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

SPECIAL THIRD DIVISION [C.T.A. CASE NO. 7913. June 13, 2013.] MANULIFE DATA SERVICES, INC. (PHILIPPINES) , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . [C.T.A. CASE NO. 7977. June 13, 2013.] MANULIFE DATA SERVICES, INC. (PHILIPPINES) , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . [C.T.A. CASE NO. 8018. June 13, 2013.] MANULIFE DATA SERVICES, INC. (PHILIPPINES) , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . DECISION BAUTISTA , J p : Before the Court are consolidated "Petitions for Review" filed by petitioner on April 14, 2009, 1 September 30, 2009, 2 and December 29, 2009 3 for the issuance of tax credit certificates for unutilized/unapplied input Value-Added Tax ("VAT") for the 1st to 4th Quarters of taxable year 2007, in the aggregate amount of P7,302,946.31. The Parties Petitioner, Manulife Data Services, Inc. (Philippines), is a foreign corporation duly registered with and authorized by Securities and Exchange Commission ("SEC") to operate as a Regional Operating Headquarters ("ROHQ") in the Philippines as evidenced by SEC License No. FS2006030505. Petitioner is engaged in the business of providing qualifying services to its affiliates and related parties in the Asia-Pacific Region and in other foreign markets, as expressly stipulated in its SEC License. Petitioner is a VAT-registered entity as of March 9, 2006. 4 Respondent, the duly appointed Commissioner of the Bureau of Internal Revenue ("BIR"), is vested with the power to decide tax cases, including claims for refunds and/or tax credits or erroneously paid or illegally collected internal revenue taxes. 5 The Facts CTA Case No. 7913 On February 27, 2009, petitioner filed with the BIR's Revenue District Office No. 38 ("RDO No. 38") an application for issuance of tax credit certificate for its excess/unutilized input VAT for the first (1st) and second (2nd) Quarters of taxable year 2007 in the amount of P3,578,830.856. 6 On April 14, 2009, petitioner filed a "Petition for Review" for the same period. 7 On June 3, 2009, respondent filed her Answer, 8 raising the following Special and Affirmative Defenses: "7. The claim for refund is still under examination by the respondent's Bureau; 8. The burden of proof is upon the petitioner to prove that it is entitled to the claim for refund or issuance of tax credit certificate; 9. The grant of claim for refund is tantamount to an exemption from taxation which is construed strictly against the claimant and in favour of the taxing authority; EDcICT 10. The taxes sought to be refunded were paid in accordance with law; the burden of proof to the contrary is upon the petitioner-claimant to show with clear and unambiguous provision of law supporting the same; 11. The prevailing law on the existence, authority and powers of this Honorable Court is now embodied in Republic Act No. 9282." On June 17, 2009, petitioner filed its "Reply," 9 stating that petition was filed within the two (2)-year prescriptive period under the law, and that under Revenue Memorandum Circular No. 49-2003, 10 the Court of Tax Appeals and the Bureau of Internal Revenue can proceed separately with a claim for refund/issuance of tax credit certificate, and that it has sufficiently cited clear and unequivocal pertinent provisions of law which support its claim for refund. On March 17, 2010, the Court issued a Resolution granting petitioner's "Motion for Consolidation" dated December 2, 2009, praying that CTA Case No. 7977 with CTA Case No. 7013. 11 On July 7, 2010, the Court issued a Resolution 12 noting the "Compliance and Manifestation" filed by petitioner with regard to the Resolution of the First Division dated June 21, 2010 consolidating CTA Case No. 8018, with CTA Case Nos. 7913 and 7977. 13 CTA Case No. 7977 On June 2, 2009, petitioner filed with the BIR's RDO No. 38 an application for issuance of tax credit certificate for its excess/unutilized input VAT for the third (3rd) Quarter of year 2007 in the amount of P1,458,274.42 14 On September 30, 2009, petitioner filed a "Petition for Review" for the same taxable quarter. 15 On October 26, 2009, respondent filed her Answer, 16 raising the following Special and Affirmative Defenses: "4. He reiterates and re-pleads the preceding paragraphs of this Answer as part of his Special and Affirmative Defenses. 5. Petitioner's claim for the issuance of tax credit certificate is subject to administrative investigation/examination by respondent's Bureau. 6. Taxes paid and collected are presumed to have been paid in accordance with law and regulations, hence, not refundable. 7. Moreover, in order to validly claim for tax credit/refund, it is imperative for petitioner to prove its compliance with the following, viz. : a. The registration requirements of a value-added taxpayer under the pertinent provision of the 1997 NIRC, as amended, and its implementing revenue regulations. b. The invoicing and accounting requirements for VAT-registered persons, as well as the filing and payment of VAT pursuant to the provisions of Sections 113 and 114 of the 1997 NIRC, as amended. Failure to comply with the invoicing requirements on the documents supporting the sale of goods and services will result in the disallowance of the claim for input tax of the taxpayer claimant. (Revenue Memorandum Circular No. 42-2003) c. The submission of complete documents in support of the administrative claim for tax refund pursuant to Section 112(C) of the 1997 NIRC, as amended, otherwise, there would be no sufficient compliance with regard to the filing of administrative claim for tax credit/refund which is a condition sine qua non prior to the filing of such claim. d. That the input taxes of P1,458,274.42 allegedly representing unutilized input VAT from its purchases of goods and services were: i. paid by petitioner; ii. attributable to its zero-rated or effectively zero-rated sales; and, aTCADc iii. such input taxes paid should not have been applied against any output tax. e. That petitioner's claim for tax credit/refund allegedly representing unutilized input VAT in the amount of P1,458,274.42 was filed within two (2) years after the close of the taxable quarter when the sales were made in accordance with Section 112(A) of the 1997 NIRC, as amended. 8. In an action for tax credit/refund, the burden of proof rests upon the taxpayer to establish by sufficient and competent evidence its entitlement to a claim for tax credit/refund. 9. Finally, basic is the rule that tax refunds are in the nature of tax exemptions and are to be construed strictissimi juris against the entity claiming the same (Philippine Geothermal, Inc. vs. Commissioner of Internal Revenue, G.R. No. 154028, July 27, 2005) . Moreover, statutes in derogation of sovereignty such as those containing exemption from taxation should be strictly construed in favour of the State. In this regard, taxation is the rule and exemption is the exception. The law does not look with favour on tax exemptions and that he who would seek to be thus privileged must justify it by words too plain to be mistaken and too categorical to be misinterpreted. (Sea-Land Service, Inc. vs. Court of Appeals, 357 SCRA 444) ." 17 On January 11, 2010, pursuant to CTA Administrative Circular No. 01-2010, dated January 5, 2010, 18 the Court issued an order transferring the case to the Third Division of the Court. 19 On March 17, 2010, the Court issued a Resolution granting petitioner's "Motion for Consolidation" dated December 2, 2009, praying for consolidation with CTA Case No. 7913. Thus, CTA Case No. 7977 was consolidated with CTA Case No. 7913. CTA Case No. 8018 On August 7, 2009, petitioner filed with the BIR's RDO No. 38 an application for issuance of tax credit certificate for its excess/unutilized input VAT for the fourth (4th) Quarter of 2007 in the amount of P2,265,841.03. 20 On December 29, 2009, petitioner filed a "Petition for Review" for the issuance of tax credit certificate for unutilized/unapplied input VAT for the same quarter. 21 On February 3, 2010, respondent filed his "Answer" raising the following Special and Affirmative Defenses: "4. Claims for refund are strictly construed against the taxpayer as the same partakes the nature of tax exemption; 5. The taxpayer has the burden to show that the taxes were erroneously or illegally paid. Failure on the part of the Petitioner to prove the same is fatal to its cause of action. In the instant case, the [p]etitioner failed to present proof that the sales of the [p]etitioner are subject to VAT at the rate of 0%. In addition, [p]etitioner must prove that the compensation or consideration which it received for the services rendered were actually paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas; 6. The [p]etitioner should prove its legal basis for claiming the amount being refunded." On May 7, 2010, petitioner filed a "Motion for Consolidation," praying that CTA Case No. 8018, be consolidated with CTA Case Nos. 7913 and 7977. On June 21, 2010, the Court issued a Resolution granting the motion and consolidating CTA Case Nos. 7913, 7977, and 8018. 22 CTA Case Nos. 7913, 7977, and 8018 During trial, petitioner presented testimonial and documentary evidence, 23 which were admitted in Resolutions dated October 10, 2011, 24 and January 17, 2012. 25 On April 23, 2012, respondent manifested in open court that since it has not yet terminated the examination of petitioner's records, she will no longer present evidence and is submitting the case for decision. 26 On the same date, Respondent filed an "Explanation (in Compliance with Resolution dated April 18, 2012)" stating the same. 27 cCTESa On April 30, 2012, the Court ordered both parties to submit their simultaneous memoranda within thirty (30) days from notice thereof. 28 Petitioner submitted its Memorandum on June 7, 2012. 29 Respondent did not file her Memorandum. On June 13, 2012, the Court resolved that the consolidated Petitions for Review be deemed submitted for Decision. 30 Hence, this Decision. The Issues The issues to be resolved, as agreed upon by the parties, are as follows: 1. WHETHER OR NOT PETITIONER'S CLAIM FOR UNUTILIZED VAT WAS FILED WITHIN THE PERIOD PRESCRIBED BY LAW; 2. WHETHER OR NOT PETITIONER IS ENTITLED TO THE ISSUANCE OF A TAX CREDIT CERTIFICATE FOR ITS UNUTILIZED/EXCESS INPUT VAT PAYMENTS FOR THE 1ST TO 4TH QUARTERS OF 2007 AMOUNTING TO PHP7,302,946.31 31 Ruling of the Court On the matter of the timeliness of petitioner's claim, the Court finds the Supreme Court decision in the case of Commissioner of Internal Revenue vs. San Roque Power Corporation; Taganito Mining Corporation vs. Commissioner of Internal Revenue; Philex Mining Corporation vs. Commissioner of Internal Revenue 32 (" San Roque case ") clarifying the application of the doctrines in the cases of Atlas Consolidated Mining and Development Corporation vs. Commissioner of Internal Revenue, 33 Commissioner of Internal Revenue v. Mirant Pagbilao Corporation , 34 and Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc. , 35 as well as the application of Revenue Memorandum Circular No. 49-03 (RMC 49-03) 36 dated 15 April 2003 and BIR Ruling No. DA-489-03 dated 10 December 2003 37 to claims for refund particularly instructive. The Supreme Court ruled as follows: "The Atlas doctrine, which held that claims for refund or credit of input VAT must comply with the two-year prescriptive period under Section 229, should be effective only from its promulgation on 8 June 2007 until its abandonment on 12 September 2008 in Mirant. The Atlas doctrine was limited to the reckoning of the two-year prescriptive period from the date of payment of the output VAT. Prior to the Atlas doctrine, the two-year prescriptive period for claiming refund or credit of input VAT should be governed by Section 112(A) following the verba legis rule. The Mirant ruling, which abandoned the Atlas doctrine, adopted the verba legis rule, thus applying Section 112(A) in computing the two-year prescriptive period in claiming refund or credit of input VAT. The Atlas doctrine has no relevance to the 120+30 day periods under Section 112(C) because the application of the 120+30 day periods was not in issue in Atlas. The application of the 120+30 day periods was first raised in Aichi, which adopted the verba legis rule in holding that the 120+30 day periods are mandatory and jurisdictional. The language of Section 112(C) is plain, clear, and unambiguous. When Section 112(C) states that 'the Commissioner shall grant a refund or issue the tax credit within one hundred twenty (120) days from the date of submission of complete documents,' the law clearly gives the Commissioner 120 days within which to decide the taxpayer's claim. Resort to the courts prior to the expiration of the 120-day period is a patent violation of the doctrine of exhaustion of administrative remedies, a ground for dismissing the judicial suit due to prematurity. Philippine jurisprudence is awash with cases affirming and reiterating the doctrine of exhaustion of administrative remedies. Such doctrine is basic and elementary. When Section 112(C) states that 'the taxpayer affected may, within thirty (30) days from 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,' the law does not make the 120+30 day periods optional just because the law uses the word 'may.' The word 'may' simply means that the taxpayer may or may not appeal the decision of the Commissioner within 30 days from receipt of the decision, or within 30 days from the expiration of the 120-day period. Certainly, by no stretch of the imagination can the word 'may' be construed as making the 120+30 day periods optional, allowing the taxpayer to file a judicial claim one day after filing the administrative claim with the Commissioner. The old rule that the taxpayer may file the judicial claim, without waiting for the Commissioner's decision if the two-year prescriptive period is about to expire, cannot apply because that rule was adopted before the enactment of the 30-day period. The 30-day period was adopted precisely to do away with the old rule, so that under the VAT System the taxpayer will always have 30 days to file the judicial claim even if the Commissioner acts only on the 120th day, or does not act at all during the 120-day period. With the 30-day period always available to the taxpayer, the taxpayer can no longer file a judicial claim for refund or credit of input VAT without waiting for the Commissioner to decide until the expiration of the 120-day period. To repeat, a claim for tax refund or credit, like a claim for tax exemption, is construed strictly against the taxpayer. One of the conditions for a judicial claim of refund or credit under the VAT System is compliance with the 120+30 day mandatory and jurisdictional periods. Thus, strict compliance with the 120+30 day periods is necessary for such a claim to prosper, whether before, during, or after the effectivity of the Atlas doctrine, except for the period from the issuance of BIR Ruling No. DA-489-03 on 10 December 2003 to 6 October 2010 when the Aichi doctrine was adopted , which again reinstated the 120+30 day periods as mandatory and jurisdictional. EIDTAa xxx xxx xxx BIR Ruling No. DA-489-03 does provide a valid claim for equitable estoppel under Section 246 of the Tax Code. BIR Ruling No. DA-489-03 expressly states that the 'taxpayer-claimant need not wait for the lapse of the 120-day period before it could seek judicial relief with the CTA by way of Petition for Review.' Prior to this ruling, the BIR held, as shown by its position in the Court of Appeals, that the expiration of the 120-day period is mandatory and jurisdictional before a judicial claim can be filed. There is no dispute that the 120-day period is mandatory and jurisdictional, and that the CTA does not acquire jurisdiction over a judicial claim that is filed before the expiration of the 120-day period. There are, however, two exceptions to this rule. The first exception is if the Commissioner, through a specific ruling, misleads a particular taxpayer to prematurely file a judicial claim with the CTA. Such specific ruling is applicable only to such particular taxpayer. The second exception is where the Commissioner, through a general interpretative rule issued under Section 4 of the Tax Code, misleads all taxpayers into filing prematurely judicial claims with the CTA. In these cases, the Commissioner cannot be allowed to later on question the CTA's assumption of jurisdiction over such claim since equitable estoppel has set in as expressly authorized under Section 246 of the Tax Code. xxx xxx xxx Clearly, BIR Ruling No. DA-489-03 is a general interpretative rule. Thus, all taxpayers can rely on BIR Ruling No. DA-489-03 from the time of its issuance on 10 December 2003 up to its reversal by this Court in Aichi on 6 October 2010, where this Court held that the 120+30 day periods are mandatory and jurisdictional ." 38 (Underlining Ours.) Petitioner filed its judicial claims as follows: the first and second quarters of 2007 on April 14, 2009 merely forty six (46) days after it filed its administrative claim on February 27, 2009; for the third quarter of 2007 on September 30, 2009, one hundred twenty (120) days after it filed its administrative claim on June 2, 2009; and for the fourth quarter of 2007 on December 29, 2009, one hundred forty four (144) days after it filed its administrative claim on August 7, 2009. In all three filings, the 120+30 day period mandated by law was not observed. Given the above discussion, however, petitioner's claims fall squarely within the period when taxpayers could rely on BIR Ruling No. DA 489-03. Thus, petitioner, did not have to observe the period strictly. The present claim covers the four taxable quarters of 2007 which closed on March 31, 2007; June 30, 2007; September 30, 2007 and December 31, 2007. Counting two years from the said dates, petitioner had until March 31, 2009; June 30, 2009; September 30, 2009 and December 31, 2009, respectively, within which to file its administrative claim for tax credit certificate/refund. Thus, petitioner's administrative claims for refund were seasonably filed on February 27, 2009, June 8, 2009 and August 7, 2009, as shown below: CTA Case No. Year 2007 Close of the Taxable Quarter Last Day to File Administrative Claim Date of Filing of Administrative Claim Exhibit 7913 1st Quarter Mar. 31, 2007 Mar. 31, 2009 Feb. 27, 2009 "C" to "C-3" 2nd Quarter June 30, 2007 June 30, 2009 7977 3rd Quarter Sept. 30, 2007 Sept. 30, 2009 June 8, 2009 "LLL" 8018 4th Quarter Dec. 31, 2007 Dec. 31, 2009 Aug. 7, 2009 "PPP" For the period covering January 1, 2007 to December 31, 2007, petitioner duly filed with the Bureau of Internal Revenue (BIR) its Quarterly VAT Returns declaring the following: AEDHST 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total (Exhibit "E") (Exhibit "F") (Exhibit "G") (Exhibit "H") Vatable Sales/Receipts - - - - - Zero-Rated Sales/Receipts P33,331,432.22 P57,000,269.38 P71,128,630.44 P78,007,661.34 P239,467,993.38 Total Sales/Receipts P33,331,432.22 P57,000,269.38 P71,128,630.44 P78,007,661.34 P239,467,993.38 Output tax due - - - - - Less: Allowable input tax Input Tax Carried Over from P3,205,753.06 P5,159,089.30 P6,784,583.91 P8,242,858.33 P3,205,753.06 Previous Quarter Input Tax Deferred on Capital 4,748,012.08 4,952,774.92 5,339,837.54 5,252,089.14 4,748,012.08 Goods Exceeding P1 Million from Previous Quarter Current Transactions Purchase of Capital Goods not 152,045.60 - 46,212.75 128,673.73 326,932.08 exceeding P1M Purchase of Capital Goods 508,376.03 735,206.32 286,844.54 660,346.56 2,190,773.45 exceeding P1M Domestic Purchase of Goods 111,149.57 91,453.03 70,503.30 262,351.17 535,457.07 Other than Capital Goods Domestic Purchase of Services 1,386,527.88 1,185,897.88 966,965.43 1,486,465.97 5,025,857.16 Total Available Input Tax P10,111,864.22 P12,124,421.45 P13,494,947.47 P16,032,784.90 P16,032,784.90 Less: Deductions from Input Tax Input Tax on Purchases of Capital (P4,952,774.92) (P5,339,837.54) (P5,252,089.14) (P5,524,085.54) (P5,524,085.54) Goods exceeding P1 Million deferred for the succeeding period VAT Refund/TCC claimed - - Total (P4,952,774.92) (P5,339,837.54) (P5,252,089.14) (P5,524,085.54) (P5,524,085.54) Total Allowable Input Tax P5,159,089.30 P6,784,583.91 P8,242,858.33 P10,508,699.36 P10,508,699.36 Net VAT Payable/(Overpayment) (P5,159,089.30) (P6,784,583.91) (P8,242,858.33) (P10,508,699.36) (P10,508,699.36) ============= ============= ============ ============= ============== As indicated in the returns, petitioner's excess input VAT arising from its domestic purchases of capital goods not exceeding P1Million, domestic purchases of goods other than capital goods, domestic purchases of services and amortization of input VAT on purchases of capital goods exceeding P1Million for the four quarters of 2007 amounted to P7,302,946.30, broken down as follows: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Input Tax Deferred on Capital P4,748,012.08 P4,952,774.92 P5,339,837.54 P5,252,089.14 P4,748,012.08 Goods exceeding P1 Million from Previous Quarter Add: Input Tax on Capital Goods 508,376.03 735,206.32 286,844.54 660,346.56 2,190,773.45 exceeding P1 Million Purchased this Quarter Total: Unamortized Input Tax on P5,256,388.11 P5,687,981.24 P5,626,682.08 P5,912,435.70 P6,938,785.53 Capital Goods exceeding P1 Million Less: Input Tax on Purchases of 4,952,774.92 5,339,837.54 5,252,089.14 5,524,085.54 5,524,085.54 Capital Goods exceeding P1 Million deferred for the succeeding period Amortization of Input Tax on Capital P303,613.19 P348,143.70 P374,592.94 P388,350.16 P1,414,699.99 Goods exceeding P1 Million Add: Input Tax on: Purchase of Capital Goods not 152,045.60 - 46,212.75 128,673.73 326,932.08 exceeding P1 Million Domestic Purchases of Goods 111,149.57 91,453.03 70,503.30 262,351.17 535,457.07 Other than Capital Goods Domestic Purchase of Services 1,386,527.88 1,185,897.88 966,965.43 1,486,465.97 5,025,857.16 Total Allowable Input Tax Due P1,953,336.24 P1,625,494.61 P1,458,274.42 P2,265,841.03 P7,302,946.30 Less: Output Tax Due - - - - - Excess Input Tax P1,953,336.24 P1,625,494.61 P1,458,274.42 P2,265,841.03 P7,302,946.30 ============ ============ ============ ============ ============ The aforesaid excess input tax of P7,302,946.30 is the subject of the present claims for refund. Section 112 (A) of the NIRC of 1997, as amended, allows the refund/tax credit of unutilized excess input VAT attributable to zero-rated or effectively zero-rated sales subject to the taxpayer's compliance with the following requisites: 39 1. there must be zero-rated or effectively zero-rated sales; TECIaH 2. that input taxes were incurred or paid; 3. that such input taxes are attributable to zero-rated or effectively zero-rated sales; 4. that the input taxes were not applied against any output VAT liability; and 5. that the claim for refund was filed within the two-year prescriptive period. The fifth requisite pertains to the filing of the administrative claim for tax credit certificate/refund of input VAT. As explicitly stated under Section 112 (A), the application for tax credit certificate/refund of unutilized excess input VAT must be filed within two years after the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made. Now to the first requisite, petitioner alleges that its sales of services to its foreign affiliates, who are all engaged in business conducted outside the Philippines, were paid for in United States Dollars inwardly remitted to the Philippines and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP) qualify for VAT zero rating under Section 108 (B) (2) of the NIRC of 1997, as amended, which states that: SEC. 108. Value-added Tax on Sale of Services and Use or Lease of Properties. "(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. , 40 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. Corollary to the second requisite, Sections 113 (A) (2), (B) (1), (2) (c) and (3) of the NIRC of 1997, as amended, as implemented by Sections 4.113-1 (A) (2), B (1) and (2) (c) of Revenue Regulations (RR) No. 16-05 41 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); ISDCaT "(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; "(3) The date of transaction, quantity, unit cost and description of the goods or properties or nature of the service; and . . . (underlining supplied) SEC. 4.113-1. Invoicing Requirements. (A) A VAT-registered person shall issue: xxx xxx xxx (B) (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 : cDTSHE (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. The Court now proceeds to determine if petitioner has complied with the aforementioned requisites for VAT zero-rating of sales of services. It is undisputed that petitioner is duly registered with the BIR as a VAT taxpayer. 42 As a Regional Operating Headquarters (ROHQ), petitioner is authorized 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. 43 Such services are not the same category as "processing, manufacturing or repacking of goods." For the taxable year 2007, petitioner rendered services to its affiliates, namely: Manulife (International) Limited, John Hancock Life Insurance Company (U.S.A.) and The Manufacturers Life Insurance Company. 44 It was established that Manulife (International) Ltd. and John Hancock Life Insurance Company (U.S.A.) are non-resident foreign entities doing business outside the Philippines as shown by the SEC Certificates of Non-Registration of Corporation/Partnership, 45 certified copy of the Philippine Stock Exchange of Manulife Financial Corporation Annual Report for 2007, 46 Registration Information of Manulife (International) Ltd. from the website of the Hong Kong Company of Registry, 47 Registration Information of John Hancock Life Insurance Company (U.S.A.) from the website of the Department of Energy, Labor and Economic Growth of the State of Michigan, 48 authenticated and certified copy of Amended Articles of Redomestication of John Hancock Life Insurance Company (U.S.A.), 49 and authenticated and certified copy of Certified Documents of Manulife (International) Ltd. 50 However, the Court noted that with regard to petitioner's client-affiliate, The Manufacturer's Life Insurance Company, records show that it is a corporation organized under the laws of the Dominion of Canada but duly licensed and registered with the SEC to do business in the Philippines though a branch, as evidenced by the 2007 General Information Sheet. 51 Clearly, it did not satisfy the final requisite. Consequently, petitioner's reported sales of services to The Manufacturer's Life Insurance Company in the amount of P72,476,309.15, detailed below, cannot qualify for VAT zero rating. Summary Exhibit Exhibit (Official Reference (Invoice) Receipt) Client Amount of Sales First Quarter of 2007 January AAA-1 AAA-1b1 AAA-1b The Manufacturer's Life Insurance Company P124,309.36 AAA-1 AAA-1e1 AAA-1e The Manufacturer's Life Insurance Company 1,318,885.34 AAA-1 AAA-1g1 AAA-1g The Manufacturer's Life Insurance Company 714,992.61 February AAA-1 AAA-1k1 AAA-1k The Manufacturer's Life Insurance Company 1,300,717.67 AAA-1 AAA-1l1 AAA-1l The Manufacturer's Life Insurance Company 691,509.83 AAA-1 AAA-1o1 AAA-1o The Manufacturer's Life Insurance Company 381,205.11 March AAA-1 AAA-1r1 AAA-1r The Manufacturer's Life Insurance Company 632,521.04 AAA-1 AAA-1t1 AAA-1t The Manufacturer's Life Insurance Company 1,197,308.34 AAA-1 AAA-1v1 AAA-1v The Manufacturer's Life Insurance Company 486,727.23 AAA-1 AAA-1w1 AAA-1w The Manufacturer's Life Insurance Company 896,781.87 AAA-1 AAA-1x1 AAA-1x The Manufacturer's Life Insurance Company 752,880.79 AAA-1 AAA-1y1 AAA-1y The Manufacturer's Life Insurance Company 559,413.46 AAA-1 AAA-2b1 AAA-2b The Manufacturer's Life Insurance Company 342,233.90 Subtotal P9,399,486.55 Second Quarter of 2007 April AAA-2 AAA-2e1 AAA-2e The Manufacturer's Life Insurance Company P514,028.70 AAA-2 AAA-2h1 AAA-2h The Manufacturer's Life Insurance Company 1,092,308.19 AAA-2 AAA-2i1 AAA-2i The Manufacturer's Life Insurance Company 688,305.97 AAA-2 AAA-2k1 AAA-2k The Manufacturer's Life Insurance Company 900,054.21 AAA-2 AAA-2l1 AAA-2l The Manufacturer's Life Insurance Company 755,267.37 AAA-2 AAA-2n1 AAA-2n The Manufacturer's Life Insurance Company 571,260.95 May AAA-2 AAA-2o1 AAA-2o The Manufacturer's Life Insurance Company 762,350.42 AAA-2 AAA-2p1 AAA-2p The Manufacturer's Life Insurance Company 608,514.88 AAA-2 AAA-2q1 AAA-2q The Manufacturer's Life Insurance Company 926,410.44 AAA-2 AAA-2x1 AAA-2x The Manufacturer's Life Insurance Company 1,013,980.59 AAA-2 AAA-2y1 AAA-2y The Manufacturer's Life Insurance Company 511,669.07 AAA-2 AAA-2z1 AAA-2z The Manufacturer's Life Insurance Company 677,719.34 June AAA-2 AAA-3d1 AAA-3d The Manufacturer's Life Insurance Company 1,067,111.03 AAA-2 AAA-3f1 AAA-3f The Manufacturer's Life Insurance Company 492,260.19 AAA-2 AAA-3g1 AAA-3g The Manufacturer's Life Insurance Company 502,162.85 AAA-2 AAA-3j1 AAA-3j The Manufacturer's Life Insurance Company 876,722.80 AAA-2 AAA-3k1 AAA-3k The Manufacturer's Life Insurance Company 604,175.48 AAA-2 AAA-3l1 AAA-3l The Manufacturer's Life Insurance Company 971,720.59 Subtotal P13,536,023.07 Third Quarter of 2007 July AAA-3 AAA-3q1 AAA-3q The Manufacturer's Life Insurance Company P1,070,561.73 AAA-3 AAA-3s1 AAA-3s The Manufacturer's Life Insurance Company 455,404.93 AAA-3 AAA-3t1 AAA-3t The Manufacturer's Life Insurance Company 505,719.64 AAA-3 AAA-3w1 AAA-3w The Manufacturer's Life Insurance Company 978,918.71 AAA-3 AAA-3x1 AAA-3x The Manufacturer's Life Insurance Company 613,032.17 AAA-3 AAA-3y1 AAA-3y The Manufacturer's Life Insurance Company 1,610,757.45 AAA-3 AAA-3z1 AAA-3z The Manufacturer's Life Insurance Company 236,939.13 August AAA-3 AAA-4e1 AAA-4e The Manufacturer's Life Insurance Company 1,099,132.08 AAA-3 AAA-4g1 AAA-4g The Manufacturer's Life Insurance Company 536,632.59 AAA-3 AAA-4h1 AAA-4h The Manufacturer's Life Insurance Company 519,215.91 AAA-3 AAA-4k1 AAA-4k The Manufacturer's Life Insurance Company 1,048,275.28 AAA-3 AAA-4l1 AAA-4l The Manufacturer's Life Insurance Company 621,480.67 AAA-3 AAA-4m1 AAA-4m The Manufacturer's Life Insurance Company 1,291,973.37 AAA-3 AAA-4n1 AAA-4n The Manufacturer's Life Insurance Company 384,195.77 AAA-3 AAA-4o1 AAA-4o The Manufacturer's Life Insurance Company 1,003,274.93 September AAA-3 AAA-4t1 - The Manufacturer's Life Insurance Company 930,633.60 AAA-3 AAA-4w1 AAA-4w The Manufacturer's Life Insurance Company 469,492.91 AAA-3 AAA-4x1 AAA-4x The Manufacturer's Life Insurance Company 443,079.20 AAA-3 AAA-5a1 AAA-5a The Manufacturer's Life Insurance Company 821,020.20 AAA-3 AAA-5b1 AAA-5b The Manufacturer's Life Insurance Company 519,107.17 AAA-3 AAA-5c1 AAA-5c The Manufacturer's Life Insurance Company 1,721,159.01 AAA-3 AAA-5d1 AAA-5d The Manufacturer's Life Insurance Company 304,508.23 AAA-3 AAA-5e1 AAA-5e The Manufacturer's Life Insurance Company 317,553.62 AAA-3 AAA-5g1 AAA-5g The Manufacturer's Life Insurance Company 841,174.70 AAA-3 AAA-5h1 AAA-5h The Manufacturer's Life Insurance Company 1,891,706.57 AAA-3 AAA-5i1 AAA-5i The Manufacturer's Life Insurance Company 19,421.70 Subtotal P20,254,371.27 Fourth Quarter of 2007 October AAA-4 AAA-5n1 AAA-5n The Manufacturer's Life Insurance Company P902,429.45 AAA-4 AAA-5q1 AAA-5q The Manufacturer's Life Insurance Company 405,907.27 AAA-4 AAA-5r1 AAA-5r The Manufacturer's Life Insurance Company 459,587.22 AAA-4 AAA-5u1 AAA-5u The Manufacturer's Life Insurance Company 840,912.51 AAA-4 AAA-5v1 AAA-5v The Manufacturer's Life Insurance Company 502,870.10 AAA-4 AAA-5w1 AAA-5w The Manufacturer's Life Insurance Company 1,720,533.04 AAA-4 AAA-5x1 AAA-5x The Manufacturer's Life Insurance Company 295,279.69 AAA-4 AAA-5y1 AAA-5y The Manufacturer's Life Insurance Company 291,387.98 AAA-4 AAA-6a1 AAA-6a The Manufacturer's Life Insurance Company 589,167.91 AAA-4 AAA-6b1 AAA-6b The Manufacturer's Life Insurance Company 908,239.29 AAA-4 AAA-6c1 AAA-6c The Manufacturer's Life Insurance Company 1,933,423.12 November AAA-4 AAA-6h1 AAA-6h The Manufacturer's Life Insurance Company 868,924.46 AAA-4 AAA-6k1 AAA-6k The Manufacturer's Life Insurance Company 427,451.29 AAA-4 AAA-6l1 AAA-6l The Manufacturer's Life Insurance Company 473,520.80 AAA-4 AAA-6o1 AAA-6o The Manufacturer's Life Insurance Company 843,811.07 AAA-4 AAA-6p1 AAA-6p The Manufacturer's Life Insurance Company 492,696.78 AAA-4 AAA-6q1 AAA-6q The Manufacturer's Life Insurance Company 2,471,115.32 AAA-4 AAA-6r1 AAA-6r The Manufacturer's Life Insurance Company 274,007.24 AAA-4 AAA-6t1 AAA-6t The Manufacturer's Life Insurance Company 515,516.19 AAA-4 AAA-6u1 AAA-6u The Manufacturer's Life Insurance Company 731,827.83 AAA-4 AAA-6v1 AAA-6v The Manufacturer's Life Insurance Company 37,364.62 AAA-4 AAA-6w1 AAA-6w The Manufacturer's Life Insurance Company 1,123,497.63 AAA-4 AAA-6x1 AAA-6x The Manufacturer's Life Insurance Company 2,019,911.01 AAA-4 AAA-6y1 AAA-6y The Manufacturer's Life Insurance Company 294,131.68 December AAA-4 AAA-7d1 AAA-7d The Manufacturer's Life Insurance Company 896,885.81 AAA-4 AAA-7g1 AAA-7g The Manufacturer's Life Insurance Company 428,628.08 AAA-4 AAA-7h1 AAA-7h The Manufacturer's Life Insurance Company 456,763.98 AAA-4 AAA-7k1 AAA-7k The Manufacturer's Life Insurance Company 954,731.89 AAA-4 AAA-7l1 AAA-7l The Manufacturer's Life Insurance Company 475,092.49 AAA-4 AAA-7m1 AAA-7m The Manufacturer's Life Insurance Company 1,697,867.60 AAA-4 AAA-7n1 AAA-7n The Manufacturer's Life Insurance Company 252,534.91 AAA-4 AAA-7o1 AAA-7o The Manufacturer's Life Insurance Company 264,585.23 AAA-4 AAA-7q1 AAA-7q The Manufacturer's Life Insurance Company 492,128.53 AAA-4 AAA-7r1 AAA-7r The Manufacturer's Life Insurance Company 711,639.13 AAA-4 AAA-7s1 AAA-7s The Manufacturer's Life Insurance Company 132,457.71 AAA-4 AAA-7t1 AAA-7t The Manufacturer's Life Insurance Company 1,032,503.55 AAA-4 AAA-7u1 AAA-7u The Manufacturer's Life Insurance Company 2,067,095.85 Subtotal P29,286,428.26 TOTAL P72,476,309.15 ============= For services rendered for the four quarters of 2007, petitioner received foreign currency payments, which were accounted for in accordance with the BSP rules and regulations, as evidenced by the Schedule of Sales, 52 VAT zero-rated sales invoices and official receipts, 53 Summary of Bank Remittances, 54 Customer Advices-Bank Credit Memos, 55 issued by Citibank and consolidated report 56 of the Court-commissioned Independent Certified Public Accountant (CPA), Nila N. Mendiola. DHITCc However, petitioner failed to substantiate the amount of P5,200,302.44 with VAT zero-rated official receipts its sales of services, detailed as follows: Year 2007 Exhibit (Invoice) Client Amount of Sales August AAA-4d1 John Hancock Life Insurance Co. P4,594,871.83 September AAA-5f1 John Hancock Life Insurance Co. 135,057.39 December AAA-7p1 John Hancock Life Insurance Co. 470,373.22 Total 5,200,302.44 ========== In sum, the Court finds that of the P239,467,993.38 zero-rated sales declared by petitioner for the first, second, third and fourth quarters of 2007, only the amount of P161,791,381.79 qualifies for VAT zero rating, computed as follows: 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total Zero-Rated Sales per Returns P33,331,432.22 P57,000,269.38 P71,128,630.44 P78,007,661.34 P239,467,993.38 Less: Disallowances Sales to The Manufacturer's Life Insurance Company P9,399,486.55 P13,536,023.07 P20,254,371.27 P29,286,428.26 P72,476,309.15 No Supporting Official Receipts - - 4,729,929.22 470,373.22 5,200,302.44 Total Disallowances P9,399,486.55 P13,536,023.07 P24,984,300.49 P29,756,801.48 P77,676,611.59 Valid Zero Rated Sales P23,931,945.67 P43,464,246.31 P46,144,329.95 P48,250,859.86 P161,791,381.79 ============= ============= ============= ============= ============== After resolving that petitioner indeed has VAT zero-rated sales of services for the four quarters of 2007 in the amount of P161,791,381.79, the Court proceeded to determine the amount of input VAT incurred by petitioner corresponding thereto. In support of its claimed input VAT, petitioner submitted various suppliers' invoices and official receipts, 57 which were examined by an Independent CPA. In the Independent CPA's consolidated Report dated September 8, 2010, she recommended a reduction of petitioner's claim of P70,881.96, 58 for the following reasons: Supplier Exhibit Exhibit Input Tax Nature of (Invoice) (OR) Exception 1st Quarter TV Food Chefs, Inc. ZZ-2a1 ZZ-2a P1,119.64 Not within the period claim TV Food Chefs, Inc. ZZ-2b1 ZZ-2b 331.07 Not within the period claim Bayan Telecommunications, Inc. ZZ-2f1 ZZ-2f 1,637.14 No TIN PLDT ZZ-2g1 ZZ-2g 154.89 No TIN PLDT ZZ-2h1 ZZ-2h 3,474.28 No TIN PLDT ZZ-2v1 ZZ-2v 151.22 No TIN PLDT ZZ-2v2 ZZ-2v 151.28 No TIN PLDT ZZ-2v3 ZZ-2v 152.59 No TIN PLDT ZZ-2v4 ZZ-2v 152.59 No TIN PLDT ZZ-2v5 ZZ-2v 153.91 No TIN PLDT ZZ-2v6 ZZ-2v 154.82 No TIN PLDT ZZ-2v7 ZZ-2v 156.69 No TIN PLDT ZZ-3m1 ZZ-3m 148.88 No TIN PLDT ZZ-3m2 ZZ-3m 152.59 No TIN PLDT ZZ-3m3 ZZ-3m 152.59 No TIN PLDT ZZ-3m4 ZZ-3m 151.22 No TIN PLDT ZZ-3m5 ZZ-3m 153.91 No TIN PLDT ZZ-3m6 ZZ-3m 156.69 No TIN PLDT ZZ-3m7 ZZ-3m 154.82 No TIN PLDT ZZ-4s1 ZZ-4s 4,229.66 No TIN PLDT ZZ-4a1 ZZ-4a 247.89 No TIN Bayan Telecommunications, Inc. ZZ-4c1 ZZ-4c 1,637.14 No TIN Xentrix Solutions - - 387.32 No document presented Total disallowed Input VAT for the 1st Quarter P15,362.83 2nd Quarter TV Food Chefs, Inc. ZZ-5h1 ZZ-5h P320.89 No TIN PLDT ZZ-5l1 ZZ-5l 148.05 No TIN PLDT ZZ-5l2 ZZ-5l 146.61 No TIN PLDT ZZ-5l3 ZZ-5l 146.61 No TIN TV Food Chefs, Inc. ZZ-6f1 ZZ-6f 321.43 No TIN Bayan Telecommunications, Inc. ZZ-6n1 ZZ-6n 1,637.14 No TIN Profiles Asia Pacific, Inc. - - 16,941.00 No document presented Total disallowed Input VAT for the 2nd Quarter P19,661.73 3rd Quarter Innospecs ZZ-9l1 ZZ-9l P12,801.60 No Invoice Punongbayan & Araullo ZZ-9t1 ZZ-9t 463.68 No Invoice Accent Micro Technologies ZZ-9x1 ZZ-9x 9,765.29 Incomplete document presented Total disallowed Input VAT for the 3rd Quarter P23,030.57 4th Quarter Rentokil Initial (Philippines), Inc. ZZ-14k1 ZZ-14k P360.00 No Invoice Accent Micro Technologies ZZ-14r2 ZZ-14r 10,962.54 No Invoice CWC International Corp. - - 1,504.29 No Invoice Total disallowed Input VAT for the 4th Quarter P12,826.83 Total disallowed Input VAT for the 1st to 4th Quarters of 2007 P70,881.96 ========= After perusal of petitioner's submissions and the Independent CPA's report, the Court agrees with these disallowances. ASEcHI The Court also finds that, petitioner's claim should be reduced further by P64,246.56, broken down as follows: Supplier Exhibit Exhibit Input Tax Nature of (Invoice) (OR) Exception 1st Quarter John Clements Consultants ZZ-1a1 ZZ-1a P2,207.47 Not within the period claim Goudie Associates Manila Ltd. ZZ-4p1 ZZ-4p 6,479.14 VAT not separately shown Total disallowed Input VAT for the 1st Quarter P8,686.61 3rd Quarter Cafea Restaurant - ZZ-10p P14,464.29 OR not dated Maxicare (Exhibit ZZ-9m1) - - 349.57 Supported with Statement of Account only Celebrity Sports Plaza - - 15,910.70 Supported with Statement (Exhibit ZZ-10q) of Account only Guthrie Jensen - - 6,480.00 No document presented Hizons Restaurant - - 1,404.00 No document presented Human Capital - - 3,420.00 No document presented E-Global Structure - - 2,203.93 No document presented E-Global Structure - - 133.93 No document presented Total disallowed Input VAT for the 3rd Quarter P44,366.42 4th Quarter CWC International - - P11,193.53 No document presented Total disallowed Input VAT for the 4th Quarter P11,193.53 Total disallowed Input VAT for the 1st to 4th Qrts of 2007 P64,246.56 ========= Furthermore, petitioner's claim should be further reduced by P897.71, representing the discrepancy between the claimed input VAT vis--vis the input VAT per summary, as shown below: 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total Per Claim P1,953,336.24 P1,625,494.61 P1,458,274.42 P2,265,841.03 P7,302,946.30 Per Summary 1,952,438.53 1,625,494.61 1,458,274.42 2,265,841.03 7,302,048.59 Difference P897.71 - - - P897.71 ============ =========== Considering all the aforesaid disallowances, out of the total reported input VAT of P7,302,946.30, only the input VAT of P7,166,920.07 was properly substantiated in accordance with Sections 110 (A) and 113 (A) of the NIRC of 1997, as amended, in relation to Sections 4.110-1, 4.110-8 and 4.113-1 of RR No. 16-2005. Below is the computation of the amount of P7,166,920.07: 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total Input VAT Claim P1,953,336.24 P1,625,494.61 P1,458,274.42 P2,265,841.03 P7,302,946.30 Less: Disallowances Per ICPA's report P15,362.83 P19,661.73 P23,030.57 P12,826.83 P70,881.96 Per this Court's findings 8,686.61 - 44,366.42 11,193.53 64,246.56 Discrepancy between input VAT per claim and input VAT per Summary 897.71 - - - 897.71 Total P24,947.15 P19,661.73 P67,396.99 P24,020.36 P136,026.23 Valid Input VAT P1,928,389.09 P1,605,832.88 P1,390,877.43 P2,241,820.67 P7,166,920.07 ============ ============ ============ ============ ============ Since petitioner had no VATable or exempt sales but only zero-rated sales for the four quarters of 2007, the substantiated input VAT claim in the amount of P7,166,920.07 can be attributed to the entire zero-rated sales declared by petitioner in the amount of P239,467,993.38. However, only the input VAT of P4,898,053.35 is attributable to the valid zero-rated sales of P161,791,381.79, as computed below: 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total Valid Zero-Rated Sales P23,931,945.67 P43,464,246.31 P46,144,329.95 P48,250,859.86 P161,791,381.79 Divided by Total Declared Zero-Rated Sales 33,331,432.22 57,000,269.38 71,128,630.44 78,007,661.34 239,467,993.38 Multiplied by Valid Input VAT 1,928,389.09 1,605,832.88 1,390,877.43 2,241,820.67 7,166,920.07 Input VAT Attributable to Valid Zero-Rated Sales P1,384,582.06 P1,224,490.98 P902,324.52 P1,386,655.79 P4,898,053.35 ============= ============ ============ ============ ============= Although the claimed input VAT was carried-over by petitioner in its succeeding Quarterly VAT Returns, 59 the same remained unutilized until it was deducted as "Any VAT Refund/TCC Claimed" 60 in its Quarterly VAT Return for the first and second quarter of 2009. Thus, the excess input VAT of P25,975,755.15 61 as of the end of the second quarter of 2009 which was to be carried-over to the succeeding third quarter of 2009 no longer included the subject claim. WHEREFORE , given the forgoing, the Petition for Review is hereby PARTLY GRANTED . Respondent is hereby ORDERED to issue a Tax Credit Certificate to petitioner in the reduced amount of Four Million Eight Hundred Ninety Eight Thousand Fifty Three and 35/100 pesos (P4,898,053.35) for its unutilized/unapplied input VAT for the 1st to 4th Quarters of 2007. CHATcE SO ORDERED . (SGD.) LOVELL R. BAUTISTA Associate Justice Amelia R. Cotangco-Manalastas, J., concurs. Footnotes 1. Rollo , (CTA Case No. 7913), "Petition for Review," pp. 1-101 with Annexes. Raffled to the then Second Division of the Court before the issuance of CTA Administrative Circular No. 01-2010, dated January 5, 2010, entitled "Implementing the Fully Expanded Membership in the Court of Tax Appeals." 2. Rollo , (CTA Case No. 7977), "Petition for Review," pp. 1-77 with Annexes. 3. Rollo , (CTA Case No. 8018), "Petition for Review," pp. 1-34 with Annexes. 4. Rollo , (CTA Case No. 7913), "Joint Stipulation of Facts and Issues," pp. 282-283. 5. Rollo , (CTA Case No. 7913), "Joint Stipulation of Facts and Issues," pp. 282-283. 6. Rollo , (CTA Case No. 7913), "Joint Stipulation of Facts and Issues," p. 283. 7. Rollo , (CTA Case No. 7913), "Petition for Review," pp. 1-101 with Annexes. 8. Rollo , (CTA Case No. 7913), pp. 108-110. 9. Rollo , (CTA Case No. 7913), pp. 114-118. 10. "Amending Answer to Question Number 17 of Revenue Memorandum Circular No. 42-2003 and Providing Additional Guidelines on Issues Relative to the Processing of Claims for Value-Added Tax (VAT) Credit/Refund, Including Those Filed with the Tax and Revenue Group, One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center, Department of Finance (OSS-DOF) by Direct Exporters". 11. Rollo , (CTA Case No. 7977), pp. 427-428. 12. Rollo , (CTA Case No. 7977), p. 468. 13. Rollo , (CTA Case No. 7913), pp. 630-631. 14. Rollo , (CTA Case No. 7913), "Joint Stipulation of Facts and Issues," p. 283. 15. Rollo , (CTA Case No. 7977), "Petition for Review," pp. 1-77 with Annexes. 16. Rollo , (CTA Case No. 7977), pp. 80-84. 17. Ibid. , pp. 81-83. 18. "Implementing the Fully Expanded Membership in the Court of Tax Appeals". 19. Rollo , (CTA Case No. 797), p. 464. 20. Rollo , (CTA Case No. 8018), pp. 33-35. 21. Rollo , (CTA Case No. 8018), "Petition for Review," pp. 1- 34 with Annexes. 22. Rollo , (CTA Case No. 8018), pp. 516-517. 23. Rollo , (CTA Case No. 7913), pp. 847-911. 24. Rollo , (CTA Case No. 7913), pp. 916-918. 25. Rollo , (CTA Case No. 7913), pp. 296-938. 26. Rollo , (CTA Case No. 7913), p. 950. 27. Rollo , (CTA Case No. 7913), pp. 948-949. 28. Rollo , (CTA Case No. 7913), p. 952. 29. Rollo , (CTA Case No. 7913), pp. 961-1006. 30. Rollo , (CTA Case No. 7913), p. 1008. 31. Rollo , (CTA Case No. 7913), p. 980. 32. G.R. No. 187485; G.R. No. 196113; G.R. No. 197156, February 12, 2013. 33. G.R. Nos. 141104 & 148763, 8 June 2007, 524 SCRA 73. 34. G.R. No. 172129, 12 September 2008, 565 SCRA 154. 35. G.R. No. 184823, 6 October 2010, 632 SCRA 422. 36. "Amending Answer to Question Number 17 of Revenue Memorandum Circular No. 42-2003 and Providing Additional Guidelines on Issues Relative to the Processing of Claims for Value-Added Tax (VAT) Credit/Refund, Including Those Filed with the Tax and Revenue Group, One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center, Department of Finance (OSS-DOF) by Direct Exporters". 37. Issued to the Department of Finance, One Stop Shop Inter-Agency Tax Credit and Duty Drawback Center Re: Lazi Bay Resources Development, Inc. 38. G.R. No. 187485; G.R. No. 196113; G.R. No. 197156, February 12, 2013. 39. Section 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. 40. G.R. No. 153205, January 22, 2007, 512 SCRA 124. 41. "Consolidated Value-Added Tax Regulations of 2005". 42. Rollo , (CTA Case No. 7913), "Joint Stipulation of Facts and Issues," p. 283. 43. Petitioner's Evidence, Exhibit "A-3." 44. Petitioner's Evidence, Exhibits "GG" to "GG-7," "HH" to "HH-3 " and "JJ" to "JJ-4." 45. Petitioner's Evidence, Exhibits "KK" and "LL." 46. Petitioner's Evidence, Exhibits "HHH," "HHH-1" to "HHH-1-c." 47. Petitioner's Evidence, Exhibit "NN-1." 48. Petitioner's Evidence, Exhibit "NN-2." 49. Petitioner's Evidence, Exhibit "TTT." 50. Petitioner's Evidence, Exhibit "UUU." 51. Petitioner's Evidence, Exhibit "MM." 52. Petitioner's Evidence, Exhibits "R," "MMM" and "QQQ." 53. Petitioner's Evidence, Exhibits "AAA-1-a" to "AAA-7-u-1." 54. Petitioner's Evidence, Exhibits "PP," "GGG" and "SSS." 55. Petitioner's Evidence, Exhibits "QQ" to "QQ-26-d," "RR" to "RR-33-d," "GGG-1" to "GGG-49-d." 56. Petitioner's Evidence, Exhibit "WWW-2." 57. Petitioner's Evidence, Exhibits "ZZ-1-a" to "ZZ-15-w-1." 58. Petitioner's Evidence, Exhibits "BBB" to "BBB-2." 59. Petitioner's Evidence, Exhibits "I," "K," "M," "N," "P," and "Q." 60. Petitioner's Evidence, Exhibits "P-3" and "Q-5." 61. Petitioner's Evidence, Exhibit "Q-6."