cta_decision CTA Case No. 1099510995 2026-04-20

TPSC PHILIPPINES CORPORATION v.COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES Court of Tax Appeals QUEZON CITY SPECIAL SECOND DIVISION TPSC PHILIPPINES CTA CASE N0.10995 CORPORATION, Petitioner, Present: vs. RINGPIS-LIBAN, Chairperson, MODESTO-SAN PEDRO, and FERRER-FLORES, JJ. COMMISSIONER OF Promulgated: INTERNAL REVENUE, Respondent. APR Z0ZOZ6 " t 7r.:P �-- t'::""- ------_/_ ------- X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X DECISION FERRER-FLORES, J.: The Petition for Review� prays for the refund and/or issuance of tax credit certificate in the amount of P25,109,019.62, allegedly representing petitioner's unutilized input tax for fiscal year (FY) 2021. 1 T~EPARTIES Petitioner TPSC Philippines Corporation is domestic corporation duly registered with the Securities and Exchange Commission (SEC) on June 30, 2015, with SEC Registration No. CS201512742. Its principal office is at Units 1602 and 1603, 88 Corporate Center, Sedefio Street comer Valero Street, Salcedo Village, Brgy. Bel-Air, Makati City 1227. It is also a value-added tax (VAT)-registered company with the Bureau of Internal Revenue (BIR), under Taxpayer Identification Number (TIN) 009-073-361.2 \ Summary of the Case, Pre-Trial Order dated January 19, 2024, Docket- Vol. III, p. 1248. 2 Par. 1.1, Stipulation of Facts, Joint Stipulation ofFacts and Issues (JSFI), Docket - Vol. III, p. 1172; Exhibit "P-3", Docket- Vol. III, pp. 1364 to 1366.

DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 2 of33 Respondent Commissioner of Internal Revenue (CIR) is charged with the assessment and collection of all national internal revenue taxes, fees and charges, and enforcement of all forfeitures, penalties and fines connected therewith.3 ANTECEDENTS (ADMINISTRATIVE LEVEL) On June 29, 2022, petitioner filed with the VAT Credit Audit Division, its Application for Tax Credits/Refunds (BIR Form No. 1914)4 of its unutilized input VAT for the period from April 1, 2020 to March 31, 2021 (FY 2021) in the amount of P25,109,019.62, and submitted the supporting documents on even date. 5 Thereafter, on September 1, 2022, petitioner received the VAT Refund Notice dated August 22, 2022, denying its VAT refund application, allegedly for lack of factual and legal basis. 6 PROCEEDINGS BEFORE THIS COURT Petitioner filed the present Petition for Review on September 30, 2022.7 Within the extended period,8 on January 17, 2023, respondent filed his Answer,9 interposing his special and affirmative defense that the instant judicial claim should be denied for petitioner's failure to substantiate the claim for refund at the administrative level since: (a) it is an established fact that a decision by the respondent has already been rendered and in such case, the Supreme Court has held that the duty of the Court is now limited in determining whether the decision is proper, and (b) the claim for refund should be denied for failure to comply with the substantiation requirements as set forth in the National Internal Revenue Code (NIRC) of 1997, as amended.~; Par. 1.2 Stipulation of Facts, JSFI, Docket- Vol. III, p. 1172. Exhibit "P-5", Docket- Vol. I, p. 168. Exhibit "P-7", Docket -Vol. I, p. 171. Par. 1.3 Stipulation of Facts, JSFI, Docket- Vol. III, p. 1173; Exhibit "P~S", Docket- Vol. III, pp. 1448 to 1464. Docket-Vol.I,p.1-Fto32. Respondent's Motion for Extension to File Answer dated November 28, 2022, Docket- Vol. I, pp. 558 to 560; Resolution dated December 20, 2022, Docket- Vol. I, p. 563. 9 Docket- Vol. I, pp. 564 to 572.

DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 3 of33 On April 4, 2023, respondent transmitted to this Court the BIR Records of this case, consisting of one folder, consecutively numbered from pages 1 to 581. 10 The Pre-Trial Conference was initially set on April 13, 2023, 11 then to August 17, 2023, 12 and later reset to, and held on, October 5, 2023. 13 Prior thereto, Respondent's Pre-Trial Briefwas filed on April3, 2023,14 while petitioner's Pre-Trial Briefwas submitted on April4, 2023_15 On October 25, 2023, the parties submitted their Joint Stipulation of Facts and Issues, 16 which was admitted and approved by the Court in its Resolution dated November 20,. 2023, 17 thereby deeming the termination of the Pre-Trial. Thereafter, the Pre-Trial Order was issued on January 19, 2024. 18 Trial then ensued, with the parties presenting and offering their respective testimonial and documentary evidence. Petitioner offered the testimonies of the following individuals, namely: (1) Ms. Ruby B. Mejia, 19 petitioner's Senior Accounting Associate for the Accounting and Finance Department; and, (2) Mr. Sonny S. Bonilla,20 the Court-commissioned Independent Certified Public Accountant (ICPA).21 The Report of the ICPA was submitted on November 6, 2023.22 On April 5, 2024, petitioner filed its Formal Offer of Documentary r Evidence,23 to which respondent filed his Comment (on Petitioner's Formal 1� Compliance dated April3, 2023, Docket- Vol. I, pp. 614 to 615. 11 Notice ofPre-Trial Conference dated January 20,2023, Docket- Vol. I, pp. 574 to 575. 12 Minute Resolution dated April20, 2023, Docket- Vol. I, p. 637. 13 Notice of Resetting dated July 12, 2023, Docket- Vol. II, p. 638; and Minutes of the hearing held on, and Order dated, October 5, 2023, Docket- Vol. II, pp. 640 to 642. 14 Docket- Vol. I, pp. 618 to 621. 15 Docket- Vol. I, pp. 626 to 636. 16 Docket- Vol. III, pp. 1I72 to 1I81. 17 Docket- Vol. III, p. 1245. 18 Docket- Vol. III, pp. I248 to I253. 19 Docket- Vol. II, pp. 645 to 656; and Minutes of the hearing held on, and Order dated, February 6, 2024, Docket- Vol. III, pp. 1316 to I3 I8. 20 Docket- Vol. III, pp. 1273 to 1285; and Minutes of the hearing held on, and Order dated, February 6, 2024, Docket- Vol. ITT, pp. 1316 to 1318. 21 Oath of Commission dated October 5, 2023, Docket- Vol. II, p. 639; and Minutes of the hearing held on, and Order dated, October 5, 2023, Docket- Vol. II, pp. 640 to 642. 22 Exhibit "P-24" (but not marked), Docket- Vol. III, pp. 1213 to 1235. 23 Docket- Vol III, pp. 1341 to 1362.

DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 4 of33 Offer of Evidence) on April 22, 2022.24 Thereafter, on April 29, 2024, petitioner filed its Reply [Re: Comment (on Petitioner's Formal Offer of Evidence) dated 22 April 2024]: 25 In the Resolution dated May 14, 2024,26 the Court� admitted petitioner's offered exhibits, except for various ICPA Exhibits, for failure to correspond with the documents actually marked and for not being found in the records. Subsequently, on May 21, 2024, petitioner filed its Motion for Reconsideration (Resolution dated 14 May 2024),27 to which respondent filed his Comment/Opposition (Re: Petitioner's Motion for Reconsideration [Resolution dated 14 May 2024]) on August 12, 2024.28 In the Resolution dated September 13, 2024,29 the Court admitted some of the ICPA Exhibits which were previously denied. Various exhibits, however, were still denied admission� for failure to correspond with the exhibit reference numbers. Consequently, on October 7, 2024, petitioner filed an Omnibus Motion (i) Re: Resolution dated 13 September 2024; and (ii) To Set Commissioner's Hearing,30 to which respondent filed his Comment/Opposition [Re: Petitioner's Omnibus Motion (i) Re: Resolution dated 13 September 2024; and (ii) To Set Commissioner's Hearing] on November 11, 2024.31 Accordingly, the Court issued the Resolution dated January 10, 2025,32 granting petitioner's Motion Re: Resolution dated 13 September 2025, admitting the exhibits previously denied for failure to correspond with the exhibit reference numbers, thereby holding petitioner's Motion to Set Commissioner's Hearing as moot. For his part, respondent offered the testimony of Group Supervisor Clariza M. Barangan.33 Respondent's Formal Offer ofEvidence was filed on May 20, 2024,34 to which petitioner filed its Comment/Opposition (Respondent's Formal Offer ofEvidence dated 20 May 2024) on May 29, 2024.35 In the Resolution dated July 29, 2024,36 the Court admitted all of respondent's offered exhibits. ~ 24 Docket- Vol. IV, pp. 1824 to 1827. 25 Docket- Vol. IV, pp. 1835 to 1842. 26 Docket- Vol. IV, pp. 1859 to 1862. 27 Docket- Vol. IV, pp. 1871 to 1889. 28 Docket- Vol. IV, pp. 1904 to 1909. 29 Docket- Vol. IV, pp. 1913 to 1920. 30 Docket- Vol. IV, pp. 1930 to 1937. 31 Docket- Vol. IV, pp. 1985 to 1990. 32 Docket- Vol. IV, pp. 1994 to 1998. 33 Exhibit "R-7", Docket - Vol. III, pp. 1262 to 1268; and Minutes of the hearing held on, and Order dated, May 14, 2024, Docket- Vol. IV, pp. 1863 to 1864. 34 Docket- Vol. IV, pp. 1865 to 1869. 35 Docket-Vol.IV,pp.1890to1895. 36 Docket- Vol. IV, pp. 1902 to 1903.

DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 5 of33 Petitioner then filed its Memorandum on February 27, 2025,37 while respondent failed to file his memorandum.38 The case was considered submitted for decision on March 20, 2025.39 Hence, this Decision. THE STIPULATED ISSUE As stipulated by the parties, the issue for this Court's resolution is:40 Whether or not petitioner has satisfactorily established its entitlement to the alleged refund of its unutilized input tax for FY 2021 in the amount ofP25,109,019.62. Petitioner's arguments: Petitioner argues that it has satisfactorily established its entitlement for refund of unutilized input tax for FY 2021 in the amount of P25,109,019.62, as (a) respondent erroneously deducted the output tax of P1 ,040,040.00 from petitioner'�s claim of refund of unutilized input tax subject of the present VAT refund application; (b) respondent erroneously disallowed petitioner's claim of refund of unutilized input tax in the amount of P13,329,607.56 due to alleged violation of invoicing requirements and non-VAT suppliers on purchases of goods and services; and, (c) respondent erroneously disallowed petitioner's claim of refund of unutilized input tax in the amount ofP67,905.04 due to alleged overclaimed input tax. Respondent's counter-arguments: In his Answer, respondent contends that the instant judicial claim should be denied for petitioner's failure to substantiate the claim for refund at the administrative level since it is an established fact that a decision by the respondent has already been rendered and, in such case, the Supreme Court has held that the duty of the court is now limited in determining whether the decision is proper; and, that the claim for refund should be denied for failure to comply with the substantiation requirements as set forth in the NIRC of 1997, as amended. 37 Docket- Vol. IV, pp. 2012 to 2059. 38 Records Verification dated March 13, 2025 issued by the Judicial Records Division of this Court, Docket- Vol. IV, p. 2215. 39 Minute Resolution dated March 20, 2025, Docket- Vol. IV, p. 2216. 40 Par. 2.1, Stipulation of the Issue, JSFI, Docket- Vol. III, p. 1173.

DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 6 of33 THE COURT'S RULING The present Petition for Review is partially granted. Requisites under the law for the refund or issuance of tax credit certificate ofinput VAT Section 112 of the NIRC of 1997, as amended by Republic Act (R.A.) No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law,41 provides, in part, as follows: SEC. 112. Refunds or Tax Credits oflnput 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)(l), (2) and (b) and Section 108(B)(l) and (2), the acceptable foreign currency exchange proceeds thereofhad been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods of properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales: Provided, finally, That for a person making sales that are zero-rated under Section 108(B)(6), the input taxes shall be allocated ratably between his zero-rated and non-zero-rated sales. XXX XXX XXX (C) Period within which Refund of Input Taxes shall be Made. - In proper cases, the Commissi.oner shall grant a refund for creditable input taxes within ninety (90) days from the date of submission of the official receipts or invoices and other documents in support of the application filed in accordance with Subsections (A) and (B) hereof: Provided, That should the Commissioner find that the grant of refund is not proper, the Commissioner must state in writing the legal and factual basis for the denial. ll'\ ~ 41 An Act Amending Sections 5, 6, 24, 25, 27, 31, 32, 33, 34, 51, 52, 56, 57, 58, 74, 79, 84, 86, 90, 91, 97, 99, 100, 101, 106, 107, 108, 109, 110, 112, 114, 116, 127, 128, 129, 145, 148, 149, 151, 155, 171, 174, 175, 177, 178, 179, 180, 181, 182, 183, 186, 188, 189, 190, 191, 192, 193, 194, 195, 196, 197, 232, 236, 237, 249, 254, 264,269, and 288; Creating New Sections 51-A, 148-A, 150-A, 150-B, 237- A, 264-A, 264-B, and 265-A; and Repealing Sections 35, 62, and 89; All Under Republic Act No. 8424, otherwise Known as the NationaJ.Intemal Revenue Code of 1997, As Amended, and For Other Purposes, Effective January I, 2018.

DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 7 of33 In case of full or partial denial of the claim for tax refund, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim, appeal the decision with the Court of Tax Appeals: Provided, however, That failure on the part of any official, agent, or employee of the BIR to act on the application within the ninety (90)- day period shall be punishable under Section 269 of this Code. Based on the foregoing provision, jurisprudence has laid down certain requisites which the taxpayer-applicant must comply with to successfully obtain a credit/refund of input VAT. Said requisites are classified into certain categories, to wit: As to the timeliness of the filing of the administrative and judicial claims: 1. the refund claim is filed with the BIR within two (2) years after the close of the taxable quarter when the sales were made�' 42 2. in case of full or partial denial of the refund claim rendered within a period of 90 days from the date of submission of the official receipts (ORs) or invoices and other documents in support of the application, the judicial claim shall be filed with this Court within 30 days from receipt of the decision,43 or after the expiration of the 90-day period;44 With reference to the taxpayer's registration with the BIR: 3. the taxpayer is a VAT-registered person;45 In relation to the taxpayer's output VAT: J � 4. the taxpayer is engaged in zero-rated or effectively zero- rated sales;46 42 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No. 166732, April 27, 2007; San Roque Power Corporation vs. Commissioner of Internal Revenue, G.R. No. 180345, November 25, 2009; and AT&T Comf!lunications Services Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No. 182364, August 3, 2010. 43 Refer to Energy Development Corporation vs. Commissioner of Internal Revenue, G.R. No. 203367, March 17, 2021; Commissioner of Internal Revenue vs. CE Casecnan Water And Energy Company, Inc., G.R. No. 212727, February 1, 2023; and Commissioner of Internal Revenue vs. Vestas Services Philippines, Inc., G.R. No. 255085, March 29, 2023. 44 Silicon Philippines, Inc. (Formerly Intel Philippines Manufacturing, Inc.) vs. Commissioner ofInternal Revenue, G.R. No. 182737, March 2, 2016. 45 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, supra; San Roque Power Corporation vs. Commissioner of Internal Revenue, supra; and AT&T Communications Services Philippines, Inc., vs. Commissioner ofInternal Revenue, supra. 46 Ibid.

DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 8 of33 5. for zero-rated sales under Sections 106(A)(2)(a)(l), (2) and (b); and 108(B)(l) and (2),47 the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);48 As regards the taxpayer's input VAT being refunded: 6. the input taxes are not transitional input taxes;49 7. the input taxes are due. or paid;5� 8. the input taxes claimed are attributable to zero-rated or effectively zero-rated sales. However, where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes cannot be directly and entirely attributable to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume�'51 and' 9. the input taxes have not been applied against output taxes during and in the succeeding quarters. 52 In addition, in claims for VAT refund/credit, applicants must satisfy the substantiation and invoicing requirements under the NIRC of 1997, as amended, and other implementing rules and regulations.53 Petitioner's compliance with all the VAT invoicing requirements is, thus, required to be able to file a claim for input taxes attributable to zero-rated sales.54 The invoicing and substantiation requirements should be followed because it is the only way to determine the veracity of the taxpayer's claims.55 Moreover, l 47 Under R.A. No. 10963, Section 106(A)(2)(a)(2) was renumbered to Section 106(A)(2)(a)(3) while Section 106(A)(2)(b) was deleted. However, there was no corresponding amendment to the subsections cited in Section 112(A) of the NIRC of 1997, as amended. 48 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, supra; San Roque Power Corporation vs. Commissioner of Inte�rnal Revenue, supra; and AT&T Communications Services Philippines, Inc. vs. Commissioner ofInternal Revenue, supra. 49 Ibid. 50 Ibid. 51 Intel Technology Philippines, Inc. vs. Commissioner ofInternal Revenue, supra; and San Roque Power Corporation vs. Commissioner ofInternal Revenue, supra. 52 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, supra; San Roque Power Corporation vs. Commissioner of Internal Revenue, supra; and AT&T Communications Services Philippines, Inc. vs. Commissioner ofInternal Revenue, supra. 53 Team Energy Corporation vs. Commissioner of fnternal Revenue, et seq., G.R. Nos. 197663 and 197770, March 14,2018. 54 J.R.A. Philippines, Inc. vs. Commissioner ofInternal Revenue, G.R. No. 171307, August 28, 2013. 55 Nippon Express (Philippines) Corporation vs. Commissioner of Internal Revenue, G.R. No. 191495, July 23,2018.

( DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 9 of33 it must be pointed out that �compliance with all the VAT mvmcmg requirements provided by tax laws and regulations is mandatory. 56 Strict compliance with substantiation and invoicing requirements is necessary considering VAT's n.ature and VAT system's tax credit method, where tax payments are based on output and input taxes and where the seller's output tax becomes the buyer's input tax that is available as tax credit or refund in the same transaction. It ensures the proper collection of taxes at all stages of distribution, facilitates computation of tax credits, and provides accurate audit trail or evidence for BIR monitoring purposes.57 Furthermore, it must be emphasized that, in cases filed before this Court, which are litigated de novo, party-litigants must prove every minute aspect of their case.58 Thus, it behooves petitioner to show compliance with each of the foregoing requisites .and invoicing requirements. As a corollary, the absence of any of the said requisites is already a valid ground to deny the refund claim. First and second requisites: Petitioner timely filed � its administrative andjudicial claims The first requisite pertains to the filing of a claim for tax credit or refund of input VAT before the BIR, within two years from the close of the taxable quarter when the zero:.rated or effectively zero-rated sales were made. The present claim pertains to FY 2021 which covers the period from April 1, 2020 to March 31, 202 ~. Counting two years from the close of the subject taxable quarters thereof, petitioner had until the following dates to file its administrative claim, to wit: Period Covered Close of Taxable Last Day to File (FY 2021) Quarter Administrative Claim . Ii.E~t.Ql:l~~~~ June 30, 2020 ---= i i . ! �~~(?~~ Ql:l~!!~!. ::_s~Q:1@L. June 30, 2022 � T =-~lO,i"OR J 56 Eastern Telecommunications Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No. 183531, March 25,2015. 57 Team Energy Corporation vs. Commissioner ofInternal Revenue, et seq., supra. 58 Edison (Bataan) Cogeneration Corporation vs. Commissioner of Internal Revenue, et seq., G.R. Nos. 201665 and 201668, August 30, 2017; Commissioner of Internal Revenue vs. Philippine National Bank, G.R. No. 180290, September 29, 2014; Commissioner of Internal Revenue vs. United Salvage and Towage (Phils.), Inc., G.R. No. 197515, July 2, 2014; Dizon vs. Court ofTax Appeals, et al., G.R. No. 140944, April 30, 2008; Atlas Consolidated Mining and Development Corporation vs. Commissioner ofInternal Revenue, G.R. No. 145526, March 16, 2007; and Commissioner of Internal Revenue vs. Manila Mining Corporation, G.R. No. 153204, August 31, 2005.

DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 10 of33 Period Covered Close of Taxable Last Day to File (FY 2021) Quarter Administrative Claim Third Ouarter Dec�. 31,2020 Dec. 31, 2022 i Fourth Quarter ....... M<:tt~JJ,~Q~L M:o!~:}J, ~Q~? . l ............................................................................................... Hence, petitioner timely filed its administrative claim for VAT refund in the amount ofP25,109,019.62, covering all quarters ofFY 2021, on June 29, 2022. 59 . The second requisite necessitates that the judicial claim must have been filed within 30 days from receipt of respondent's decision, or after the expiration of the 90-day period .under Section 112(C) of the NIRC of 1997, as amended. Thus, from the filing of petitioner's administrative claim on June 29, 2022, respondent had 90 days therefrom, or until September 27, 2022, to act on the said claim. On September 1, 2022, petitioner received the VAT Refund Notice dated August 22, 2022, denying its Application for Tax Credits/Refunds.60 Such being the case, petitioner had 30 days from receipt thereof, or until October 3, 2022,61 to file an appeal before this Court. The present Petition on Review was, thus, timely filed on September 30, 2022.62 Such being the case, the Court finds that petitioner complied with the above-stated first and second requisites. Third requisite: Petitioner is a VAT- registered entity Anent the third requisite, it is also undisputed that petitioner is a VAT-registered entity, with TIN 009-073-361.63 Thus, petitioner complied with the said requisite. 1 59 Exhibits "P-5" and "P-5a", Docket- Vol. I, p. 168. 60 Exhibit "P-8". Docket- Vol. TTl. at p. 1448. 61 October 1, 2022, the 30th day, fell on a Saturday. 62 Docket- Vol. I, p. 1-F to 32. 63 Par. 1.1, Stipulation of Facts, JSFI, Docket- Vol. III, p. 1172; Exhibit "P-3", Docket- Vol. Ill, pp. 1364 to 1366.

DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 11 of33 Fourth and fifth requisites: Not all of petitioner's reported zero-rated sales or effectively zero-rated. sales during FY 2021 qualify as such The fourth and fifth requisites respectively require that the taxpayer is engaged in zero-rated or effectively zero-rated sales, and, for zero-rated sales under Sections 106(A)(2)(a)(l ), (2) and (b), and 108(B)(l) and (2) of the NIRC �of 1997, as amended, the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with BSP rules and regulations. In its amended Quarterly �yAT Returns for the first to fourth quarters of FY 2021, petitioner reported total sales amounting to P341,452,082.35, summarized as follows: FY 2021 First Quarter Second Quarter Third Quarter Fourth Quarter Total ' Vatable Sales 8,667,000.00 (Exhibit "P-4"t4 (Exhibit "P-4-a"t5 (Exhibit "P-4-b"t6 (Exhibit "P-4-c"t7 i - , P 67,000.00-, . - i P .. 8,600,000.00 i P J=:~~!!IP! �<.1.!~? .. ... j ' Total Sales P 31,817,963.12 I p 53,553,086.39 l P 97,518,523.41 1 P 158,562,509.43 i P 341,452,082.35 Petitioner's zero-rated sales allegedly pertain to sales to entities registered with the Philippine Economic Zone Authority (PEZA) and to a non-resident foreign corporation (NRFC) during FY 2021. (i) Sales to an NRFC- {P2,246,501.12) Petitioner avers that it rendered services to its foreign client, TPSC Engineering (Malaysia) SDN. BHD. In relation thereto, Section 108(B)(2) of the NIRC of 1997, as amended, states: SEC. 108. Value-added Tax on Sale of Services and Use or Lease ofProperties.- XXX XXX XXXI 64 Docket-Vol.III,p. 1367. 65 Docket- Vol. III, p. 1380. 66 Docket-Vol.III,p. 1403. 67 Docket- Vol. III, p. 1424.

DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 12 of33 (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, wher~ 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); (Emphasis supplied) Based on the foregoing, in order for a sale or supply of services to qualify as zero-rated under Section 108(B)(2) of the NIRC of 1997, as amended, the following essential elements must be present: 1. The recipient of the services is a foreign corporation, and the said corporation is doing business outside the Philippines, or is a non-resident person not engaged in business who is outside the Philippines when the services are performed;68 2. The services fall under any of the categories under Section 108(B)(2),69 or simply; the services rendered should be other than ''processing, manufacturing or repacking goods";70 3. The service must be performed in the Philippines71 by a VAT-registered person; and, 4. The payment for such services should be in acceptable foreign currency accounted for in accordance with BSP 72 ~ rules. 68 Site! Philippines Corporation (Formerly Clientlogic Phils. Inc.) vs. Commissioner ofInternal Revenue, G.R. No. 201326, February 8, 2017; Commissioner of Internal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., G.R. No. 153205, January 22, 2007; Accenture, Inc. vs. Commissioner ofInternal Revenue, G.R. No. 190102, July 11,2012. 69 Commissioner ofInternal Revenue vs. American Express International, Inc. (Philippine Branch), G.R. No. 152609, June 29,2005. 7� Commissioner ofInternal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., supra. 71 Commissioner ofInternal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., supra; Commissioner of Internal Revenue vs. American Express International, Inc. (Philippine Branch), supra. 72 !d.

DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 13 of33 Anent the first essential element, to prove that the recipient of services is an NRFC doing business outside the Philippines, petitioner, at the very least, must present both the Philippine SEC Certification of Non- Registration of Company, and proof of incorporation or registration in a foreign country (e.g., Articles/Certificate of Incorporation/Registration and/or Tax Residence Certificate) of the foreign corporation.73 The former document �establishes that the recipient of the service has no registered business in the Philippines, and that it is not engaged in trade or business within the Philippines; while the latter document proves that the said recipient of the service is indeed foreign. The said documents have been consistently required by this Court for purposes of the said first essential element. � In the present case, petitioner satisfied the first essential element as it proved that its client, TPSC Engineering (Malaysia) SDN. BHD., for the subject period of claim, is doing business outside the Philippines, as evidenced.by the SEC Certific;tion of Non-Registration of Company,74 and Certificate ofForeign Incorporation in Malaysia. 75 With regard to the second essential element, petitioner submitted the Management Service Agreement dated June 23, 2020,76 between petitioner and TPSC Engineering (Malaysia) SDN. BHD, indicating therein that petitioner is being engaged for "management service". An examination of the said Agreement would show that the services provided by petitioner clearly fall within the scope of "services other than processing, manufacturing or repacking goods"; hence, petitioner satisfactorily complied with the second essential element. Anent the third essenti~l element, petitioner must show that the services were performed in the Philippines. A perusal of Appendix I Management Service Order Sheet of the Management Service Agreement reveals that the location of services was specified to be performed in the Philippines, (i.e., in Makati City, Cavite and Muntinlupa City). In view of the foregoing, petitioner is considered to have complied with the said third essential element.~ 73 Refer to Commissioner of Internal Re~enue vs. Deutsche Knowledge Services Pte. Ltd., G.R. No. 234445, July 15, 2020; and Commissioner of Internal Revenue vs. BW Shipping, Inc., G.R. No. 261171, October 4, 2023. 74 Exhibit "ICPA SECN-1", USB (submitted on November 8, 2023). 75 Exhibit "ICPA CCM-1 ",USB (submitted on November 8, 2023). 76 Exhibit "P-20", Docket- Vol. III, pp. 1775 to 1786.

DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 14 of33 As for the fourth essential element, and in relation to the fifth requisite for the granting of the input VAT refund, petitioner presented the Bank Certificate77 of inward remittance issued by Sumitomo Mitsui Banking Corporation - Manila Branch showing the foreign currency remittances of TPSC Engineering (Malaysia) SDN. BHD as payments for its sales. Relative thereto, it is equally important to consider that the VAT zero- rated sales, to which the said foreign currency remittances correspond, must be duly supported by VAT zero-rated ORs, which must comply with the pertinent invoicing requirements, containing all the required information under Section 113(A) and (B) of the NIRC of 1997, as amended, as implemented by Sections 4.113-1 (A) and (B) of Revenue Regulations (RR) No. 16-2005 and must be duly registered with the BIR as prescribed under Section 237, in relation to Section 238 ofthe NIRC of 1997, as amended. To support its zero-rated sales to TPSC Engineering (Malaysia) SDN. BHD, petitioner submitted VAT zero-rated ORs, totaling P2,246,015.71. A comparison of the aggregate amount of the VAT zero-rated ORs with the sales amount declared per Quarterly VAT Return revealed the following difference: Exhibit No.78 OR N Zero-Rated Sales Zero-Rated Sales o. 'in USD) (in PhP\79 "ICPA SQ3-10" : 0000581 . 13,483.74 I 655,134.48 I ~~~~~4 ~~~mrr~~li!F4m~~!Fi .~~1:S.~~;~~t~~~,~~~~~p~~~~~:~��:�� ~;:~~~:~~. r��~'~;~,~;�~:~�~��' . f~~~: ~~EI?:J:~!~~ ~~~~~P~EQ'!~~~EIYY~!g~!l!r:!l........ . 2,246,501.1280 ' ' Difference- amount to be disallowed (485.41 In this regard, the above difference of P485.41 shall be denied VAT zero-rating for being unsupported. Furthermore, the zero-rated sales of P2,246,015.71, albeit supported by VAT zero-rated ORs, shall likewise be denied VAT zero-rating since the supporting VAT zero-rated ORs were not fully compliant with the prescribed invoicing requirements, particularly, for failure to indicate therein \ 77 Exhibit "ICPA BC-1 ",USB (submitted on November 8, 2023). 78 Annexes C.2 and C.3, USB (submitted on November 8, 2023). 79 Peso amounts per SLS attached to Third and Fourth Quarterly VAT Returns (Exhibits "P-4-b" and "P- 4-c"), Docket- Vol. III, pp. 1412 to 1414 and 1433 to 1435. 80 Erroneously reported as VAT-exempt sales in petitioner's Third and Fourth Quarterly VAT Returns.

DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 15 of33 the nature of services rendered by petitioner to TPSC Engineering (Malaysia) SDN. BHD. For purposes of computation, petitioner's claimed sales to TPSC Engineering (Malaysia) SDN. BHD in the amount of P2,246,501.12 shall initially be considered as part of the total zero-rated sales (instead of exempt sales); however, the same shall.be disallowed for failure to qualify as valid zero-rated sales under Section 108(B)(2) ofthe NIRC of 1997, as amended. Verily, the fourth essential element and fifth requisite were not fulfilled, insofar as the sales to an NRFC are concerned. (ii) Sales to PEZA-registered entities- (P330, 538, 581.23) Petitioner claims that its zero-rated sales of P330,538,581.23 pertain to its sales to PEZA-registered entities. Sections 106(A)(2)(a)(5) and 108(B)(3) of the NIRC of 1997, as amended, provide for the zero~rating of sales to persons or entities with exemption. under special laws, to wit: SEC. 106. Value-added Tax on Sale ofGoods or Properties.- (A) Rate and Base ofTax. - xxx XXX XXX XXX (2) The following sales by VAT-registered persons shall be subject to zero percent (0%) rate: (a) Export Sales.- The� term 'export sales' means: XXX XXX XXX (5) Those considered export sales under Executive Order No. 226, otherwise known as th~ Omnibus Investment Code of 1987, and other special laws; and XXX XXX XXX (b) Sales to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects such sales to zero rate.1

DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 16 of33 XXX XXX XXX SEC. 108. Value-added Tax on Sale of Services and Use or Lease ofProperties. - (A) Rate and Base ofTax. - xxx XXX XXX XXX (B) Transactions Subject to Zero Percent (0%) Rate. - The following services performed in the Philippines by VAT-registered persons shall be subject to zero percent (0%) rate: XXX XXX XXX (3) Services rendered to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects the supply of such services to zero percent (0%) rate; (Emphasis supplied) Implementing the above provisions, Sections 4.1 06-5(a)(5) and 4.108- 5(b)(3) ofRR No. 16-2005, as amended, provide: SEC. 4.106-5. Zero-Rated Sales o(Goods or Properties.- xxx The following sales by VAT-registered persons shall be subject to zero percent (0%) rate: (a) Export sales.- 'Export Sales' shall mean: XXX XXX XXX (4) Transactions considered export sales under Executive Order No. 226, otherwise known as the Omnibus Investments Code of 1987, and other special laws. � 'Considered export sales under Executive Order No. 226' shall mean the Philippine port F.O.B. value determined from invoices, bills of lading, inward letters of credit, landing certificates, and other commercial documents, of export products exported directly by a registered export producer, or the net selling pi-ice of export products sold by a registered export producer to another export producer, or to an export trader that subsequently exports the same; Provided, That sales of export products to another producer or to an export trader shall only be deemed export sales when actually exported by the latter, as evidenced by landing certificates or similar commercial documents; Provided, further, That without actual exportation, the following shall be considered constructively exported for purposes of these provisions: (1) sales to bonded manufacturing warehouses of export-oriented manufacturers; (2) sales to export processing zones; (3) sales to registered export traders operating bonded tradmg warehouses supplying raw materials in the manufacture of export~

DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 17 of33 products under guidelines to be set by the Board in consultation with the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC); (4) sales to diplomatic missions and other agencies and/or instrumentalities granted tax immunities, of locally manufactured, assembled or repacked products whether paid for in foreign currency or not. XXX XXX XXX (b) Sales to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects such sales�to zero rate. XXX XXX XXX SEC. 4.108-5. Zero-Rated Sale o(Services. - XXX XXX XXX (b) Transactions Subject to Zero Percent (0%) VAT Rate. -The following services performed in the Philippines by VAT-registered persons shall be subject to zero percent (0%) rate: XXX XXX XXX (3) Services rendered to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects the supply of such services to zero percent (0%) rate; (Emphasis supplied) One of the special laws mentioned in the above provisions, which specifically applies to this case, is R.A. No. 7916, as amended by R.A. No. 8748, otherwise known as "The Special Economic Zone Act of 1995". Sections 8. and 24 thereof provide as follows: SEC. 8. ECOZONE to be Operated and Managed as Separate Customs Territory. - The ECOZONES shall be managed and operated by the PEZA as separate customs territory. The PEZA is hereby vested with the authority to issue certificates of origin for products manufactured or processed in each ECOZONE in accordance with the prevailing rules of origin, and the pertinent regulations of the Department of Trade and Industry and/or the Department of Finance." XXX XXX XXX SEC. 24. Exemption from National and Local Taxes. - Except for real property taxes on land owned by developers, no taxes, local and national, shall be imposed on business establishments operating within the ECOZONE. xxx (Emphasis supplied) 1

DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 18 of33 Since the ecozone is viewed as a foreign territory by legal fiction, sales of goods and services J?ade by a VAT-registered person in the Philippine customs territory to an entity registered and operating within the ecozone are considered exports to a foreign country subject to zero percent VAT. This was elucidated by the Supreme Court in the case of Commissioner of Internal Revenue vs. Toshiba Information Equipment (Phils.), Inc., 81 to wit: This Court agrees, however, that PEZA-registered enterprises, which would necessarily be located within ECOZONES, are VAT- exempt entities, not because of Section 24 of Rep. Act No. 7916, as amended, which imposes the five percent (5%) preferential tax rate on gross income of PEZA-registered enterprises, in lieu of all taxes; but, rather, because of Section 8 �of the same statute which establishes the fiction that ECOZONES are foreign territory. xxx An ECOZONE or a Special Economic Zone has been described as - ... [S]elected areas with highly developed or which have the potential to be developed into agro-industrial, industrial, tourist, recreational, commercial, banking, investment and financial centers whose metes and bounds are fixed or delimited by Presidential Proclamations. An ECOZONE may contain any or all of the following: industrial estates (IEs), export processing zones (EPZs), free trade zones and tourist/recreational centers. The national territory of the Philippines outside of the proclaimed borders ofthe ECOZONE shall be referred to as the Customs Territory. Section 8 of Rep. Act No. 7916, as amended, mandates that the PEZA shall manage and operate the ECOZONES as a separate customs territory; thus, creating the fiction that the ECOZONE is a foreign territory. As a result, sales made by a supplier in the Customs Territory to a purchaser in the ECOZONE shall be treated as an exportation from the Customs Territory. Conversely, sales made by a supplier from the ECOZONE to a purchaser in the Customs Territory shall be considered as an importation into the Customs Territory. - Given the preceding discussion, what would be the VAT implication of sales made by a supplier from the Customs Territory to an ECOZONE enterprise? The Philippine VAT system adheres to the Cross Border Doctrine, according to which, no VAT shall be imposed to form part of the cost of goods destined for consumption outside of the territorial border of the taxing authority. Hence, actual export of goods and services from the Philippines to a foreign country must be free of VAT; while, those destined for use or consumption within the Philippines shall be imposed with ten perQent (10%)82 VAT. (Emphasis supplied) 1 "' G.R. No. 150154, August 9, 2005. 82 Nowat12%VATrate.

DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 19 of33 Pursuant to Sections 106(A)(2)(a)(5) and 108(B)(3) of the NIRC of 1997, as amended, in order for a "considered export sale" to qualify for VAT zero-rating, the following essential elements must be present, to wit: 1. the sale was made by a VAT registered person; and, 2. there was a sale to an entity which is entitled to incentives under Executive Order No. (E.O.) 226, otherwise known as the Omnibus Investment Code of 1987, and other special laws. As for the first essential element, as earlier established, petitioner is a VAT-registered person. Relative to the second essential element, petitioner must present the following documents: � 1. proof of entitlement to zero-rating under the Omnibus Investment Code or other special laws; and, 2. the sales invoice (SI) �as proof of sale of goods or OR as proof of sale of services. As a corollary thereto, the supporting Sis or ORs must comply with the pertinent invoicing require~ents, containing all the required information under Section 113(A) and (B) of the NIRC of 1997, as amended, as implemented by Sections 4.113-1(A) and (B) ofRR No. 16-2005 and must be duly registered with the BIR as prescribed under Section 23 7, in relation to Section 238 of the NIRC of 1997, as amended. As proof of entitlement to zero-rating of its PEZA-registered clients, petitioner submitted PEZA Confirmation dated October 25, 2023,83 and PEZA Certifications and Certificates of Registration showing that its clients, namely, Epson Precision (Philippines), Inc.,84 Taganito HPAL Nickel Corporation,85 Toshiba Information Equipment (Philippines), Inc.86 and EMS Land Services, Inc.,87 are PEZA-registered entities and entitled to VAT zero-rating for FY 2021. I 83 Exhibits ICPA PEZA-1 to ICPA PEZA-1.1, USB (submitted on November 8, 2023). 84 Exhibits ICPA PEZA-2.1 to ICPA PEZA-2.6, USB (submitted on November 8, 2023). 85 Exhibits ICPA PEZA-2.7 to ICPA PEZA-2.11, USB (submitted on November 8, 2023). 86 Exhibits ICPA PEZA-2.12 to ICPA PEZA-2.19, USB (submitted on November 8, 2023). 87 Exhibits "P-15" and "P-15-a", Docket - Vol. I, p. 484 and Docket- Vol. 3, p. 1761, respectively.

DECISION CTA Case No.10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 20 of33 To prove its zero-rated sales to the aforementioned PEZA-registered entities, petitioner submitted th~ related ORs and Billing Invoices (Bls),88 and the Summary List of Sales (SLS) attached to the amended Quarterly VAT Retums,89 which were examined by the Court-commissioned ICPA. Based on the ICPA's examination, out of the P330,538,581.23 90 declared zero-rated sales to PEZA-registered entities, only the amount of P329,773,337.21 91 were properly supported. The difference of P765,244.0292 was verified and attributed by the ICPA to the following items: Summary of noted differences ICPA Report Amount Reference93 ! Schedule of Difference in Amount in the Reported SLS Y~. j..... .!.\.~~.~:;t!Q!3:~C1.'!!<?~~rz.t. rf!Pf?~.rf!c!Pe._~..�?�..!~Yrz4f!~.~tctJe._cl) ...!...... Annex E p ),?????9?::3�: ! Schedule of Overreporting of Sales in the Reported SLS \ Y.~ !.\~!Y.~!Q!3:~ {{:lf!!�?LtJ!J Tf!Pi?~!<':.cfl?e._~ �?� [!! PY<!f'�!c:t!<':.cl) .' Annex E.I , (?:3�,:3?�:�:3) i ! Schedule of Unidentified Sales Entries in the SLS Report Annex E.3 ! i ({:/'!!Pl!rzt~e.pgr_te._c{pe.~ �?�i�PY<!t!!tqJe.ciL : J (1' 102,086.57) �Nt!! A~J~~!~~!l! !~ ~t!E~:g~!~~ ~~~~~ Pt!~ !~~AY~Eifi~~!i~!J: J (P 765,244.02) ' i PA SQI-7", "!CPA SQ2-1" to "!CPA SQ2-9", "!CPA SQ3-1" to "!CPA SQ3-12" and "ICPA-4-1" to "ICPA SQ4-11" with Sub-Exhibits "ICPA SQl-1.1" to ICPA SQl-7.1", "ICPA SQ2-l.l" to ICPA SQ2-9.5", "ICPA SQ3-l.l" to ICPA SQ3-12.2" and "ICPA SQ4-1.1" to ICPA SQ4-11.2", Annexes C to CJ, USB (submitted on November 8, 2023). 89 Exhibits "P-4" to "P-4-c", Docket- Vol. III, pp. 1374 to 1376, 1389 to 1391, 1412 to 1414 and 1433 to 1435. 90 Zero-Rated Sales to PEZA-registered entities declared per VAT returns/SLS: Quarterly VAT Returns Period Monthly Details Total Reference/SLS ~-- J!~l! ~.1: :ttl~il �� - �� L f Exhibit "P-4", Docket- Vol. III, ! pp. 1374 io 1376 10 [Jl!IY~Q~Q . f r r }I,?I?,?6.?,1? " """" [~;,~;~~~;,_ !i1Ui f~)~)~ ! Exhibit"P-4-a", Docket- Vol. P 5,452,795.0 Vo=t �:::::::: .. ?3A?6..Q~6.}?) 9.(j,?}I,?9.}.:~9 Exhibit "P-4-c", Docket- Vol. 4th Quarter �� 1'..?..4,.7.7~,.?.41.: III, pp. 1433 to 1435 32,259,294. 149,002,638.42 91.964:801. I<:t~lll~~J:I:l~~ll!~~~lll~s P~tYAT~~!'!Til~!~.l.:.~ ' p 330,538,581.23 91 Zero-Rated Sales to PEZA-registered entities as accounted by ICPA: . ICPA Report Reference<al � .PEZA sales � Annex C l ? ??A4?.,4??:?9 : Allll~?C g.J : ?},??4,919,9? : 95,391,730.77 i , Annex C.2(b) �� i48;250j37.76 1\~~~~C:Jic) ' Total P 329,773,337.21 (a) USB submitted on November 8, 2023 (b) Total off'96,678,360.88 less total sales to TPSC Engineering Malaysia of PI ,286,630. I I (c) Total ofP149,209,523.36 less total sales to TPSC Engineering Malaysia ofP959,385.60 92 P330,538,581.23 declared sales to PEZA-registered entities less P329, 773,337.21 sales to PEZA- registered entities as accounted by ICPA. 93 USB (submitted on November 8, 2023).

DECISION CTA Case No.. l0995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 21 of33 As aptly found by the ICPA,94 the zero-rated sales reported in the VAT retums/SLS were net of withholding taxes, while the zero-rated sales reflected in the ORs were stated in gross amounts, resulting in differences totaling Pl,275,209.38. Hence, considering that the amount of zero-rated sales ofP1,275,209.38 was covered by VAT zero-rated ORs, albeit excluded from the VAT return/SLS, the same shall be considered as part of the total zero-rated sales for the period. On the other hand, the amounts of P938,366.83 and P1, 102,086.57 or a total of P2,040,453.40 shall be denied VAT zero-rating as the said amounts pertain to sales unsupported by VAT zero-rated ORs. Moreover, further verification reveals that the sales to Toshiba Information Equipment Phils. Inc. in the amount of P885,268.00 (i.e., OR No. 0000516),95 although not reported in the VAT return/SLS,96 was determined to be VAT zero-rated and properly substantiated by VAT zero- rated OR.97 As such, the same shall be considered as VAT zero-rated sales for purposes of computation. The Court further notes that the following alleged zero-rated sales, with an aggregate amount of Pl13,130,550.48, must be disallowed for failure to indicate the nature of services in the supporting VAT ORs: Customer Name OR No.98 Exhibit No.99 Amount in PhP l �p~(?~ :PE~~~~i(?P:(Phil~)JP:<::: .. �� + 0000313 L''I~PA �QJ~}'' ..... ~,24.~,909:99 ' �M�~~J;t.q�~EYi~~~,JJ;t.~:�� \ 000050? mC ''I~:PA�Q~~l:' L �� .,900:99 � I~g~~~~<?H.:PA1Ni~k~L~<?1J?.()E~~~<?~ .. ...... :m QQQO?O? , ''I~J'.A �Q~~4:' J 4,44Q,Q99:00.: I()~h:~l:>~!~f<?.~~!~()J;t.�ql!iP~~J;t.!:Ph}I~:JP:~: t OOOO?Q2 , ''J~:PA�Q~~?'' 1 ...... 14,02?,~1~:09! gTJa?g~a2n~i~t~o~~HIP~Ai2L~cN~hicik!~eil XC~~o-r=noration 0000090o5$1i1~ ! "~I~Cx�P~!A.\S$gQ~~2?-.6;"; 969,545.32 : I : l J;I$9:9�.9:991 I : 17,556,343.50 ' Toshiba Information Equipment Phils. Inc. � 0000513 . "ICPA SQ2-8" l t gJ?~9~~i~~i~i2~(~hU~5j~~- l oooo$1 $ : ~~i�p!\$Q~~?.'~ l 19:9~?;�~~:~9 i l T?s.~!~~ !I1f()~~~igl1_~q~iP!Il~I1~ ~hi!s.:l.l11?: 1 ~~ L 0000523 ..... l '~J~:PA �Q?.::~''. ~~:hr~~1~1~irii~~~rii[q~1~~~�~t.Phii�~�-��t.~~�-� � � ~3,}4.�.,:3}4]4 i � �~� � �~.~.~.~.$~$� � � � � �: :.:t~~~ �� ~4:~t.~:.$4i:i�� ' �p~~!l. RE~<?.~~~9!1. C:Phn~2JP:~: . oooo 53 Q , ~I~PA ............J,:3l?,Q9Q:09 i l� � : $��Q44=~.r:4:�'��'��: li~g~~~~<?.H.:PA~N~~k<?.!~<?.EP<?.~~~i()l} ........ + 000053? , ''I.~:PA�Q4~?'' J....... 19,)??,94?:0~ 1 I~g~~i~<?.H.:PA~ N~~k~~ ~<?.IJ?.~E~!i()l} .m �� : oooo536 J ''I.~:PA�Q4~?'' ) 48o,ooo.oo Total i 113,130,550.48 94 Par. K.a., ICPA Report (Exhibit "P-24"), Docket- Vol. III, p. 1224. 7 95 Exhibit "ICPA SQ3-l", Annex C.2, USB (submitted on November 8, 2023). 96 Exhibit "P-4-b", Docket - Vol. III, pp. 1412 to 1414; See also Annex E.l, USB (submitted on November 8, 2023). 97 Exhibit "ICPA SQ3-l", Annex C.2, USB (submitted on November 8, 2023). 98 Annexes C to C.3, USB (submitted on N.ovember 8, 2023). 99 Id. 100 The total amount per the supporting Bls does not tally with the OR amount; hence, the said Bls and the nature of service indicated therein cannot be ascertained as actually pertaining to the amount per OR.

DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 22 of33 In sum, petitioner's adjusted zero-rated sales to PEZA-registered entities for FY 2021 amounted to P332,699,058.61, but out of the said sales, only the amount of P217,528,054.73 qualifies for VAT zero-rating under Sections 106(A)(2)(a)(5) and 108(B)(3) of the NIRC of 1997, as amended, as computed below: Reported zero-rated sales to PEZA entities p 330,538,581.23 1,275,209.38 1 Add: s~b~t~tiai~ct b~i~~~port~d ~~ro~rat~ct r !..............~.?..l~.~. P~r.!~RAm Subs~antiated but.unrepo~ed sale to. 1 1 ! 885 268 .00 I I2~h.I.~?.J~f9I"gi?.!!<?.~ �q~1P~~~! Ph.~I.~~J~~~ : ... ........................! ' . i }}~,~??,Q?~~�J I Total zero-:r~t~d sales to PEZA entities ...... J I ~~��: �?.1~~ <:l.~~~~<:l.YAI~~E9.:~~!i~g ............. j , .R~~!~P.A~~Y~E~~~?.!~<?.~ . : P ),Q4QA?J~49 L . I Per Court's further verification 113,130,550.48 115,171,003.88 lv~iirli~~~~R~t~ds~i~~ t~i>E:ZA~~titi~~ . 217,528,054.73 !P Thus, in compliance with the fourth requisite, only the said amount of P217,528,054. 73 pertaining to sales to PEZA-registered entities represents petitioner's valid zero-rated sales for FY 2021. Note that, for petitioner's zero-rated sales to PEZA-registered entities under Section 106(A)(2)(a)(5) and 108(B)(3) of the NIRC of 1997, as amended, the fifth requisite101 does not apply. To recapitulate, out of the total zero-rated sales for FY 2021 amounting to P334,945,559.73,102 only the amount of P217,528,054.73 represents petitioner's valid zero-rated sales for the same period comprising of its sales to PEZA-registered entities qualified for zero-rating. Sixth requisite: The input VAT being claimed do not appear to be transitional input taxes The claimed input taxes do not appear to be transitional input taxes, as understood under Section Ill (A) of the NIRC of 1997, as amended. Transitional input tax credit operates to benefit newly VAT-registered persons, whether or not they previously paid taxes in the acquisitions of their 1 rronoy oxohongo pmoood< hove boon duly oooounted fo' in aooonlanco with the rules and regulations of the BSP. p ~~.~4$.~9CiiJ 102 ,I<?.!~l?:.t:.~9.~.~~t~4.. �~Ic:~..f<?~. ~h.c: P.~ri.<:J.4..:.... . 332,699,058.61 ! : Zero-Rated sales to NRFC P 334,945,559.73 I J��~�~�~9.~.~.<lt.~.~..~.~.!~.~..!<?..I.'..~:0A.~.~.~g.i.~!t:.r.~.~..~.!!t.!!.i~~....... L..T<?t<ll.:Z.:.~.r.<?.~~.~~t:c.!..�<ll~~f()~..!ht:..P~r.igc.!...... .

DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue beginning inventory of goods, materials and supplies. During the period of transition from non-VAT to VAT status, the transitional input tax credit serves to alleviate the impact of the VAT on the taxpayer. 103 Since there is no showing that the above-stated input VAT are transitional input VAT, the sixth requisite is likewise fulfilled. Seventh requisite: A portion of the input taxes being claimed we~e due or paid Anent the seventh requisite, it is of fatal importance for petitioner to provide supporting documents to prove that the input taxes claimed were actually due or paid in accordance with Section 11 O(A) of the NIRC of 1997, as amended, as implemented by Sections 4.110-1 to 4.110-3 and 4.110-8 ofRR No. 16-2005, as amended. In order to prove entitlement to credits for input taxes due or paid, petitioner's claimed input taxes must be evidenced by VAT invoices (for domestic purchases of goods) or ORs (for domestic purchases of services) issued in accordance with the invoicing requirements under Sections 113(A) and (B), 237 and 238 of the NIRC of 1997, as amended, as implemented by Section 4.113-1(A) and (B) ofRR No. 16-2005. In sum, petitioner must not only present the supporting documents prescribed under Section 4.110-8 ofRR No. 16-2005, but more importantly, these documents must also comply with the invoicing requirements under Sections 113(A) and (B), 237 and 238 of the NIRC of 1997, as amended, as implemented by Section 4.113-l(A) and (B) of RR No. 16-2005, as amended. In the present case, petitioner claims for refund the input VAT credits amounting to P25,109,019.62 for FY 2021, pertaining to current transactions, particularly, purchase of capital goods, domestic purchases of goods other than capital goods and domestic purchases of services, to wit: ' 103 Fort Bonifacio Development Corporation vs. Commissioner of Internal Revenue, G.R. Nos. 158885 and 170680, April 2, 2008.

DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissir:mer ofInternal Revenue Page 24 of 33 . FY 2021 First Quarter Second Quarter Third Quarter Fourth Quarter Total Exhibit "P-4") 104 (Exhibit "P-4-a") 105 (Exhibit "P-4-b") 106 (Exhibit "P-4-c"\ 107 p 1??}?7:1~ ! Input Tax on Purchase I J I_ p _125.25].14 of Capital Goods ~~~~~~ing~JMiiJiC?!l L ............ )�� Input Tax on Purchase � of Capital Goods not i I ..........2.....1.....5.....,...8.....3.....5........5.....5..........r�� P��1��7��4��,��5��6��1��.��3��4��1�� i P 23,52o.oo 413,916.89 i exceeding PI Million .. �� .. �� --~�� ...., Input Tax on Domestic I Purchases of Goods I Other than Capital r ??.?.,?}}}~ L .... ~,?.P?~J??:?? L.. },??~,}(J.Q}?.J ... ~&?.?~~1?:�4 .;.. ~~.9~?)??.7:?.9 ' Goods i"'' Input Tax on Domestic !, : Purchases of Services ! 1,268,561.39 3,459,534.77 2,334,868.92 5,447,882.61 12,510,847.69 ., ~ P 8,538,916.01 P 6,064,190.65 P 8,369,818.25 P25,109,019.62 i Total P 2,136,094.71 In support of its claimed input VAT, petitioner submitted various invoices, ORs and other related� documents, 108 which were examined by the ICPA. Based on the findings of the ICPA, input VAT amounting to P667,414.74 shall be disallowed for the following reasons: I Reference (from) I ICPA findings Input Tax . ICPA Rep_ort109 . r <5<57~?64:9} Annex G ' Schedule of amounts claimed in SLP with no 50.50 0.21 ,... AP.l1~~-G:4 ( ~Y.PP9~if1g <:i~:JgY.!l:l~l1!~ p 667,414.74 l 1 Schedule of amol!nt differences between actual source J <:l~:J~Y!l:l~l1~ ~l1<:1 �.1.:-? (Qy~rr~P9~ip.g) ! Calculation difference Total Disallowance ICPA Verificatio In addition, further verification reveals that input VAT amounting to P3,592,868.08 shall likewise be "disallowed for reasons stated below: Exhibit No Supplier Name Input VAT Purchases of goods/services supported by invoices/DRs but some or all relevant details are unreadable j "ICPA G-1" CLEAN FUEL AUTOGAS INC p 233.57 ' "ICPA G-2" CLEAN FUEL AUTOGAS INC 246.43 "ICPA G-3" MANILA KLEAN FUEL CORPORATION ,......... 154.10 214.29 "ICPA G-4" MAGALLANES MANAGEMENT CORPORATION "ICPA G-6" MAGALLANES MANAGEMENT CORPORATION 214.29 "ICPA G-7" MAGALLANES MANAGEMENT CORPORATION ..... 214.29 "ICPA G-8" MAGALLANES MANAGEMENT CORPORATION 214.29 I 104 Docket- Vol. III, at p. 1367. ~I 105 Docket- Vol. III, at p. 1380. 1�6 Docket-Vol.IIT,atp.1403. 107 Docket- Vol. III, at p. 1424. 108 Exhibits "ICPA P-1" to "ICPA P-1316..1" and "ICPA G-1" to "ICPA G-68", Annexes F to FA and G.2, USB (submitted on November 8, 2023). 109 USB (submitted on November 8, 2023). -----------

DECISION CTA Case No.l0995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 25 of33 F:xhihit No. Supplier Name Input VAT "ICPA G-9" MAGALLANES MANAGEMENT CORPORATION 121.05 "ICPA G-10" "ICPA G-11" MAGALLANES MANAGEMENT CORPORATION 160.71 "ICPA G-12" "ICPA G-13" MAGALLANES MANAGEMENT CORPORATION 153.71 "ICPA G-14" "ICPA G-15" MAGALLANES MANAGEMENT CORPORATION 223.29 "ICPA G-16" "ICPA G-17" MAGALLANES MANAGEMENT CORPORATION 128.57 "ICPA G-18" "ICPA G-19" MAGALLANES MANAGEMENT CORPORATION 128.57 "ICPA G-20" "ICPA G-21" MAGALLANES MANAGEMENT CORPORATION 151.01 "ICPA G-22" "ICPA G-23" MAGALLANES MANAGEMENT CORPORATION 199.11 "ICPA G-24" "ICPA G-25" MAGALLANES MANAGEMENT CORPORATION 153.47 "ICPA G-26" "ICPA G-27" MAGALLANES MANAGEMENT CORPORATION 128.57 "ICPA G-28" "ICPA G-30" MAGALLANES MANAGEMENT CORPORATION 97.81 "ICPA G-31" "ICPA G-32" MAGALLANES MANAGEMENT CORPORATION 133.76 "ICPA G-33" "ICPA G-35" MAGALLANES MANAGEMENT CORPORATION 147.86 "ICPA G-36" "ICPA G-37" MAGALLANES MANAGEJy1:"�NT CORPORATION 125.48 "ICPA G-38" "ICPA G-39" MAGALLANES MANAGEMENT CORPORATION 126.06 "ICPA G-40" "ICPA G-41" MANILA KLEAN FUEL CORPORATION 98.51 "ICPA G-42" "ICPA G-43" MANILA KLEAN FUEL CORPORATION 166.37 "ICPA G-44" "ICPA G-45" MANILA KLEAN FUEL CORPORATION 160.72 "ICPA G-46" "ICPA G-48" MANILA KLEAN�FUEL CORPORATION 165.57 "ICPA G-49" "ICPA G-50" MANILA KLEAN FUEL CORPORATION 137.97 "ICPA G-51" "ICPA G-52" MANILA KLEAN FUEL CORPORATION 170.05 "ICPA G-53" "ICPA G-54" MANILA KLEAN FUEL CORPORATION 109.85 "ICPA G-55" "ICPA G-56" MANILA KLEAN FUEL CORPORATION 173.10 "ICPA G-57" "ICPA G-58" MAGALLANES MANAGEMENT CORPORATION 214.29 "ICPA G-59" "ICPA G-60" MANILA KLEAN�FUEL CORPORATION !�� 156.79 "ICPA G-61" MANILA KLEAN FUEL CORPORATION 175.33 "ICPA G-64" "ICPA G-65" MANILA KLEAN FUEL CORPORATION 150.91 CLEAN FUEL AUTOGAS INC 214.33 MANILA KLEAN FUEL CORPORATION 142.10 MANILA KLEAN FUEL CORPORATION 167.79 MANILA KLEAN�FUEL CORPORATION 160.92 MANILA KLEAN FUEL CORPORATION 113.82 MAGALLANES MANAGEMENT CORPORATION 260.21 MAGALLANES MANAGEMENT CORPORATION 214.29 MAGALLANES MANAGEMENT CORPORATION 214.29 MAGALLANES MANAGEMENT CORPORATION 214.29 MAGALLANES MANAGEMENT CORPORATION 139.80 MANILA KLEAN FUEL CORPORATION 160.71 MANILA KLEAN FUEL CORPORATION 160.71 MANILA KLEAN FUEL CORPORATION 107.14 MANILA KLEAN FUEL CORPORATION 192.86 MANILA KLEAN FUEL CORPORATION 160.71 MANILA KLEAN �FUEL CORPORATION 240.83 MANILA KLEAN FUEL CORPORATION 160.17 MANILA KLEAN FUEL CORPORATION 160.71 MANILA KLEAN FUEL CORPORATION 120.95 MANILA KLEAN FUEL CORPORATION 209.24 MANILA KLEAN FUEL CORPORATION 107.14 MANILA KLEAN -FUEL CORPORATION 175.40 MAGALLANES MANAGEMENT CORPORATION 136.69 MAGALLANES MANAGEMENT CORPORATION 192.41 MAGALLANES MANAGEMENT CORPORATION 214.29 I

DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 26 of33 Exhibit No. Supplier Name Input VAT "ICPA G-66" MAGALLANES MANAGEMENT CORPORATION "ICPA G-67" MAGALLANES MANAGEMENT CORPORATION "ICPA G-68" MANILA KLEAN FUEL CORPORATION "ICPA P-91" CONIC INDUSTRIAL SUPPLY CENTER INC "ICPA P-92" CONIC INDUSTRIAL SUPPLY CENTER INC "ICPA P-93" CONIC INDUSTRIAL SUPPLY CENTER INC "ICPA P-94" PUYAT STEEL CORPORATION "ICPA P-95" PUYAT STEEL CORPORATION "ICPA P-96" CONIC INDUSTRIAL SUPPLY CENTER INC "ICPA P-106" S POWER CORPORATION "ICPA P-107'' S POWER CORPORATION "ICPA P-108" S POWER CORPORATION "ICPA P-167" S POWER CORPORATION "ICPA P-171" JOB STREET "ICPA P-199" MACHINEBANKS CORPORATION "ICPA P-200" JOBSTREET COM PHILIPPINES INC "ICPA P-201" GLOBE TELECOM INC , PHELPS DODGE PHILIPPINES ENERGY "ICPA P-210" i PRODUCTS 131 PHELPS DODGE PHILIPPINES ENERGY "ICPA P-211" PRODUCTS "ICPA P-227" GLOBE TELECOM INC "ICPA P-252" ANSON EMPORIUM CORPORATION "ICPA P-255" ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,+,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, "ICPA P-271" CIM TECHNOLOGIES INC ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,;,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ACCUBEND INCORPORATED "ICPA P-275" S POWER CORPORATION "ICPA P-280" GLOBE TELECOM INC "ICPA P-281" GLOBE TELECOM INC "ICPA P-291" S POWER CORPORATION "ICPA P-292" ARNEL M ;,,,,,,,,,,,,,,,,,, "ICPA P-293" ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ARNEL M "ICPA P-294" VERIDIAN ENTERPRISES "ICPA P-295" ACCUBEND INCORPORATED "ICPA P-296" ACCUBEND INCORPORATED""""""""'"'"""""'"'""""'"'"'""'"""'""'"""""""""""""'"'""' , "'"'""""""'"" "ICPA P-299" S POWER CORPORATION "ICPA P-300" S POWER CORPORATION "ICPA P-301" S POWER CORPORATION "ICPA P-302" YALE HARDWARE CORPORATION "ICPA P-303" YALE HARDWARE CORPORATION "ICPA P-328" S POWER CORPORATION "ICPA P-329" ! S POWER CORPORATION 5,278.10 "ICPA P-335" ACCUBEND INCORPORATED 16.43 "ICPA P-336" ACCUBEND INCORPORATED 1~1?7~14 "ICPA P-337" ACCUBEND INCORPORATED ,,,, ''"'' '" ',,,,,,,, 16,392. __ "ICPA P-338" ACCUBEND INCORPORATED '"" "'' '' 8,042 14 "ICPA P-339" TOOLEC INC 31,522.50 "ICPA P-340" TOOLEC INC ~~}?Q~?? "ICPA P-341" ANSON EMPORIUM CORPORATION I ,553.57, "ICPA P-342" ANSON EMPORIUM CORPORATION , 8,164.29 "ICPA P-352" ABENSON VENTURES INC , 2,335.50 "ICPA P-367" E WHA FOAM PHILIPPINES INC 23,785.71 "ICPA P-406" ACCUBEND INCORPORATED l ??~485.36 l

DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 27 of33 Exhibit No. Supplier Name ; Input VAT : "ICPA P-426" FIRST CHOICE INDUSTRIAL SAFETY :. "ICPA P-442" CORPORATION "ICPA P-443" MACHINE AND COMPUTER WORLD INC 5,598.21 "ICPA P-444" S POWER CORPORATION "ICPA P-545" S POWER CORPORATION 3,664.29 "ICPA P-586" S POWER CORPORATION "ICPA P-587" S POWER CORPORATION 1,665.21 "ICPA P-592" S POWER CORPORATION "ICPA P-642" S POWER CORPORATION 2,079.79 "ICPA P-643" S POWER CORPORATION "ICPA P-644" S POWER CORPORATION 78,843.82 ; "ICPA P-655" S POWER CORPORATION 82,078 : "ICPA P-656" ISO-LUX INDUSTRIAL SALES "ICPA P-661" ISO-LUX INDUSTRIAL SA LFS 12,315.56 "ICPA P-664" ISO-LUX INDUSTRIAL SALES "ICPA P-665" S POWER CORPORATION 1,577.52 "ICPA P-697" S POWER CORPORATION "ICPA P-736" ISO-LUX INDUSTRIAL SALES 167.95 "ICPA P-73 7" ISO-LUX INDUSTRIAL SALES "ICPA P-739" ISO-LUX INDUSTRIAL SALES 6,267.96 "ICPA P-740" S POWER CORPORATION "ICPA P-760" S POWER CORPORATION 2,266}7 "ICPA P-761" ISO-LUX INDUSTRIAL SALES "ICPA P-762" ISO-LUX INDUSTRIAL SALES 262.50 "ICPA P-763" ISO-LUX INDUSTRIAL SALES "ICPA P-764" ISO-LUX INDUSTRIAL SALES 13,602.22: "ICPA P-765" ISO-LUX INDUSTRIAL SALES "ICPA P-766" ISO-LUX INDUSTRIAL SALES 3,842.95 : "ICPA P-773" ISO-LUX INDUSTRIAL SALES "ICPA P-774" ISO-LUX INDUSTRIAL SALES 14,561.46 "ICPA P-775" ISO-LUX INDUSTRIAL SALES "ICPA P-784" ISO-LUX INDUSTRIAL SALES 213,750.00\ "ICPA P-785" ISO-LUX INDUSTRIAL SALES "ICPA P-792" ISO-LUX INDUSTRIAL SALES 9,456.35 "ICPA P-793" ISO-LUX INDUSTRIAL SALES "ICPA P-794" ISO-LUX INDUSTRIAL SALES 2,349.90 "ICPA P-795" ISO-LUX INDUSTRIAL SALES "ICPA P-796" ISO-LUX INDUSTRIAL SALES 3,349.5Q "ICPA P-797" ISO-LUX INDUSTRIAL SALES "ICPA P-798" ISO-LUX INDUSTRIAL SALES 8,977.50 "ICPA P-802" ISO-LUX INDUSTRIAL SALES "ICPA P-812" S POWER CORPORATION 969.15 "ICPA P-813" S POWER CORPORATION "ICPA P-814" S POWER CORPORATION 5,041 "ICPA P-815" ISO-LUX INDUSTRIAL SALES "ICPA P-816" ISO-LUX INDUSTRIAL SALES 631.07 "ICPA P-817" ISO-LUX INDUSTRIAL SALES �� "ICPA P-818" ISO-LUX INDUSTRIAL SALES "ICPA P-819" ISO-LUX INDUSTRIAL SALES 261.59 "ICPA P-820" ISO-LUX INDUSTRIAL SALES "ICPA P-827" ISO-LUX INDUSTRIAL SALES 330.80 ISO-LUX INDUSTRIAL SALES 1,323.21 2;442:86, 10,560.27 I 806.40 : 223.93 2, 748.21 3 104.46 : �� 3,715.18 3,470.89 i 3,847.50 977.14 439.71 �� 872.81 269.73 l 990.37 : 32,087.43 15,637.99 : 29,787.59 21,,3634�0�.� � � � � � � � � 3,206.25 661.61 661.6i 6,107.14 7,357:97.. 661.61 \

DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 28 of33 Exhibit N -- :- - ----=----~ Suoolier N�_c�---,_- I -=- VAT:___ ....- ~--:....= "ICPA P-831" ISO-LUX INDUSTRIAL SALES ~- "ICPA P-850" S POWER CORPORATION "ICPA P-851" S POWER CORPORATION .2,514:JJ 10,714.2? 2,711.57 "ICPA P-852" S POWER CORPORATION 4,395.10 "ICPA P-853" S POWER CORPORATION 10,714.29 "ICPA P-905" ISO-LUX INDUSTRIAL SALES 2,859 16 "ICPA P-939" ISO-LUX INDUSTRIAL SALES 11,842.7 "ICPA P-940" ISO-LUX INDUSTRIAL SALES 2,585.36 "ICPA P-957" ISO-LUX INDUSTRIAL SALES 671.79 "ICPA P-958" ISO-LUX INDUSTRIAL SALES 1,282.50 "ICPA P-1 045" ACCUBENDINCORPORATED 1,928.57 PHELPS DODGE PHILIPPINES ENERGY "ICPA P-1072" PRODUCTS 94,821.43 "ICPA P-1155" ACCUBEND INCORPORATED 7,328.57 "ICPA P-1156" ACCUBEND INCORPORATED 2,748.21 "ICPA P-1157" ACCUBENDINCORPORATED 1,526.79 CONCEPCION CARRIER AIR CONDITIONING "ICPA P-1210" COMPANY 116,100.00 "ICPA P-1233" LAGUNA AUTO INDUSTRIAL BEARING INC 1,859.34 CONCEPCION CARRIER AIR CONDITIONING "ICPA P-1259" COMPANY i 12,000.01 Purchases ofgoods/services supported by VAT invoices/DRs with alterations on date and/or VAT amount but the countersignatures are not ascertained as belonging to the authorized sig">~~ary therein "ICPA P-17'' CONIC INDUSTRIAL SUPPLY CENTER INC 2,550.0j, "ICPA P-60" AZBIL PHILIPPINES CORPORATION 3,681.67 "ICPA P-89" SIA SY, JEFFERSON D 750.00 "ICPA P-175" SIA SY, JEFFERSON D �� 2,192.14 "ICPA P-213" ISO-LUX INDUSTRIAL SALES 5,507.14 "ICPA P-313" ISO-LUX INDUSTRIAL SALES 384.00' "ICPA P-314" ISO-LUX INDUSTRIAL SALES 2,989.87 "ICPA P-315" ISO-LUX INDUSTRIAL SALES 1,612.81 "ICPA P-316" ISO-LUX INDUSTRIAL SALES 5,512.50 "ICPA P-317" ISO-LUX INDUSTRIAL SALES 4,115.26 "ICPA P-318" ISO-LUX INDUSTRIAL SALES 27,844.4: "ICPA P-474" ISO-LUX INDUSTRIAL SALES 26s:23l "ICPA P-475" ISO-LUX INDUSTRIAL SALES 739.20 "ICPA P-476" ISO-LUX INDUSTRIAL SALES "ICPA P-477" ISO-LUX INDUSTRIAL SALES 5,697.8~1 467.14 "ICPA P-496" ISO-LUX INDUSTRIAL SALES 2,278.50 "ICPA P-615" ISO-LUX INDUSTRIAL SALES 756.00 "ICPA P-626" ISO-LUX INDUSTRIAL SALES �� "ICPA P-627" ISO-LUX INDUSTRIAL SALES 1,512.00 ................................. . ..... 1,575.00 "ICPA P-628" ISO-LUX INDUSTRIAL SALES 8,455.12 13,858.11 "ICPA P-629" ISO-LUX INDUSTRIAL SALES i 31,400.36 : "ICPA P-634" CONIC INDUSTRIAL SUPPLY CENTER INC "ICPA P-635" CONIC INDUSTRIAL SUPPLY CENTER INC 12,876.43 "ICPA P-636" CONIC INDUSTRIAL SUPPLY CENTER INC 660.00 "ICPA P-637" ISO-LUX INDUSTRIAL SALES 1,324.0: "ICPA P-638" ISO-LUX INDUSTRIAL SALES .............. 1,575.00 "ICPA P-653" ISO-LUX INDUSTRIAL SALES 1,501.50 "ICPA P-654" ISO-LUX INDUSTRIAL SALES 11,631.9QJ \

DECISION CTA Case No. I0995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 29 of33 . Rxhibit No. Supplier Name Input VAJ "ICPA P-662" ISO-LUX INDUSTRIAL SALES 3,857 14 "ICPA P-698" ISO-LUX INDUSTRIAL SALES 1,056.30 "ICPA P-699" ISO-LUX INDUSTRIAL SALES 6,360.90 "ICPA P-700" ISO-LUX INDUSTRIAL SALES 2,883.30 "ICPA P-70 1" ISO-LUX INDUSTRIAL SALES 7,773.15 "ICPA P-702" ISO-LUX INDUSTRIAL SALES 1,244.25 "ICPA P-703" ISO-LUX INDUSTRIAL SALES 9,8Q4.46 "ICPA P-704" ISO-LUX INDUSTRIAL SALES 2,687.47 "ICPA P-715" ISO-LUX INDUSTRIAL SALES 17,438.40 "ICPA P-716" ISO-LUX INDUSTRIAL SALES 8,63~~9? "ICPA P-880" ISO-LUX INDUSTRIAL SALES 1,628.57 "ICPA P-881" ISO-LUX INDUSTRIAL SALES 4,563.30 "ICPA P-882" ISO-LUX INDUSTRIAL SALES 23,895.21 "ICPA P-883" ISO-LUX INDUSTRIAL SAT .FS �4,529.4� "ICPA P-884" ISO-LUX INDUSTRIAL SALES 376.61 "ICPA P-885" ISO-LUX INDUSTRIAL SALES 8,816.68 "ICPA P-886" ISO-LUX INDUSTRIAL SALES 977.14 "ICPA P-896" ISO-LUX INDUSTRIAL SALES 3,552.32 "ICPA P-897" ISO-LUX INDUSTRIAL SALES 4,275.00 "ICPA P-903" ISO-LUX INDUSTRIAL SALES . 4,275.00 "ICPA P-904" ISO-LUX INDUSTRIAL SALES 778.66 "ICPA P-909" ISO-LUX INDUSTRIAL SALES 7,6is:96 "ICPA P-941" ISO-LUX INDUSTRIAL SALES 814.29 "ICPA P-959" ISO-LUX INDUSTRIAL SALES 977.14 "ICPA P-960" ISO-LUX INDUSTRIAL SALES 25,163.97 "ICPA P-967" ISO-LUX INDUSTRIAL SALES 895.71 "ICPA P-969" ISO-LUX INDUSTRIAL SALES 23,619.88 "ICPA P-970" ISO-LUX INDUSTRIAL SALES 4,936.61 "ICPA P-987" ISO-LUX INDUSTRIAL SALES 1,369.02 "ICPA P-988" ISO-LUX INDUSTRIAL SALES 3,715.18 "ICPA P-1153" ISO-LUX INDUSTRIAL SALES 5. 166.64 "ICPA P-1154" ISO-LUX INDUSTRIAL SALES 3,053.57 Purchases ofservices supported by VAT ORs but the nature ofservices was not indicated therein or cannot be verifiedfrom the referenced billing statements/invoices as the billing statements/invoices were either not submitted or have unreadable details "ICPA P-37" ENT PHILS INTERNATIONAL CORP 323,414.32 "ICPA P-40" MAXICARE HEALTHCARE CORPORATION 4,706,)9 "ICPA P-82" VOGCINC 147,535.71 "ICPA P-126" JAMES CONSTRUCTION 17,678.57 "ICPA P-188" ECOPY CORPORATION 1,232.14 "ICPA P-205" DHL EXPRESS PHILIPPINES CORPORATION 1,948.60 "ICPA P-206" ECOPY CORPORATION 1,288.71 "ICPA P-207" J P MARZAN PROJECT VENTURES INC 6,929.91 "ICPA P-208" EIDRIHT VA CORPORATION 1,23711 "ICPA P-209" EIDRIHT VA CORPORATION 12~}?~1J "ICPA P-235" J P MARZAN PROJECT VENTURES INC 4,166.10 "ICPA P-237" VOGC INC 227,678.57 "ICPA P-257" ECOPY CORPORATION ' 9,493.28 "ICPA P-262" INFINIVAN INC 1,800.00 "ICPA P-264" J P MARZAN PROJECT VENTURES INC 11,056.86 "ICPA P-283" J P MARZAN PROJECT VENTURES INC 7,200.00 "ICPA P-298" PHILIPPINE PIONEER FORWARDING 3,636.00 1

DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 30 of33 Exhibit No. Suoolier Name InoutVAT CORPORATION "ICPA P-633" MAXICARE HEALTHCARE CORPORATION "ICPA P-1 094" J P MARZAN PROJECT VENTURES INC "ICPA P-1120" J P MARZAN PROJECT VENTURES INC "ICPA P-1197" J P MARZAN PROJECT VENTURES INC "ICPA P-1 J P MARZAN PROJECT VENTURES INC ��,��m��'�� Purchase ofgoods supported by VAT invoice but the input VAT amount was not separately shown CONCEPCION CARRIER AIR CONDITIONING "ICPA P-44" COMPANY 1 Input VAT on purchase ofcapital goods claimed during FY 2021 but should be deferredfor ~~l!!!.':':~C:f!l!c!!f!gp�!1'_!'!4.~ �� om 132,053.57 110 , ''ICPA P-169" \ HUSSAR ENTERPRISES �. Total Disallowance P3,592,868.08 Thus, out of the total claimed input VAT of P25, 109,019.62, only the amount of P20,848,736.80, as computed below, represents petitioner's valid input VAT due or paid for FY 2021, in compliance with the seventh requisite: Total claimed input VAT p 667,414.7 p 25,109,019.62......., ..... .......... ........ ..... ................................................~... 3,592,868.08 � n:nnllowed input VAT 4,260,282.82 i Per ICPA verification p 20,848,736.80 l Per Court verification l Valid Input VAT Eighth requisite: A portion of the valid input VAT being claimed is attributable to zero-rated or effectively zero-rated sales. The eighth requisite is to the effect that the input taxes claimed are attributable to zero-rated or effectively zero-rated sales. However, where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes cannot be directly and entirely attributable to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume. For FY 2021, petitioner had zero-rated sales and VATable sales subject to 12% VAT, in the following amounts: ~ 110 ,G<?'P:P~!!'lti()f.l (){if.Ip~! Y!\I sl~f~II~clf()Eth~ ~l!c~~~clill:gP~ri<?ci: . ................. !()t<ll IJ1pl1tY!\T (p~~~has~ci Jl!]Y ?Q?Q) PJ5?,}57.14 j l Less: Input VAT amortized during FY 2021 (Pl55,357.14-:- 60 mo. i Est. life x 9 mos.(�l) 23,303.57 [)~p~ffAf ~~f~~~~4f~~ ih~ ~~~~~~~(~g P~d~~ p 132,053.57 (a) July 2020 to March 31, 2021

DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 31 of33 Total Zero-Rated p }}4,24?~??2~7:? Total VATable Sales 8,667,000.00 Total Sales p 343,612,559.73 Since petitioner's input VAT cannot be directly or entirely attributed to any of the transactions, the valid input VAT of P20,848,736.80 shall be allocated proportionately on the basis of the volume of its total sales, thus: Total VATable Sales for the period [ P 8,667,000.00 T 343,612,559.73 Divided by the Total Sales for the period .... ; 20;848;736.80 , itipii~dbyT~tal Vaiid Input VAT for the p~ri~cc�� .... p 525,871.35 ! ........................................................................................................................................ ~................................ ... .. . . . . ........................ T r334;945;559.731 T 343,612,559.73 : Y~~i~~~P~~Y~!~~l(.)~~t~~f.() Total VATtable Sales ' ............ 20,848,736.80, i Total Zero-Rated Sales for the period..................................................................................... P 20,322,865.45 : l Di~ided by the Total Sales for the period ....... 'M~ltipli~d by Total Valid Input VAT for the period l v~iirli~p~tvA:TA:ii~~~t~dt~T~t~iz~;~~R~t~ds~i~~ Thus, with regard to petitioner's compliance with the eighth requisite, only the amount of P20,322,865.45 represents its valid input VAT attributable to total zero-rated sales for FY 2021. Ninth requisite: The subject valid input taxes have not been applied against output taxes during a,nd in the succeeding quarters Having determined that petitioner had valid input VAT attributable to its zero-rated sales, this Court shall now determine whether the same was applied against its output VAT liability during and in the succeeding quarters, relative to the ninth requisite for the successful prosecution of an input VAT refund claim. The Supreme Court, in Chevron Holdings, Inc. (Formerly Caltex Asia Limited) vs. Commissioner of Internal Revenue,112 held that the input tax attributable to zero-rated sales, may at the option of the VAT-registered taxpayer, be: (1) charged against output tax from regular 12% VATable sales, and any unutilized or "excess" input tax may be claimed for refund or 111 T()t~l ~~t()~~~t~4 ~~l~~f()E!h~P~ri()q: 1 Rated sales to NRFC mo m� p ��f?~A~,?Ql~J�~�� p IJ~i~f~~i~;~~l~4t$~[~~~;ih;i~t~;;~4~~!i.!i~~ � . ;;~:~:~:~~::~~ � 112 G.R. No. 215159, July 5, 2022.

DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 32 of 33 � the issuance of tax credit certificate; or, (2) claimed for refund or tax credit in its entirety, and such option is vested with the taxpayer-claimant, to wit: Thus, the input tax attributable to zero-rated sales may, at the option of the VAT-registered taxpayer, be: (1) charged against output tax from regular 12% VAT-able sales, and any unutilized or 'excess' input tax may be claimed for refund of the issuance of tax credit certificate; or (2) claimed for refund or tax credit in its entirety. It must be stressed that the remedies of charging the input tax against the output tax and applying for �a refund or tax credit are alternative and cumulative. Furthermore, the option is vested with the taxpayer- claimant. xxx (Emphasis and underscoring supplied) In the present case, petitioner effectively chose the second option, that is, to claim for refund or issuance of tax credit certificate, the input VAT allegedly attributable to its zero-rated sales in the amount ofP25,109,019.62, in its entirety, without deduction of any output VAT liability. However, considering that petitioner was able to properly substantiate only the amount of P217,528,054. 73 out of its total zero-rated sales of P334,945,559.73, a shown below, only Pl3,198,543.05-representing its valid input VAT attributable to such valid zero-rated sales-is refundable: VAT attributable to Total Zero-Rated Sales p 20,322,865.45 Total Zero-Rated Sales 334,945,559.73 217,528,054.73 Valid Zero-Rated Sales Total Refundable Amount p 13,198,543.05 Moreover, although the claimed input VAT ofP25,109,019.62, which includes the refundable input VAT of P13,198,543.05, was carried-over by petitioner in its succeeding amended First Quarterly VAT Return for FY 2022, 113 the same remained unutilized as it was deducted as "VAT Refund/TCC claimed" 114 in the said amended First Quarterly VAT Return for FY 2022, thereby preventing the carry-over or application of such input taxes in the succeeding taxable periods. As such, petitioner is deemed to have fulfilled the ninth requisite for the grant of its claim for refund/tax credit of input VAT. l In fine, petitioner has sufficiently proven its entitlement to the refund or issuance of tax credit certificate in the amount of P13,198,543.05, 113 BIR Records (Exhibit "R-6"), pp. 194 to 195. 114 BIR Records (Exhibit "R-6"), Line 23D, p. 195.

DECISION CTA Case No. 10995 TPSC Philippines Corporation vs. Commissioner ofInternal Revenue Page 33 of33 representing its unutilized input VAT attributable to its zero-rated sales for FY 2021. ACCORDINGLY, the p~esent Petition for Review is PARTIALLY GRANTED. In view thereof, respondent is ORDERED TO REFUND or ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner, the amount of Pl3,198,543.05, representing the latter's unutilized input VAT attributable to its zero-rated sales for fiscal year 2021. SO ORDERED. ~~11'-~~-c co:RAroN� G. FERRER-FL6RES Associate Justice WE CONCUR: .. - ~. ~ ....,}- MA. BELEN M. RINGPIS-LIBAN Presiding Justice CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. ~.~)-- MA. BELEN M. RINGPIS-LIBAN Presiding Justice

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