3-88 could not have adversely affected its case in the CTA indicates a failure on its part to appreciate the nature of the proceedings in that court. First, a judicial claim for refund or tax credit in the CTA is by no means an original action but rather an appeal by way of petition for review of a previous, unsuccessful administrative claim. Therefore, as in every appeal or petition for review, a petitioner has to convince the appellate court that the quasi-judicial agency a quo did not have any reason to deny its claims. In this case, it was necessary for petitioner to show the CTA not only that it was entitled under substantive law to the grant of its claims but also that it satisfied all the documentary and evidentiary requirements for an administrative claim for refund or tax credit . Second, cases filed in the CTA are litigated de novo . Thus, a petitioner should prove every minute aspect of its case by presenting, formally offering and submitting its evidence to the CTA. Since it is crucial for a petitioner in a judicial claim for refund or tax credit to show that its administrative claim should have been granted in the first place, part of the evidence to be submitted to the CTA must necessarily include whatever is required for the successful prosecution of an administrative claim .' (emphasis and underscoring supplied) The implementing rule for these complete documents required by law is RMO No. 53-98. Annex B-1 of said RMO lists all the required documents as follows: VALUE-ADDED TAX (For audit involving Claim for Refund/TCC) A.) Requirements from Taxpayer I. Requirements mention (sic) in Annex B II. Additional General Requirements 1) 3 copies of 'Application for VAT Credit/Refund.' 2) Summary List of Local Purchases specifying the following: xxx xxx xxx 3) Photocopies of VAT purchase invoices for purchase of goods and official receipts for purchase of services. (The invoices/official receipts must be arranged according to the summary list) 4) Summary of importations made during the period with the following details: xxx xxx xxx 5) Photocopies of invoices, import entry documents, official receipts or confirmation receipts evidencing payment of VAT. (Segregate documents paid by cash from those paid by tax debit memo) 6) VAT returns filed for the quarter showing that the amount applied for refund/TCC has been reflected as a deduction from the total available input tax, as well as VAT Return for the succeeding quarter. 7) Certification of taxpayer showing the amount of Zero-rated Sales, Taxable Sales and Exempt Sales. 8) A statement showing the amount and description of the sale of goods and services, name of persons or entities (except in case of exports) to whom the goods or services were sold and date of the transaction, where the applicant's zero-rated transactions are regulated by certain government agency. 9) Articles of Incorporation for first time filers. 10) Sales Contract/Agreement. 11) BOI Certificate of Registration. 12) BIR Certificate of Registration. 13) Certification from BOI, DOF, BOC, EPZA, etc., that subject taxpayer has not filed similar claim for refund covering the same period. 14) Sworn statement that ending inventory as of the close of the period covered by the Claim has been used directly or indirectly in the products subsequently exported as supported by export documents, if the applicant is 100% exporter. 15) Documents of liquidation evidencing the actual utilization of the raw materials in the manufacture of goods at least 70% of which has been actually exported, if the applicant is an indirect exporter. 16) Copy of the ITR and Certified Financial Statement, if applicable. 17) Beginning and ending inventory of raw materials, work-in-process, finished goods, supplies and materials. Additional Specific Requirements 1) For Zero-Rated Sales of Services (contractors, mining, etc.) a. Authenticated copy/ies of the contract/s showing the person/s for whom the services were rendered, amount of consideration, description of the services and documents evidencing actual payments. b. Photocopies of official receipts and billings together with a summary of the date of billing, name of principal, official receipt number, date of receipt, amount in foreign currency and the corresponding value thereof, date of remittance, name of bank, bank credit memo number and amount remitted in pesos. c. Bank credit memoranda and certificate from the BSP with information similar to 1-c (export sales). As stated above, the first documentary requirement is that provided in Annex B of the same RMO. Annex B provides for more requirements as follows: VALUE-ADDED TAX A) Requirements from Taxpayers 1) Proof of claimed tax credits 2) Proof of Tax Compliance Certificates applied 3) Xerox copy of used Tax Credit Certificate (TCC) with annotation of issued TDM at the back, if applicable 4) Proof of payment of deficiency tax, if any a) current year/period b) previous year/period 5) Certification of the appropriate government agency as to taxpayer's entitlement to tax incentives, if applicable 6) Xerox copies of the Official Receipts evidencing VAT payment on imported purchases, if applicable 7) Proof of exemption under special law, if applicable 8) Certification of the appropriate regulatory agency as to the exempt or zero-rated sales of the taxpayer under its regulatory supervision, if applicable 9) Certificate of Registration issued by the appropriate regulatory agency, together with the conditions attached to such registration, if applicable 10) Proof of 'Approval for Effective Zero-Rating of Sales,' if applicable 11) Sample invoice/s for 'Export/Exempt Sales,' if applicable 12) Proof that the acceptable foreign currency exchange proceeds on export/sales foreign currency denominated sales had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP), if applicable Far from complying with the checklist of requirements, petitioner merely stated that it submitted complete documents in support of its administrative claim for refund. This is not a claim for erroneously or illegally collected taxes where petitioner has the discretion of choosing the evidence it deems fit to prove its case. This is a claim for excess but legally collected, unutilized input taxes. It does not have to prove its case because the law already acknowledges it is entitled to refund. Thus, it merely has to substantiate the export sales and the excess/unutilized amount of input taxes attributable to the said export sales. Hence, petitioner's failure to comply with the duly mandated legal requirements in such claims for refund/tax credit warranted the denial by inaction of the administrative claim. The power to tax is the most effective instrument to raise needed revenues to finance and support the myriad activities of the government for the delivery of basic services essential to the promotion of the general welfare and enhancement of peace, progress, and prosperity of the people (Mactan Cebu International Airport Authority vs. Marcos, 261 SCRA 667, 690) . Consequently, any delay in implementing tax measures would be to the detriment of the public. It is for this reason that claims for refund are required to be done within certain time frames. In the instant petition, the failure of petitioner to comply with such periods is fatal to its cause. Moreover, petitioner's failure to submit documents supporting its claim for refund makes its administrative claim for refund pro-forma. This pro-forma administrative claim should not be taken as proper compliance with the requirements of the law that an administrative claim for refund should have been filed prior to the institution of a judicial claim for refund. Thus, without a validly and duly filed administrative claim for refund, the Honorable Court is without jurisdiction to entertain the Petition for Review. Petitioner's failure to comply with a condition precedent prior to the institution of its petition for review makes it dismissible for absence of jurisdiction on the part of the Honorable Court. The claimant has the burden of proof to establish the factual basis of his claim for tax credit or refund. After all tax refunds, like tax exemptions, are construed strictly against the taxpayer ( Citibank N.A. vs. Court of Appeals and Commissioner of Internal Revenue , 280 SCRA 459; Commissioner of Internal Revenue vs. Tokyo Shipping Co., Ltd. , 244 SCRA 332, both cited in Benguet Corporation vs. Commissioner of Internal Revenue , CTA Case No. 5392 promulgated October 30, 1998) . Partaking of the nature of exemptions, claims for refund are strictly construed against the claimant and cannot be allowed unless granted in the most explicit and categorical language ( Sps. Aguilar vs. Commissioner of Internal Revenue, et al. , CA G.R. SP No. 16432, March 30, 1999) . Being in the nature of tax exemptions, these claims are regarded as in derogation of sovereign authority and to be construed strictissimi juris against the claimant and liberally in favor of the taxing authority ( Commissioner of Internal Revenue vs. Procter and Gamble Philippines Manufacturing Corporation , 204 SCRA 377) . Claims for refund are construed strictly against the claimant for the same partake the nature of exemption from taxation (Commissioner of Internal Revenue vs. Ledesma, 31 SCRA 95) and such, they are looked upon with disfavor (Western Minolco Corp. vs. Commissioner of Internal Revenue, 124 SCRA 1211) ." The Pre-Trial Conference was reset 7 on October 29, 2015. Respondent's Pre-Trial Brief 8 was filed on August 11, 2015; while petitioner's Pre-Trial Brief 9 was filed on September 24, 2015. The parties filed their Joint Stipulation of Facts and Issues 10 on December 17, 2015, which was approved by the Court in its Pre-Trial Order 11 dated January 21, 2016. Petitioner presented as its witnesses, Ms. Rachel Concepcion 12 and Independent Certified Public Accountant (ICPA) Katherine O. Constantino. 13 On April 28, 2016, petitioner filed its Formal Offer of Evidence, 14 offering Exhibits "P-1" to "P-753", inclusive of submarkings, as its documentary evidence. Respondent filed his Comment (Re: Petitioner's Formal Offer of Evidence), 15 on May 2, 2016. In the Resolution 16 dated June 1, 2016, the Court admitted petitioner's Exhibits except for Exhibits "P-7.8", "P-8", "P-8.1", "P-8.2", "P-12", "P-13", "P-14", "P-16", "P-17", "P-18", "P-19", "P-20", "P-21", "P-22", "P-23" to "P-78", "P-80" to "P-95", "P-98" to "P-109", "P-112" to "P-208", "P-210", "P-79", "P-96" to "P-97", "P-110" to "P-111", "P-209", "P-254" to "P-694", "P-211" to "P-217", "P-218" to "P-253", "P-753", "P-8.3", "P-8.4", "P-8.5", "P-8.6", "P-8.7", "P-8.8", "P-8.9", "P-8.10", "P-8.11", "P-8.12", "P-8.13", "P-8.14", "P-8.15", "P-8.16", "P-8.17", "P-8.18", "P-8.19", "P-8.20", "P-8.21", "P-8.22", "P-8.23", "P-8.24", "P-8.25", "P-8.26", "P-8.27", "P-8.28", "P-8.29", "P-8.30", "P-8.31", "P-8.32", "P-8.33", "P-8.34" and "P-8.35". Considering the manifestation of respondent's counsel that there is no report of investigation submitted by the Revenue Officer and upon motion, the parties were granted a period of thirty (30) days within which to file their respective memoranda. 17 On July 26, 2016, respondent filed his Memorandum, 18 while petitioner filed its Omnibus Motion (1) For leave of Court to submit evidence; (2) To admit evidence; and (3) To defer submission of Petitioner's Memorandum 19 on July 29, 2016 sans respondent's, comment thereto. 20 In the Resolution 21 dated August 16, 2016, the Court granted petitioner's motion to defer submission of its memorandum. In the Resolution 22 dated October 20, 2016 the Court granted petitioner's Motion for leave to submit evidence; and partially granted petitioner's Motion to admit evidence. On December 29, 2016, petitioner filed its Memorandum 23 through registered mail and the same was received by the Court on January 11, 2017. In a Resolution 24 dated January 17, 2017, the case was submitted for decision. The parties stipulated the following issues: 25 Whether or not petitioner is entitled to the claim for refund of or issuance of TCC for its alleged excess or unutilized input VAT in the amount of P23,816,670.55 for the 2nd quarter of CY 2013. The main issue may be broken down into the following sub-issues: A. Whether or not petitioner incurred input VAT on its alleged purchases of goods and services attributable to zero-rated sales for the 2nd quarter of CY 2013. B. Whether or not petitioner had zero-rated sales during the 2nd quarter of CY 2013, the consideration for which were allegedly paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP. C. Whether or not the input VAT allegedly incurred by petitioner for the 2nd quarter of CY 2013 is duly supported by VAT invoices and official receipts. D. Whether or not the input VAT allegedly incurred by petitioner for the 2nd quarter of CY 2013 amounting to P23,816,670.55 was applied against any output VAT or carried over to succeeding taxable periods. E. Whether or not petitioner's administrative and judicial claims for refund of or issuance of TCC for its alleged excess and unutilized input VAT on purchases of goods and services attributable to its zero-rated sales were filed within the period prescribed under the Tax Code. The provisions of the NIRC of 1997, as amended, relevant to the case at hand are Sections 110 (B) and 112 (A) and (C), which, respectively, read: " SEC. 110. Tax Credits . xxx xxx xxx " (B) Excess Output or Input Tax . If at the end of any taxable quarter the output tax exceeds the input tax, the excess shall be paid by the VAT-registered person. If the input tax exceeds the output tax, the excess shall be carried over to the succeeding quarter or quarters: Provided, however , that any input tax attributable to zero-rated sales by a VAT-registered person may at his option be refunded or credited against other internal revenue taxes, subject to the provisions of Section 112." 26 " 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 above provisions, in order to be entitled to a refund or tax credit of input VAT attributable to zero-rated or effectively zero-rated sales, the following requisites must be complied with: 1. that the taxpayer is VAT-registered; 2. that the claim for refund was filed within the prescriptive periods; 3. there must be zero-rated or effectively zero-rated sales; 4. that input taxes were incurred or paid; 5. that such input taxes are attributable to zero-rated or effectively zero-rated sales; and 6. that the input taxes were not applied against any output VAT liability. First Requisite: The taxpayer is a VAT-registered entity It is undisputed that petitioner is registered with the BIR on June 16, 2005 as a VAT taxpayer with TIN 238-763-115-000 and with BIR Certificate of Registration No. OCN 9RC0000270209. 27 Second Requisite: Timeliness of administrative and judicial claims Applying Section 112 (A) of the NIRC of 1997, as amended, the two (2)-year prescriptive period in filing administrative claim is reckoned from the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made. The present claim covers the second quarter of CY 2013, which closed on June 30, 2013. Counting two years from the said date, petitioner had until June 30, 2015, within which to file its administrative claim for refund. Thus, petitioner's administrative claim filed on February 27, 2015 28 was timely filed. As to the timeliness of petitioner's judicial claim, Section 112 (C) of the NIRC of 1997, as amended, provides that the Commissioner of Internal Revenue (CIR) has 120 days from the date of submission of the complete documents in support of the application for refund or tax credit certificate within which to grant or deny the claim. In case of full or partial denial by the CIR, the taxpayer's recourse is to file an appeal before the Court of Tax Appeals within thirty (30) days from receipt of the decision of the CIR. However, if, after the 120-day period, the CIR fails to act on the application for tax refund/credit, the remedy of the taxpayer is to appeal the inaction of the CIR to the Court of Tax Appeals within thirty (30) days. However, starting June 21, 2014 when Revenue Memorandum Circular (RMC) No. 54-2014 took effect, the 120-day period shall be reckoned from the date the administrative claim was filed and the taxpayer-claimant is required to submit complete supporting documents and attest to the completeness of the same at the time of filing the claim. At this point, it is relevant to refer to the pronouncement of the Supreme Court in the case of Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue . 29 In the said case, the Supreme Court went to discuss that RMC No. 54-2014 dated June 11, 2014 mandates that the application for VAT refund or tax credit must be accompanied by complete supporting documents, and a statement under oath attesting to the completeness of the submitted documents, which are the only documents the taxpayer will present to support the claim; that upon submission of the administrative claim and its supporting documents, the claim shall be processed and no other documents shall be accepted or required from the taxpayer in the course of its evaluation and a decision shall be rendered by the Commissioner based only on the documents submitted by the taxpayer, to wit: "It bears mentioning at this point that the foregoing summation of the rules should only be made applicable to those claims for tax credit or refund filed prior to June 11, 2014 , such as the claim at bench. As it now stands, RMC 54-2014 dated June 11, 2014 mandates that: The application for VAT refund/tax credit must be accompanied by complete supporting documents as enumerated in Annex "A" hereof. In addition, the taxpayer shall attach a statement under oath attesting to the completeness of the submitted documents (Annex B). The affidavit shall further state that the said documents are the only documents which the taxpayer will present to support the claim. If the taxpayer is a juridical person, there should be a sworn statement that the officer signing the affidavit ( i.e. , at the very least, the Chief Financial Officer) has been authorized by the Board of Directors of the company. Upon submission of the administrative claim and its supporting documents, the claim shall be processed and no other documents shall be accepted/required from the taxpayer in the course of its evaluation. A decision shall be rendered by the Commissioner based only on the documents submitted by the taxpayer. The application for tax refund/tax credit shall be denied where the taxpayer/claimant failed to submit the complete supporting documents. For this purpose, the concerned processing/investigating office shall prepare and issue the corresponding Denial Letter to the taxpayer/claimant. Thus, under the current rule, the reckoning of the 120-day period has been withdrawn from the taxpayer by RMC 54-2014, since it requires him at the time he files his claim to complete his supporting documents and attest that he will no longer submit any other document to prove his claim. Further, the taxpayer is barred from submitting additional documents after he has filed his administrative claim." Since petitioner's administrative claim was filed after June 11, 2014, the rules under RMC No. 54-2014 shall apply. Thus, the 120-day period shall be reckoned from the date the administrative claim was filed. Applying the foregoing, upon the filing of its administrative claim on February 27, 2015, respondent had 120 days or until June 27, 2015 to decide on the petitioner's claim. Since respondent failed to act on the said claim, petitioner had until July 27, 2015, the last day of the thirty (30)-day period, within which to file its judicial claim. Clearly, petitioner, timely filed its judicial claim via a Petition for Review on June 30, 2015. Third Requisite: Existence of zero-rated or effectively zero- rated sales Petitioner asserts that its sales of services to its various nonresident foreign clients, the consideration for which was paid in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP) are subject to zero percent (0%) VAT pursuant to Section 108 (B) (2) of the NIRC of 1997, as amended, which provides: " 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: xxx xxx xxx "(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. , 30 the Supreme Court held that in order for the supply of services to be VAT zero-rated under Section 108 (B) (2) of the NIRC of 1997, as amended, the following requisites must be met: 1. the services must be other than processing, manufacturing or repacking of goods; 2. 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. Petitioner satisfied the first requisite. Petitioner is licensed to do business as a regional operating headquarters (ROHQ) in the Philippines by the SEC on April 25, 2005, pursuant to the Omnibus Investment Code of 1987, as amended by Republic Act (RA) No. 8756, and its implementing rules and regulations, 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. 31 Such services are not in the same category as "processing, manufacturing or repacking of goods." In compliance with the third requisite, petitioner presented the following documents showing that its clients/affiliates are non-resident foreign corporations doing business outside the Philippines: 1. SEC Certifications of Non-Registration of Company; 32 2. IntraGroup Service Agreements; 33 3. Company Registration Documents (Certificate of Registration/Certificate of Incorporation/Association); 34 4. AMInet Company Profile Fact Sheets; 35 and 5. Deutsche Bank Comprehensive List of Shareholdings 2013. 36 However, each of the aforesaid documents, standing alone, is inadequate proof that petitioner's client is, indeed, a non-resident foreign corporation doing business outside the Philippines. The Certificates of Registration/Foreign Incorporation/Association, as well as the List of Shareholdings, only prove that the named entities therein were incorporated/organized/domiciled abroad. They, however, do not establish that such entities are not doing business in the Philippines. Also, while the SEC Certificates of Non-Registration show that the named entities therein are not registered corporations/partnerships in the Philippines, the same do not, however, prove that such entities are non-resident foreign corporations doing business outside the Philippines. Likewise, the Service Agreements only show the names and addresses of petitioner's clients to whom it renders services but the same do not establish that such clients are non-resident foreign corporations doing business outside the Philippines. In the case of Sitel Philippines Corporation (formerly Clientlogic Phils., Inc.) vs. Commissioner of Internal Revenue , 37 the Supreme Court already held that while Sitel's documentary evidence, which includes Certifications issued by the Securities and Exchange Commission and Agreements between Sitel and its foreign clients, may have established that Sitel rendered services to foreign corporations and received payment therefor through inward remittances, said documents failed to specifically prove that such foreign clients were doing business outside the Philippines or have a continuity of commercial dealings outside the Philippines. Hence, to be considered as non-resident foreign corporation doing business outside the Philippines, each entity must be supported at the very least by both SEC Certificate of Non-Registration of Corporation/Partnership and Certificate/Articles of Foreign Incorporation/Association/Registration and that there is no other indication that the recipient of the services is doing business in the Philippines. This Court, however, cannot give credence to the purported foreign business registration print-outs retrieved from the AMInet database which is a database set up by Deutsche Bank Global (the Head Office located in Germany). The said documents are not sufficient to establish the fact that the service recipients are non-resident foreign corporations doing business outside the Philippines, as they may be considered self-serving and can be easily manipulated to favor petitioner in view of its affinity with the entity that maintains or keeps the said database. In this case, the following table shows whether petitioner complied with the third requisite as it presented admitted evidence of the said SEC Certificate of Non-Registration and Certificates of Registration/Foreign Incorporation/Association for each of the recipients of the services rendered by petitioner: Name of Client/Affiliate SEC Certificate of Non-Registration Certificate of Registration/ Incorporation/ Association Bankers International Corporation P-5 None DB Consorzio S. Cons. A.R.L. P-5.1 None DB Energy Trading LLC P-5.2 None DB Investment Partners, Inc. P-5.3 None DB Services New Jersey, Inc. P-5.4 None Deutsche Asia Pacific Holdings Pte. Ltd. P-5.5 P-7 Deutsche Asset Management (Korea) Company Limited P-5.6 None Deutsche Bank (Malaysia) Berhad P-5.7 P-7.1 Deutsche Bank (Suisse) SA P-5.8 None Deutsche Bank Aktiengesellschaft None P-7.7/P-7.9 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office P-5.10 P-7.2 Deutsche Bank Aktiengesellschaft, Filiale Amsterdam P-5.11 None Deutsche Bank Aktiengesellschaft, Filiale Bangkok P-5.12 None Deutsche Bank Aktiengesellschaft, Filiale Dubai (DIFC) P-5.13 None Deutsche Bank Aktiengesellschaft, Filiale Ho Chi-Minh City P-5.14 None Deutsche Bank Aktiengesellschaft, Filiale Hongkong P-5.15 P-7.3 Deutsche Bank Aktiengesellschaft, Filiale Karachi P-5.16 None Deutsche Bank Aktiengesellschaft, Filiale Labuan P-5.17 None Deutsche Bank Aktiengesellschaft, Filiale London P-5.18 P-7.11 Deutsche Bank Aktiengesellschaft, Filiale New York P-5.19 P-7.4 Deutsche Bank Aktiengesellschaft, Filiale Paris P-5.20 None Deutsche Bank Aktiengesellschaft, Filiale Prag P-5.21 None Deutsche Bank Aktiengesellschaft, Filiale Riad P-5.22 None Deutsche Bank Aktiengesellschaft, Filiale Seoul P-5.23 P-7.5 Deutsche Bank Aktiengesellschaft, Filiale Singapur P-5.24 P-7.6 Deutsche Bank Aktiengesellschaft, Filiale Tokyo P-5.25 None Deutsche Bank Aktiengesellschaft, Filiale Wien P-5.26 None Deutsche Bank Aktiengesellschaft, Filiale Zurich P-5.27 None Deutsche Bank Aktiengesellschaft, Inlandsbank P-5.28 None Deutsche Bank AS P-5.9 None Deutsche Bank Luxembourg S.A. P-5.29 None Deutsche Bank National Trust Company P-5.30 None Deutsche Bank Netherland N.V. P-5.31 None Deutsche Bank PBC Spolka Akcyjna P-5.32 None Deutsche Bank Polska Spolka Akcyjna P-5.33 None Deutsche Bank Privat-UND Geschaftskunden Aktiengesellschaft P-5.34 None Deutsche Bank Securities, Inc. P-5.35 None Deutsche Bank Societa per Azioni P-5.36 None Deutsche Bank Trust Company Americas P-5.37 None Deutsche Bank, Sociedad Anonima Espanola P-5.38 None Deutsche Group Services Pty Limited P-5.39 None Deutsche Investment Management Americas, Inc. P-5.40 None Deutsche Securities, Inc. P-5.41 P-7.10 Deutsche Securities Korea Co. P-5.42 None Deutsche Trust Company Limited Japan P-5.43 None Deutsche Trustees Malaysia Berhad P-5.44 None DWS Holding & Service GmbH P-5.45 None DWS Investment S.A. P-5.46 None OOO Deutsche Bank P-5.47 None PT. Deutsche Securities Indonesia P-5.48 None RREEF Management GmbH P-5.49 None RREEF Management LLC P-5.50 None Correspondingly, only the sales of services by petitioner to entities which have the said two (2) required documents will be treated as subject to the 0% VAT rate, pursuant to Section 108 (B) (2) of the NIRC of 1997, as amended. Corollary to the second requisite, Section 113 (A) (2), (B) (1), (2) (c) and (3) of the NIRC of 1997, as amended, as implemented by Section 4.113-1 (A) (2), B (1) and (2) (c) of Revenue Regulations (RR) No. 16-05 provide that a VAT taxpayer, like herein petitioner, shall for every lease of goods or properties, and for every sale, barter or exchange of services, issue a VAT official receipt which must contain the following information: " SEC. 113. Invoicing and Accounting Requirements for VAT-registered Persons . "(A) Invoicing Requirements . A VAT-registered person shall issue: xxx xxx xxx "(2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services; "(B) Information Contained in the VAT Invoice or VAT Official Receipt. The following information shall be indicated in the VAT invoice or VAT official receipt: "(1) A statement that the seller is a VAT-registered person, followed by his Taxpayer's Identification Number (TIN); "(2) The total amount which the purchaser pays or is obligated to pay to the seller with the indication that such amount includes the value-added tax: Provided , That: xxx xxx xxx "(c) If the sale is subject to zero percent (0%) value-added tax, the term ' zero-rated sale ' shall be written or printed prominently on the invoice or receipt; xxx xxx xxx "(3) The date of transaction, quantity, unit cost and description of the goods or properties or nature of the service; and x x x" (underlining supplied) SEC. 4.113-1. Invoicing Requirements . (A) A VAT-registered person shall issue: xxx xxx xxx (2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services. Only VAT-registered persons are required to print their TIN followed by the word "VAT" in their invoice or official receipts . Said documents shall be considered as a "VAT Invoice" or VAT official receipt. All purchases covered by invoices/receipts other than VAT Invoice/VAT Official Receipt shall not give rise to any input tax. VAT invoice/official receipt shall be prepared at least in duplicate, the original to be given to the buyer and the duplicate to be retained by the seller as part of his accounting records. (B) Information contained in VAT invoice or VAT official receipt. The following information shall be indicated in VAT invoice or VAT official receipt: (1) A statement that the seller is a VAT-registered person, followed by his TIN; (2) The total amount which the purchaser pays or is obligated to pay to the seller with the indication that such amount includes the VAT; Provided , That: xxx xxx xxx (c) If the sale is subject to zero percent (0%) VAT, the term " zero-rated sale " shall be written or printed prominently on the invoice or receipt; (underlining supplied) Pursuant to the foregoing provisions, the foreign currency remittances referred to under Section 108 (B) (2) of the NIRC of 1997, as amended, must likewise be supported by VAT zero-rated official receipts. To prove that it rendered services to its foreign affiliates and was paid in foreign currency duly accounted for in accordance with the rules and regulations of the BSP for the second quarter of CY 2013, petitioner submitted in evidence its VAT zero-rated official receipts (ORs) with attached invoices 38 issued to its alleged non-resident foreign clients and Certificate of Inward Remittance 39 issued by Deutsche Bank AG Manila. Upon scrutiny of the documents submitted, the Court finds that out of the P1,105,734,437.79 40 zero-rated sales declared per VAT Return for the second quarter of CY 2013, only the amount of 9,725,820.10 with peso equivalent of P522,720,069.53, as detailed below, qualifies for VAT zero-rating under Section 108 (B) (2) of the NIRC of 1997, as amended: Customer's Name O.R. Exhibit No. O.R. Date O.R. Number Amount (in Euro) Amount (in Peso) Deutsche Bank Aktiengesellschaft, Filiale London P-28 8-Apr-13 3149 979,193.36 52,546,825.37 Deutsche Bank Aktiengesellschaft, Filiale New York P-32 10-Apr-13 3153 43,122.42 2,321,653.31 Deutsche Bank Aktiengesellschaft, Filiale London P-33 10-Apr-13 3154 494,390.96 26,617,346.81 Deutsche Securities, Inc. P-38 10-Apr-13 3159 140,139.92 7,544,945.51 Deutsche Bank Aktiengesellschaft, Filiale London P-49 16-Apr-13 3171 1,095,610.50 59,152,624.44 Deutsche Bank Aktiengesellschaft, Filiale Singapur P-50 16-Apr-13 3172 235,086.13 12,692,431.81 Deutsche Bank (Malaysia) Berhad P-51 16-Apr-13 3173 845.12 45,628.50 Deutsche Bank (Malaysia) Berhad P-54 17-Apr-13 3176 18,724.73 1,016,742.35 Deutsche Bank Aktiengesellschaft, Filiale Hongkong P-61 18-Apr-13 3183 108,135.00 5,818,146.39 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office P-62 18-Apr-13 3184 220,953.04 11,888,261.26 Deutsche Bank Aktiengesellschaft, Filiale Singapur P-64 19-Apr-13 3186 734,597.25 39,447,431.61 Deutsche Bank Aktiengesellschaft, Filiale London P-65 19-Apr-13 3187 2,422,044.20 130,019,216.95 Deutsche Securities, Inc. P-67 19-Apr-13 3189 40,260.24 2,161,950.73 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office P-68 19-Apr-13 3190 31,677.30 1,701,052.01 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office P-77 23-Apr-13 3199 1,633,881.00 87,688,873.76 Deutsche Asia Pacific Holdings Pte. Ltd. P-78 23-Apr-13 3200 2,811.39 150,884.69 Deutsche Bank Aktiengesellschaft, Filiale Seoul P-80 23-Apr-13 3202 28,739.60 1,542,427.60 Deutsche Bank Aktiengesellschaft, Filiale New York P-83 24-Apr-13 3205 483,452.03 25,898,211.00 Deutsche Bank Aktiengesellschaft, Filiale London P-87 25-Apr-13 3209 1,012,155.91 54,465,415.43 Total 9,725,820.10 522,720,069.53 Fourth and Fifth Requisites: Petitioner had input taxes attributable to its zero-rated sales Having resolved that petitioner had valid VAT zero-rated sales for the second quarter of CY 2013 in the amount of P522,720,069.53, we proceed to determine the amount of input VAT attributable thereto. In its Quarterly VAT Return for the second quarter CY 2013, petitioner declared input VAT of P24,020,395.21 on its current purchases of goods and services, of which the amount of P23,816,670.55 is the subject of the present claim, as shown below: Amount Input tax on Purchase of Capital Goods not exceeding P1M (Line 18B) P130,605.62 Input tax on Domestic Purchases of Goods other than Capital Goods (Line 18F) 208,138.23 Input tax on Domestic Purchase of Services (Line 18J) 23,277,651.34 Input tax on Services rendered by Non-residents (Line 18L) 404,000.02 Total Input Taxes on Current Purchases P24,020,395.21 Divide by Total Declared Sales 1,115,192,744.62 Multiply by Declared Zero-rated Sales 1,105,734,437.79 Input VAT claimed for refund/TCC P23,816,670.55 In support of its input VAT on current purchases of goods and services amounting to P24,020,395.21, petitioner presented various official receipts and invoices 41 issued by its suppliers and BIR Forms No. 1600 with payment confirmations, 42 which were all examined by the Court-commissioned Independent Certified Public Accountant (ICPA), Ms. Katherine O. Constantino of Constantino Guadalquiver & Co. In her Report, the ICPA noted the following exceptions: 43 OTHER FINDINGS Reference Amount PURCHASE OF GOODS 1. Purchase of goods supported by VAT REG. TIN Invoices without VAT breakdown. Annex 9-i P659.92 2. Purchase of goods supported by VAT REG. TIN/TIN NO. V Invoices with date not within the quarter of claim. Annex 9-j 14,780.67 3. Purchase of goods supported by VAT REG. TIN Invoices with date not within the quarter of claim, with incomplete Petitioner's address and without VAT breakdown. Annex 9-k 6,037.50 4. Purchase of goods supported by a Certified True Copy VAT REG. TIN Invoice with date not within the quarter of claim and with incomplete Petitioner's address. Annex 9-l 3,460.71 5. Purchase of goods supported by VAT REG. TIN Invoice with date not within the quarter of claim and without VAT breakdown shown in the support. Annex 9-m 1,462.31 Subtotal P26,401.11 PURCHASE OF SERVICES 1. Purchase of services supported by VAT REG. TIN/TIN NO. V ORs with date not within the quarter of claim. Annex 9-n P88,515.17 2. Purchase of services supported by VAT REG. TIN ORs with date not within the quarter of claim. Annex 9-o 36,071.52 3. Purchase of services supported by VAT REG. TIN ORs with altered date without countersign. Annex 9-p 9,360.00 4. Purchase of services supported by VAT REG. TIN ORs with date not within the quarter of claim and with wrong Petitioner's address. Annex 9-q 39,267.70 5. Purchase of services supported by VAT REG. TIN ORs with date not within the quarter of claim and without VAT shown in the support. Annex 9-r 214.29 6. Purchase of services supported by VAT REG. TIN ORs with date not within the quarter of claim and with VAT claimed that is more than the VAT shown in the support but equal to our independent computation. Annex 9-s 1,574.86 7. Purchase of services supported by VAT REG. TIN ORs with date not within the quarter of claim and with VAT shown in the support but not placed in the "12% VAT" line. Annex 9-t 1,814.04 8. Purchase of services supported by VAT REG. TIN ORs with date not within the quarter of claim and such date was altered but countersigned and the claimed input VAT are more than the VAT shown in the supporting documents and our independent computation. Annex 9-u 36,846.67 9. Purchase of services supported by VAT REG. TIN ORs with date not within the quarter of claim and such date was altered but countersigned and the claimed input VAT are less than the VAT shown in the supporting documents and our independent computation. Annex 9-v 33,907.41 10. Purchase of services supported by VAT REG. TIN ORs with date not within the quarter, with incomplete Petitioner's name and with VAT claimed that is more the VAT than shown in the support but equal to our independent computation. Annex 9-w 12,895.92 11. Purchase of services supported by VAT REG. TIN ORs with incorrect Petitioner's TIN, without Petitioner's address and the claimed input VAT are less than the VAT shown in the supporting documents and our independent computation. Annex 9-x 158,361.40 12. Purchase of services supported by VAT REG. TIN ORs without BIR permit number and printing date indicated in the support and incorrect Petitioner's TIN. Annex 9-y 214.08 13. Purchase of services supported by VAT REG. TIN/TIN NO. V OR with incomplete Petitioner's address and the claimed input VAT are more than the VAT shown in the supporting documents and our independent computation. Annex 9-z 24,340.71 14. Purchase of services supported by VAT REG. TIN ORs with claimed input VAT that is greater than the VAT shown in the supporting documents but less than our independent computation. Annex 9-aa 34,896.33 15. Purchase of services supported by Certified True Copy VAT REG. TIN ORs without BIR permit number and printing date indicated in the support. Annex 9-ab 804.12 16. Purchase of services supported by photocopy VAT REG. TIN OR with VAT claimed that is more than the VAT shown in the support but equal to our independent computation. Annex 9-ac 420.00 17. Purchase of services supported by VAT REG. TIN/TIN No. ORs with note that states "Not to be used for claim of Input Tax." Annex 9-ad 527,848.28 18. Purchase of services supported by VAT REG. TIN OR with incomplete Petitioner's name, with incorrect Petitioner's TIN, with date not within the quarter of claim, and with VAT claimed that is more than the VAT shown in the support but equal to our independent computation. Annex 9-ae 9,360.00 19. Purchase of services supported by documents other than VAT ORs. Annex 9-af 331,602.81 20. Purchase of services supported by VAT REG. TIN ORs where the claimed input VAT is different from schedule VAT shown in the official receipts is lower than the VAT in the schedule and the computed amount. This pertains to excess claim of input tax. Annex 9-c 28,385.72 21. Purchase of services supported by VAT REG. TIN ORs where the claimed input VAT shown in the official receipt is different from schedule the VAT shown in the receipts and the independent computation is lower than the schedule. This pertains to excess claim of input tax. Annex 9-d 1,390.76 22. Purchase of services supported by VAT REG. TIN ORs where the claimed input VAT shown in the official receipt is different from schedule the VAT shown in the receipts and the independent computation is lower than the schedule (independent computation differs from official receipt and schedule amount). This pertains to excess claim of input tax. Annex 9-e 1,645.74 Subtotal P1,379,737.53 PURCHASE OF CAPITAL GOODS NOT EXCEEDING ONE (1) MILLION 1. Purchase of capital goods not exceeding one (1) million supported by VAT REG. TIN Invoices with date not within the quarter of claim. Annex 9-ag P910.72 Subtotal P910.72 Purchases of services without supporting documents P250,312.38 Grand Total P1,657,361.74 The above-noted exceptions found by the ICPA in the amount of P1,657,361.74 should be disallowed 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, 4.110-8 and 4.113-1 of Revenue Regulations (RR) No. 16-05, as amended. IAETDc Further verification of the ICPA report, together with the supporting documents, reveals that the additional input VAT of P10,174,946.65, shall, likewise, be disallowed for the reasons stated below: Exhibit No. Supplier OR No. Amount 1. Purchases of goods supported by VAT invoices w/ATPs dated between Jan. 1, 2011 to Jan. 17, 2013 not stamped "valid until October 31, 2013 only" in violation of RMC No. 52-2013. P-254 1618 OFFICE SOLUTIONS, INC. 3903 P541.07 P-340 AVLS ALL VISUAL & LIGHTS 035393 41,078.57 P-388 MERCURY DRUG CORPORATION 283-93671 1,617.05 P-389 MERCURY DRUG CORPORATION 283-93672 1,020.19 P-390 MERCURY DRUG CORPORATION 283-93673 485.20 P-391 MERCURY DRUG CORPORATION 283-94066 550.45 P-392 MERCURY DRUG CORPORATION 283-94067 332.28 P-449 QUARTZ BUSINESS PRODUCTS CORP. 493693 6,006.86 P-450 QUARTZ BUSINESS PRODUCTS CORP. 496091 15,474.64 P-611 THE FLOWER FARM CORPORATION 127779 492.86 P-612 THE FLOWER FARM CORPORATION 127783 267.86 P-613 THE FLOWER FARM CORPORATION 127782 439.29 P-627 DISTINCTIVE BLINDS & OFFICE 64885 68,307.59 P-628 GB DISTRIBUTORS, INC. 1020054538 34,821.43 P-629 GB DISTRIBUTORS, INC. 1020054537 5,357.14 Subtotal P176,792.48 2. Purchases of services supported by VAT ORs w/ATPs dated between Jan. 1, 2011 to Jan. 17, 2013 not stamped "valid until October 31, 2013 only" in violation of RMC No. 52-2013. P-311 ACCENTURE, INC. 12662 P461,940.00 P-312 ACCENTURE, INC. 12684 656,059.01 P-313 ACCENTURE, INC. 12693 104,745.00 P-315 ADVENTURE INTERNATIONAL TOURS, INC. 200-00019813 17,072.40 P-320 ARISTEDES TAN 3118 16,236.71 P-323 ASIAPEOPLEWORKS! INC. 501 1,075.24 P-324 ASIAPEOPLEWORKS! INC. 569 3,343.90 P-325 ASIAPEOPLEWORKS! INC. 566 1,455.13 P-326 ASIAPEOPLEWORKS! INC. 568 1,455.98 P-327 ASIAPEOPLEWORKS! INC. 590 3,415.18 P-328 ASIAPEOPLEWORKS! INC. 591 1,682.68 P-329 ASIAPEOPLEWORKS! INC. 592 3,053.86 P-330 ASIAPEOPLEWORKS! INC. 0634 2,696.78 P-331 ASIAPEOPLEWORKS! INC. 0635 3,015.58 P-332 ASIAPEOPLEWORKS! INC. 0682 1,658.88 P-333 ASIAPEOPLEWORKS! INC. 0680 1,678.72 P-334 ASIAPEOPLEWORKS! INC. 0681 1,964.43 P-336 ATLANTICA FIRE SAFETY SYSTEMS, INC. 3510 7,872.00 P-337 ATLANTICA FIRE SAFETY SYSTEMS, INC. 3521 7,258.68 P-341 BANIQUED & BANIQUED 3844 7,800.00 P-342 BANIQUED & BANIQUED 3843 7,800.00 P-344 BAYANTEL A/C 337550509 943625 182.04 P-345 BAYANTEL A/C 337550509 955049 178.81 P-346 BAYANTEL A/C 337550509 956682 182.04 P-347 BAYANTEL A/C 342578098 943140 19,200.00 P-348 BAYANTEL A/C 342578098 956681 9,600.00 P-349 BAYANTEL A/C 345079866 942869 182.04 P-350 BAYANTEL A/C 337550363 942870 182.04 P-351 BUSINESSWORKS, INC. 3596 17,688.00 P-352 BUSINESSWORKS, INC. 3597 8,250.00 P-353 BUSINESSWORKS, INC. 3599 5,940.00 P-354 HEADSTRONG PHILIPPINES, INC. 2135 83,383.90 P-355 HEADSTRONG PHILIPPINES, INC. 2146 419,385.80 P-356 HEADSTRONG PHILIPPINES, INC. 2162 231,288.00 P-357 HEWLETT-PACKARD PHILIPPINES 129674 7,466.34 P-358 HEWLETT-PACKARD PHILIPPINES 130168 6,799.76 P-359 HOSPITALITY INTERNATIONAL, INC. 8154 3,602.48 P-360 HOSPITALITY INTERNATIONAL, INC. 8155 17,714.29 P-361 HOSPITALITY INTERNATIONAL, INC. 8156 17,142.86 P-362 HOSPITALITY INTERNATIONAL, INC. 8184 55,637.27 P-363 IBM PHILIPPINES, INC. 24293 244,584.72 P-364 IBM PHILIPPINES, INC. 24812 81,734.40 P-365 INDRA Philippines, Inc. 2097 17,142.86 P-366 INDRA Philippines, Inc. 2150 17,142.86 P-370 JEBSEN & JEBSEN COMMUNICATIONS 1771 6,569.28 P-372 JOHN CLEMENTS CONSULTANTS, INC. 114775 154,782.24 P-373 JOHN CLEMENTS CONSULTANTS, INC. 114934 375,822.96 P-374 JOHN CLEMENTS CONSULTANTS, INC. 115168 153,093.94 P-396 MISNET EDUCATION, INC. 12007 19,071.43 P-397 MISNET EDUCATION, INC. 11898 38,142.86 P-400 NET PACIFIC, INC. 13306 5,943.39 P-401 NEXT STEP TRAINING AND 0184 12,504.00 P-402 NEXT STEP TRAINING AND 0186 18,230.00 P-403 NEXT STEP TRAINING AND 0187 26,544.00 P-404 NEXT STEP TRAINING AND 0193 12,612.00 P-405 NEXT STEP TRAINING AND 0194 12,000.00 P-406 NEXT STEP TRAINING AND 0197 8,040.00 P-407 NEXT STEP TRAINING AND 0200 23,640.00 P-408 OVE ARUP AND PARTNERS 3388 152,896.14 P-409 OVE ARUP AND PARTNERS 3395 102,640.63 P-410 OVE ARUP AND PARTNERS 3416 20,115.00 P-411 OVE ARUP AND PARTNERS 3417 85,533.86 P-417 PAUL CALVIN DELI 0911 9,245.36 P-418 PAUL CALVIN DELI 0919 2,970.00 P-425 PREMIUM SECURITY & INVESTIGATION 69576 29.66 P-426 PREMIUM SECURITY & INVESTIGATION 69633 8,540.71 P-427 PREMIUM SECURITY & INVESTIGATION 69749 84.29 P-428 PREMIUM SECURITY & INVESTIGATION 69825 41.76 P-430 PREMIUM SECURITY & INVESTIGATION 65012 9,214.13 P-431 PREMIUM SECURITY & INVESTIGATION 69974 834.43 P-433 PREMIUM SECURITY & INVESTIGATION 69972 714.79 P-434 PREMIUM SECURITY & INVESTIGATION 69975 107.70 P-435 PREMIUM SECURITY & INVESTIGATION 69990 13.19 P-453 REALFORM FURNITURE SHOP 1253 8,451.36 P-454 GLOBE TELECOM A/C 49622252 2305003 1,488.95 P-455 INNOVE AC 830635288 0368834 62,369.15 P-456 INNOVE AC 106886134 0371607 298.93 P-457 INNOVE AC 830635288 0373458 30,617.18 P-458 GLOBE TELECOM A/C 45413292 2298496 19,949.77 P-465 BUSINESSWORKS, INC. 3617 7,232.14 P-466 CHITTICK FIRE & SECURITY 8178 324.58 P-467 CHITTICK FIRE & SECURITY 8103 10,764.00 P-468 CHITTICK FIRE & SECURITY 8224 10,764.00 P-469 CHITTICK FIRE & SECURITY 8261 3,981.64 P-470 CIBI INFORMATION, INC. 32120 540.00 P-471 CIBI INFORMATION, INC. 32213 180.00 P-472 CITYWAY PRINTING SERVICES 91 1,072.71 P-473 CITYWAY PRINTING SERVICES 92 3,367.98 P-474 CITYWAY PRINTING SERVICES 111 6,181.61 P-475 CITYWAY PRINTING SERVICES 112 9,173.08 P-476 CITYWAY PRINTING SERVICES 113 5,566.22 P-478 DESIGN & CREATIVE LOGIC, INC. 4021 2,335.71 P-482 DEVELOPMENT DIMENSIONS 14158 25,845.56 P-483 DEVELOPMENT DIMENSIONS 14157 12,922.28 P-484 DHL EXPRESS (PHILIPPINES) CORP. 2243603 33.60 P-485 DHL EXPRESS (PHILIPPINES) CORP. 2243606 1,615.00 P-486 DHL EXPRESS (PHILIPPINES) CORP. 2243608 7,947.00 P-487 DHL EXPRESS (PHILIPPINES) CORP. 2243605 1,335.78 P-488 DHL EXPRESS (PHILIPPINES) CORP. 2243604 33.60 P-489 DHL EXPRESS (PHILIPPINES) CORP. 2258227 1,359.00 P-490 DHL EXPRESS (PHILIPPINES) CORP. 2258226 103.02 P-491 DHL EXPRESS (PHILIPPINES) CORP. 2258225 1,052.00 P-492 DHL EXPRESS (PHILIPPINES) CORP. 2260678 6,503.00 P-493 DHL EXPRESS (PHILIPPINES) CORP. 2262391 92.38 P-494 DHL EXPRESS (PHILIPPINES) CORP. 2265204 33.60 P-495 DHL EXPRESS (PHILIPPINES) CORP. 2265203 33.60 P-496 DHL EXPRESS (PHILIPPINES) CORP. 2265207 3,342.00 P-497 DHL EXPRESS (PHILIPPINES) CORP. 2265206 1,258.00 P-498 DHL EXPRESS (PHILIPPINES) CORP. 2265202 81.66 P-499 DHL EXPRESS (PHILIPPINES) CORP. 2265205 1,827.00 P-500 DHL EXPRESS (PHILIPPINES) CORP. 2178042 3,537.47 P-501 DHL EXPRESS (PHILIPPINES) CORP. 2178043 67.20 P-523 REALFORM FURNITURE SHOP 1254 1,472.04 P-524 REALFORM FURNITURE SHOP 1255 360.00 P-527 REUTERS LIMITED 37144 221,565.69 P-542 FUJI XEROX PHILIPPINES, INC. 178371 7,346.22 P-543 FUJI XEROX PHILIPPINES, INC. 178370 26,233.77 P-544 FUJI XEROX PHILIPPINES, INC. 178378 10,874.48 P-545 FUJI XEROX PHILIPPINES, INC. 179702 12,095.64 P-546 FUJI XEROX PHILIPPINES, INC. 179834 25,562.46 P-547 FUJI XEROX PHILIPPINES, INC. 179833 11,028.84 P-548 FUJI XEROX PHILIPPINES, INC. 179839 90.05 P-549 FUJI XEROX PHILIPPINES, INC. 179842 21.73 P-550 FUJI XEROX PHILIPPINES, INC. 179841 37,426.14 P-551 GLOBAL CITY CAR LEASE & 9464 27,385.51 P-552 GLOBAL CITY CAR LEASE & 9475 25,623.43 P-553 GLOBAL CITY CAR LEASE & 9482 746.29 P-554 GLOBAL CITY CAR LEASE & 9484 35,539.81 P-555 GLOBAL CITY CAR LEASE & 9483 14,902.07 P-556 GLOBAL CITY CAR LEASE & 9501 197.68 P-557 GLOBAL CITY CAR LEASE & 9502 55,162.18 P-558 GLOBAL CITY CAR LEASE & 9505 25,795.34 P-559 GLOBAL CITY CAR LEASE & 9525 17,046.96 P-560 GLOBAL CITY CAR LEASE & 9524 309.64 P-561 GLOBAL CITY CAR LEASE & 9541 4,606.39 P-562 GLOBAL CITY CAR LEASE & 9542 6,464.04 P-563 GLOBAL CITY CAR LEASE & 9549 27,530.14 P-564 GLOBAL CITY CAR LEASE & 9547 11,458.71 P-565 GLOBAL CITY CAR LEASE & 9548 12,990.75 P-566 GLOBAL CITY CAR LEASE & 9553 25,094.89 P-567 GLOBAL CITY CAR LEASE & 9563 32,369.74 P-573 SALVADOR & ASSOCIATES, 7317 10,183.08 P-574 SALVADOR & ASSOCIATES, 7318 5,092.29 P-575 SALVADOR & ASSOCIATES, 7407 10,254.29 P-576 SALVADOR & ASSOCIATES, 7408 11,174.77 P-577 SANTA FE MOVING AND RELOCATION 8757 641.40 P-586 SGV & CO. MK00005708 49,060.25 P-587 SGV & CO. MK00005709 29,070.00 P-588 SGV & CO. MK00006664 2,908.09 P-589 SGV & CO. MK00006663 228,300.00 P-590 SGV & CO. MK00006662 129,722.49 P-591 SGV & CO. MK00008289 3,600.00 P-592 SGV & CO. MK00009280 5,985.21 P-593 SGV & CO. MK00008724 2,550.00 P-595 SGV & CO. MK00009279 3,600.00 P-597 SQ RESOURCES, INC. 52025 32,436.00 P-598 SQ RESOURCES, INC. 52026 3,261.15 P-599 SQ RESOURCES, INC. 52027 5,961.78 P-600 SQ RESOURCES, INC. 52028 18,510.99 P-601 SQ RESOURCES, INC. 52037 2,052.00 P-602 SQ RESOURCES, INC. 52458 6,732.00 P-603 SQ RESOURCES, INC. 52481 59,657.58 P-604 SQ RESOURCES, INC. 52467 9,540.00 P-605 Taurus Electrical Services 0088 12,931.43 P-606 Taurus Electrical Services 0089 431,047.72 P-607 Taurus Electrical Services 0095 61,460.52 P-608 Taurus Electrical Services 0092 19,640.33 P-609 TECOMA CORPORATION 01571 32,894.31 P-615 TOWERS WATSON PHILIPPINES, INC. 24963 1,800.00 P-616 TOWERS WATSON PHILIPPINES, INC. 24964 85,440.00 P-617 TOWERS WATSON PHILIPPINES, INC. 24128 2,160.00 P-619 ZUNIEGA OLASO MACAPUNDAG 1530 120.00 P-620 ZUNIEGA OLASO MACAPUNDAG 1531 13,920.00 P-621 ZUNIEGA OLASO MACAPUNDAG 1538 3,495.00 P-624 ACCENTURE, INC. 12682 105,435.18 Subtotal P6,169,488.66 3. Purchases of services supported by VAT ORs without the TIN of petitioner. P-255 6-24 PROPERTY HOLDINGS, INC. 3666 P2,305,615.20 P-462 ePLDT, INC. 14910 1,237,846.28 Subtotal P3,543,461.48 4. Purchase of service supported by VAT OR but with alteration on the year of the date. P-377 Johnson Controls IFM Phils. Co. 3313 P98,258.05 Subtotal P98,258.05 5. Purchases of services supported by VAT ORs but with notation "not to be used for claim/not valid as source of input tax." P-623 ACCENT MICRO TECHNOLOGIES, INC. 69277 P2,148.33 P-386 LANTRO PHILS., INC. 0405 7,962.48 P-387 LANTRO PHILS., INC. 0436 6,723.21 Subtotal P16,834.02 6. Purchases of services supported by VAT ORs but without the BIR Authority to Print. P-631 PLDT PBMOR001227204 P235.13 P-632 PLDT PELOR000858865 4.27 P-633 PLDT PBMOR001253406 235.13 P-634 PLDT PELOR000892057 4.27 P-635 PLDT PELOR000892059 4.27 P-636 PLDT PBMOR001253408 235.13 P-637 PLDT PELOR000892061 582.86 P-638 PLDT PBMOR001253410 32,057.14 P-639 PLDT PELOR000892062 2.72 P-642 PLDT PELOR000892069 6.43 P-643 PLDT PBMOR001253417 353.57 P-644 PLDT PELOR000892056 4.27 P-645 PLDT PBMOR001253405 235.13 P-648 PLDT PBMOR001227201 235.13 P-649 PLDT PELOR000858862 4.27 P-650 PLDT PELOR000859370 4.27 P-651 PLDT PBMOR001227205 235.13 P-652 PLDT PELOR000859371 582.86 P-653 PLDT PBMOR001227206 32,057.14 P-654 PLDT PELOR000858868 2.70 P-655 PLDT PBMOR001253411 149.89 P-656 PLDT PBMOR001253416 151.09 P-657 PLDT PELOR000859381 6.43 P-658 PLDT PBMOR001227215 353.57 P-659 PLDT PELOR000859367 4.27 P-660 PLDT PBMMOR001227202 235.13 P-661 PLDT PELOR000859368 2.87 P-662 PLDT PBMOR001227203 157.84 P-663 PLDT PELOR000859375 1.91 P-664 PLDT PBMOR001227210 105.13 P-667 PLDT PELOR000892065 1.91 P-668 PLDT PBMOR001253414 105.13 P-671 PLDT PELOR000892060 4.27 P-672 PLDT PBMOR001253409 235.13 P-673 PLDT PELOR000892058 2.87 P-674 PLDT PBMOR001253407 157.84 P-675 PLDT PELOR000892070 6.43 P-676 PLDT PBMOR001253418 353.57 Subtotal P69,117.10 7. Purchases of capital goods not exceeding P1M supported by VAT invoices w/ATPs dated between Jan. 1, 2011 to Jan. 17, 2013 not stamped "valid until October 31, 2013 only" in violation of RMC No. 52-2013. P-262 ACCENT MICRO TECHNOLOGIES, INC. 147619 P482.14 P-263 ACCENT MICRO TECHNOLOGIES, INC. 147508 2,410.71 P-264 ACCENT MICRO TECHNOLOGIES, INC. 147735 6,292.99 P-265 ACCENT MICRO TECHNOLOGIES, INC. 147736 3,199.11 P-266 ACCENT MICRO TECHNOLOGIES, INC. 147734 1,446.43 P-267 ACCENT MICRO TECHNOLOGIES, INC. 147740 42.86 P-268 ACCENT MICRO TECHNOLOGIES, INC. 147739 42.86 P-269 ACCENT MICRO TECHNOLOGIES, INC. 147617 193.71 P-270 ACCENT MICRO TECHNOLOGIES, INC. 147795 964.29 P-271 ACCENT MICRO TECHNOLOGIES, INC. 147796 2,410.71 P-272 ACCENT MICRO TECHNOLOGIES, INC. 148086 4,821.43 P-273 ACCENT MICRO TECHNOLOGIES, INC. 147618 42.86 P-274 ACCENT MICRO TECHNOLOGIES, INC. 147989 42.86 P-275 ACCENT MICRO TECHNOLOGIES, INC. 147942 696.43 P-276 ACCENT MICRO TECHNOLOGIES, INC. 148087 964.29 P-277 ACCENT MICRO TECHNOLOGIES, INC. 147379 42.86 P-278 ACCENT MICRO TECHNOLOGIES, INC. 148645 6,292.99 P-279 ACCENT MICRO TECHNOLOGIES, INC. 149080 482.14 P-280 ACCENT MICRO TECHNOLOGIES, INC. 149081 482.14 P-281 ACCENT MICRO TECHNOLOGIES, INC. 148946 1,607.14 P-282 ACCENT MICRO TECHNOLOGIES, INC. 149082 42.86 P-283 ACCENT MICRO TECHNOLOGIES, INC. 148893 2,089.29 P-284 ACCENT MICRO TECHNOLOGIES, INC. 149294 4,821.43 P-285 ACCENT MICRO TECHNOLOGIES, INC. 149301 696.43 P-286 ACCENT MICRO TECHNOLOGIES, INC. 149133 12,585.98 P-287 ACCENT MICRO TECHNOLOGIES, INC. 149640 42.86 P-288 ACCENT MICRO TECHNOLOGIES, INC. 149642 6,292.99 P-289 ACCENT MICRO TECHNOLOGIES, INC. 149641 39,051.36 P-290 ACCENT MICRO TECHNOLOGIES, INC. 149298 2,410.71 Subtotal P100,994.86 Grand Total P10,174,946.65 Thus, out of petitioner's total reported input VAT on current purchases of P24,020,395.21 for the second quarter of 2013, only the amount of P12,188,086.82 represents its valid input VAT, as computed hereunder: Total Input VAT on Current Purchases per Returns P24,020,395.21 Less: Disallowances Per ICPA's findings P1,657,361.74 Per Court's further verification 10,174,946.65 11,832,308.39 Valid Input VAT P12,188,086.82 However, a portion of the P12,188,086.82 shall be applied against the reported output VAT liability of P1,134,996.82. 44 Consequently, only the remaining input VAT of P11,053,090.00 can be attributed to the entire zero-rated sales amounting to P1,105,734,437.79 and only the input VAT of P5,225,189.50 is attributable to the valid zero-rated sales of P522,720,069.53, computed as follows: Valid Input VAT P12,188,086.82 Less: Output tax due 1,134,996.82 Excess Input VAT P11,053,090.00 Divide by Total Declared Zero-Rated Sales 1,105,734,437.79 Multiply by Valid Zero-Rated Sales 522,720,069.53 Excess Input VAT attributable to Valid Zero-Rated Sales P5,225,189.50 Sixth Requisite: Excess input taxes were not applied against any output VAT liability Although the claimed input VAT was carried-over by petitioner in its succeeding Quarterly VAT Returns, 45 the same remained unutilized until it was deducted as "VAT Refund/TCC Claimed" 46 in its Amended Quarterly VAT Return for the first quarter of CY 2015. Thus, the excess input VAT of P155,729,598.48 47 as of the end of the first quarter of 2015, which was carried-over to the succeeding second quarter of 2015, no longer included the subject claim. WHEREFORE , premises considered, the Petition for Review is PARTIALLY GRANTED . Accordingly, let a tax refund or a Tax Credit Certificate be issued in favor of petitioner in the reduced amount of P5,225,189.50 , representing its unutilized and excess input VAT attributable to zero-rated sales for the attributable to zero-rated sales for the second quarter of CY 2013. SO ORDERED. (SGD.) CAESAR A. CASANOVA Associate Justice Juanito C. Castaeda, Jr. and Catherine T. Manahan, JJ. , concur. Footnotes 1. Docket (Vol. I), pp. 10-21. 2. Par. 1, Joint Stipulation of Facts and Issues (JSFI), Docket (Vol. IV), p. 1421. 3. Par. 3, JSFI, Docket (Vol. IV), p. 1422. 4. Par. 2, JSFI, Docket (Vol. IV), pp. 1421-1422. 5. Par. 5, JSFI, Docket (Vol. IV), p. 1422. 6. Docket (Vol. I), pp. 35-43. 7. Notice of Resetting dated September 24, 2015, Docket (Vol. III), p. 1386. 8. Docket (Vol. I), pp. 46-49. 9. Docket (Vol. I), pp. 56-65. 10. Docket (Vol. IV), pp. 1421-1429. 11. Docket (Vol. IV), pp. 1466-1470. 12. Minutes of the Hearing on January 27, 2016, Docket (Vol. IV), p. 1480. 13. Minutes of the Hearing on April 6, 2016, Docket (Vol. IV), p. 1497. 14. Docket (Vol. IV), pp. 1502-1537. 15. Docket (Vol. IV), pp. 1538-1541. 16. Docket (Vol. IV), pp. 1543-1545. 17. Minutes of the hearing on July 11, 2016, Docket (Vol. IV), p. 1546. 18. Docket (Vol. IV), pp. 1548-1558. 19. Docket (Vol. IV), pp. 1559-1570. 20. Records Verification dated September 2, 2016, Docket (Vol. IV), p. 1578. 21. Docket (Vol. IV), p. 1577. 22. Docket (Vol. IV), pp. 1580-1584. 23. Docket (Vol. IV), pp. 1593-1619. 24. Resolution dated January 17, 2017, Docket, (Vol. IV), p. 1621. 25. JSFI, Docket (Vol. IV), pp. 1422-1423. 26. NIRC of 1997, as amended by R.A. 9361, November 21, 2006. 27. Par. 3, Stipulated Facts, JSFI, Docket (Vol. IV), p. 1422; Exhibit "P-2". 28. Exhibits "P-4" and "P-4-a". 29. G.R. No. 207112, December 8, 2015. 30. G.R. No. 153205, January 22, 2007. 31. Par. 2, Stipulated Facts, JSFI, Docket (Vol. IV), pp. 1421-1422; Exhibit "P-1". 32. Exhibits "P-5" to "P-5.50". 33. Exhibits "P-6" to "P-6.37". 34. Exhibits "P-7" to "P-7.7", "P-7.9" to "P-7.11". 35. Exhibits "P-9" to "P-9.49". 36. Exhibit "P-10". 37. G.R. No. 201326, February 8, 2017. 38. Exhibits "P-23" to "P-78" and "P-80" to "P-95". 39. Exhibit "P-21". 40. Exhibit "P-3". 41. Exhibits "P-254" to "P-691". 42. Exhibits "P-692" to "P-694". 43. Exhibit "P-11". 44. Exhibit "P-3". 45. Exhibits "P-3.1", "P-3.3", "P-3.4", "P-3.7", "P-3.9", "P-3.11", "P-3.15". 46. Exhibit "P-3.15". 47. Exhibit "P-3.15".