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

THIRD DIVISION [C.T.A. CASE NOS. 8623, 8656, 8661 and 8685. August 4, 2017.] DEUTSCHE KNOWLEDGE SERVICES PTE. LTD. , petitioner , vs. COMMISSIONER OF INTERNAL REVENUE , respondent. DECISION FABON-VICTORINO , J p : These four (4) consolidated Petitions for Review filed by petitioner Deutsche Knowledge Services Pte. Ltd. on different dates seek for the refund or issuance of tax credit certificate (TCC) in the total amount of P153,201,143.71, allegedly representing unutilized input value-added tax (VAT) arising from petitioner's domestic purchases of goods other than capital goods and services, purchases of capital goods, and purchases of services rendered by non-residents for the four quarters of calendar year (CY) 2011 which are attributable to its zero-rated sales, broken down, as follows: HTcADC CTA Case No. CY 2011 Input VAT Claim 8623 1st Quarter P30,987,110.54 1 8656 2nd Quarter 43,483,971.55 2 8661 3rd Quarter 39,444,853.68 3 8685 4th Quarter 39,285,207.94 4 Total P153,201,143.71 Petitioner Deutsche Knowledge Services Pte. Ltd. is a foreign corporation organized and existing under the laws of Singapore, with license to transact business in the Philippines with office address at Net Quad Center, 31st Street corner 4th Avenue, E-Square Zone Crescent Park West, Taguig City. 5 It is a VAT-registered taxpayer as of June 16, 2005, with Taxpayer Identification No. (TIN) 238-763-115-000. 6 Petitioner is also registered with the Securities and Exchange Commission (SEC) and is licensed to do business as a regional operating headquarters (ROHQ) in the Philippines. It is engaged 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 to its affiliates in the Philippines and abroad. 7 On the other hand, respondent is Commissioner of the Bureau of Internal Revenue (BIR),with power to decide, approve, and grant refunds of internal revenue taxes or issue a tax credit certificate. He holds office at the BIR National Office Building, BIR Road, Diliman, Quezon City. Petitioner filed with the BIR its Monthly VAT Declarations and Quarterly VAT Returns through the Electronic Filing and Payments System (EFPS),for the period beginning January 1, 2011 to December 31, 2011 as follows: 8 PERIOD COVERED DATE FILED January 2011 February 18, 2011 9 February 2011 March 9, 2011 10 First Quarter of 2011 April 25, 2011 11 April 2011 May 19, 2011 12 May 2011 June 17, 2011 13 Second Quarter of 2011 July 22, 2011 14 July 2011 August 18, 2011 15 August 2011 September 19, 2011 16 Third Quarter of 2011 October 26, 2011 17 October 2011 November 18, 2011 18 November 2011 December 19, 2011 19 Fourth Quarter of 2011 January 20, 2012 (original) 20 March 14, 2013 (amended) 21 On October 31, 2012, 22 January 9, 2013, 23 January 23, 2013 24 and March 19, 2013, 25 petitioner separately filed with the BIR Large Taxpayers Regular Audit Division 3 (LTRAD),its administrative claims for refund or issuance of TCC for its alleged unutilized input VAT attributable to zero-rated sales for the 1st, 2nd, 3rd, and 4th quarters of 2011 in the respective amounts of P30,987,110.54, P43,483,971.55, P39,444,853.68, and P39,285,207.94 or in the aggregate amount of P153,201,143.71. 26 When no action was taken by respondent on its administrative claims for refund, petitioner filed with the Court four (4) separate Petitions for Review on March 27, 2013, May 20, 2013, June 19, 2013, and August 5, 2013, docketed as CTA Case Nos. 8623, 8656, 8661, and 8685, respectively. Respondent filed his Answer in CTA Case No. 8623 on June 14, 2013, 27 in CTA Case No. 8656 on July 19, 2013, 28 in CTA Case No. 8661 on August 23, 2013, 29 and in CTA Case No. 8685 on October 30, 2013. 30 aScITE To respondent's mind, the four cases for refund/tax credit should not be given due course for failure of petitioner to exhaust administrative remedies before elevating its cases to the Court. Allegedly, petitioner failed to submit complete supporting documents at the administrative level as mandated in Section 112 of the National Internal Revenue Code (NIRC), as amended, and Revenue Memorandum Order (RMO) No. 53-98. Further, to be entitled to refund, petitioner, who has the burden of proof, must prove compliance with all the requisites under existing law and jurisprudence including registration, invoicing and accounting requirements. After the parties submitted their Joint Stipulation of Facts and Issues, 31 the Court issued the Pre-Trial Order 32 on December 10, 2013. To prove its case, petitioner presented as witnesses (1) Rachel M. Concepcion; 33 and (2) Katherine O. Constantino, the Court-commissioned Independent Certified Public Accountant (ICPA). 34 Rachel M. Concepcion ,the Finance Controller of petitioner testified 35 that she is familiar with the instant cases since she oversees, prepares and safekeeps petitioner's financial documents pertaining to its operations. Petitioner is registered with the Securities and Exchange Commission (SEC) and is licensed to operate as a Regional Operating Headquarters (ROHQ) in the country. Petitioner is likewise registered with the BIR with Certificate of Registration OCN No. 9RC0000270209 dated June 16, 2005. As a ROHQ, petitioner provides accounting, valuation and information systems maintenance and development services, among others, to entities in the Deutsche Bank Group. Thus, petitioner renders zero-rated services to its non-resident affiliates engaged in business outside the Philippines or nonresident persons not engaged in business who are outside the Philippines based on Section 108 (B) (2) of the NIRC. For services rendered, it is paid in acceptable foreign currency, i.e. , Euros, inwardly remitted through Deutsche Bank Manila then credited to petitioner's account in said bank. Thus, petitioner incurred input VAT for domestic purchases of goods (other than capital goods) and services, purchases of capital goods, and purchases of services rendered by nonresidents attributable to zero-rated sale of services in the year 2011, based on Section 110 (B) and Section 112 (A) of the NIRC. The input VAT incurred by petitioner remained unutilized since it was not applied against any output VAT liability. Due to the inaction of respondent on petitioner's administrative claims for refund, petitioner filed four (4) separate administrative claims for refund of its unutilized input VAT for the year 2011 on October 31, 2012, January 9, 2013, January 23, 2013, and March 19, 2013. The Court-commissioned ICPA Katherine O. Constantino testified 36 that she examined and verified the documentary evidence of petitioner in relation to the present cases. Thereafter, she prepared an ICPA Report which she submitted to the Court on May 29, 2014, indicating that of the pro-rated amount of input VAT attributable to petitioner's zero-rated sales of P158,201,143.71, only P62,454,876.86 was properly substantiated. She also examined the additional documents submitted by petitioner and submitted to the Court a supplemental report. 37 After petitioner rested, respondent manifested that he would not present any evidence in the absence of the investigation report from the BIR examiners. At the instance of petitioner, the cases were reopened for the recall of witness Rachel M. Concepcion, who identified 38 additional documents to prove that petitioner rendered services to non-resident clients who are doing business outside the Philippines. In the Resolution 39 dated August 5, 2016, the cases were submitted for decision. THE ISSUES The parties submitted the following issues for this Court's resolution: 40 1. Whether, petitioner is entitled to a refund or issuance of tax credit certificate for its unutilized input VAT arising from purchases of goods (other than capital goods) and services, purchases of capital goods, and purchases of services rendered by non-residents attributable to zero-rated sales for the 1st, 2nd, 3rd, and 4th quarters of taxable year 2011 in the respective amounts of P30,987,110.54, P43,483,971.55, P39,444,853.68, and P39,285,207.94, or in the aggregate amount of P153,201,143.71. HEITAD 2. Whether the Court has jurisdiction over the Petitions for Review filed by petitioner. DISCUSSION/RULING First, the jurisdiction of the Court. Respondent claims that the Court lacks jurisdiction to determine the present petitions as petitioner failed to exhaust administrative remedies given that it failed to submit complete supporting documents at the administrative level, as mandated under Section 112 of the National Internal Revenue Code (NIRC), as amended, and Revenue Memorandum Order (RMO) No. 53-98, before resorting to judicial action. The issue has long been settled. There is nothing in the cited provisions that requires submission of complete documents enumerated in RMO No. 53-98 for a grant of a refund/tax credit of input VAT. In other words, the alleged flaw is not fatal to petitioner's cause. This much had been clarified by the Supreme Court in the following manner: The CIR's reliance on RMO 53-98 is misplaced. There is nothing in Section 112 of the NIRC, RR 3-88 or RMO 53-98 itself that requires submission of complete documents enumerated in RMO 53-98 for a grant of a refund or credit of input VAT. x x x Even assuming that RMO 53-98 applies, it specifically states that some documents are required to be submitted by the taxpayer "if applicable." Moreover, if TSC indeed failed to submit the complete documents in support of its application, the CIR could have informed TSC of its failure, consistent with Revenue Memorandum Circular No. (RMC) 42-03. 41 In another case, the High Court elucidated on the matter, as follows: As explained earlier and underlined in Team Sual above, taxpayers cannot simply be faulted for failing to submit the complete documents enumerated in RMO No. 53-98, absent notice from a revenue officer or employee that other documents are required. Granting that the BIR found that the documents submitted by Total Gas were inadequate, it should have notified the latter of the inadequacy by sending it a request to produce the necessary documents in order to make a just and expeditious resolution of the claim. Indeed, a taxpayer's failure with the requirements listed under RMO No. 53-98 is not fatal to its claim for tax credit or refund of excess unutilized excess VAT. This holds especially true when the application for tax credit or refund of excess unutilized excess VAT has arrived at the judicial level. After all, in the judicial level or when the case is elevated to the Court, the Rules of Court governs. Simply put, the question of whether the evidence submitted by a party is sufficient to warrant the granting of its prayer lies within the sound discretion and judgment of the Court. 42 Thus, the alleged submission of complete documents at the administrative level is irrelevant when the claim for refund has already reached the Court. In Court, the basis of whether or not to grant the claim for refund will be dependent on the evidence presented pursuant to the Rules of Court, showing compliance with all the requisites under the applicable law and jurisprudence. On the merits of the claim, Sections 110 (B) and 112 (A) and (C) of the NIRC, as amended, provide: 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: x x x 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. 43 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. ATICcS 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. Based on the foregoing provisions, to be entitled to a refund/tax credit of input VAT attributable to zero-rated or effectively zero-rated sales, the following requisites must be satisfied: 1. that the taxpayer is VAT-registered; 2. that the claim for refund was filed within the prescriptive periods; 3. that 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: Taxpayer is a VAT-registered entity It is undisputed that petitioner is a VAT-registered taxpayer with TIN/VAT Registration No. 238-763-115-000 and BIR Certificate of Registration No. OCN 9RC0000270209 effective June 16, 2005 issued by the BIR Revenue District Office (RDO) No. 44. 44 Second Requisite: Timeliness of the administrative and judicial claims Applying Section 112 (A) of the NIRC of 1997, as amended, the two (2)-year prescriptive period in filing an administrative claim is reckoned from the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made; thus, petitioner's administrative claims for the 1st, 2nd, 3rd, and 4th quarters of 2011 were timely filed, as shown below: Taxable Quarter Close of the taxable Quarter End of the 2-year period to file Administrative Claim Filing of the Administrative Claim 1st Qtr of 2011 Mar. 31, 2011 Mar. 31, 2013 Oct. 31, 2012 45 2nd Qtr of 2011 Jun. 30, 2011 Jun. 30, 2013 Jan. 9, 2013 46 3rd Qtr of 2011 Sept. 30, 2011 Sept. 30, 2013 Jan. 23, 2013 47 4th Qtr of 2011 Dec. 31, 2011 Dec. 31, 2013 Mar. 19, 2013 48 As to the judicial claim, Section 112 (C) of the NIRC of 1997, as amended, provides a 30-day period, from either the receipt of the adverse decision of respondent or the lapse of the 120-day period for respondent to act on the claim, within which to file a Petition for Review with the CTA. Since respondent failed to act on petitioner's administrative claims for refund, petitioner sought judicial intervention and filed the claims for the 1st, 2nd, 3rd, and 4th quarters of 2011 within the "120+30"-day period, as shown below: Taxable Quarter Filing of Administrative claim End of 120-day period End of 30-day period Filing of Petition for Review 1st Qtr of 2011 Oct. 31, 2012 Feb. 28, 2013 Apr. 1, 2013 49 Mar. 27, 2013 2nd Qtr of 2011 Jan. 9, 2013 May 9, 2013 Jun. 10, 2013 50 May 20, 2013 3rd Qtr of 2011 Jan. 23, 2013 May 23, 2013 Jun. 24, 2013 51 Jun. 19, 2013 4th Qtr of 2011 Mar. 19, 2013 Jul. 17, 2013 Aug. 16, 2013 Aug. 5, 2013 Third Requisite: Existence of zero-rated or effectively zero-rated sales In its Quarterly VAT Returns for the four quarters of CY 2011, petitioner reported zero-rated sales in the amount of P6,757,540,662.07, as shown below: TIADCc Exhibit Quarter Zero-rated sales P-5-b (CTA Case No. 8623, Docket, Vol. 3, p. 1506) 1st P1,452,400,318.22 P-6-b (CTA Case No. 8623, Docket, Vol. 3, p. 1519) 2nd 1,324,728,851.41 P-7-b (CTA Case No. 8623, Docket, Vol. 3, p. 1528) 3rd 1,529,170,363.03 P-8-c (CTA Case No. 8623, Docket, Vol. 3, p. 1543) 4th 2,451,241,129.41 Total P6,757,540,662.07 Petitioner posits that its sales of services to its various non-resident affiliates, 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: (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. , 52 it was 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 concur: 1. the services must be other than processing, manufacturing or repacking of goods; 2. the payment for such services must be in acceptable foreign currency accounted for in accordance with the BSP rules and regulations; and 3. the recipient of such services is doing business outside the Philippines. Petitioner satisfied the first condition. Petitioner is duly registered with the SEC and is licensed as ROHQ in the Philippines to provide qualifying services of 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 to its affiliates in the Philippines and abroad. 53 Such services are not in the same category as "processing, manufacturing or repacking of goods." To comply with the third requisite, petitioner presented the following documents showing that its foreign clients are non-resident foreign corporations doing business outside the Philippines: 1. SEC Certifications of Non-Registration of Company; 54 2. Various Registration Documents ( i.e. ,AMInet Company Profile Fact Sheet, Certificate of Registration/Certificate of Incorporation/Association); 55 and 3. Intragroup Service Agreements. 56 However, each of the aforesaid documents, standing alone, is inadequate proof that petitioner's clients are non-resident foreign corporations doing business outside the Philippines. While the Certificates of Registration/Foreign Incorporation/Association prove that the therein named entities were incorporated/organized abroad, these documents do not necessarily establish that such entities are not doing business in the Philippines. AIDSTE The same holds true for the SEC Certificates of Non-Registration which show that the named entities are not registered corporations/partnerships in the Philippines. However, they do not prove that such entities are non-resident foreign corporations doing business outside the Philippines. The service agreements only indicate the names and addresses of petitioner's customers to whom it rendered services but they do not establish that such customers 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 , 57 the Supreme Court 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, the 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. Therefore, 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. On this account, the Court cannot give credence to the purported foreign business registration print-outs retrieved from the Deutsche Bank Global (the Head Office located in Germany) AMInet database. The said documents are insufficient to establish that the service recipients are non-resident foreign corporations doing business outside the Philippines, for they are 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. The following table will indicate whether petitioner complied with the third requisite with the presentation of the said SEC Certificate and Certificates of Registration/Foreign Incorporation/Association for each of the recipients of the services rendered: SSC Certificate of Non-Registration Certificate of Registration/Incorporation/Association AO DB Securities (Kazakhstan) None None DB Consorzio S. Cons. A.R.L. in Liquidazione P-6154 None DB Finance, Inc. P-6113 None DD HedgeWorks, LLC P-6114 None DB International (Asia) Limited P-6115 None DB Securities Services NJ, Inc. None None DB Services New Jersey, Inc. P-6116 None DB Services Tennessee, Inc. None None DB Trust Company Limited Japan P-6117 None DBOI Global Services Private Limited None None Deutsche Asia Pacific Holdings Pte. Ltd. P-6118 P-6156 Deutsche Asset Management Asia Limited None None Deutsche Bank (Malaysia) Berhad P-6149 None Deutsche Bank Aktiengesellschaft None P-13/P-6169 Deutsche Bank Aktiengesellschaft Inlandsbank P-6139 None Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office P-15-a P-13-a Deutsche Bank Aktiengesellschaft, Filiale Abu Dhabi None None Deutsche Bank Aktiengesellschaft, Filiale Amsterdam P-6123 None Deutsche Bank Aktiengesellschaft, Filiale Bangkok P-6124 None Deutsche Bank Aktiengesellschaft, Filiale Dubai (DIFC) P-6125 None Deutsche Bank Aktiengesellschaft, Filiale Frankfurt A.M. Zurich P-6138 None Deutsche Bank Aktiengesellschaft, Filiale Ho-Chi-Minh City P-6126 None Deutsche Bank Aktiengesellschaft, Filiale Hongkong P-6127 None Deutsche Bank Aktiengesellschaft, Filiale Jakarta P-6128 P-6167 Deutsche Bank Aktiengesellschaft, Filiale Labuan None None Deutsche Bank Aktiengesellschaft, Filiale London P-6129 None Deutsche Bank Aktiengesellschaft, Filiale Mumbai P-6130 None Deutsche Bank Aktiengesellschaft, Filiale New York P-15 P-13-b Deutsche Bank Aktiengesellschaft, Filiale Paris P-6131 None Deutsche Bank Aktiengesellschaft, Filiale Prague P-6132 None Deutsche Bank Aktiengesellschaft, Filiale Riad P-6133 None Deutsche Bank Aktiengesellschaft, Filiale Seoul P-6134 None Deutsche Bank Aktiengesellschaft, Filiale Singapore P-15-b None Deutsche Bank Aktiengesellschaft, Filiale Taipei P-6135 None Deutsche Bank Aktiengesellschaft, Filiale Tokyo P-6136 None Deutsche Bank Aktiengesellschaft, Filiale Wien P-6137 None Deutsche Bank Aktiengesellschaft, Filiale Zurich None None Deutsche Bank China Co. Ltd. Beijing Branch P-6119 None Deutsche Bank China Co. Ltd. Guangzhou Branch P-6120 None Deutsche Bank China Co. Ltd. Shanghai Branch P-6121 None Deutsche Bank International Limited None None Deutsche Bank Luxembourg S.A. P-6140 None Deutsche Bank National Trust Company P-6141 None Deutsche Bank PBC Spolka Akcyjna P-6142 None Deutsche Bank Pgk Ag None None Deutsche Bank Real Estate Japan YK P-6143 None Deutsche Bank Securities, Inc. P-6144 None Deutsche Bank Sociedad Anonima Espanola P-6146 None Deutsche Bank Societa Per Azione None None Deutsche Bank Suisse SA P-6122 None Deutsche Bank Trust Company Americas P-6145 None Deutsche Group Services Pty Limited P-6147 None Deutsche Securities, Inc. P-6148 P-6155 Deutsche Trustees Malaysia Berhad None None DWS Holding & Service GMBH P-6150 None Global Markets Centre Private Limited None None Licorne Gestion P-6151 None PT Deutsche Securities Indonesia P-6152 None RREEF Management GMBH P-6153 None RREEF Management LLC None None Rued Blass and CIE AG None None Correspondingly, only the sales of services by petitioner to entities which have the said two 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. acEHCD 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" (Emphasis supplied) "SECTION 4.113-1. Invoicing Requirements. (A) A VAT-registered person shall issue: xxx xxx xxx (2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services . Only VAT-registered persons are required to print their TIN followed by the word 'VAT' in their invoice or official receipts .Said documents shall be considered as a 'VAT Invoice' or VAT official receipt. All purchases covered by invoices/receipts other than VAT Invoice/VAT Official Receipt shall not give rise to any input tax. VAT invoice/official receipt shall be prepared at least in duplicate, the original to be given to the buyer and the duplicate to be retained by the seller as part of his accounting records. (B) Information contained in VAT invoice or VAT official receipt. The following information shall be indicated in VAT invoice or VAT official receipt: (1) A statement that the seller is a VAT-registered person, followed by his TIN; (2) The total amount which the purchaser pays or is obligated to pay to the seller with the indication that such amount includes the VAT; Provided, That: xxx xxx xxx (c) If the sale is subject to zero percent (0%) VAT, the term 'zero-rated sale' shall be written or printed prominently on the invoice or receipt;" (Emphasis supplied) Pursuant to Section 108 (B) (2) of the NIRC of 1997, as amended, only the sales of services by petitioner to entities which have the two required documents will be treated as subject to the 0% VAT rate. To prove that petitioner 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 four quarters of CY 2011, petitioner submitted in evidence its VAT zero-rated official receipts (ORs) and invoices 58 issued to its alleged non-resident foreign clients and bank certification of inward remittances 59 issued by Deutsche Bank AG Manila. Upon verification of the foregoing pieces of evidence, the Court finds that out of the P6,757,540,662.07 zero-rated sales declared per VAT Return for the four quarters of CY 2011, only the amount of 28,324,387.08 with peso equivalent of P1,691,367,779.99, as presented below, qualifies for VAT zero-rating under Section 108 (B) (2) of the NIRC of 1997, as amended: Customer's Name O.R. Date O.R. No. OR Exhibit No. OR Amount (in Euro) Amount in Peso Deutsche Asia Pacific Holdings Pte. Ltd. 12-Jan-11 1176 P-51 8,742.50 498,916.99 Deutsche Asia Pacific Holdings Pte. Ltd. 24-Jan-11 1208 P-79 8,742.50 528,279.55 Deutsche Asia Pacific Holdings Pte. Ltd. 6-Apr-11 1387 P-250 38,467.07 2,369,559.97 Deutsche Asia Pacific Holdings Pte. Ltd. 7-Jul-11 1578 P-419 38,467.08 2,360,305.41 Deutsche Asia Pacific Holdings Pte. Ltd. 4-Oct-11 1708 P-540 64,216.80 3,759,125.80 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 5-Jan-11 1164 P-40 86,210.13 5,017,731.30 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 12-Jan-11 1178 P-53 70,855.00 4,075,367.04 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 12-Jan-11 1179 P-54 34,640.00 1,992,388.88 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 12-Jan-11 1180 P-55 16,140.00 928,324.38 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 12-Jan-11 1181 P-56 13,784.25 792,828.71 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 12-Jan-11 1182 P-57 18,157.50 1,044,364.93 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 12-Jan-11 1183 P-58 8,847.41 508,876.48 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 12-Jan-11 1184 P-59 8,070.00 464,162.19 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 7-Feb-11 1246 P-114 8,733.74 518,247.90 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 7-Feb-11 1247 P-115 8,742.50 518,767.71 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 7-Feb-11 1248 P-116 18,157.50 1,077,440.63 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 7-Feb-11 1249 P-117 106,039.80 6,292,253.28 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 9-Feb-11 1261 P-128 347,187.05 20,608,606.66 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 3-Mar-11 1293 P-157 731,092.86 44,139,512.09 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 3-Mar-11 1294 P-158 344,808.75 20,817,724.84 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 3-Mar-11 1295 P-159 29,988.26 1,810,532.20 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 11-Mar-11 1321 P-184 319.94 19,199.92 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 11-Mar-11 1322 P-185 26,900.00 1,614,295.90 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 11-Mar-11 1323 P-186 103,349.80 6,202,124.85 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 11-Mar-11 1324 P-187 16,140.00 968,577.54 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 11-Mar-11 1325 P-188 26,900.00 1,614,295.90 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 11-Mar-11 1326 P-189 8,070.00 484,288.77 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 11-Mar-11 1327 P-190 96,581.41 5,795,947.00 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 11-Mar-11 1328 P-191 8,847.41 530,941.92 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 11-Mar-11 1329 P-192 18,157.50 1,089,649.73 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 11-Mar-11 1330 P-193 3,257.59 195,491.23 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 11-Mar-11 1331 P-194 16,140.00 968,577.54 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 11-Mar-11 1332 P-195 35,104.59 2,106,661.55 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 11-Mar-11 1333 P-196 6,298.02 377,950.48 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 11-Mar-11 1334 P-197 31,204.08 1,872,588.04 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 11-Mar-11 1336 P-199 262,500.21 15,752,900.10 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 11-Mar-11 1337 P-200 9,153.11 549,287.28 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 11-Mar-11 1338 P-201 209,180.30 12,553,118.98 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 4-Apr-11 1382 P-245 13,903.53 852,817.50 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 14-Apr-11 1401 P-262 766,230.31 48,046,394.97 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 9-May-11 1459 P-310 27,081.03 1,658,664.34 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 9-May-11 1460 P-311 12,976.22 794,770.12 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 9-May-11 1461 P-312 23,672.04 1,449,869.84 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 9-May-11 1462 P-313 13,778.06 843,881.37 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 9-May-11 1463 P-314 152,566.30 9,344,411.26 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 9-May-11 1464 P-315 4,777.81 292,632.26 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 9-May-11 1465 P-316 744,023.10 45,570,075.63 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 2-Jun-11 1507 P-353 12,976.22 807,316.82 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 2-Jun-11 1508 P-354 17,754.03 1,104,568.75 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 2-Jun-11 1509 P-355 4,777.81 297,251.93 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 10-Jun-11 1526 P-366 21,731.19 1,364,464.48 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 5-Jul-11 1576 P-417 17,530.57 1,091,667.16 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 2-Sep-11 1653 P-482 4,777.81 286,037.45 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 2-Sep-11 1654 P-483 12,976.22 776,859.04 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 2-Sep-11 1655 P-484 148,620.96 8,897,624.77 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 2-Sep-11 1656 P-485 17,754.03 1,062,896.49 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 2-Sep-11 1657 P-486 8,346.59 499,692.82 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 6-Sep-11 1668 P-497 131,616.75 7,835,526.82 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 20-Sep-11 1682 P-510 737,573.83 43,968,251.15 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 20-Sep-11 1683 P-511 695,023.94 41,431,767.11 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 20-Sep-11 1684 P-512 541,450.26 32,276,932.90 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 20-Sep-11 1685 P-513 632,036.99 37,676,989.05 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 20-Sep-11 1686 P-514 8,696.54 518,179.69 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 20-Sep-11 1687 P-515 11,670.84 695,722.11 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 18-Oct-11 1737 P-566 152,566.30 9,053,177.14 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 18-Oct-11 1740 P-569 26,542.11 1,574.990.17 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 18-Oct-11 1743 P-572 23,672.04 1,404,682.24 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 18-Oct-11 1746 P-575 20,763.12 1,232,068.97 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 18-Oct-11 1747 P-576 8,226.05 488,128.03 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 18-Oct-11 1748 P-577 6,473.94 384,159.05 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 18-Oct-11 1749 P-578 20,713.04 1,229,097.25 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 18-Oct-11 1750 P-579 23,672.04 1,404,682.24 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 18-Oct-11 1751 P-580 23,672.04 1,404,682.24 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 18-Oct-11 1752 P-581 3,195.73 3,195.73 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 18-Oct-11 1754 P-583 4,429.53 262,845.20 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 18-Oct-11 1755 P-584 25,628.58 1,520,781.95 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 18-Oct-11 1756 P-585 19,819.31 1,176,063.94 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 18-Oct-11 1757 P-586 12,908.50 765,981.33 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 18-Oct-11 1758 P-587 141,673.23 8,406,790.01 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 18-Oct-11 1760 P-589 152,566.30 9,053,177.14 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 18-Oct-11 1761 P-590 21,502.09 1,275,918.93 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 18-Oct-11 1762 P-591 4,777.81 283,511.89 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 18-Oct-11 1763 P-592 25,115.15 1,490,315.37 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 18-Oct-11 1765 P-594 3,515.30 208,595.43 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 8-Nov-11 1815 P-631 29,074.77 1,715,019.62 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 8-Nov-11 1816 P-632 309,621.67 18,263,506.07 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 8-Nov-11 1817 P-633 126.29 7,449.41 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 8-Nov-11 1818 P-634 4,312.37 254,371.72 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 8-Nov-11 1819 P-635 19,079.16 1,125,413.33 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 8-Nov-11 1820 P-636 25,628.58 1,511,740.85 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 8-Nov-11 1821 P-637 8,226.05 485,226.10 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 8-Nov-11 1822 P-638 25,115.15 1,481,455.40 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 8-Nov-11 1823 P-639 12,610.97 743,877.28 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 8-Nov-11 1824 P-640 2,162.05 127,531.81 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 8-Nov-11 1825 P-641 141,673.23 8,356,811.38 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 8-Nov-11 1826 P-642 12,908.50 761,427.55 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 18-Nov-11 1855 P-669 123,970.09 7,289,840.63 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 18-Nov-11 1857 P-671 1,001,938.81 58,755,587.49 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 18-Nov-11 1858 P-672 3,151.73 184,823.41 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 9-Dec-11 1893 P-703 3,140.08 180,934.99 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 14-Dec-11 1928 P-736 16,824.66 966,245.44 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 14-Dec-11 1929 P-737 16,885.18 969,721.12 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 14-Dec-11 1930 P-738 145,395.12 8,350,086.81 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 14-Dec-11 1931 P-739 30,320.33 1,741,305.95 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 14-Dec-11 1932 P-740 18,105.83 1,039,823.43 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 14-Dec-11 1933 P-741 27,617.38 1,586,074.69 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 14-Dec-11 1934 P-742 255,808.23 14,691,145.95 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 14-Dec-11 1935 P-743 8,325.06 478,110.78 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 14-Dec-11 1936 P-744 8,489.36 487,546.58 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 8-Nov-11 1814 P-781 7,503.79 442,622.49 Deutsche Bank Aktiengesellschaft, Filiale Jakarta 7-Jan-11 1166 P-231 16,650.05 953,237.01 Deutsche Bank Aktiengesellschaft, Filiale Jakarta 9-Feb-11 1255 P-122 15,942.04 946,300.36 Deutsche Bank Aktiengesellschaft, Filiale Jakarta 9-Feb-11 1256 P-123 4,842.00 287,415.31 Deutsche Bank Aktiengesellschaft, Filiale Jakarta 9-Feb-11 1258 P-125 2,690.00 159,675.17 Deutsche Bank Aktiengesellschaft, Filiale Jakarta 9-Feb-11 1254 P-232 16,650.05 988,326.99 Deutsche Bank Aktiengesellschaft, Filiale Jakarta 12-Dec-11 1897 P-705 8,164.33 476,198.03 Deutsche Bank Aktiengesellschaft, Filiale Jakarta 12-Dec-11 1898 P-706 8,115.61 473,356.35 Deutsche Bank Aktiengesellschaft, Filiale Jakarta 12-Dec-11 1899 P-707 7,101.62 414,213.71 Deutsche Bank Aktiengesellschaft, Filiale Jakarta 12-Dec-11 1900 P-708 9,361.22 546,008.61 Deutsche Bank Aktiengesellschaft, Filiale Jakarta 12-Dec-11 1901 P-709 4,842.00 282,417.64 Deutsche Bank Aktiengesellschaft, Filiale Jakarta 13-Dec-11 1902 P-710 7,101.61 414,213.13 Deutsche Bank Aktengesellschaft, Filiale Jakarta 13-Dec-11 1903 P-711 7,101.61 414,213.13 Deutsche Bank Aktiengesellschaft, Filiale Jakarta 13-Dec-11 1904 P-712 8,115.61 473,356.35 Deutsche Bank Aktiengesellschaft, Filiale Jakarta 13-Dec-11 1905 P-713 7,101.61 414,213.13 Deutsche Bank Aktiengesellschaft, Filiale New York 10-Jan-11 1172 P-47 441,832.23 25,327,060.55 Deutsche Bank Aktiengesellschaft, Filiale New York 20-Jan-11 1195 P-67 1,228.87 73,407.16 Deutsche Bank Aktiengesellschaft, Filiale New York 24-Jan-11 1209 P-80 145,393.46 8,785,632.45 Deutsche Bank Aktiengesellschaft, Filiale New York 18-Feb-11 1276 P-141 6,610.27 389,578.91 Deutsche Bank Aktiengesellschaft, Filiale New York 3-Mar-11 1298 P-162 1,464,237.13 88,402,877.45 Deutsche Bank Aktiengesellschaft, Filiale New York 7-Apr-11 1389 P-252 7,479.53 460,722.59 Deutsche Bank Aktiengesellschaft, Filiale New York 5-May-11 1440 P-293 9,524.43 607,697.68 Deutsche Bank Aktiengesellschaft, Filiale New York 15-Jun-11 1531 P-371 1,091,949.00 68,422,725.48 Deutsche Bank Aktiengesellschaft, Filiale New York 24-Jun-11 1547 P-384 30,254.52 1,861,158.23 Deutsche Bank Aktiengesellschaft, Filiale New York 4-Jul-11 1570 P-414 1,339,442.14 83,751,566.58 Deutsche Bank Aktiengesellschaft, Filiale New York 23-Aug-11 1637 P-468 31,083.38 1,899,514.67 Deutsche Bank Aktiengesellschaft, Filiale New York 2-Sep-11 1650 P-479 1,920,418.99 115,602,885.81 Deutsche Bank Aktiengesellschaft, Filiale New York 23-Sep-11 1694 P-521 62,916.13 3,709,566.48 Deutsche Bank Aktiengesellschaft, Filiale New York 26-Sep-11 1696 P-523 689,090.12 40,598,279.84 Deutsche Bank Aktiengesellschaft, Filiale New York 25-Oct-11 1783 P-608 1,071,419.83 64,377,412.23 Deutsche Bank Aktiengesellschaft, Filiale New York 2-Nov-11 1801 P-623 629,013.40 36,676,676.87 Deutsche Bank Aktiengesellschaft, Filiale New York 24-Nov-11 1875 P-688 3,335.04 193,988.60 Deutsche Bank Aktiengesellschaft, Filiale New York 28-Nov-11 1883 P-694 626,365.95 36,513,078.54 Deutsche Bank Aktiengesellschaft, Filiale New York 16-Dec-11 1948 P-756 621,062.04 35,602,282.69 Deutsche Bank Aktiengesellschaft, Filiale New York 20-Dec-11 1963 P-767 1,047,662.31 60,013,512.49 Deutsche Securities, Inc. 10-Feb-11 1265 P-132 2,367,688.53 141,384,626.42 Deutsche Securities, Inc. 18-Feb-11 1278 P-143 713,521.06 42,051,649.08 Deutsche Securities, Inc. 15-Apr-11 1409 P-270 358,026.33 22,376,645.63 Deutsche Securities, Inc. 12-Sep-11 1671 P-500 516,744.23 30,131,614.42 Deutsche Securities, Inc. 12-Dec-11 1906 P-714 1,870,536.33 109,102,119.70 Deutsche Securities, Inc. 11-Jul-11 1581 P-422 481,808.18 28,923,330.49 TOTAL VALID ZERO-RATED SALES 28,324,387.08 1,691,367,779.99 Fourth and Fifth Requisites: Petitioner had input taxes attributable to its zero-rated sales Having resolved that petitioner had VAT zero-rated sales for the four quarters of CY 2011 in the amount of P1,691,367,779.99, the Court shall proceed to determine the amount of input VAT attributable thereto. HSAcaE In its Quarterly VAT Returns for CY 2011, petitioner declared input VAT of P154,055,337.69 on its purchases of goods and services, of which the amount of P153,201,143.71 is the subject of the present claim, as shown below: 1st Qtr 2011 2nd Qtr 2011 3rd Qtr 2011 4th Qtr 2011 Total Purchase of Capital Goods not exceeding P1M P41,088.23 P104,241.74 P81,582.20 P55,201.28 P282,113.45 Domestic Purchases of Goods Other than Capital Goods 526,757.57 528,741.83 778,425.96 554,519.30 2,388,444.66 Domestic Purchases of Services 28,144,992.12 40,966,477.96 36,434,881.54 35,374,660.46 140,921,012.08 Services rendered by non-residents 1,997,755.77 1,987,882.52 2,130,215.31 3,304,374.40 9,420,228.00 Total Input VAT on Purchases of Goods and Services other than Capital Goods P30,710,593.69 P43,587,344.05 P39,425,105.01 P39,288,755.44 P153,011,798.19 Add: Input VAT on Purchases of Capital Goods exceeding P1 Million 276,516.85 263,775.87 239,882.15 263,364.63 1,043,539.50 Total Input VAT on Current Purchases of Goods and Services P30,987,110.54 P43,851,119.92 P39,664,987.16 P39,552,120.07 P154,055,337.69 Divided by total declared sales 1,335,913,939.24 1,537,704,342.95 2,467,895,387.24 5,341,513,669.43 Multiply by zero-rated sales 1,324,728,851.41 1,529,170,363.03 2,451,241,129.41 5,305,140,343.85 Total P30,987,110.54 P43,483,971.55 P39,444,853.68 P39,285,207.94 P153,201,143.71 To substantiate its claim that its input VAT on purchases of goods and services other than capital goods amounts to P153,011,798.19, petitioner presented various invoices and official receipts issued by its suppliers, BIR Forms No. 1600 and other documents 60 which were all examined by the ICPA. From the ICPA's findings, the Court subscribes to the following exceptions: 61 Reference (Annex 9 of ICPA Reports) Original Amount (Exhibit P-29) Supplemental Amount (Exhibit P-6172) TOTAL OTHER FINDINGS Purchases of Goods 1 Purchases of goods supported by TIN VAT REG invoices but not dated within the quarter of claim and without BIR permit to print 4Q-e P124,347.80 P124,347.80 2 Purchases of goods supported by REG VAT TIN invoices but not dated within the year of claim and/or petitioner's TIN is not indicated 1Q-f; 2Q-f 4,144.98 4,144.98 3 Purchases of goods supported by VAT REG TIN invoices but date is not clearly visible, without petitioner's TIN and VAT amount is not shown separately 1Q-g; 4Q-g 5,364.10 5,364.10 4 Purchases of goods supported by VAT REG TIN invoices but not dated within the year of claim, and/or without petitioner's TIN and/or incorrect petitioner's TIN and/or VAT amount is not shown separately 1Q-h; 2Q-h; 3Q-h; 4Q-h 500,588.39 P189,417.16 690,005.55 5 Purchases of goods supported by VAT REG TIN invoices but no date indicated and without petitioner's TIN 1Q-I; 3Q-I; 4Q-i 3,158.40 192.86 3,351.26 6 Purchases of goods supported by VAT REG TIN invoices but date is written on a computer generated invoice and petitioner's TIN is not indicated 3Q-j 2,362.50 2,362.50 7 Purchases of goods supported by VAT REG TIN invoices but amount per OR is not tie-up with the amount per schedule 2Q-k 825.00 825.00 8 Purchases of goods supported by VAT REG TIN invoices without BIR Permit to Print and/or printing date 2Q-l; 4Q-l 58,007.15 58,007.15 9 Purchases of goods supported by TIN invoices 3Q-m 62 6,029.83 6,029.83 10 Purchases of goods supported by TIN VAT invoices but not dated within the year of claim and/or without petitioner's TIN 1Q-n; 2Q-n; 3Q-n 63,866.32 63,866.32 11 Purchases of goods supported by TIN VAT invoices with incorrect petitioner's TIN 1Q-o 15,953.22 15,953.22 12 Purchases of goods supported by TIN VAT invoices with incorrect petitioner's TIN and/or VAT amount is not tie-up with the amount per schedule 1Q-p; 3Q-p 24,812.15 24,812.15 13 Purchases of goods supported by documents other than VAT invoices 1Q-q; 2Q-q; 4Q-q 319,313.37 48,882.06 368,195.43 14 Purchases of goods supported by REG VAT TIN invoices where petitioner's TIN is not indicated 1Q-bu; 3Q-bu 3,294.76 3,294.76 15 Purchases of goods supported by TIN VAT invoices but petitioner's TIN is not indicated and VAT amount is not shown separately 1Q-bv; 3Q-bv; 4Q-bv 169,007.81 169,007.81 16 Purchases of goods supported by photocopied invoices 2Q-r; 3Q-r; 4Q-r 936,422.44 (817,898.61) 118,523.83 Sub-total P2,065,195.65 P(407,103.96) P1,658,091.69 OTHER FINDINGS Purchases of Services 1 Purchases of services supported by BIR TIN ORs with no BIR permit to print 2Q-w P26,756.57 P26,756.57 2 Purchases of services supported by VAT REG ORs but VAT amount is not shown separately 1Q-x; 3Q-x 27,487.02 P1,019.60 28,506.62 3 Purchases of services supported by VAT REG ORs but not dated within the quarter of claim with incorrect petitioner's TIN and VAT amount is not tied-up with the amount per schedule 3Q-y 33.60 33.60 4 Purchases of services supported by VAT REG ORs with incorrect petitioner's TIN and VAT amount is not tied-up with the amount per schedule 1Q-z 1,982.20 1,982.20 5 Purchases of services supported by VAT REG ORs with incorrect petitioner's TIN and VAT amount is not tied-up with the amount per schedule 1Q-aa; 2Q-aa; 3Q-aa 40,793.14 40,793.14 6 Purchases of services supported by VAT REG TIN VAT ORs without petitioner's TIN and VAT amount is not shown separately 1Q-ab 273,908.52 273,908.52 7 Purchases of services supported by VAT REG TIN ORs but not dated within the quarter of claim and/or petitioner's TIN and/or VAT amount is not shown separately 1Q-ac; 2Q-ac; 3Q-ac 488,515.17 488,515.17 8 Purchases of services supported by VAT REG TIN ORs but not dated within the quarter of claim and incorrect petitioner's TIN and VAT amount per OR is not tied-up with the amount per schedule 3Q-ad 3,756.70 3,756.70 9 Purchases of services supported by VAT REG TIN ORs but not dated within the quarter of claim and VAT amount per OR is not tied-up with the amount per schedule 1Q-ae; 2Q-ae; 3Q-ae; 4Q-ae 261,114.17 261,114.17 10 Purchases of services supported by VAT REG TIN ORs but not dated within the year of claim 4Q-af 2,565,815.39 167,658.21 2,733,473.60 11 Purchases of services supported by VAT REG TIN ORs but no date indicated and/or without petitioner's TIN 1Q-ag; 4Q-ag 58,134.59 58,134.59 12 Purchases of services supported by VAT REG TIN ORs but no date indicated and with incorrect petitioner's TIN and VAT amount per OR is not tied-up with the amount per schedule 1Q-ah 9,076.28 9,076.28 13 Purchases of services supported by VAT REG TIN ORs but no date indicated and VAT amount per OR is not tied-up with the amount per schedule 2Q-ai 2,090.98 2,090.98 14 Purchases of services supported by VAT REG TIN ORs but no year indicated in the date 2Q-aj 182.04 182.04 15 Purchases of services supported by VAT REG TIN ORs but without petitioner's TIN and/or incorrect petitioner's TIN and/or VAT not shown separately 1Q-ak; 2Q-ak; 3Q-ak; 4Q-ak 11,523,808.61 4,403,506.66 15,927,315.27 16 Purchases of services supported by VAT REG TIN ORs without petitioner's TIN and VAT amount is not tied-up with the amount per schedule 1Q-al; 2Q-al; 3Q-al; 4Q-al 280,752.84 280,752.84 17 Purchases of services supported by VAT REG TIN ORs but incorrect petitioner's TIN and VAT amount per OR is not tied-up with the amount per schedule 1Q-am; 2Q-am; 3Q-am 3,768,597.09 3,768,597.09 18 Purchases of services supported by VAT REG TIN ORs but without countersignature on the alteration in the petitioner's TIN 3Q-an 78,019.20 78,019.20 19 Purchases of services supported by VAT REG TIN ORs but VAT amount per OR is not tied-up with the amount per schedule 1Q-ap; 2Q-ap; 3Q-ap; 4Q-ap 2,225,215.82 2,225,215.82 20 Purchases of services supported by TIN ORs without petitioner's TIN and VAT amount is not shown separately 1Q-aq; 3Q-aq; 4Q-aq 117,843.23 44,536.85 162,380.08 21 Purchases of services supported by TIN ORs 1Q-ar 32,350.37 32,350.37 22 Purchases of services supported by TIN ORs but incorrect petitioner's TIN and VAT amount per OR is not tied-up with the amount per schedule 1Q-as 28,382.14 28,382.14 23 Purchases of services supported by TIN ORs but VAT amount per OR is not tied-up with the amount per schedule 1Q-at; 2Q-at; 4Q-at 85,146.42 85,146.42 24 Purchases of services supported by TIN NON VAT and/or NON VAT REG TIN ORs and/or TIN VAT ZERO RATED 1Q-au; 2Q-au; 4Q-au 147,102.74 147,102.74 25 Purchases of services supported by TIN VAT ORs but not dated in the quarter of claim and/or without petitioner's TIN and/or VAT not shown separately 1Q-av; 2Q-av; 3Q-av 361,750.33 361,750.33 26 Purchases of services supported by TIN VAT ORs but not dated in the quarter of claim and VAT amount is not tied-up with the amount per schedule 2Q-aw; 3Q-aw 19,529.67 19,529.67 27 Purchases of services supported by TIN VAT ORs but not dated in the year of the claim and/or VAT amount is not shown separately 1Q-ax; 4Q-ax 41,344.20 1,712.68 43,056.88 28 Purchases of services supported by TIN VAT ORs but without petitioner's TIN or incorrect petitioner's TIN and/or VAT amount is not shown separately 1Q-ay; 2Q-ay; 3Q-ay; 4Q-ay 2,563,712.39 4,650,934.98 7,214,647.37 29 Purchases of services supported by TIN VAT ORs but without petitioner's TIN and VAT amount is not tied-up with the amount per schedule 1Q-az; 2Q-az; 4Q-az 483,858.45 483,858.45 30 Purchases of services supported by TIN VAT ORs but incorrect petitioner's TIN and VAT amount is not tied-up with the amount per schedule 1Q-ba 132,252.83 132,252.83 31 Purchases of services supported by TIN VAT ORs but without countersignature on the alteration in the petitioner's TIN 3Q-bb 18,543.75 18,543.75 32 Purchases of services supported by TIN VAT ORs but without BIR permit to print and VAT amount is not tied-up with the amount per schedule 2Q-bc 32,749.82 32,749.82 33 Purchases of services supported by TIN VAT ORs but VAT amount is not tied-up with the amount per schedule 1Q-bd; 2Q-bd; 3Q-bd; 4Q-bd 1,011,678.34 1,011,678.34 34 Purchases of services supported by tape receipts 1Q-be; 2Q-be; 3Q-be 238,504.92 97,598.70 336,103.62 35 Purchases of services supported by other than OR 1Q-bf; 2Q-bf; 3Q-bf; 4Q-bf 2,722,422.65 701,738.73 3,424,161.38 36 Purchases of services supported by photocopied OR 1Q-bg; 2Q-bg; 3Q-bg; 4Q-bg 47,754,185.11 (27,122,791.74) 20,631,393.37 37 Purchases of services supported by VAT REG TIN ORs but no date indicated and/or VAT amount is not shown separately 4Q-bw 27,540.00 27,540.00 38 Purchases of services supported by NON VAT REG TIN ORs and VAT amount is not shown separately 4Q-bx 7,170.00 7,170.00 39 Purchases of services supported by TIN NON VAT ORs and VAT amount is not shown separately 3Q-by; 4Q-by 2,829.75 2,829.75 40 Purchases of services supported by TIN VAT ORs but no date indicated and VAT amount is not shown separately 3Q-bz; 4Q-bz 224,318.09 224,318.09 41 Purchases of services supported by TIN VAT ZERO Rated ORs and VAT amount is not shown separately 3Q-ca 24,130.00 24,130.00 42 Purchases of services supported by VAT REG TIN ORs/TIN VAT ORs representing overstated VAT amount 1Q-bt; 2Q-bt; 3Q-bt; 4Q-bt 348,115.17 348,115.17 Sub-total P77,427,397.29 P(16,419,982.32) P61,007,414.97 OTHER FINDINGS Purchases of Capital Goods not exceeding P1 Million 1 Purchases of capital goods not exceeding one million supported with TIN VAT invoices dated not within the year of claim 1Q-bj P72,581.79 P72,581.79 2 Purchases of capital goods not exceeding one million supported with TIN VAT invoices not dated within the quarter of claim 2Q-bk 1,500.00 1,500.00 3 Purchases of capital goods not exceeding one million supported by VAT REG TIN invoices not dated within the quarter of claim 4Q-bl 9,000.00 9,000.00 4 Purchases of capital goods not exceeding one million supported by documents other than VAT invoices 1Q-bm; 2Q-bm; 4Q-bm (91,686.42) (91,686.42) 5 Purchases of capital goods not exceeding one million supported by documents other than VAT invoices 1Q-bn; 2Q-bn; 4Q-bn 177,070.37 177,070.37 Sub-total P168,465.74 - P168,465.74 Purchases of services without supporting documents 10,960,023.58 10,960,023.58 GRAND TOTAL P90,621,082.26 P(16,827,086.28) P73,793,995.98 Thus, the input VAT in the amount of P73,793,995.98 should be disallowed as they were not 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. AScHCD Upon further verification, the Court finds that the additional input VAT of P5,382,960.55, as presented below, shall likewise be disallowed for petitioner's failure to meet the substantiation requirements prescribed under the aforesaid VAT law and regulations: Name of Supplier Exhibit Input VAT Amount 1 Supported by documents/exhibits which were denied admission by the Court Tierra International P-2704 P331,200.00 6-3 Property Holdings, Inc. P-4843 973,834.10 Trane Philippines P-2705 2,400.00 DHL Express (Philippines) Corp. P-3701 58.75 subtotal P1,307,492.85 2 Purchases of goods supported by documents other than VAT invoice Reach Marketing P-3926 P4,446.00 Reach Marketing P-3927 10,017.86 subtotal P14,463.86 3 Purchases of goods supported by VAT invoices but without petitioner's TIN and/or dated outside the year of claim JJED Philippines, Inc. P-1738 P10,348.29 Bettilane Marketing Corporation P-2051 16,664.99 subtotal P27,013.28 4 Purchases of goods supported by VAT invoice without BIR Permit to Print Hewlett-Packard Philippines P-5131 P8,799.71 Hewlett-Packard Philippines P-5132 13,688.44 Papertech, Inc. P-5217 14,128.93 subtotal P36,617,08 5 Purchases of services supported by VAT ORs but VAT amount was not separately shown or the VAT amount stated refers to withholding tax MGE UPS Systems Philippines, Inc. P-1170 P18,480.00 MGE UPS Systems Philippines, Inc. P-1171 18,480.00 PSEI Firesafety System P-1334 17,280.00 PSEI Firesafety System P-1335 33,960.00 Realform Furniture Shop P-1344 15,000.00 Chloride Secure P-2296 17,142.86 Professional Skills Enrichment P-2524 3,000.00 Colliers International Philippines P-3552 2,888.44 International Elevator & Equipment, Inc. P-3793 14,325.00 Exclusive Cars International P-5033 9,211.61 Asia Select, Inc. P-823 2,458.31 Asia Select, Inc. P-827 7,511.87 Asia Select, Inc. P-828 1,459.40 Asia Select, Inc. P-829 3,924.48 Asia Select, Inc. P-830 1,156.13 Asia Select, Inc. P-832 3,081.53 Asia Select, Inc. P-833 4,377.30 Asia Select, Inc. P-834 2,473.80 Asia Select, Inc. P-835 6,652.88 Asia Select, Inc. P-836 7,366.12 Asia Select, Inc. P-837 12,901.18 Colliers International Philippines P-899 36,720.00 subtotal P239,850.91 6 Purchases of services supported by VAT ORs but input VAT amount per OR is lower than amount being claimed (overclaimed input VAT) DHL Express Phils. Corp. (P745.60-P33.60) P-972 P712.00 DHL Express Phils. Corp. (P731.60-P33.60) P-975 698.00 DHL Express Phils. Corp. (P1,039.60-P33.60) P-979 1,006.00 DHL Express Phils. Corp. (P1,714.60-P33.60) P-980 1,681.00 DHL Express Phils. Corp. (P1,873.60-P33.60) P-981 1,840.00 DHL Express Phils. Corp. (P264.86-P33.60) P-982 231.26 DHL Express Phils. Corp. (P815.60-P33.60) P-983 782.00 Headstrong Philippines, Inc. (P12,960.00-P12,728.57) P-1095 231.43 Headstrong Philippines, Inc. (P25,200-P24,750) P-1096 450.00 Headstrong Philippines, Inc. (P41,040.00-P40,307.14) P-1097 732.86 Headstrong Philippines, Inc. (P14,130.00-P13,877.68) P-1098 252.32 Headstrong Philippines, Inc. (P21,052.50-P20,676.56) P-1099 375.94 Headstrong Philippines, Inc. (P114,660.00-P112,612.50) P-1457 2,047.50 Colliers International Philippines (P198,791.41-P33,131.90) P-2076 165,659.51 DHL Express Phils. Corp. (P899.60-P33.60) P-2096 866.00 DHL Express Phils. Corp. (P1,266.60-P33.60) P-2099 1,233.00 DHL Express Phils. Corp. (P728.60-P33.60) P-2099 695.00 DHL Express Phils. Corp. (P6,781.60-P33.60) P-2100 6,748.00 DHL Express Phils. Corp. (P4,226.00-P81.66) P-2106 4,144.34 DHL Express Phils. Corp. (P2,329.44-P2,029.44) P-2106 300.00 DHL Express Phils. Corp. (P897.00-P33.60) P-2107 863.40 DHL Express Phils. Corp. (P830.00-P33.60) P-2107 796.40 DHL Express Phils. Corp. (P816.60-P33.60) P-2110 783.00 DHL Express Phils. Corp. (P1,429.00-P33.60) P-2112 1,395.40 Colliers International Philippines (P249,846.96-P41,641.73) P-2162 208,205.23 Colliers International Philippines (P10,038.35-P1,673.06) P-2163 8,365.29 DHL Express Phils. Corp. (P838.60-P33.60) P-2169 805.00 DHL Express Phils. Corp. (P787.00-P33.60) P-2171 753.40 Servcom Incorporated (P7,873.92-P7,733.34) P-2275 140.58 Servcom Incorporated (P7,071.42-P6,945.00) P-2279 126.42 DHL Express Phils. Corp. (P633.60-P33.60) P-2301 600.00 Headstrong Philippines, Inc. (P12,071.25-P11,855.69) P-2307 215.56 Headstrong Philippines, Inc. (P61,320-P60,225) P-2312 1,095.00 Headstrong Philippines, Inc. (P53,010-P52,063) P-2313 947.00 IBM Philippines, Inc. (P26,006.40-P25,542.00) P-2329 464.40 Frasers Hospitality Investment (P2,753.10-P1,261.84) P-2231 1,491.26 Frasers Hospitality Investment (P3,670.80-P1,682.45) P-2232 1,988.35 Taurus Electrical Service (P6,428.57-P6,313.78) P-2276 114.79 Bigfish Restaurant Concepts (P13,794.64-P12,663.93) P-2297 1,130.71 Cedorada Glass &Aluminum Supply (P9,664.29-P1,610.71) P-2298 8,053.58 International Elevator (P54,016.88-P51,605.41) P-2335 2,411.47 Jebsen & Jessen Communications (P2,784.00-P2,360.91) P-2337 423.09 MGE UPS Systems Philippines, Inc. (P11,040.00-P10,842.86) P-2371 197.14 MGE UPS Systems Philippines, Inc. (P6,920.00-P6,796.83) P-2372 123.17 Misnet Education, Inc. (P18,857.14-P15,714.28) P-2374 3,142.86 Misnet Education, Inc. (P19,500.00-P19,151.79) P-2376 348.21 Professional Skills Enrichment (P11,460-P1,910) P-2523 9,550.00 Professional Skills Enrichment (P15,360-P2,560) P-2525 12,800.00 Professional Skills Enrichment (P900-P150) P-2526 750.00 Professional Skills Enrichment (P27,000-P4,500) P-2527 22,500.00 Professional Skills Enrichment (P3,000-P500) P-2529 2,500.00 Professional Skills Enrichment (P8,502-P1,417) P-2530 7,085.00 Professional Skills Enrichment (P13,080-P2,180) P-2531 10,900.00 Salvador & Associates (P9,112.29-P7,998.00) P-2548 1,114.29 DHL Express Phils. Corp. (P673.60-P33.60) P-2677 640.00 DHL Express Philippines Corp. (P1,229.60-P33.60) P-2678 1,196.00 Benchmark Consulting Co. (P13,200.00-P12,964.28) P-3519 235.72 Asia Select, Inc. (P11,494.26-P11,289.00) P-3681 205.26 Premium Security & Investigation (P22,938.51-P3,671.75) P-3896 19,266.76 Taurus Electrical Service (P132,055.21-P129,697.19) P-4016 2,358.02 Headstrong Philippines, Inc. (P48,645.00-P47,776.40) P-4045 868.60 Headstrong Philippines, Inc. (P45,360.00-P44,550.00) P-4046 810.00 Headstrong Philippines, Inc. (P8,100-P7,955) P-4047 145.00 6-24 Property Holdings, Inc. (P2,264,525.85-P2,201,607.81) P-4839 62,918.04 6-24 Property Holdings, Inc. (P973,834.10-P945,820.89) P-4843 28,013.21 Asia Select, Inc. (P13,335.87-P13,097.73) P-4907 238.14 Asia Select, Inc. (P12,698.25-P12,471.49) P-4914 226.76 Asia Select, Inc. (P10,717.74-P10,526.35) P-4919 191.39 Emerson Network Power (P65,207.99-P64,043.56) P-5016 1,164.43 Fuji Xerox Philippines, Inc. (P79,936.47-P77,766.97) P-5078 2,169.50 Headstrong Philippines, Inc. (P131,400-P129,054) P-5125 2,346.00 Headstrong Philippines, Inc. (P58,860.00-P57,808.00) P-5127 1,052.00 Headstrong Philippines, Inc. (P93,240.00-P91,575.00) P-5129 1,665.00 IBM Philippines, Inc. (P122,585.40-P12,585.40) P-5141 110,000.00 Manila Peninsula Hotel, Inc. (P3,780.00-P486.30) P-5191 3,293.70 MGE UPS Systems Philippines, Inc. (P31,920.01-P31,350.00) P-5200 570.01 MGE UPS Systems Philippines, Inc. (P27,945.16-P27,446.14) P-5202 499.02 MGE UPS Systems Philippines, Inc. (P59,865.16-P58,796.14) P-5203 1,069.02 Premium Security & Investigation (P12,565.86-P1,104.53) P-5279 11,461.33 subtotal P755,469.07 7 Purchases of services supported by document with statement "NOT ELIGIBLE FOR/NOT VALID AS SOURCE OF INPUT TAX" Accent Micro Technologies, Inc. P-1969 P2,452.50 Shellsoft Technology Corp. P-2563 1,366.07 SOP Printing House P-2623 321.43 Accent Micro Technologies, Inc. P-3432 1,227.27 Accent Micro Technologies, Inc. P-3436 3,000.00 Shellsoft Technology Corp. P-3957 1,285.71 SOP Printing House P-4000 675.00 subtotal P10,327.98 8 Purchases of services supported by documents other than VAT ORs FTL Hotels P-2682 P15,114.60 FTL Hotels P-2683 15,114.60 6-24 Property Holdings, Inc. P-2686 2,033,861.39 6-24 Property Holdings, Inc. P-2687 352,341.02 ACCRA Law P-3445 86,400.00 Salvador & Associates P-4657 4,980.00 Nexstep, Inc. P-4669 26,136.00 Manila Peninsula Hotel, Inc. P-4670 2,116.80 Hospitality International, Inc. P-4672 15,918.37 Headstrong Philippines, Inc. P-4673 31,920.00 Headstrong Philippines, Inc. P-4674 26,880.00 Headstrong Philippines, Inc. P-4675 25,920.00 subtotal P2,636.702.78 9 Purchases of services supported by VAT OR with alteration on date or amount without countersignature Headstrong Philippines, Inc. P-3771 P35,280.00 Sunvision Cable, Inc. P-5368 3,360.00 subtotal P38,640.00 10 Purchase of services supported by VAT OR but without BIR Permit to print Federal Phoenix Assurance P-2229 P316,382.74 subtotal P316,382.74 Grand Total P5,382,960.55 Moreover, part of the total input VAT of P154,055,337.69 is the amount of P1,043,539.50 representing input VAT on purchases of capital goods exceeding P1 Million. Pursuant to Section 110 (A) of the NIRC of 1997, as amended, as implemented by Section 4.110-3 of RR No. 16-2005, input VAT claim on capital goods purchases attributable to zero-rated sales may be claimed either in full during the month of acquisition, or spread over a period of time, depending on the aggregate acquisition cost of the capital goods in the calendar month. If the aggregate acquisition cost exceeds P1 Million, the claim for input tax should be spread over 60 months or the estimated useful life of the capital goods, whichever is shorter. On the other hand, if aggregate acquisition cost does not exceed P1 Million, the total input taxes shall be allowed as credit/refund in the month of acquisition. Upon verification of the documents supporting the purchases on capital goods exceeding P1 Million, the Court finds that the amount of P243,537.00 should be disallowed due to the following reasons: Annex 12 of Exhibit P-6172 Original Amount Supplemental Total Supported by VAT REG TIN invoices but VAT amount per invoice is not tie-up with the amount per schedule Annex 10 2Q-b P73,928.57 P73,928.57 Supported with TIN VAT Invoices not dated within the year of claim Annexes 10 1Q-d; 2Q-d 4,595.14 P19,557.43 24,152.57 Supported with invoices but unable to verify to original copy (photocopied invoices) Annex 10 2Q-f; 3Q-f 659,461.71 (542,890.28) 116,571.43 Supported by documents other than VAT invoices Annex 2Q-g; 3Q-g 8,485.72 8,485.72 Without supporting documents/unaccounted Annexes 12-A; 12-B 20,398.71 20,398.71 TOTAL P766,869.85 P(523,332.85) P243,537.00 Thus, while petitioner was able to substantiate the amount of P800,002.50 (P1,043,539.50 less P243,537.00), out of the total input VAT of P1,043,539.50 on purchases of capital goods exceeding P1 Million, only the amortization for CY 2011 in the amount of P132,943.20 may be claimed by petitioner as valid input tax credits for the same taxable year, as determined hereunder: Exhibit Name of Supplier Months acquired Substantiated Input VAT Monthly Input VAT Credit 63 No. of Months amortized Amortization P-39 Accent Micro Technologies, Inc. January P229,542.86 P4,782.14 12 P57,385.72 P-40 Accent Micro Technologies, Inc. January 6,107.14 127.23 12 1,526.79 P-793 Accent Micro Technologies, Inc. January 6,107.14 127.23 12 1,526.79 P-1960 Accent Micro Technologies, Inc. February 36,642.86 763.39 11 8,397.32 P-3679 Accent Micro Technologies, Inc. March 7,500.00 156.25 10 1,562.50 P-1963 Accent Micro Technologies, Inc. March 1,500.00 31.25 10 312.50 P-2002 Accent Micro Technologies, Inc. March 1,500.00 31.25 10 312.50 P-1977 Accent Micro Technologies, Inc. April 642.86 13.39 9 120.54 P-1978 Accent Micro Technologies, Inc. April 1,500.00 31.25 9 281.25 P-1979 Accent Micro Technologies, Inc. April 342.86 7.14 9 64.29 P-1980 Accent Micro Technologies, Inc. April 642.86 13.39 9 120.54 P-1982 Accent Micro Technologies, Inc. April 342.86 7.14 9 64.29 P-1990 Accent Micro Technologies, Inc. April 642.86 13.39 9 120.54 P-1991 Accent Micro Technologies, Inc. April 482.14 10.04 9 90.40 P-3692 Accent Micro Technologies, Inc. April 487.50 10.16 9 91.41 P-3696 Accent Micro Technologies, Inc. April 1,500.00 31.25 9 281.25 P-1992 Accent Micro Technologies, Inc. May 6,107.14 127.23 8 1,017.86 P-2663 Accent Micro Technologies, Inc. May 27,857.14 580.36 8 4,642.86 P-3691 Accent Micro Technologies, Inc. May 4,553.57 94.87 8 758.93 P-3697 Accent Micro Technologies, Inc. May 122,142.86 2,544.64 8 20,357.14 P-1987 Accent Micro Technologies, Inc. May 559.29 11.65 8 93.22 P-1988 Accent Micro Technologies, Inc. May 22,125.00 460.94 8 3,687.50 P-3418 Accent Micro Technologies, Inc. June 25,500.00 531.25 7 3,718.75 P-3693 Accent Micro Technologies, Inc. June 487.50 10.16 7 71.09 P-3694 Accent Micro Technologies, Inc. June 487.50 10.16 7 71.09 P-3695 Accent Micro Technologies, Inc. June 10,725.00 223.44 7 1,564.06 P-3698 Accent Micro Technologies, Inc. June 10,516.07 219.08 7 1,533.59 P-3419 Accent Micro Technologies, Inc. July 9,107.14 189.73 6 1,138.39 P-3420 Accent Micro Technologies, Inc. July 342.86 7.14 6 42.86 P-4849 Accent Micro Technologies, Inc. September 535.71 11.16 4 44.64 P-4850 Accent Micro Technologies, Inc. September 168.21 3.50 4 14.02 P-4851 Accent Micro Technologies, Inc. September 4,553.57 94.87 4 379.46 P-4852 Accent Micro Technologies, Inc. September 258,107.14 5,377.23 4 21,508.93 P-4630 Accent Micro Technologies, Inc. October 642.86 13.39 3 40.18 Total P800,002.50 P132,943.20 Consequently, the unamortized input VAT of P667,059.30 (P800,002.50 less P132,943.20) pertaining to capital goods purchases exceeding P1 Million shall also be disallowed. In sum, only the remaining amount of P73,967,784.86 represents petitioner's valid input VAT for the four quarters of 2011, as computed below: AcICHD Total Input VAT per Returns P154,055,337.69 Less: Disallowed Input VAT On purchases of goods and services other than capital goods Per ICPA Report P73,793,995.98 Per this Court's Further Verification 5,382,960.55 (79,176,956.53) On purchases of capital goods exceeding P1 Million Per this Court's Further Verification P243,537.00 Unamortized input VAT on capital goods exceeding P1 Million 667,059.30 (910,596.30) Valid Input VAT P73,967,784.86 However, a portion of the P73,967,784.86 shall be applied against the reported output VAT liability of P5,293,874.95. 64 Consequently, only the remaining input VAT of P68,673,909.91 can be attributed to the entire zero-rated sales amounting to P6,757,540,662.07 and only the input VAT of P17,188,625.90 is attributable to the valid zero-rated sales of P1,691,367,779.99, computed as follows: Valid Input VAT P73,967,784.86 Less: Output Tax Due 5,293,874.95 Total P68,673,909.91 Divide by Total Zero-Rated Sales declared per return 6,757,540,662.07 Multiply by Valid Zero-Rated Sales 1,691,367,779.99 Excess Input VAT Attributable to Valid Zero-Rated Sales P17,188,625.90 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, 65 the same remained unutilized until it was deducted as "VAT Refund/TCC Claimed" in its Quarterly VAT Returns for the fourth quarter of CY 2012 66 and first quarter of CY 2013. 67 Therefore, the excess input VAT of P249,651,814.19 68 as of the end of the fourth quarter of 2012, which was carried over to the succeeding first quarter of 2013, no longer included the subject first quarter claim and the input VAT of P147,996,613.27 69 as of the end of the first quarter of 2013, which was carried over to the succeeding second quarter of 2013, no longer included the subject second, third, and fourth quarters claims. WHEREFORE ,the present Petitions for Review are hereby PARTIALLY GRANTED .Accordingly, let a tax refund or a tax credit certificate be issued in favor of petitioner in the reduced amount of P17,188,625.90 ,representing its unutilized and excess input VAT attributable to zero-rated sales for the first, second, third, and fourth quarters of calendar year 2011. SO ORDERED. (SGD.) ESPERANZA R. FABON-VICTORINO Associate Justice Lovell R. Bautista and Ma. Belen M. Ringpis-Liban, JJ. ,concur. Footnotes 1. Petition for Review, docket, vol. 1, p. 16, CTA Case No. 8623. 2. Petition for Review, docket, p. 18, CTA Case No. 8656. 3. Petition for Review, docket, p. 18, CTA Case No. 8661. 4. Petition for Review, docket, p. 18, CTA Case No. 8685. 5. Par. 1, Joint Stipulation of Facts and Issues (JSFI),docket, vol. 1, p. 489. 6. Par. 4, JSFI, docket, vol. 1, unpaginated. 7. Par. 3, JSFI, docket, vol. 1, p. 489. 8. Par. 5, JSFI, docket, vol. 1, unpaginated. 9. Exhibit "P-4". 10. Exhibit "P-4-a". 11. Exhibit "P-5". 12. Exhibit "P-4-b". 13. Exhibit "P-4-c". 14. Exhibit "P-6". 15. Exhibit "P-4-d". 16. Exhibit "P-4-e". 17. Exhibit "P-7". 18. Exhibit "P-4-f". 19. Exhibit "P-4-g". 20. Exhibit "P-31". 21. Exhibit "P-8". 22. Exhibits "P-24" and "P-24-a". 23. Exhibits "P-25" and "P-25-a". 24. Exhibits "P-26" and "P-26-a". 25. Exhibits "P-27" and "P-27-a". 26. Par. 6, Joint Stipulation of Facts and Issues, docket, vol. 1, unpaginated. 27. Docket, vol. 1, pp. 67-82, CTA Case No. 8623. 28. Docket, pp. 53-64, CTA Case No. 8656. 29. Docket, pp. 55-67, CTA Case No. 8661. 30. Docket, pp. 76-89, CTA Case No. 8685. 31. Docket, vol. 1, pp. 489-498. 32. Docket, vol. 1, pp. 500-506. 33. Minutes of the hearing dated February 10, 2014, docket, vol. 1, p. 519; Minutes of the hearing dated June 27, 2016, docket, vol. 7, p. 3945. 34. Minutes of the hearing dated June 9, 2014, docket, vol. 3, p. 1389; Minutes of the hearing dated June 15, 2015, docket, vol. 6, p. 3672. 35. See Minutes of the hearing dated February 10, 2014, docket, vol. 1, p. 519; Judicial Affidavit dated November 15, 2013, docket, vol. 1, pp. 135-167; no cross examination conducted. 36. See Minutes of the hearing dated June 9, 2014, docket, vol. 3, p. 1389; Judicial Affidavit dated June 4, 2014, docket, vol. 3, pp. 1383-1388; no cross examination was conducted. 37. See Minutes of the hearing dated June 15, 2015, docket, vol. 6, p. 3672; Judicial Affidavit dated March 27, 2015, docket vol. 6, pp. 3637-3645. 38. See Minutes of the hearing dated June 27, 2016, docket, vol. 7, p. 3945; Judicial Affidavit dated June 21, 2016, docket, vol. 7, pp. 3844-3848. 39. Docket, vol. 7, pp. 4031-4032. 40. JSFI, docket, vol. 1, p. 490. 41. Commissioner of Internal Revenue vs. Team Sual Corporation (formerly Mirant Sual Corporation) ,G.R. No. 205055, July 18, 2014. 42. Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue ,G.R. No. 207112, December 8, 2015. 43. As amended by Republic Act No. 9361, November 21, 2006. 44. Par. 4, JSFI, docket, vol. 1, unpaged (between pp. 489 and 490);Exhibit "P-2",docket, vol. 3, p. 1487. 45. Exhibits "P-24" to "P-24-a",docket, vol. 3, pp. 1752-1758. 46. Exhibits "P-25" to "P-25-a",docket, vol. 3, pp. 1759-1764. 47. Exhibits "P-26" to "P-26-a",docket, vol. 3, pp. 1765-1771. 48. Exhibits "P-27" to "P-27-a",docket, vol. 3, pp. 1772-1777. 49. March 30, 2013 fell on a Saturday. 50. June 8, 2013 fell on a Saturday. 51. June 22, 2013 fell on a Saturday. 52. G.R. No. 153205, January 22, 2007. 53. Par. 3, JSFI, docket, vol. 1, p. 489. 54. Exhibits "P-15" to "P-15-b" and "P-6113" to "P-6154". 55. Exhibits "P-13" to "P-13-b","P-14" to "P-14-b","P-6155" to "P-6156","P-6167" to "P-6168","P-5992" to "P-6064",and "P-6200" to "P-6208". 56. Exhibits "P-11" to "P-11-b","P-6065" to "P-6112","P-6170" to "P-6171",and "P-6209" to "P-6212". 57. G.R. No. 201326, February 8, 2017. 58. Exhibits "P-38" to "P-238","P-244" to "P-403","P-414" to "P-532",and "P-539" to "P-782". 59. Exhibits "P-17" to "P-17-c",docket, vol. 5, pp. 2729-2751. 60. Exhibits "P-21" to "P-22-a" and "P-793" to "P-5991". 61. Exhibit "P-6172",Supplemental ICPA Report, Annexes 11 and 12. 62. The annex referred to cannot actually be found. 63. Based on useful life of 48 months. 64. Sum of the amounts in Line 15B of Exhibits "P-5-a","P-6-a","P-7-a",and "P-8-b",docket, vol. 3, pp. 1506, 1519, 1528, and 1543, respectively. 65. Exhibits "P-6" to "P-8" and "P-19" to "P-20". 66. Exhibit "P-19-c",Line 23D, docket, vol. 5, p. 2771. 67. Exhibit "P-20",Line 23D, docket, vol. 5, p. 2776. 68. Exhibit "P-19-c",Line 29, docket, vol. 5, p. 2772. 69. Exhibit "P-20",Line 29, docket, vol. 5, p. 2777.