CHEVRON HOLDINGS, INC. v. COMMISSIONER OF INTERNAL REVENUE

'\ REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION ********* CHEVRON HOLDINGS, INC. , CTA Case No. 8946 Petitioner, -versus - Members: DEL ROSARIO, P.J. , Chairperson. UY, and MINDARO-GRULLA, JJ. COMMISSIONER OF INTERNAL Promulgated: ~ - - - -- -X MAF'c ~ REVENUE, Respondent. ~~ - X - - -- -- - - - -- -- - - - - - - - -- - -- -- - DECISION UY, J.: This is a Petition for Review1 filed on December 15, 2014 by Chevron Holdings, Inc. against the Commissioner of Internal Revenue to seek the refund or issuance of tax cred it certificate (TCC) of the amount of P32 ,400,108.14, allegedly representing excess and unutilized input value added tax (VAT) on purchases of goods and services attributable to its zero-rated sales for the third and fourth quarters of calendar year (CY) 2012. THE FACTS Petitioner Chevron Holdings, Inc. is the Ph ilippine branch of 1 Docket- Vol. I, pp. 14 to 23. ~

DECISION CTA CASE NO. 8946 Page 2 of37 Chevron Holdings, Inc. (CHI), a multinational company organized and existing under and by virtue of the laws of the State of Delaware, United States of America,2 with registered office address at the 35th Floor, Yuchengco Tower, RCBC Plaza, 6819 Ayala Avenue, Makati City. It is also registered with the Bureau of Internal Revenue (BIR) as a VAT taxpayer and was issued a Certificate of Registration with Taxpayer Identification Number (TIN) 201-056-391-000 on July 30, 1998. 3 Petitioner is licensed by the Securities and Exchange Commission (SEC) to transact business in the Philippines as a Regional Operating Headquarters (ROHQ) under SEC Registration No. A199802486 dated June 3, 1998, with purposes limited to general administration and planning; business planning and coordination; sourcing and procurement of raw materials and components; corporate finance advisory services; marketing control and sales promotion; training and personnel management; logistic services; research and development services and product development; technical support and maintenance; data processing and communication; and business development.4 On the other hand, respondent is the duly appointed Commissioner of Internal Revenue vested under appropriate laws with the authority to carry out the functions, duties, and responsibilities of said office, including, inter alia, the power to decide, approve, and grant refunds and/or tax credits of overpaid and erroneously paid or collected internal revenue taxes. He holds office at the 5th Floor, Bureau of Internal Revenue (BIR) National Office Building, Agham Road, Diliman, Quezon City. Petitioner filed its Quarterly VAT Returns for the third and fourth quarters of CY 2012 on October 24, 20125 and on January 25, 2013, respectively. 6 On May 2, 2014, petitioner filed an administrative claim for refund or issuance of TCC for unutilized input VAT for the third quarter of CY 2012 in the total amount of P18,025,207. 76 with the 2 Par. 2, Joint Stipulation of Facts and Issues (JSFI), Docket- Vol. III, p. 1677. 3 Exhibit "P-3", Docket- Vol. IV, p. 2189. 4 Exhibit "P-1", Docket- Vol. IV, pp. 2157 to 2169. 5 Exhibit "P-4", Docket - Vol. IV, pp. 2190 to 2191. 6 Exhibit "P-5", Docket- Vol. IV, pp. 2192 to 2193. t

DECISION CTA CASE NO. 8946 Page 3 of37 BIR. 7 It submitted all relevant documents in support of its claim when it filed its administrative claim for refund. On May 27, 2014, petitioner filed an administrative claim for refund or issuance of TCC for unutilized input VAT for the fourth quarter of CY 2012 in the total amount of P14,374,900.38 with the BIR.8 Petitioner likewise submitted all relevant supporting documents when it filed its administrative claim. On June 9, 2014, petitioner received Letter of Authority (LOA) No. LOA-124-2014-00000045 (eLA201100060743) dated May 27, 2014,9 authorizing concerned revenue officers to examine its books of accounts and other accounting records for all internal revenue taxes for the period covering July 1, 2012 to September 30, 2012. On July 7, 2014, petitioner received LOA No. LOA-124-2014- 00000048 (eLA201100060745) dated June 27, 2014, 10 authorizing revenue officers to examine its books of accounts and other accounting records for all internal revenue taxes for the period covering October 1, 2012 to December 31, 2012. For the period July 1, 2012 to September 30, 2012 (Third Quarter of CY 2012), the BIR requested petitioner to submit certain supporting documents in its letters dated June 16, 201211 , July 7, 201412 and July 14, 201413 pursuant to LOA No. LOA-124-2014- 00000045 (eLA201100060743) dated May 27, 2014. As regards the letter dated June 16, 2012, it is observed that the year 2012 should be 2014, based on the first paragraph of said letter marked as Exhibit "P-8.1" for the petitioner, which is quoted in full as follows: 7 Exhibit "P-6.1", Docket- Vol. IV, pp. 2194 to 2204. 8 Exhibit "P-6.2", Docket- Vol. IV, pp. 2205 to 2210. 9 Exhibit "P-7.1", Docket- Vol. IV, p. 2212. 10 Exhibit "P-7.2", Docket- Vol. IV, p. 2213. 11 Exhibit "P-8.1", Docket- Vol. IV, p. 2214. 12 Exhibit "P-8.2", Docket- Vol. IV, pp. 2215 to 2216. 13 Exhibit "P-8.4", Docket- Vol. IV, pp. 2219 to 2220. ~

DECISION CTA CASE NO. 8946 Page 4 of37 "June 16, 2012 The President CHEVRON HOLDINGS, INC. 351h Floor, Yuchengco Tower, RCBC Plaza, 6819 Ayala Avenue, Makati City Attention: The Chief Finance Officer/ Chief Accountant/ Tax Compliance Officer/ Chief, MIS Subject: Data Files request for Tax Audit Sir: Pursuant to our Letter of Authority No. 124-2014-00000045, dated May 27, 2014, for the examination of your books of accounts and other accounting records for the year beginning July 1, 2012 to September 30, 2012, we hereby request for the reproduction of the following master and transaction files in electronic form in accordance with Revenue Regulations 16-2006 dated 16, 2006. � General Ledger/Subsidiary Ledger (Transaction file) � Journal Book (Transaction file) � Account Payable (Transaction file) � Sales Book (Transaction file) Customer Master File � Account Receivable (Transaction file) � Inventory Module (Transaction file) � Purchase Book (Transaction file & Vendor Supplier File) � Chart of Accounts (Master file) � Capital Assets File (Master file) � Other records (as needed) We request that each of the above files reflect all transactions captured by the system from July 1, 2012 to September 30, 2012 and that the data should be given in any of the following formats: delimited text files (tab delimited or csv), .mdb, spreadsheet format e.g. excel (flat file) or .dbf file on a storage media preferably on a CD-R or DVD-R. The above enumerated files may differ from your electronic records and as such you may submit whatever electronic files in your computerized accounting systems in lieu of our requests. Together with the data, please document the file record layouts. For each field, document the field name, data type, and formats of numeric and date items. We also require documentation of key control information, the number of records in the file and control totals of numeric fields where applicable In case your books of accounts are still in manual (handwriting) form, kindly present or submit the same for examination. We also require you to submit an affidavit that you are not using a computerized accounting system or any components thereof such as but not limited to inventory module, sales module, etc. r

DECISION CTA CASE NO. 8946 Page 5 of37 This represents our initial data request associated with this audit. We anticipate a necessity for subsequent data requests, but we will endeavor to keep these requests to a minimum, in consideration of your time and resources. The documents supporting entries in your books of accounts should be presented to us upon our request which will be made after our data analysis. We appreciate your assistance with this data access, and look forward to working with you during the course of our audit. We expect our files Five (5) days from receipt of this notice in accordance with RR-16-2006. Very truly yours, Signed LINDAGRACE B. SAGUN Chief, ELTEAD 2 " Subsequently, for the period October 1, 2012 to December 31, 2012 (Fourth Quarter of CY 2012), the BIR also requested petitioner to submit specific supportin~ documents in its letters dated July 7, 201414 and July 15, 20141 pursuant to LOA No. LOA-124-2014- 00000048 (eLA201100060745) dated June 27, 2014. On July 11, 2014, petitioner submitted supporting documents as requested by the BIR in connection with its claim for refund of excess input VAT for the third16 and fourth17 quarters of CY 2012. On July 18, 2014, petitioner submitted the final batch of supporting documents requested by the BIR pertaining to its claim for refund of excess input VAT for the third 18 and fourth 19 quarters of CY 2012. There being no action taken by respondent on petitioner's administrative claim for refund or issuance of TCC, petitioner filed the instant Petition for Review on December 15, 2014. Respondent filed his Answef-0, through registered mail on April 6, 2015 and received by the Court on April 16, 2015, interposing the 14 Exhibit "P-8.3", Docket- Vol. IV, pp. 2217 to 2218. 15 Exhibit "P-8.5", Docket- Vol. IV, pp. 2221 to 2222. 16 Exhibit "P-9.1", Docket- Vol. IV, pp. 2223 to 2226. 17 Exhibit "P-9.2", Docket- Vol. IV, pp. 2291 to 2294. 18 Exhibit "P-9.3", Docket- Vol. IV, pp. 2346 to 2354. 19 Exhibit "P-9.4", Docket- Vol. IV, pp. 2355 to 2359. 20 Docket - Vol. I, pp. 85 to 91. f

DECISION CTACASENO. 8946 Page 6 of37 following Special and Affirmative Defenses: "SPECIAL AND AFFIRMATIVE DEFENSES 4. She reiterates and re-pleads the preceding paragraphs of this Answer as part of her Special and Affirmative Defenses. 5. In a claim for tax refund or tax credit, the applicant must prove not only entitlement to the claim but also compliance with all the documentary and evidentiary requirements therefor. (Western Mindanao Power Corporation v. CIR, G.R. No. 181136, June 13, 2012, 672 SCRA 350, 362) 6. To support its claim, it is imperative for petitioner to prove the following, viz: a. The registration requirements of a value- added taxpayer in compliance with section 6 (a) and (b) of Revenue Regulations No. 6-97 in relation to Section 4.107-1 (a) of Revenue Regulations No. 7-95, and Section 236 of the Tax Code, as amended; b. The invoicing and accounting requirements for VAT-registered persons, as well as the filing and payment of VAT in compliance with the provisions of Section 113 and 114 of the Tax Code, as amended; c. Proof of compliance with the prescribed checklist of requirements to be submitted involving claim for VAT refund pursuant to Revenue Memorandum Order No. 53-98, otherwise there would be no sufficient compliance with the filing of an administrative claim for refund which is a condition sine qua non prior to the filing of a judicial claim in accordance with Section 112 of the Tax Code, as amended. This requires the submission of complete documents in support of the application t

DECISION CTA CASE NO. 8946 Page 7 of37 filed with the Bureau of Internal Revenue before the 120-day audit period shall apply; d. That the input taxes in the aggregate amount of P26,520, 184.81 allegedly paid by petitioner on its purchases of goods and services for the 1st to 4th quarter of calendar years 2009, 2010 and 2011 were attributable to its zero-rated sales and such have not been applied against any output tax and were not carried over to the succeeding taxable quarter or quarters; e. That petitioner's administrative and judicial claims for tax credit or refund of the unutilized input tax (VAT) were filed within the periods provided in Sections 112 (A) and (D) of the Tax Code, as amended; f. That petitioner's domestic purchases of goods and services were made in the course of its trade or business, properly supported by VAT invoices and /or official receipts and other documents, such as subsidiary purchase Journal showing that it actually paid VAT in accordance with Sections 110 (A) (2) and 113 of the Tax Code, as amended, and pursuant to Section 4.104-5 (a) and (b) of Revenue Regulations No. 7-95 (Re: Substantiation of Claims for Input Tax Credits); g. The requirements as enumerated under Section 4.1 04-5 of Revenue Regulations No. 7-95. (Re: Substantiation of Claims for Input Tax Credits). h. The requirements as enumerated under Revenue Memorandum Circular 54-2014 (Re: Clarifying Issues Relative to the Application for Value Added Tax Refund/Credit under Section 112 of the Tax Code, as amended). ~

DECISION CTA CASE NO. 8946 Page 8 of37 7. Petitioner must prove that the aggregate amount of P32,400,108.14 allegedly representin~ excess and unutilized input VAT for the 3rd to 4t quarter of taxable years 2012 are properly documented. 8. In Revenue Memorandum Circular 54-2014 issued on June 11, 2014, the administrative claim for VAT refund or TCC must be filed within two (2) years from the close of the taxable quarter when the zero- rated sales and/or effectively zero-rated sales were made. The application for VAT refund must be accompanied by complete supporting documents as specifically enumerated in Annex 'A' of the RMC. In addition, the taxpayer should attach a sworn statement/affidavit (i) attesting to the completeness of the submitted documents; (ii) stating that the attached supporting documents are the only documents which the taxpayer will present to support the claim; and, additionally, (iii) in the case of corporations or other juridical persons, there should be a sworn statements that the officer signing the affidavit (which should at the very least be the Chief Finance Officer) has been authorized by the company's Board of Directors. 9. Corollary thereto, Section 112 (D) [now Section 112(c) of the Tax Code of 1997] provides as follows, to wit: '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; xxx XXX ~

DECISION CTA CASE NO. 8946 Page 9 of37 (D) 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 Subsections (A) and (B) 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.' (Emphasis supplied) Pursuant to the aforequoted provision of law, the application for tax refund must be filed within two (2) years after the close of the taxable quarter when the sales were made and the CIR has a 120-day period within which to decide whether to grant the claim. It logically follows that a taxpayer must first submit the complete supporting documents before the 120-day period should commence. If the claim is not acted upon by respondent, within the 120-day period, such inaction shall be deemed a denial of the claim. It cannot be overemphasized that respondent cannot decide the claim for refund without the complete supporting documents. 10. Under RMC 54-2014, the taxpayer may appeal in one of two ways: (1) file the judicial claim within thirty days after the Commissioner denies the claim within the 120-day period, or (2) file the judicial claim within thirty days from the expiration of the 120- day period if the Commissioner does not act within the 120-day period. In this case, petitioner's administrative claim for refund was allegedly filed on May 2, 2014 for its 3rd quarter claim and on May 27, 2014 for its 4th ~

DECISION CTA CASE NO. 8946 Page 10 of37 quarter claim. Thus, the 120-day period expired on August 30, 2014 and September 24, 2014 respectively. Counting thirty days from each expiration, petitioner's judicial claim should have been filed on or before September 29, 2014 and October 23, 2014. Therefore, the instant petition was filed out of time. 11. All in all, the burden of proof is on the taxpayer to establish its right to refund, and failure to sustain the burden is fatal to the claim for refund. Hence, a taxpayer is charged with the heavy burden of proving that he has complied with and satisfied all the statutory and administrative requirements to be entitled to the tax refund. Failure to comply therewith warrants a dismissal of the taxpayer's claim for refund. Respondent humbly submits that petitioner failed to establish its right to refund. 12. It can never be emphasized enough that in this jurisdiction tax refunds/ credits are in the nature of tax exemptions, hence, laws relating to them call for a strict application against the claimant. As held by the Honorable Supreme Court: 'Tax refunds are in the nature of tax exemptions, and are to be construed strictissimi juris against the entity claiming the same. Thus, the burden of proof rests upon the taxpayer to establish by sufficient and competent evidence, its entitlement to a claim for refund.' 13. Taxes collected are presumed to be in accordance with laws and regulations. 14. Claims for refund are construed strictly against the claimant for the same partake of the nature of exemption from taxation and as such, they are looked upon with disfavor. Basic is the rule that tax refunds are regarded as tax exemptions that are in of the sovereign authority and are to be construed in strictissimi juris against the person or entity claiming the exemption. The law does not look with favor on tax exemptions and that he who would seek to be thus r

DECISION CTA CASE NO. 8946 Page 11 of37 privileged must justify it by words too plain to be mistaken and too categorical to be misinterpreted. 15. Based on the foregoing, petitioner's claim for refund has no basis in fact and in law. Thus, the instant petition should be dismissed for lack of jurisdiction and/or for lack of merit." As agreed upon during the pre-trial conference held on July 30, 2015 21 , the parties filed their Joint Stipulation of Facts and Issues (or JSFI) 22 on Au~ust 24, 2015. Said JSFI was approved by the Court in its Resolution2 dated September 15, 2015 and thereafter, a Pre-Trial Orde~4 was issued on November 4, 2015. During trial, petitioner presented Ma. Nerita C. Ferreol25, Carolyn C. Ardina26, Jennifer A. Valdez27, and the Independent Certified Public Accountant28 (ICPA) Czarina R. Miranda as its witnesses. On April 19, 2016, petitioner filed its Formal Offer of Evidence29 , offering Exhibits "P-1" to "P-59.1 ", inclusive of submarkings". Respondent failed to file his comment to petitioner's Formal Offer of Evidence. 30 In the Resolution dated July 21, 2016,31 the Court admitted all the formally offered exhibits of petitioner except for Exhibits "P-32.1", "P-32.2", "P-50.1", "P-50.2", "P-21.1", "P-21.2", and "P-54". Petitioner filed its Motion for Reconsideration (Re: Resolution dated July 21, 2016) on August 5, 2016.32 Respondent, however, 21 Order dated June 18, 2015, Docket- Vol. I, p. 103. 22 Docket- Vol. III, pp. 1676 to 1684. 23 Docket - Vol. III, p. 1699. 24 Docket - Vol. III, pp. 1757 to 1779. Pre-Trial Order was amended as per Court's Resolution dated March 7, 2016, Docket- Vol. III, pp. 2083 to 2086. 25 Minutes ofthe hearing dated November 5, 2015, Docket- Vol. III, pp. 1780 to 1784. 26 Minutes ofthe hearing dated January 26, 2016 and March 8, 2016, Docket- Vol. III, pp. 1855 to 1857 and 2087 to 2089, respectively. 27 Minutes ofthe hearing dated March 8, 2016, Docket- Vol. III, pp. 2087 to 2089. 28 Minutes ofthe hearing dated January 26, 2016, Docket- Vol. III, pp. 1855 to 1857. 29 Docket- Vol. IV, pp. 2099 to 2156. 30 Records Verification dated May 19, 2016, Docket- Vol. V, p. 3624. 31 Docket- Vol. V, pp. 3630 to 3633. 32 Docket- Vol. V, pp. 3634 to 3639. ~

DECISION CTA CASE NO. 8946 Page 12 of37 failed to file his comment thereto. 33 In the Resolution dated November 22, 2016,34 petitioner's Motion was granted and its withdrawal of Exhibits "P-32.1", "P-32.2", "P-50.1" and "P-50.2" was noted; while Exhibits "P-21.1", "P-21.2" and "P-54" were admitted. During the hearing held on January 24, 2017 for the presentation of respondent's evidence, respondent's counsel manifested that he will no longer present evidence on the ground that there is no report of investigation as regards petitioner's claim for refund. 35 Upon the filing of petitioner's Memorandum36 on March 20, 2017 and taking into consideration the Records Verification dated March 23, 2017 issued by the Court's Judicial Records Division stating that respondent failed to file his Memorandum37 , this case was considered submitted for decision on March 30, 2017.38 Hence, this decision. THE ISSUES The ~arties submitted the following issues for the Court's resolution: 3 "Whether or not petitioner is entitled to the claim for refund or issuance of TCC for the excess or unutilized input VAT in the aggregate amount of P32,400, 108.14 for the 3rd and 4th quarters of CY 2012. The main issue may be broken down to the following sub-issues: 1. Whether or not petitioner incurred input VAT on its purchases of goods and services attributable to zero-rated sales for the 3rd and 4th quarters of CY 2012. 33 Records Verification dated September 8, 2016, Docket- Vol. V, p. 3645. 34 Docket- Vol. V, pp. 3653 to 3655. 35 Minutes ofthe hearing dated January 24, 2017. 36 Docket- Vol. V, pp. 3669 to 3698. 37 Records Verification dated March 23, 2017, Docket- Vol. V, p. 3699. 38 Resolution dated March 30, 2017, Docket- Vol. V, p. 3703. 39 JSFI, Docket - Vol. III, p. 1677. f

DECISION CTA CASE NO. 8946 Page 13 of37 2. Whether or not the input VAT incurred by petitioner for the 3rd and 4th quarters of CY 2012 is duly supported by VAT invoices and official receipts. 3. Whether or not the input VAT incurred by petitioner for the 3rd and 4th quarters of CY 2012 amounting to P32,400, 108.14 was applied against any output VAT or carried over to succeeding taxable periods. 4. Whether or not petitioner's administrative and judicial claims for refund or issuance of TCC for its excess and unutilized input VAT on purchases of goods and services attributable to its zero-rated sales were filed within the period prescribed by law." THE COURT'S RULING Section 112(A) of the NIRC of 1997, as amended, provides the basis for the refund or tax credit of excess input VAT attributable to zero-rated or effectively zero-rated sales, to wit: "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(8)(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 f

DECISION CTA CASE NO. 8946 Page 14 of37 sales: Provided, finally, That for a person making sales that are zero-rated under Section 108(8)(6), the input taxes shall be allocated ratably between his zero-rated and non-zero-rated sales. XXX XXX XXX (C) Period within which Refund or Tax Credit of Input Taxes shall be Made. - In proper cases, the Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in accordance with Subsection (A) hereof. In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty day-period, appeal the decision or the unacted claim with the Court of Tax Appeals." Based on the foregoing provisions, in order to be entitled to refund or tax credit of input tax due or paid attributable to zero-rated or effectively zero-rated sales, the following requisites must be satisfied: 1. That the taxpayer is VAT-registered; 2. That there must be zero-rated or effectively zero-rated sales; 3. That input taxes are due or paid; 4. That such input taxes were attributable to zero-rated sales or effectively zero-rated sales; 5. That the input taxes were not applied against any output VAT liability; and 6. That the claim for refund was filed within the two (2)- year prescriptive period. Petitioner's administrative and judicial claims were timely filed. ~

DECISION CTACASENO. 8946 Page 15 of37 As explicitly stated under Section 112(A) of NIRC of 1997, as amended, the application for the issuance of TCC or the refund of unutilized excess input VAT must be filed within two (2) years after the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made. The present claim covers the third and fourth quarters of CY 2012 which closed on September 30, 2012 and December 31, 2012, respectively. Counting two years from the said dates, petitioner had until September 30, 2014 and December 31, 2014, respectively, within which to file its administrative claims for tax credit or refund for the third and fourth quarters of CY 2012. Clearly, petitioner's administrative claims filed with the BIRon May 2, 2014 and on May 27, 2014 were seasonably filed. As to the timeliness of petitioner's judicial appeal, Section 112(C) of the NIRC of 1997, as amended, states the time requirements for filing a judicial claim for the refund or tax credit of input VAT. The legal provision speaks of two periods: the period of 120 days, which serves as a waiting period to give time for the BIR Commissioner to act on the administrative claim for refund or tax credit; and the period of 30 days, which refers to the period for filing a judicial claim with this Court.40 From date of submission of complete documents by the taxpayer, respondent has 120 days within which to grant or deny the claim. In case of respondent's inaction on the claim, petitioner is given a period of 30 days from the expiration of the 120-day period to appeal the claim before this Court. The reckoning of the 120-day period under Section 112(C) of the NIRC of 1997, as amended, was ruled upon by the Supreme Court in the case of Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue41 , viz: "Lest it be misunderstood, the benefit given to the taxpayer to determine when it should complete its submission of documents is not unbridled. Under RMC No. 49-2003, if in the course of the investigation and processing of the claim, additional documents are 40 Rohm Apollo Semiconductor Philippines vs. Commissioner of Internal Revenue, G.R. No. 168950, January 14, 2015. 41 G.R. No. 207112, December 8, 2015. t

DECISION CTA CASE NO. 8946 Page 16 of37 required for the proper determination of the legitimacy of the claim. the taxpayer-claimants shall submit such documents within thirty (30) days from request of the investigating/ processing office. Again, notice, by way of a request from the tax collection authority to produce the complete documents in these cases, is essential. Moreover, under Section 112(A) of the NIRC, as amended by RA 9337, a taxpayer has two (2) years, after the close of the taxable quarter when the sales were made, to apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales. Thus. before the administrative claim is barred by prescription. the taxpayer must be able to submit his complete documents in support of the application filed. This is because, it is upon the complete submission of his documents in support of his application that it can be said that the application was, 'officially received' as provided under RMC No. 49-2003. To summarize, for the just disposition of the subject controversy, the rule is that from the date an administrative claim for excess unutilized VAT is filed, a taxpayer has thirty (30) days within which to submit the documentary requirements sufficient to support his claim, unless given further extension by the CIR. Then. upon filing by the taxpayer of his complete documents to support his application. or expiration of the period given. the CIR has 120 days within which to decide the claim for tax credit or refund. Should the taxpayer, on the date of his filing, manifest that he no longer wishes to submit any other addition documents to complete his administrative claim, the 120 day period allowed to the CIR begins to run from the date of filing. In all cases. whatever documents a taxpayer intends to file to support his claim must be completed within the two-year period under Section 112(A) of the NIRC. The 30-day period from denial of the claim or from the expiration of the 120-day period within which to appeal the denial or inaction of the CIR to the CTA must also be respected." (Emphases and underscoring supplied) ~

DECISION CTA CASE NO. 8946 Page 17 of37 Thus, upon filing of the application for tax credit or refund for excess creditable input taxes, the taxpayer is given 30 days within which to complete the required documents, unless given further extension by the head of the processing unit. But, if in the course of the investigation and processing of the claim, additional documents are required for the proper determination of the claim, the taxpayer shall submit the same within 30 days from request of the investigating/processing office. It must be noted that notice, by way of a request from the tax collection authority to produce the complete documents, is important. Furthermore, the 120-day period begins to run only upon the submission of these documents. Nevertheless, in all cases, whatever documents a taxpayer intends to file to support his claim must be completed within the two-year period under Section 112(A) of the NIRC of 1997. In this case, evidence show that when petitioner respectively filed its administrative claims on May 2, 20144 and May 27, 20144 , petitioner deemed that it has already submitted complete documents in support of the said administrative claims. However, from the point of view of the BIR, the latter finds the necessity to submit other documents, and thus, it still requested petitioner to submit certain supporting documents in its letters dated June 16, 201244 (should be 2014 as earlier observed by the Court), July 7, 201445 and July 14, 201446 pursuant to LOA No. LOA-124- 2014-00000045 (eLA201100060743) dated May 27, 2014 for the period July 1, 2012 to September 30, 2012, as well as, in its in letters dated July 7, 201447 and July 15, 201448 pursuant to LOA No. LOA- 124-2014-00000048 (eLA201100060745) dated June 27, 2014 for the period October 1, 2012 to December 31, 2012. Thereafter, in compliance with the said letters, petitioner subsequently submitted certain documents for the third and fourth quarters of CY 2012, 49 the final batch of which were attached to petitioner's letters dated July 18, 2014, which were filed with the BIRon the same date. 50 Since the 42 Exhibit "P-6-1 ", Docket- Vol. IV, pp. 2194 to 2199. 43 Exhibit "P-6-2", Docket- Vol. IV, pp. 2205 to 2210. 44 Exhibit "P-8-1", Docket- Vol. IV, p. 2214. 45 Exhibit "P-8-2", Docket- Vol. IV, pp. 2215 to 2216. 46 Exhibit "P-8-4", Docket- Vol. IV, pp. 2219 to 2220. 47 Exhibit "P-8-3", Docket- Vol. IV, pp. 2217 to 2218. 48 Exhibit "P-8-5", Docket- Vol. IV, pp. 2221 to 2222. 49 Exhibit "P-9.1", Docket- Vol. IV, pp. 2223 to 2226; Exhibit "P-9.2", Docket- Vol. IV, pp. 2291 to 2294. 50 Exhibit "P-9.3", Docket - Vol. IV, pp. 2346 to 2354; and Exhibit "P-9.4", Docket - Vol. IV, pp. 2355 to 2359. ~

DECISION CTA CASE NO. 8946 Page 18 of37 submission of the said additional documents were made within the two-year prescriptive period, the said date of the submission of the final batch of documents must be the reckoning date of the 120-day period under Section 112(C) of the NIRC of 1997. Counting 120 days from July 18, 2014, respondent had until November 15, 2014, within which to grant or deny the claim. Due to the inaction of respondent during the said 120-day period, petitioner had 30 days from November 15, 2014 or until December 15, 2014 to file its appeal before the Court. Clearly, the instant Petition for Review filed on December 15, 2014 was filed on time. Petitioner is a VAT-registered entity and had zero-rated sales during the subject periods. Petitioner complied with the first requisite it appearing that it is a VAT-registered taxpayer with Taxpayer's Identification No. 201-056- 391-000, as evidenced by its BIR Certificate of Registration No. OCN 8RC0000039799 dated July 30, 1998. As regards the second requisite, i.e., the existence of zero- rated sales, petitioner claims that the services it rendered to its affiliates located and doing business outside the Philippines, which were paid for 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�/o) VAT in accordance with Section 108(8)(2) of the NIRC of 1997, as amended, which states that: "SEC. 108. Value-added Tax on Sale of Services and Use or Lease of Properties. - 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�/o) rate: (1) Processing, manufacturing or repacking goods for other persons doing business outside the Philippines which goods are subsequently exported, where the ~

DECISION CTA CASE NO. 8946 Page 19 of37 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. 51 , the Supreme Court held that in order for the supply of services to be VAT zero-rated under Section 108 (B) (2) of the NIRC of 1997, as amended, the following requisites must be satisfied: 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 fulfilled the first requisite. Petitioner is licensed by the Securities and Exchange Commission to transact business in the Philippines as a regional operating headquarters (ROHQ) to engage in general administration and planning; business planning and coordination; sourcing and 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. 52 These services clearly fall within the scope of "services other than processing, 51 G.R. No. 153205, January 22, 2007. 52 Exhibits "P-1" and "P-2", Docket- Vol. IV, pp. 2157 to 2187. ~

DECISION CTA CASE NO. 8946 Page 20 of37 manufacturing or repacking of goods" contemplated by the afore- mentioned provision. In relation to the second requisite, Sections 113(A)(2), (8)(1 ), (2)(c) and (3) of the NIRC of 1997, as amended, as implemented by Sections 4.113-1 (A)(2), (8)(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�/o) value- added tax, the term 'zero-rated sale' shall be written or printed prominently on the invoice or receipt; XXX XXX XXX ~

DECISION CTA CASE NO. 8946 Page 21 of37 (3) The date of transaction, quantity, unit cost and description of the goods or properties or nature of the service;" (Emphasis supplied) "SEC. 4.113-1. Invoicing Requirements.- (A) A VAT-registered person shall issue:- XXX XXX XXX (2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services. Only VAT-registered persons are required to print their TIN followed by the word 'VAT' in their invoice or official receipts. Said documents shall be considered as a 'VAT Invoice' or VAT official receipt. All purchases covered by invoices/receipts other than VAT lnvoiceNAT 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�/o) VAT, the term 'zero-rated sale' shall be written or printed prominently on the invoice or receipt;" (Emphasis supplied) ~

DECISION CTACASENO. 8946 Page 22 of37 Pursuant to the foregoing provisions, the foreign currency remittances referred to under Section 108(8)(2) of the NIRC of 1997, as amended, must likewise be supported by VAT zero-rated official receipts. It was established that for services rendered to its affiliates for the third and fourth quarters of CY 2012, petitioner was paid in US . dollars which were accounted for in accordance with the BSP rules and regulations, as evidenced by the Certificate of Inward Remittance53 and Bank Statements54 for CY 2012 issued by JPMorgan Chase Bank N.A - Manila Branch and duly supported by VAT zero-rated official receipts55 issued by petitioner to its client- affiliates. Thus, the second requisite has also been satisfied. In compliance with the third requisite of proving that its clients for the subject period of claim are non-resident foreign corporations doing business outside the Philippines, petitioner presented the following documents: 1. Certification of Non-Registration of Company issued by the SEC� 56 ' 2. Articles/Certificate of Incorporation/Registration and/or other similar documents;57 3. Tax Residence Certificates; 58 4. Screenshot of Chevron Subsidiary Governance Website� 59 5. Screensh' ot of US SEC Website; 60 and 6. Service Agreements. 61 However, each of the aforesaid documents, standing alone, is insufficient proof that petitioner's client is a non-resident foreign corporation doing business outside the Philippines. 53 Exhibit "P-35.1". 54 Exhibit "P-35.2". 55 Exhibit "P-33", pp. 1 to 113. 56 Exhibits "P-14.1" to "P14.41", Docket- Vol. IV, pp. 2376 to 2416. 57 Exhibits "P-15.1" to "P-15.32", Docket - Vol. IV, pp. 2417 to 3115; Exhibits "P- 15.33" to "P-15.40" (Separate Folders 1-8). 58 Exhibits "P-16.1" to "P-16.8", Docket, Vol. IV, pp. 3116 to 3129. 59 Exhibits "P-17.1" to "P-17.39", Docket, Vol. IV, pp. 3130 to 3171. 60 Exhibits "P-18.1" to "P-18.9", Docket, Vol IV, pp. 3172 to 3180. 61 Exhibits "P-19.1" to "P-19.25", Docket, Vol. IV, pp. 3181 to 3589; Exhibit "P-19.26" (Separate Folder) f

DECISION CTA CASE NO. 8946 Page 23 of37 While the SEC Certificates of Non-Registration of Company show that the named entities are not registered corporations or partnerships in the Philippines, the same do not prove that such entities are non-resident foreign corporations doing business outside the Philippines. The same holds true with the Articles/Certificates of Incorporation/Registration and Tax Residence Certificates which only prove that therein named entities were incorporated/organized abroad. However, these documents do not necessarily establish that such entities are not doing business in the Philippines. Likewise, the service agreements only indicate the names and addresses of petitioner's customers to whom it renders services but they do not establish that such customers are non-resident foreign corporations doing business outside the Philippines. In the case of Site/ Philippines Corporation (formerly Clientlogic Phils., Inc.) vs. Commissioner of Internal Revenue62 , the Supreme Court held that while Sitel's documentary evidence, which included Certifications issued by the Securities and Exchange Commission and Agreements between Sitel and its foreign clients, may have established that Sitel rendered services to foreign corporations and received payment therefor through inward remittances, said documents failed to specifically prove that such foreign clients were doing business outside the Philippines or have a continuity of commercial dealings outside the Philippines. Therefore, in order 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 and proof of incorporation/registration in a foreign country (e.g., Articles/Certificate of Incorporation/Registration and/or Tax Residence Certificate) and that there is no other indication which would disqualify said entity in being classified as a non-resident foreign corporation. In this regard, the Court cannot give credence or probative value to the printed screenshots of Chevron Subsidiary Governance Website63 as the information contained therein was retrieved from the 62 G.R. No. 201326, February 8, 2017. 63 Exhibits "P-17.1" to "P-17.39". ~

DECISION CTA CASE NO. 8946 Page 24 of37 database set-up and maintained by petitioner's group of companies. The said documents are self-serving and can be easily manipulated to favor petitioner in view of its affinity with the entities that maintain or keep the said database. As a result, only the following clients of petitioner for the third and fourth quarters CY 2012 shall be considered as non-resident foreign corporations doing business outside the Philippines: SEC Articles/Certificate of Registration Incorporation/Registration and/or other Tax Screens hot of Non- Client Registration similar document Residence of US SEC Asia Pacific Marine Services (EF) Exhibit No Document Certificate Website BV Chevron (Cambodia) Limited "P-14.1" - - P-16.1 - P-14.8 - Chevron (Thailand) Limited P-14.33 P-15.5 Articles of Incorporation - Chevron Asia South Ltd. P-14.4 P-15.28 Certificate of Change of P-18.8 Chevron Bangladesh Blocks P-14.7 P-15.2 Name and Incorporation P-16.7 Thirteen & Fourteen, Ltd. P-14.10 P-15.4 - P-14.12 P-15.7 Certification Document - Chevron CorQoration P-14.14 P-15.9 Certification of Incorporation - I P-14.15 P-15.11 on Change of Name - Chevron Hong_ Kong_ Limited P-14.16 P-15.12 Restated Certificate of -I Chevron International Limited P-14.18 P-15.14 Incorporation P-16.3 P-14.19 P-15.15 Certificate of Change of - I Chevron International Pte. Ltd. P-14.22 P-15.16 Name - P-14.23 P-15.18 - - Chevron Kuo Pte. Ltd. P-14.24 P-15.19 Certificate of Incorporation - Chevron Lubricants Lanka PLC P-14.26 P-15.20 Certificate of Incorporation - - I P-14.27 P-15.22 on Change of Name - Chevron Malaysia Limited P-14.31 P-15.23 Certificate Confirming - -j P-14.32 P-15.26 lncoiJ)oration of Company - Chevron Neftegaz Inc. P-14.34 P-15.27 - I Chevron New Zealand P-14.36 P-15.29 Articles of Association P-16.4 P-14.39 P-15.36 Certificate of Registration of I Chevron North Sea Limited P-15.31 Change of Name P-16.5 Certificate of Amendment of - Chevron Oronite Pte. Ltd. Certificate - Chevron Overseas Services - Corporation Certificate of Incorporation - - Certificate of Incorporation Chevron Singapore Pte. Ltd. on Change of Name - - Memorandum and Articles - Chevron South Africa (Pty) Limited of Association - P-18.6 Certificate of Amendment of - Chevron Trading Pte. Ltd. Certificate of Incorporation - - Chevron USA Inc. (Singapore Memorandum and Articles - Branch) of Association - PT Chevron Oil Products Indonesia Certificate of Change of - Name of Company - Certificate Confirming Incorporation of Company Certificate of Registration of Foreign Company Domicile Information Letter Accordingly, out of the P1,239,280,756.4964 zero-rated sales declared per petitioner's Quarterly VAT Returns for the third and 64 f

DECISION CTA CASE NO. 8946 Page 25 of37 fourth quarters of CY 2012, only the amount of P290,091 ,249.42, broken down below, qualifies for VAT zero-rating under Section 108(8)(2) of the NIRC of 1997, as amended: OR No. Date Client Amount in USD Amount in Exhibit PHP P-33 THIRD QUARTER OF CY 2012 3528 7/25/2012 Chevron Corporation 232,178.40 9,739,026.85 page4 207,400.52 8,699,686.24 page 5 3529 7/25/2012 Chevron Singapore Pte. Ltd. 203,589.07 8,539,809.98 page6 179,782.71 7,541,221.06 page 7 3530 7/25/2012 Chevron New Zealand 169,928.24 7,127,862.42 _pag_e 8 161,061.04 6, 755,916.11 page 9 3531 7/25/2012 Chevron (Thailand) Limited 106,767.28 4,478,493.29 page 10 page 11 3532 7/25/2012 Chevron Hon_g_ Kong_ Limited 10,261.85 430,446.73 page 13 3,421.08 143,682.49 page 14 3533 7/25/2012 Chevron International Pte. Ltd. 1,468.53 61,832.84 page 15 6,824.75 287,600.08 _Q_age 16 3534 7/25/2012 Chevron USA Inc. (Singapore Branch) 1,468.53 61,265.33 page 19 9,621,285.23 page 20 3535 7/25/2012 Chevron Neftegaz Inc. 227,350.97 8,616,057.13 _Q_age 21 203,597.43 8,199,162.08 page 22 I 3537 7/26/2012 Chevron Oronite Pte. Ltd. 193,746.20 7,717,953.45 page 23 182,375.24 4,972,934.83 page 24 ! 3538 7/27/2012 Chevron Kuo Pte. Ltd. 117,510.45 4,803,582.31 gage 25 113,508.65 4,489,481.17 page 26 3539 7/30/2012 Chevron Lubricants Lanka PLC 106,086.44 472,050.36 page 27 I 434,272.11 _Q_age 30 ' 3540 8/2/2012 Chevron Kuo Pte. Ltd. 11,154.55 6,370,754.33 page 33 10,261.85 99,022.79 page 34 3543 8/24/2012 Chevron Corporation 150,923.17 288,695.01 pag_e 36 427,933.69 page 37 3544 8/24/2012 Chevron New Zealand 2,345.85 95,245.62 page 38 6,824.75 302,768.11 page 41 3545 8/24/2012 Chevron North Sea Limited 10,261.85 8,468,950.92 page 42 2,283.99 8,093,406.41 page 43 3546 8/24/2012 Chevron International Pte. Ltd. 7,272.49 7,433,985.86 _Q_age 44 203,593.58 7,385,687.19 page 45 3547 8/24/2012 Chevron Malaysia Limited 194,565.49 7,064,339.85 page 46 178,713.02 5,538,326.54 page 48 3548 8/24/2012 Chevron Singapore Pte. Ltd. 177,551.92 4,419,800.33 page 49 169,826.73 4,317,744.59 3549 8/24/2012 Chevron USA lnc.f_Singa_Q_ore Branchl 133,141.37 106,252.00 3550 8/24/2012 Asia Pacific Marine Services (EF) BV 103,798.58 3551 8/24/2012 Chevron Neftegaz Inc. 3554 8/28/2012 Chevron _(CambodiCl}_ Limited 3557 8/28/2012 Chevron Oronite Pte. Ltd. 3558 8/30/2012 Chevron Lubricants Lanka PLC 3560 9/26/2012 Chevron Neftegaz Inc. 3561 9/26/2012 Chevron Oronite Pte. Ltd. 3562 9/27/2012 Chevron Lubricants Lanka PLC 3565 9/25/2012 Chevron New Zealand 3566 9/25/2012 Chevron Com_oration 3567 9/25/2012 Chevron (Thailand) Limited 3568 9/25/2012 Chevron International Pte. Ltd. 3569 9/25/2012 Chevron Hong Kong Limited 3571 9/25/2012 Chevron South Africa (Pty) Limited 3573 9/25/2012 Chevron USA Inc. (Singapore Branch1 3574 9/25/2012 Chevron North Sea Limited Exhibit CY2012 Zero-Rated Sales I p 722,922,912.26 "P-4" 3rd Quarter 516,357,844.23 "P-5" 4th Quarter _rt,2)9,2~0,75�.49 1 ' Total -- ---- - �--- t

DECISION CTA CASE NO. 8946 Page 26 of37 I I 3577 9/27/2012 Chevron_{Cambodia}_ Limited 21,389.11 890,470.86 page 52 subtotal 3,918,487.68 164,390,754.19 FOURTH QUARTER OF CY 2012 3580 10/18/2012 Chevron International Limited 28,374.15 1 '173,455.33 page 55 2,937.06 121,115.88 page 56 3581 10/22/2012 Chevron Kuo Pte. Ltd. page 60 92,817.52 3,822,797.36 paQe 61 3585 10/29/2012 Chevron Oronite Pte. Ltd. 43,605.65 1'795,949.34 page 62 26,371.86 1,086 155.68 page 63 3586 10/29/2012 Chevron South Africa (Pty) Limited 16,138.63 664,688.22 3587 . 10/29/2012 Chevron Overseas Services CorQ_oration 3588 10/29/2012 BUT Chevron Indonesia Company 2,259.11 93,044.07 page 64 3589 10/29/2012 Chevron Bangladesh Blk Thirteen/Fourteen 3591 10/30/2012 Chevron Hong Kong Limited 84,910.64 3,502,914.19 paQe 66 3595 10/25/2012 Chevron New Zealand 217,832.88 9,008,803.97 page 69 3596 10/25/2012 Chevron Corporation 210,060.40 8,687,361.46 page 70 3597 10/25/2012 Chevron International Pte. Ltd. 197,217.70 8,156,232.42 page 71 3598 10/25/2012 Chevron Singapore Pte. Ltd. 187,535.15 7,755,796.11 pa_g_e 72 3599 10/25/2012 Chevron Malaysia Limited 147,639.65 6,105,858.15 page 73 3600 10/25/2012 Chevron USA Inc. (Singapore Branch) 106,224.81 4,393,085.61 page 74 3601 10/25/2012 Chevron North Sea Limited 105,890.91 4,379,276.67 _Qage 75 3603 10/25/2012 Chevron (Thailand) Limited 89,356.49 3,695,471.05 page 77 3607 10/25/2012 Chevron Trading Pte. Ltd. 19,206.28 794,304.38 page 81 3609 10/25/2012 Chevron Neftegaz Inc. 10,261.85 424,394.13 paQe 83 3612 10/25/2012 Chevron Asia South Ltd. 613.62 25,377.17 page 86 3613 10/25/2012 PT Chevron Oil Products Indonesia 194.03 8,024.40 page 87 3614 10/31/2012 Chevron Lubricants Lanka PLC 6,824.74 281,548.68 page 88 3621 11/23/2012 Chevron New Zealand 202,852.26 8,330,688.30 page 94 3626 11/26/2012 Chevron International Pte. Ltd. 167,436.99 6,870,619.20 page 98 3627 11/26/2012 Chevron Corporation 152,399.02 6,253,550.27 page 99 1 3628 11/26/2012 Chevron USA Inc. (SinQapore Branch) 102,635.28 4,211,542.06 _Qage 100 3629 11/26/2012 Chevron North Sea Limited 100,841.70 4,137,944.19 page 101 3630 11/26/2012 Chevron Neftegaz Inc. 10,261.85 421,085.35 page 102 I 3631 11/26/2012 Chevron Oronite Pte. Ltd. 3,427.02 140,624.54 paQe 103 3632 12/3/2012 Chevron Lubricants Lanka PLC 6,824.75 278,674.97 page 104 3635 12/21/2012 Chevron Corporation 212,831.35 8, 715,452.50 page 106 3636 12/21/2012 Chevron (Thailand) Limited 164,145.41 6,721,761.26 paQe 107 3637 12/21/2012 Chevron Hong KonQ Limited 142,479.55 5,834,543.41 page 108 3638 12/21/2012 Chevron Malay_sia Limited 117,378.40 4,806,650.29 page 109 3640 12/26/2012 Chevron (Cambodia) Limited 54,740.53 2,248,994.66 page 111 3641 12/26/2012 Chevron Lubricants Lanka PLC 11,737.10 482,214.46 page 112 3645 12/21/2012 Chevron Oronite Pte. Ltd. 6,605.50 270,495.50 page 113 subtotal 3,052,869.84 125,700,495.23 VALID ZERO-RATED SALES 6,971,357.52 290,091,249.42 - The rest of petitioner's declared zero-rated sales in the amount of P949, 189,507.07, detailed below, shall be denied VAT zero-rating for its failure to prove that the entities to whom it rendered services are non-resident foreign corporations doing business outside the Philippines: ~

DECISION CTACASENO. 8946 Page 27 of37 OR Amount in PHP No. Date Client Amount in USD Exhibit P-33 THIRD QUARTER OF CY 2012 604,599.26 3525 7/17/2012 Chevron Products Com_pan_y 2,074,954.21 25,360,707.21 pa_g_e 1 3526 7/25/2012 Chevron Information Technology 1,496,385.28 Company 87,036,669.88 page 2 182,671.35 62,767,838.93 page 3 3527 7/25/2012 Chevron Services Company 589,109.29 page 12 7,672,043.26 page 17 3536 7/26/2012 Chevron Australia Pty. Ltd. - Other 2,192,118.93 24,856,932.07 1,442,695.83 page 18 3541 8/17/2012 Chevron Products Company 92,768,469.32 page 28 3542 8/24/2012 Chevron Information Technology 182,671.35 60,898,937.53 _page 29 Company 141,018.58 7,710,905.45 page 31 3552 8/28/2012 Chevron Services Company 115,751.72 5,952,662.73 page 32 3553 8/28/2012 Chevron Australia Pty. Ltd. - Other 587,456.67 page 35 3555 8/28/2012 CPUK- Trading and Marine 4,886,100.46 3556 8/28/2012 Lubricants Branch 1,921,269.26 24,528,462.21 page 39 Chevron Australia Pty. Ltd. - 1,394,234.77 page 40 Gorgon 79,919,686.36 123,006.90 57,996,454.66 _page 47 3559 9/20/2012 Chevron Products Com_pani 3563 9/25/2012 Chevron Information Technology 79,155.06 5,116,759.57 page 50 Company 186,249.99 page 51 13,313,348.45 3,292,639.77 3564 9/25/2012 Chevron Services Company 7,766,888.66 3572 9/25/2012 Chevron Energy Technology 18.74 558,532,158.07 3575 9/25/2012 Com_pan_y 587,786.21 CGEI - Global Dnstrm Cost Allocation 91,588.83 182,671.35 3576 9/26/2012 Chevron Australia Pty. Ltd.- Other 142,424.11 subtotal 142.61 FOURTH QUARTER OF CY 2012 2,464,798.03 1,377,833.97 3578 10/11/2012 UECSL- Chuandongbei Branch 776.63 page 53 90,985.75 24,308,776.26 _pag_e 54 3579 10/16/2012 Chevron Products Company 59,000.26 3582 Chevron AI Khalij, A Branch of 3,783,099.13 page 57 39,974.32 7,523,531.71 page 58 10/23/2012 Caphi 22,885.10 5,865,902.39 _pag_e 59 3583 10/29/2012 Chevron Australia Pty. Ltd. - Other 16,210.37 5,873.56 page 65 3584 CPUK- Trading and Marine 4,246.78 101,935,402.40 page 67 10/29/2012 Lubricants Branch 56,982,380.89 page 68 2,800.00 3,762,851.53 page 76 3590 10/29/2012 CPUK Limited - BRES 2,440,043.84 page 78 3592 10/25/2012 Chevron Information Technology 26,452.02 Company 1,653,197.68 page 79 3,827.84 946,447.48 page 80 3593 10/25/2012 Chevron Services Com_Qany_ 13,902.37 670,404.05 page 82 3602 10/25/2012 Chevron Liberia Limited 175,631.93 page 84 3604 10/25/2012 Chevron Upstream 3605 Chevron Energy Technology 115,798.18 page 85 10/25/2012 Com_Qany_ 1,089,457.17 page 89 3606 10/25/2012 Chevron Products Company 157,654.04 page 90 3608 10/25/2012 Chevron Canada Limited - 572,585.26 page 91 3610 10/25/2012 Downstream 3611 10/25/2012 Chevron N.A. Exploration 3615 10/29/2012 Production Co. 3616 10/29/2012 Chevron Malampaya LLC - Field Branch Chevron Australia Pty. Ltd. - Gorgon Chevron Australia Pty. Ltd.- Gorgon 3617 10/29/2012 Chevron Australia Ptv. Ltd. -Other ~

DECISION CTA CASE NO. 8946 Page 28 of37 3619 10/29/2012 Chevron Products Company 588,245.28 24,197,666.80 page 92 12,885.99 530,287.65 page 93 3620 10/19/2012 Chevron Pakistan Limited - Branch _Qa_ge 95 191,427.37 7,861,493.63 3622 11/23/2012 Chevron Australia Pty. Ltd. -Other page 96 3623 Chevron Information Technology 2,075,306.37 85,158,242.51 page 97 1,430,878.89 58,714,767.75 11/26/2012 Company page 105 12,868.81 527,626.49 3624 11/26/2012 Chevron Services Company page 110 3634 12/17/2012 Chevron Marine Products LLC - 40,963.33 1,677,450.04 3639 12/21/2012 lnt'l Chevron Energy Technology 9,480, 124.70 390,657,349.00 Company 22,793,4 73.15 949,189,507.07 subtotal TOTAL INVALID ZERO-RATED SALES Petitioner incurred/paid input taxes attributable to zero-rated sales and said input taxes were not applied against any output VAT liability. Having resolved that petitioner had valid VAT zero-rated sales for the third and fourth quarters of CY 2012 in the amount of P290,091 ,249.42, the Court shall proceed to determine whether petitioner incurred input taxes in connection therewith and if said input taxes were not applied against any output VAT liability of petitioner. In its Quarterly VAT Returns for the third and fourth quarters of CY 2012, petitioner reflected a total amount of P33, 778,989.54 allowable input VAT arising from its amortization of input VAT on purchases of capital goods exceeding P1 Million, domestic purchases and importation of goods other than capital goods, domestic purchases of services and purchases of services rendered by non- residents, detailed as follows: 3rd Qtr 4th Qtr CY 2012 (Exhibit CY 2012 (Exhibit "P-4'') P-5'') Consolidated p 38,649,658.55 Input Tax Deferred on Capital Goods exceeding P1Million from p 38,649,658.55 p 36,325,894.53 Previous Quarter 12,478,896.94 Add: Input Tax on Capital Goods exceeding P1 Million 1,219,454.71 11 ,259,442.23 p 51' 128,555.49 Purchased this Quarter p 39,869,113.26 p 47,585,336.76 44,187,976.62 Total Unamortized Input Tax on Capital Goods exceeding p 6,940,578.87 P1Million 36,325,894.53 44, 187'976.62 Less: Input Tax on Purchases of Capital Goods exceeding 2,283,073.99 P1 Million deferred for the succeeding period p 3,543,218.73 p 3,397,360.14 254,104.00 Amortization of Input Tax on Capital Goods exceeding P1Million 1 ,883,983.41 399,090.58 111,892.00 142,212.00 Add: Input Tax on- Domestic Purchases of Goods Other than Capital Goods Importation of Goods other than Capital Goods ~

DECISION CTA CASE NO. 8946 Page 29 of37 Domestic Purchase of Services 9,923,817.53 7,620,790.19 17,544,607.72 Services Rendered by Non-Residents 3,278,626.85 3,477,998.11 6,756,624.96 Total Allowable Input Tax P18,741 ,538.52 t-15,037 ,451.02 P33, 778,989.54 Out of the P33,778,989.54 input VAT, petitioner is claiming refund of the amount of P32,400, 108.1465 allegedly representing input VAT attributable to its zero-rated sales for the third and fourth quarters of CY 2012. In support of its input VAT claim, petitioner presented various summary lists66 and schedules67, and the corresponding invoices, official receipts, import documents, BIR Forms No. 1600 and other documents68; which were all examined by the ICPA. A review of the Independent CPA report69 and the documents supporting the P26,838,41 0.6770 input VAT claim on domestic purchases and importation of goods other than capital goods, domestic purchases of services and purchases of services rendered by non-residents shows that input taxes amounting to P2, 102,853.13 should be disallowed for not being properly substantiated by VAT 65 Per Petition/or Review. Docket- Vol. I. D. 16: ~ CY 2012 Input VAT Claim 3rd Quarter p 18,025,207.76 4th Quarter 14,374,900.38 Total p 32,400,108.14 66 Exhibits "P-36.1" to "P-36.2" (Summary List of Purchases), Exhibits "P-37.1" to "P- 37.2" (Summary List ofImportations). 67 Exhibits "P-38.1" to "P-38.2" (Schedule of Domestic Purchases of Goods), Exhibits "P-39.1" to "P-39.2" (Schedule of Domestic Purchases of Services and Services Rendered to Non-Residents), Exhibits "P-40.1" to "P-40.2" (Schedule of Capital Goods), Exhibits "P-41.1" to "P-41.2" (Schedule ofImportation ofGoods), and Exhibit "P-45" (Schedule ofInput Tax on Purchases from Prior Quarters) 68 Exhibits "P-42.1" to "P-42.2". 69 Exhibit "P-56". 70 3rd Qtr 4th Qtr CY2012 CY2012 (Exhibit "P-4" (Exhibit P-5 '~ Total Domestic Purchases of Goods Other p 1,883,983.41 p 399,090.58 p 2,283,073.99 than Capital Goods Importation of Goods other than 111,892.00 142,212.00 254,104.00 Capital Goods 17,544,607.72 Domestic Purchase of Services 9,923,817.53 7,620,790.19 6,756,624.96 Services Rendered by Non-Residents P26,838,410.67 Total Allowable Input Tax 3,278,626.85 3,477,998.11 _ P1~198,319.7_2_ P11,640,090.88 f

DECISION CTACASENO. 8946 Page 30 of37 invoices or official receipts as prescribed under Sections 11 O(A) and 113(A) and (B) and 237 and 238 of the NIRC of 1997, as amended, in relation to Sections 4.110-1, 4.110-8, and 4.113-1 of RR No. 16-05, as amended, to wit: 3'u Qtr 4'" Qtr Total Reference CY 2012 CY 2012 to ICPA Report Findings Amount in PHP DOMESTIC PURCHASES OF GOODS 44,203.30 - 44,203.30 Annex B-6 a. Supported by original copies of sales invoice dated outside 594.64 the period of claim but within CY 2012 - 594.64 Annex B-7 b. Supported by original copy of charge invoice dated outside 1,146.75 the period of claim but within CY 2012 1,301.79 - 1'146.75 Annex 8-8 c. Supported by original copies of retail invoice dated outside 2,951.78 the period of claim but within CY 2012 50,198.26 - 1,301.79 Annex B-9 d. Supported by original copies of service invoice stamped 33,023.53 Annex B-10 with "Not Valid Source of Input VAT" 30,071.75 80,270.01 30,071.75 e. Domestic purchase of goods without supporting documents 210,991.72 95,715.24 306,706.96 Annex C-3 Subtotal 857,771.17 165,575.59 1,023,346.76 Annex C-6 DOMESTIC PURCHASES OF SERVICES - 3,233.10 3,233.10 Annex C-7 a. Supported by original copies of newly issued VAT ORs showing all the information required under the Tax Code, as 30,384.96 3,763.69 34,148.65 Annex C-8 amended 4,296.72 71,431.19 75,727.91 Annex C-13 b. Supported by original copies of VAT ORs dated outside the period of claim but within CY 2012 - 1,603.54 1,603.54 Annex C-14 c. Supported by original copies of VAT ORs dated outside the - 1,123.49 1,123.49 Annex C-15 period of claim but within CY 2012 and where actual amount 7,800.00 Annex C-16 was not indicated in words 7,800.00 - d. Services supported by original copies of VAT ORs dated outside the period of claim but within CY 2012 and where 7,761.97 - 7,761.97 Annex C-17 amount per OR differs from amount per Schedule e. Supported by original copies of VAT ORs where the 307.50 - 307.50 Annex C-18 amount of Input VAT was not indicated f. Supported by original copies of VAT ORs where the amount 2,881.07 55,637.24 58,518.31 Annex C-19 of Input VAT was not indicated and where actual payment was not indicated in words 2,869.60 5,571.43 5,571.43 Annex C-20 g. Supported by original copies of VAT ORs dated outside the period of claim but within CY 2012 - 12,564.12 12,564.12 Annex C-21 h. Supported by original copies of VAT ORs with incorrect 12,829.56 15,699.16 Company TIN 20,062.32 I i. Supported by original copies of VAT ORs with incorrect 1, 145,127.03 Company name and where actual payment was not indicated Annex C-22 in words j. Supported by original copies of VAT ORs stamped with "Not 183,879.12 183,879.12 Annex C-23 1 Valid Source of Input VAT" and where Company TIN was not indicated 10,424.78 30,487.10 Annex C-24 k. Supported by original copies of VAT ORs stamped with "Not Valid Source of Input VAT" and where input VATwas 623,352.09 1' 768,479.12 indicated in sales invoice I. Supported by original copies of VAT ORs dated outside CY 111,892.00 142,212.00 254,104.00 Annex E-1 2012 m. Supported by original copies of VAT ORs dated outside CY 2012 and where actual payment was not indicated in words n. Supported by original copies of sales invoice dated outside the period of claim o. Supported by Certified True Copies of VAT ORs where amount of input VAT was not indicated p. Domestic purchase of services without supporting documents Subtotal IMPORTATION OF GOODS a. Supported by IEIRDs but without proof of VAT Payment ~

DECISION CTA CASE NO. 8946 Page 31 of37 Subtotal 111,892.00 142,212.00 254,104.00 1,307,217.29 795,635.84 2,1 02,853.13 TOTAL In addition, the Court finds that the following amounts of input VAT claimed by petitioner were higher than the amounts reflected in the official receipts, thus, the difference of P23,257.67 should likewise be disallowed: Input VAT Input VAT per per Official OR Schedule Receipt Difference Exhibit P-41 Supplier No. OR Date Amount in PHP Folder 19, Supported by original copies of VAT ORs where amount per OR differs from amount per Schedule Page 2 (Annex C-10 of the /CPA Report) Folder 19, Page 3 Third Quarter of CY 2012 Folder 19, Ayala Foundation, Inc. 1789 8/22/2000 2,280.00 2,239.29 40.71 Page 7 DMJ Multi-Print and Services 664 8/29/2012 482.14 482.00 0.14 Folder 19, Page 8 North Park Noodle House, Inc. 46469 9/26/2012 26,690.98 4,453.18 22,237.80 I North Park Noodle House, Inc. 46471 9/26/2012 4,621.00 4,238.62 382.38 Folder 19, I subtotal 34,074.12 11,413.09 22,661.03 Page 18 Folder 19, Fourth Quarter of CY 2012 Page 21 llustrado Restaurant 18330 10/31/2012 499.83 176.79 323.04 ' MoneyDoctors, Inc. 22 11/22/2012 9,120.00 8,846.40 273.60 subtotal 9,619.83 9,023.19 596.64 Total 43,693.95 20,436.28 23,257.67 As a consequence, out of the P26,838,410.67 input VAT claim on domestic purchases and importation of goods other than capital goods, domestic purchases of services and purchases of services rendered by non-residents, only the amount of P24, 712,299.87 represents petitioner's valid input VAT, computed as follows: 3rd Qtr 4th Qtr Total CY 2012 CY 2012 Amount in PHP 2,283, 073.99 Input VAT per Returns 254,104.00 Domestic Purchases of Goods Other than Capital 1,883,983.41 399,090.58 111,892.00 142,212.00 17,544,607.72 Goods 7,620,790.19 6,756,624.96 9,923,817.53 3,477,998.11 Importation of Goods other than Capital Goods 3,278,626.85 11 ,640,090.88 26,838,410.67 15,198,319.79 Domestic Purchases of Services 1,307,217.29 795,635.84 2,102,853.13 Services Rendered by Non-Residents Total Less: Disallowances Not properly substantiated by VAT invoices and official Recei_Q_ts f

DECISION CTACASENO. 8946 Page 32 of37 Excess of petitioner's claim over the input VAT shown 22,661.03 596.64 23,257.67 in the supporting official receipts 1 ,329,878.32 796,232.48 2,126,110.80 Total Disallowances 13,868,441.47 10,843,858.40 24,712,299.87 Properly Substantiated Input VAT Claim on Domestic Purchases of Goods Other than Capital Goods and Domestic Purchases of Services and Purchases of Services Rendered by Non-residents The Court shall now look into the substantiation of the P6,940,578.87 amortization of input VAT on capital goods purchases exceeding P1 Million which originated from the P38,649,658.55 input tax deferred on capital goods exceeding P1 Million from previous quarter and P12,478,896.94 input VAT from purchases during the third and fourth quarters of CY 2012, as shown below: 3rd Qtr 4th Qtr Consolidated CY 2012 CY 2012 Input Tax Deferred on Capital Goods exceeding P1 P38,649,658.55 P36,325,894.53 P38,649,658.55 Million from Previous Quarter Add: Input Tax on Capital Goods exceeding P1 Million 1,219,454.71 11 ,259,442.23 12,478,896.94 Purchased this Quarter P39,869, 113.26 P47,585,336.76 P51, 128,555.49 Total Unamortized Input Tax on Capital Goods exceeding P1 Million 36,325,894.53 44,187,976.62 44,187,976.62 Less: Input Tax on Purchases of Capital Goods P3,543,218. 73 P3,397,360.14 P6,940,578.87 I exceeding P1 Million deferred for the succeeding period Amortization of Input Tax on Capital Goods exceeding P1 Million The Court notes that petitioner failed to present the VAT invoices/official receipts in support of the P38,649,658.55 input tax deferred on capital goods exceeding P1 Million from previous quarter. Hence, any claimed amortization of input tax related to the said amount shall be denied. In addition, the Court finds that the following purchases of capital goods during the fourth quarter of CY 2012, in the total amount of P1, 769,951.48, are not properly substantiated by VAT invoices, thus, shall likewise be disallowed, to wit: Domestic Purchases of Capital Goods Exceeding P1 M Input VAT Reference to a. Supported by original copies of sales invoice dated outside p 13,500.06 ICPA Report the period of claim but within CY 2012 1,263,296.85 Annex F-7 b. Represents capitalized purchases of services supported by 493,154.57 Annex F-8 VAT ORs dated outside CY 2012 P1 ,769,951.48 c. Represents capitalized purchases of services supported by Annex F-9 Certified True Co_py of VAT ORs dated outside CY 2012 Total t

DECISION CTA CASE NO. 8946 Page 33 of37 Consequently, only the amount of P1 0, 708,945.46 (~12,478,896.94 less ~1, 769,951.48) representing input VAT on petitioner's purchases of capital goods exceeding P1 Million during the third and fourth quarters of CY 2012 is properly substantiated by VAT invoices. Pursuant to Section 11 O(A)(2) of the NIRC of 1997, as amended, 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. Applying the provisions of Section 11 O(A)(2) to the present case, out of the P1 0, 708,945.46 substantiated input VAT on current purchases of capital goods exceeding P1 Million, only the amount of P418,686.24 is creditable for the third and fourth quarters of CY 2012, computed as follows: Monthly Allowable Input Tax Input Tax Supplier Period Input VAT 3rd Qtr 4th Qtr Total Credit 275,892.86 2012 2012 I 1,410,081.53 Amount in PHP 9,196.43 12,000.00 23,501.36 I Annex F-1 of the ICPA Report 923,517.00 (Supported by original copies of sales 408,432.30 200.00 invoice showing all the information 3,029,923.69 15,391.95 I required under the Tax Code, as 20,421.62 amended) 355,758.27 68,711.35 577,275.92 Fourth Quarter of CY 2012 23,717.22 28,863.80 I Citimex, Inc. November 4,598.21 - 9,196.43 December 23,501.36 Equicom, Inc. December 23,501.36 - December 200.00 One Sky Trading & Construction 200.00 - 15,391.95 October 20,421.62 Phil-Data Business S_ystems, Inc. 15,391.95 - 68,711.35 September Schneider Electric October 6,807.21 - subtotal 50,498.73 - Annex F-2 of the ICPA Report (Supported by original copies of charge 5,929.30 5,929.30 17,787.91 invoice showing all the information required under the Tax Code, as 9,621.27 - 28,863.80 amended) Third Quarter of CY 2012 Microdata Systems and Management, Inc. Fourth Quarter of CY 2012 Microdata Systems and Management, Inc. t

DECISION CTA CASE NO. 8946 Page 34 of37 subtotal 933,034.19 15,550.57 5,929.30 46,651.71 52,581.01 Annex F-3 of the ICPA Report (Supported by original copies of sales 764,409.24 invoice dated outside the quarter of 764,409.24 claim but within the period of claim) 1,549,176.29 Fourth Quarter of CY 2012 1,549,176.29 Phil-Data Business Systems, Inc. August 9,168.00 12,740.15 - 38,220.46 38,220.46 43,908.00 38,220.46 38,220.46 subtotal October 151,029.28 12,740.15 - Annex F-4 of the ICPA Report 234,618.75 (Supported by original copies of sales September 47,959.47 invoice dated outside the quarter of August 61,947.04 claim but within the period of claim and July 151,121.22 where amount per invoice differs from July amount per Schedule) 11,740.18 September 181,635.97 Fourth Quarter of CY 2012 August 448,660.71 1,368,916.78 Phil-Data Business Systems, Inc. September 137,046.12 25,819.60 - 77,458.81 77,458.81 152,400.68 77,458.81 77,458.81 subtotal October 166,473.42 25,819.60 - Annex F-5 of the ICPA Report December (Represents capitalized purchases of November 29,332.80 services supported by original copies of November 13,847.86 VATORs) 160,161.90 October 54,400.44 Third Quarter of CY 2012 November 15,000.00 December JLGT Marketing December 864.00 152.80 152.80 458.40 611.20 December 4,945.68 731.80 1,463.60 2,195.40 3,659.00 One Sk_y Trading & Construction December 448,449.48 2,517.15 7,551.46 7,551.46 15,102.93 December 227,787.84 3,910.31 11,730.94 11,730.94 23,461.88 One Sky Trading & Construction December 147,041.75 799.32 2,397.97 3,197.30 4,268,457.37 1,032.45 799.32 3,097.35 5,162.25 One Sky Trading & Construction October 2,518.69 2,064.90 7,556.06 10,074.75 December 3,984.00 2,518.69 One Sky Trading & Construction October Worry No-More Incorporated December December Worry No-More Incorporated October Fourth Quarter of CY 2012 Arkigrafix Corporation 195.67 - 587.01 587.01 3,027.27 - 3,027.27 3,027.27 Date Center Design Corp. 7,477.68 - 14,955.36 14,955.36 I 22,815.28 - 45,630.56 Date Center Design Corp. 2,284.10 - 6,852.31 ! 2,540.01 - 5,080.02 E.E. Black, Ltd. 2,774.56 2,774.56 45,630.56 - 6,852.31 One Sky Trading & Construction 488.88 - 488.88 230.80 230.80 I One Sky Trading & Construction 2,669.37 - 2,669.37 906.67 - 906.67 5,080.02 One Sky Trading & Construction 250.00 - 250.00 2,774.56 - One Sky Trading & Construction 14.40 - 43.20 488.88 82.43 - 82.43 230.80 One Sky Trading & Construction 7,474.16 - 22,422.47 2,669.37 3,796.46 - 3,796.46 906.67 One Sky Trading & Construction 2,450.70 - 2,450.70 250.00 71,140.96 147,235.64 One Sky Trading & Construction 26,281.71 43.20 82.43 One Sky Trading & Construction 22,422.47 3,796.46 Santa Fe Moving and Relocation 2,450.70 173,517.36 Santa Fe Moving and Relocation Trends and Technologies, Inc. Ultra Modular Concepts, Inc. Ultra Modular Concepts, Inc. subtotal Annex F-6 of the ICPA Report (Represents capitalized purchases of services supported by original copies of ORs dated outside the quarter of claim but within the period of claim) Third Quarter of CY 2012 ___..JI...GT Marketing -- - 66.40 - 199.20 199.20 t

DECISION CTA CASE NO. 8946 Page 35 of37 One Sky Trading & Construction October 152,400.68 2,540.01 - 7,620.03 7,620.03 RSB - Design and Management October 7,560.00 126.00 - 378.00 378.00 I - subtotal 163,944.68 2,732.41 8,197.23 8,197.23 32,211.02 TOTAL 10,708,945.46 178,482.42 I 386,475.22 418,686.24 In sum, petitioner's total allowable input VAT amounts only to P25, 130,986.11, as computed below: 3rd Qtr 4th Qtr Total CY 2012 CY 2012 p 24,712,299.87 Input VAT Claim on Domestic Purchases of Goods p 13,868,441.47 p 10,843,858.40 418,686.24 Other than Capital Goods and Domestic Purchases of Services and Purchases of Services 32,211.02 386,475.22 P25, 130,986.11 Rendered by Non-residents Amortization of Input VAT on Purchases of P13,900,652.49 P11 ,230,333.62 Capital Goods exceeding P1 Million Total Allowable Input VAT Since petitioner did not submit VAT invoices/receipts proving the existence of its reported input VAT carry-over from previous quarter in the amount of P184,844,401.2671 , its output VAT liability for the third and fourth quarters of CY 2012 in the aggregate amount of P6,303,439.59, shall be offset against the total allowable input VAT of P25, 130,986.11. Hence, only the remaining input VAT of P18,827,546.52 can be attributed to the entire zero-rated sales declared by petitioner in the amount of P1 ,239,280, 756.49 and only the input VAT of P4,415,655.04 is attributable to the valid zero-rated sales of P290,091 ,249.42, as computed below: 3rd Qtr 4th Qtr Total CY 2012 CY 2012 Total Allowable Input VAT ~ 13,900,652.49 ~ 11 ,230,333.62 ~ 25,130,986.11 Less: Output VAT72 Excess Input VAT 3,447,518.15 2,855,921.44 6,303,439.59 I i ~ 10,453,134.34 ~ 8,374,412.18 ~ 18,827,546.521 Valid Zero-Rated Sales ~164,390,754.19 ~125, 700,495.23 ~ 290,091,249.42 ~722,922,912.26 ~516,357,844.23 ~1 ,239,280,756.49 Total Declared Zero-Rated Sales 22.73973496% 24.34367883% I % of Valid Zero-Rated Sales to Total Declared Zero-Rated Sales 71 Exhibit "P-4", Line 20A, Docket, Vol. IV, p. 2190 72 Exhibits "P-4" and "P-5", Line 15B, Docket- Vol. IV, pp. 2190 to 2192. f

DECISION CTA CASE NO. 8946 Page 36 of37 Excess Input VAT Attributable P 2,377,015.041 P 2,038,640.00 I P 4,415,655.04 I to Valid Zero-Rated Sales Although the claimed input VAT was carried over by petitioner in its succeeding Quarterly VAT Returns73, the same remained unutilized until it was deducted as "VAT Refund/TCC Claimed"74 in its amended Quarterly VAT Return for the second quarter of CY 2014, thus, preventing the carry-over or application of the claimed input VAT in the next taxable quarters. WHEREFORE, in light of the foregoing considerations, the Petition for Review is PARTIALLY GRANTED. Accordingly, respondent is ORDERED TO REFUND or TO ISSUE A TAX CREDIT CERTIFICATE to petitioner in the amount of Four Million Four Hundred Fifteen Thousand Six Hundred Fifty Five Pesos and Four Centavos (P4,415,655.04) representing petitioner's unutilized excess input value-added tax attributable to its zero-rated sales for the Third and Fourth Quarters of Calendar Year 2012. SO ORDERED. ER~P.UY Associate Justice WE CONCUR: ~ ll. M\,..~-C~ Presiding Justice CIELITO N. MINDARO-GRULLA Associate Justice 73 Exhibits "P-1 0.1" to "P-1 0.2" (1st Qtr of CY 20 13), "P-11.1" to "P-11.2" (2nd Qtr of CY 2013), "P-12.1" to "P-12.2" (3rd Qtr of CY 2013), "P-13.1" to "P-13.2" (4th Qtr of CY 2013), Docket, Vol. IV, pp. 2360-2375; "P-20.1" to "P-20.2" (1st Qtr ofCY 2014), "P-21.1" to "P-21.2" (2nd Qtr ofCY 2014), Docket- Vol. IV, pp. 3590 to 3597. 74 Exhibit "P-21.2" (2nd Qtr ofCY 2014), Line 23D, Docket- Vol. IV, p. 3597.

DECISION CTA CASE NO. 8946 Page 37 of37 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. Presiding Justice Chairperson, 1st Division