NEW YORK BAY PHILIPPINES, INC., (now, Mastercard Transactions Services (Philippines) Inc) v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION NEW YORK BAY PHILIPPINES, CTA CASE NO. 9669 INC., Members: Petitioner, - versus- DEL ROSARIO, P.J. , Chairperson , MANAHAN, and REYES-FAJARDO, JJ. COMMISSIONER OF INTERNAL Promulgated : REVENUE, Respondent. )(- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - AMENDED DECISIO DEL ROSARIO, P.J.: This case was remanded by the Court of Ta)( Appeals (CTA) En Bane to the CTA First Division for the proper determination of the refundable amount, pursuant to its Decision dated March 24, 20221 and Resolution dated July 21 , 20222 in CTA EB Nos. 2364 and 2366 entitled Commissioner of Internal Revenue vs. New York Bay Philippines, Inc. and New York Bay Philippines, Inc. vs. Commissioner of Internal Revenue, respectively. The dispositive portions of said Decision pnd Resolution read : Decision dated March 24, 2022 "WHEREFORE, in light of the foregoing considerations, the Petition for Review filed by Commissioner of Internal Revenue is hereby DENIED. Meanwhile, the Petition for Review filed by New York Bay Philippines, Inc. is hereby GRANTED. According ly, the case is REMANDED to the Court of Tax Appeals First Division for the proper determination of the refundable amount. 1 CTA En Bane No. 2364 Docket, pp. 84 to 105. 2 CTA En Bane No. 2364 Docket, pp. 142 to 145l!Jl

Amended Decision New York Bay Philippines, Inc. vs. Commissioner of Internal Revenue CTA Case No. 9669 Meanwhile, the Commissioner of Internal Revenue's Notice of Change of Address is NOTED. SO ORDERED." Resolution dated July 21 . 2022 "WHEREFORE, the CIR's Motion for Reconsideration (En Bane Decision dated 24 March 2022) is hereby DENIED for lack of merit. SO ORDERED." NATURE OF THE CASE The present case involves New York Bay Philippines, Inc.'s (NYBPI) claim for refund or issuance of a tax credit certificate (TCC) in the aggregate amount of P46,835,732.67, allegedly representing its alleged excess and unutilized input value-added tax (VAT) on its purchases of goods and services attributable to its zero-rated sales for the four (4) quarters of calendar year (CY) 2015. THE FACTS As culled from CTA First Division's original Decision dated July 9, 2020, the undisputed facts of the present case are as follows: "THE PARTIES Petitione r [NYBPI] is a domest ic corporation w ith principal p lace of business at Unit 2102, 21st Floor AnteI Global Corporate Center, Julia Vargas Avenue, Pasig City. Petitioner is registered with the Bureau of Internal Revenue (BIR) Revenue District Office (ROO) No. 43 as a VAT taxpayer with Taxpayer Identification No. (TIN) 000-217-994-000. Respondent, on the other hand, is the Commissioner of Internal Revenue (CIR) with the power to decide, approve and grant claims for refund or tax credit of erroneously paid or overpaid taxes, as provided by law. THE FACTS AND THE PROCEEDINGS Based on its Amended Article of Incorporation, petitioner was organized with the following primary purpose: ~

Amended Decision New York Bay Philippines, Inc. vs. Commissioner of Internal Revenue CTA Case No. 9669 'To acquire by purchase, exchange, assignment, gift or otherwise, and to hold, own and use for investment or otherwise, and to sell, assign, transfer, exchange, lease, let, develop, mortgage, pledge, traffic, deal in and with and otherwise operate, enjoy and dispose of any and all properties and assets of every kind and description and wherever situated, as and to the extent permitted by law, including but not limited to, real estate, whether improved or unimproved, and any interest or right therein, as well as building , tenements, warehouses, factories , edifices and structures and other improvements, and bonds, debentures, promissory notes, shares of capital stock, or other securities or obligations, created, negotiated or issued by any corporation, association, or other entity, fore ign or domestic, and while the owner, holder or possessor thereof, to exercise all the right, powers and privileges of ownership or any interest therein , including the right to receive, collect and dispose of, any and all rentals, dividends, interests and income derived therefrom, and the right to vote on any proprietary or other interest, on any shares of the capital stock, and upon any bonds, debentures or other securities, having voting power, so owned or held provided that the Corporation shall not engage in mining, and provided further that it shall not engage in the business of an open- end investment company as defined in the Investment Company Act (Republic Act No. 2629), without first complying with the applicable provisions of the said Act, without necessarily engaging in stock brokerage or dealership in securities.' During the 4 quarters of CY 2015, petitioner rendered services in the Philippines to non-resident foreign corporations not engaged in business in the Philippines, the consideration for which were paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of Bangko Sentral ng Pilipinas. On April 24, 2015, July 24, 2015, October 23, 2015 and January 22, 2016, petitioner filed with the SIR its original Quarterly VAT Returns (SIR Form No. 2550-Q) for the 1st, 2nd, 3rd and 4th quarters of CY 2015, respectively, through the SIR's Electronic Filing and Payment System (eFPS). On February 2, 2015, November 23, 2015 and March 23, 2016, petitioner respectively filed through the SIR eFPS its Amended Quarterly VAT Returns (SIR Form No. 2550-Q) for the 1st, 3rd and 4th quarters of CY 2015. Per its final/amended Quarterly VAT Returns for the 1st, 2"d, 3rd and 4th quarters of CY 2015, petitioner's gross receipts amounted to ,.631 ,162,185.35, which consists of zero-rated sales and local sales subject to 12% VAT. Likewise, it reported an output tax liability of !>10,650.21 and accumulated input VAT credits on its domestiC11

Amended Decision New York Bay Philippines, Inc. vs. Commissioner of Internal Revenue CTA Case No. 9669 purchases of goods and services amounting to ,47,188,611 .72, for the 4 quarters of CY 2015. Allegedly, petitioner applied a portion of its input tax credits as payment for its output tax of P10,650.21 and deducted therefrom the amount of P342,228.84 representing input tax on purchases of capital goods exceeding P1 million deferred for the succeeding period. Hence, it had excess and unutilized input VAT in the amount of P46,835,732.67 attributable to its zero-rated sales for the 4 quarters of CY 2015, which was not applied against any output tax during the succeeding taxable periods. On March 29, 2017, petitioner filed with the SIR an administrative claim for refund, with attached Application for Tax Credits/Refunds (SIR Form No. 1914), requesting for the refund of or issuance of TCC of its alleged excess and unutilized input VAT for the 4 quarters of CY 2015 in the amount ofP46,835,732.67. On August 25, 2017, petitioner filed the instant Petition for Review, which was initially raffled to the Court's Second Division. In his Answer, respondent argued that in claims for refund , the taxpayer has the burden of proof and must adduce the required documents under the law, rules and regulations. Specifically, petitioner must prove that its sale of services qualified as VAT zero-rated pursuant to Section 108 (B) (2) of the National Internal Revenue Code (NIRC) of 1997, as amended. It must comply with the parameters laid down under Section 110 (B) of the NIRC of 1997, as amended, as well as the substantiation requirements under Section 113 of the same Code and Section 4.108-5 (a) of Revenue Regulations (RR) No. 16- 2005. It must also establish compliance with the substantiation of input tax credits under Section 4.110-8-5 (a) of RR No. 16-05, as amended, and those under Revenue Memorandum Order (RMO) No. 53-98. After the Pre-Trial Conference on November 23, 2017, the parties filed their Joint Stipulation of Facts and Issues on January 12, 2018, on the basis of which a Pre-Trial Order was issued on January 19, 2018. During the trial, petitioner presented Ma. Victoria Cruz and Madonna Mia S. Dayego as its witnesses. Witness Ma. Victoria Cruz testified that she started working for petitioner on June 11, 2001 and currently its Senior Accounting Manager. Petitioner's case is for refund or issuance of TCC in the amount of P46,835,732.67, representing its excess and unutilized input VAT on its purchases of goods and services attributable to zero-rated sales for the 4 quarters of CY 2015. Petitioner is a domestic corporation authorized to engage in the following business activities, to wit: [t]o acquire by purchase,r:J/

Amended Decision New York Bay Philippines, Inc. vs. Commissioner of Internal Revenue CTA Case No. 9669 exchange, assignment, gift or otherwise, and to hold, own and use for investment or otherwise, and to sell, assign, transfer, exchange, lease, let, develop, mortgage, pledge, traffic, deal in and with and otherwise operate, enjoy and dispose of any and all properties and assets of every kind and description and wherever situated, as and to the extent permitted by law. It is also engaged in financial holding activities, particularly the business of a remittance service provider. As a remittance service provider, petitioner utilizes and offers, alternative delivery channels, including door-to-door, deposit to commercial bank account, pick-up from pawnshops and commercial and rural banks, credit cash cards and bills payment, as services to its non-resident clients . For CY 2015, petitioner rendered services to two (2) non-resident clients, namely: i) Trans-Fast Remittance, LLC., a limited company created under the laws of Delaware, United States of America (U .S.A.) and conducting business in the U.S.A.; and ii) Trans-Fast International FZ-LLC, a company existing under the laws of Dubai, United Arab Emirates (UAE) and conducting business therein. Both companies are doing business outside the Philippines and were not engaged in any business activity in the Philippines at the time petitioner rendered services to them. The witness further declared that per petitioner's Quarterly VAT Returns for the 1st, 2nd , 3rd and 4th quarters of CY 2015, its gross receipts amounted to ~631 , 162 , 185.35, consisting of local sales subject to 12% VAT and zero-rated sales amounting to ~631 , 073 ,433 .56 . On the other hand, petitioner's output tax on its VATable sales for the 4 quarters of CY 2015 amounted to P10,650.21 . Further, based on its Quarterly VAT Returns for the 4 quarters of CY 2015, petitioner accumulated input VAT credits on its domestic purchases of goods and services in the total amount of ~47 , 188, 611 .72 . Petitioner applied a portion of its input tax credits as payment for its output tax of ~ 10 ,650 .21 and deducted therefrom the amount of ~342,228.84 representing input tax on purchases of capital goods exceeding P1 million deferred to the succeeding period . Hence, petitioner had excess and unutilized input VAT in the amount of P46,835,732.67, which remained unutilized since it was not applied against any output VAT liability during and in the succeeding quarters and was not carried forward to the succeeding taxable periods. On March 29, 2017, petitioner filed with BIR ROO No. 43 an administrative claim for refund/issuance of TCC for its excess and unutilized input VAT for the 4 quarters of CY 2015 in the total amount of ~46,835,732.67, with a Sworn Certification that it has submitted complete documents to substantiate its claim for refund . This notwithstanding , the BIR failed to act on the said claim for refund. Hence, petitioner filed the instant case with the Court on August 25, 2017~

Amended Decision New York Bay Philippines, Inc. vs. Commissioner of Internal Revenue CTA Case No. 9669 The Court-commissioned ICPA, Madonna Mia 5. Dayego, testified that she audited and evaluated petitioner's documents and record in support of its claim for tax refund/issuance of TCC for its excess and unutilized input VAT on purchases of goods and services attributable to zero-rated sales for the 4 quarters of CY ended December 31, 2015. Per her examination and verification of petitioner's pertinent documents, the result of which was stated in her ICPA Report dated February 28, 2018, petitioner is entitled to its claim for refund/issuance of TCC in the reduced amount of ~46 , 371 ,661.68, corresponding to the excess and unutilized input VAT on purchase of goods and services. The amount of ,464,070.99 was disallowed due to petitioner's non-compliance to the VAT invoicing requ irements and lack of supporting documents. After its Formal Offer of Evidence, petitioner rested per Resolution dated September 5, 2018. For his part, respondent presented his lone witness, Revenue Officer II Susan G. Abesamis, who testified that she has been employed with the BIR since 1990 and is currently assigned at ROO 43, Pasig City. Petitioner's application for VAT refund was assigned to her for evaluation and audit investigation through Letter of Authority (LOA) No. LOA-043-201 7-00000002 dated April 24, 2017. Upon receipt of the LOA, she checked the requirements attached to the application for VAT refund and noticed that certain documentary requi rements were lacking . Thus, she notified petitioner's representative with instruction to submit the lacking documents. However, petitioner's representative failed to comply, hence, she gave petitioner another extension to comply, but still failed . This prompted her to prepare a Memorandum of Report stating that petitioner failed to comply with mandatory requirements for claims for VAT CrediVRefund under Revenue Memorandum Circular (RMC) No. 54-2014, as clarified by RR No. 1-2017. After Formal Offer of Evidence, respondent rested as shown in the Resolution dated January 17, 2019. On September 24, 2018, the instant case was transferred to the Court's First Division. On March 25, 2019, petitioner filed its Memorandum. Respondent did not despite directive. Accordingly, the instant case was deemed submitted for decision on April 10, 2019."3 (Citations omitted) 3 CTA Division Docket, Valli , pp. 538 to 54()1

Amended Decision New York Bay Philippines, Inc. vs. Commissioner of Internal Revenue CTA Case No. 9669 On July 9, 2020, this CTA First Division rendered its Decision on the present case,4 the dispositive portion of which reads: "WHEREFORE, the instant Petition for Review filed by petitioner New York Bay Philippines, Inc., on August 25, 2017, is hereby PARTIALLY GRANTED. Accordingly, respondent Commissioner of Internal Revenue is DIRECTED to REFUND or to ISSUE A TAX CREDITR CERTIFICATE in favor of petitioner New York Bay Philippines, Inc. the amount of P9,582,877.37, representing its excess and unutilized input VAT attributable to its zero-rated sales for the four (4) quarters of CY 2015. SO ORDERED." On July 28, 2020, NYBPI filed a "Motion for Partial Reconsideration (Re: Decision dated July 9, 2020)"; 5 while the Commissioner of Internal Revenue (CIR) filed his "Motion for Reconsideration (Decision dated 09 July 2020)"6 on July 30, 2020. On October 7, 2020, the CTA First Division issued a Resolution denying the parties' respective Motions.7 Undeterred, NYBPI and the CIR filed their respective "Petitions for Review" before the CTA En Bane on November 3, 2020 and November 11 , 2020, docketed as CTA EB No. 2366 8 and 2364,9 respectively. As already intimated, the CTA En Bane granted NYBPI's "Petition for Review" and denied the CIR's "Petition for Review" in its Decision dated March 24, 2022. On April 12, 2022, the CIR posted a "Motion for Reconsideration (En Bane Decision dated 24 March 2022)" .10 In the Resolution dated July 21 , 2022,11 the CTA En Bane denied CIR's Motion for Reconsideration for lack of merit. On August 12, 2022, the CIR, through the Office of the Solicitor General (OSG), filed with the Supreme Court a "Motion for Extension 4 eTA Division Docket, Vol II, pp. 538 to 564. 5 eTA Division Docket, Vol II, pp. 565 to 58 1. 6 eTA Division Docket, Vol II, pp. 583 to 588. 7 CTA Division Docket, Vol II, pp. 6 10 to 6 12. 8 CTA En Bane No. 2366 Docket, pp. 1 to 31 . �9 CTA En Bane No. 2364 Docket, pp. 5 to 12. 1 CTA En Bane No. 2364 Docket, pp. 11 1 to 115. "CTA En Bane No. 2364 Docket, pp. 142 to 145~

Amended Decision New York Bay Philippines, Inc. vs. Commissioner of Internal Revenue CTA Case No. 9669 of Time to File Petition for Review on Certiorari", 12 which was docketed as G.R. No. 262100. On September 6, 2022, the CIR, through the OSG, posted his "Motion to Withdraw Motion for Extension of Time to File Petition for Review on Certiorari".13 Thereafter, the Supreme Court issued the Resolution dated September 12, 2022,14 which reads as follows: "G.R. No. 262100 (Commissioner of Internal Revenue vs. New York Bay Philippines, Inc.). - The Court resolves to GRANT the Office of the Solicitor General's (OSG) Motion to Withdraw Motion for Extension of Time to file petition for review on certiorari dated September 5, 2022, stating that upon further review of the pertinent records and applicable laws and jurisprudence, the OSG determined that it would be best to no longer appeal the assailed resolution, thus, praying that the previously filed motion for extension we considered withdrawn . In view thereof, the Court NOTES WITHOUT ACTION the Office of the Solicitor General's motion for extension of thirty (30) days from the expiration of the reglementary period within which to file a petition for review on certiorari. Let this case be considered CLOSED and TERMINATED and the parties be INFORMED accordingly." On January 3, 2023, due to the OSG's "Motion to Withdraw Motion for Extension of Time to File Petition for Review on Certiorari", the Supreme Court Resolution dated September 2, 2022 became final and executory and was recorded in the Book of Entries of Judgment. 15 THE ISSUE The main issue submitted by the parties for the CTA First Division's resolution is as follows: Whether NYBPI is entitled to its claim for refund of or issuance of TCC in the amount of P46,835,732.67, representing its excess and unutilized input VAT for the four quarters of CY 2015.16 12 CTA En Bane No. 2364 Docket, pp. 146-1 83. 13 CTA En Bane No. 2364 Docket, pp. 185-1 98. 14 CTA En Bane No. 2364 Docket, p. 201 . 1s CTA Division Docket, Vol II, p. 822. 1s CTA Division Docket, Vol II, p. 545~

Amended Decision New York Bay Philippines, Inc. vs. Commissioner of Internal Revenue CTA Case No. 9669 THE COURT'S RULING In its Decision dated March 24, 2022, the CTA En Bane has already resolved that NYBPI has satisfactorily proven that its sales to Trans-Fast International FZ-LLC qualify for VAT zero-rating, viz. : "To recall, the Court in Division denied VAT zero-rating to TF International for failure to satisfy the two requisites: (1) services rendered in its favor were not in the same category as 'processing, manufacturing or repacking of goods;' and (2) services were performed in the Philippines. Given that the Service Agreement to TF Remittance extends to TF International pursuant to the Addenda, the relevant provisions in the Service Agreement, insofar as it proves that services rendered are not in the same category as 'processing, manufacturing or repacking of goods' and that services were performed in the Philippines, also apply to TF International." Apropos thereto, considering that in the CTA First Division Decision dated July 9, 2020 it was already established that NYBPI has successfully proven its compliance with the first, 17 second, 18 third, 19 sixth, 20 and seventh21 requisites for the entitlement to input VAT refund , the CTA First Division, pursuant to CTA En Bane's Decision dated March 24, 2022, shall determine anew whether NYBPI complied with the fourth , fifth, eighth, and ninth requisites, namely: 1. Whether the taxpayer is engaged 1n zero-rated or effectively zero-rated sales; 2. For zero-rated sales under Sections 106(A)(2)(a)(1 ), (2) and (b), and 108(8)(1) and (2), of the National Internal Revenue Code (NIRC) of 1997, as amended, whether the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with BSP rules and regulations; 3. Whether 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 17 NYBPI's administrative claim was seasonably filed. 18 NYBPI's judicial claim was seasonably filed . 19 NYBPI is a VAT-registered taxpayer with Certificate of Registration No. 3RC0000807275 dated January 1, 1997 and Tax Identification No. (TIN) 000-217-994-000. 20 NYBPI 's input VAT being claimed does not appear to be transitional input taxes. " NYBPI's input taxes being claimed are due or paid in the amount of ~46,31 0 ,726.4~

Amended Decision New York Bay Philippines, Inc. vs. Commissioner of Internal Revenue CTA Case No. 9669 of these sales, the input taxes shall be proportionately allocated on the basis of sales volume; and, 4. Whether the input taxes have not been applied against output taxes during and in the succeeding quarters. NYBPI is engaged in zero-rated sales of services to non- resident foreign entities during the four (4) quarters of 2015 in the amount of P631,073,433.56. In the Decision dated June 9, 2020, the CTA First Division determined that only the amount of P130,660 ,046.47 are valid zero- rated sale of services to non-resident foreign entities during the four (4) quarters of CY 2015. This amount pertains to NYBPI's sale of services to Trans-Fast Remittance LLC. On the other hand, the zero-rated sales to Trans-Fast International FZ-LLC for CY 2015 amounting to P500,413,387.12 was disallowed for NYBPI's failure to prove that the services it rendered thereto were not in the same category as "processing, manufacturing or repacking of goods", and that the services rendered were performed in the Philippines. The CTA En Bane, however, ruled that NYBPI's sales to Trans- Fast International FZ-LLC for the four (4) quarters of the CY 2015 likewise qualify as zero-rated sales. To recall, the CTA First Division, in the Decision dated June 9, 2020, found that NYBPI fully complied with the fourth and fifth requisites by presenting Bank Advices or proof of inward remittance from BOO Corporate Remittance System,22 Schedule of Zero-rated Sales for CY 201523 and the corresponding VAT zero-rated official receipts 24 supporting its declared zero-rated sales for the four (4) quarters of CY 2015. The CTA First Division finds that the enumerated documents likewise include those which duly support NYBPI's zero-rated sales to Trans-Fast International FZ-LLC amounting to P500,413,387.12, detailed as follows: 22 Exhibits "P-37-1 " to "P-37-25". 23 Exhibit "P-32". 24 Exhibits "P-35-26" to " P-35-50" ~

Amended Decision New York Bay Philippines, Inc. vs. Commissioner of Internal Revenue CTA Case No. 9669 Bank Amount Conversion Amount in USD Rat e in Ph~ (c)= Advi ce (b) (a) (a) � (b) Offic ial ReceiJ:>t Exhibit No. p 44.9514 $ 741,31 4.00 p 33,323,1 02.14 E xh i bit 869,588.00 44 .6878 707,608.00 4 4 .6044 38,859,974.63 Date No. No. 726,294.00 44 .2214 3 1,562,430 .28 901,314.00 44 .4457 32 ,117,737.49 As declared i n the 1st Quarterl'l VAT Return 40,059,531.65 3,946,118.00 44.4136 175, 922,776. 19 January 6, 2015 11540 "P-35-26" "P-37-1" 4 4 .6106 776,536.00 44 .9831 34,488 ,759.29 February 10, 2015 11543 "P-35-29" "P-37-4" 903,814.00 40,319,684.83 846,620.00 45.2649 38 ,083 ,592. 12 March 3, 2015 11544 "P-35-30" "P-37-5" 2,526,970.00 112,892,036.24 46.1420 March 24, 2015 11546 "P-35-32" "P-37-7" 92 1,532 .00 46 .7504 41,713,053.83 April 28, 2015 11548 "P-35-34" "P-37-9" 879,556 .0 0 46.3609 4 0,584 ,472 .9 5 903 ,240 .0 0 47.0067 4 2,226,83 1.30 Subtotal 2, 704,328.00 124,524,358.08 As declared in the 2nd Quarter! VAT Return 968,460.00 44 ,898 ,677 .21 897,224.00 42 ,175,539.40 May 27,2015 11550 "P-35-36" "P-37-11" 1,865,684.00 87,074,216.61 $ 11,043,100.00 ~ 500,41 3,387.12 July 1, 2015 11553 "P-35-39" "P-37-1 4" August 4, 2015 11555 "P-35-41 " "P-37-16" Subtotal As declared in the 3'd Quarterh VAT Return August26,2015 11557 "P-35-43" "P-37-18" September 29, 2015 11558 "P-35-44" "P-37-19" November 3, 2015 11 562 "P-35-47" "P-37-22" Subtotal As declared in the 4th Quarterlv VAT Return December 1, 2015 11564 "P-35-49" "P-37-24" December 29, 2015 11565 "P-35-50" "P-37-25" Subtotal GRAND TOTAL Adding the foregoing valid zero-rated sales of NYBPI to Trans- Fast International FZ-LLC amounting to P500,413,387.12 to the previously determined valid zero-rated sales to Trans-Fast Remittance LLC amounting to P130,660,046.47 , the same yields a total valid zero-rated sales of P631 ,073,433.59, with a minimal rounding difference against the total zero-rated sales declared by NYBPI in its Quarterly VAT Returns for CY 201525 in the aggregate amount of P631,073,433.56. Verily, NYBPI has complied with the fourth and fifth requisites by establishing that it is engaged in zero-rated sale of services for the four (4) quarters ofCY 2015 in the amount ofP631 ,073,433.56. 2s Exhibits "P-4", "P-5", "P-7", and "P-9", CTA Division Docket, Vol. I, pp. 386 to 387, 388 to 389, 392 to 393, and 396 to 397, respectively. ~

Amended Decision New York Bay Philippines, Inc. vs. Commissioner of Internal Revenue CTA Case No. 9669 Since there are both zero-rated or effectively zero-rated sales and taxable sales, the input taxes due or paid in the amount of P46,310,726.45 shall be proportionately allocated on the basis of sales volume. To reiterate, the eighth requisite pertains to those input taxes claimed that are attributable to zero-rated or effectively zero-rated sales. Whenever there is a mixture of zero-rated or effectively zero- rated sales, and taxable or exempt sales, and considering that 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. Again, in the Decision dated June 9, 2020, the CTA First Division determined that, on the basis of its Quarterly VAT Returns for CY 2015, NYBPI had sales for the said periods in the aggregate amount of P631 ,162,185.35, broken down as follows: Type of Sale Amount VATable Zero-Rated p 88,751 .79 Total Sales 631 ,073,433.56 p 631 '162,185.35 Since its input VAT cannot be directly or entirely attributed to any of the transactions, the CTA First Division shall allocate the valid input VAT of P46,31 0,726.45 proportionately on the basis of the volume of its sales, as shown below: Taxable Sales for the CY 2015 p 88,751 .79 Divided by the Reported Total Sales per Quarterly VAT Returns 631 ,1 62,185.35 Multiplied by Total Valid Input VAT 46, 310 ,726.45 Valid input VAT allocated to sales subject to the 12% VAT p 6,512.05 Total Valid Zero-Rated Sales p 631,073,433.56 Divided by the Reported Total Sales per Quarterly VAT Return 631,162, 185.35 Multiplied by Tota l Valid Input VAT Valid Input VAT allocated to valid zero-rated sales 46,3 10 ,726.45 p 46,304,214.40 Thus, for the purposes of, and with regard to NYBPI 's compliance with the eighth requisite, only the amount of "'

Amended Decision New York Bay Philippines, Inc. vs. Commissioner of lntema/ Revenue CTA Case No. 9669 P46,304,214.40 represents valid input VAT attributable to valid zero- rated sales. NYBPI's input taxes were not applied to any output tax liability. Having determined that NYBPI had valid input VAT attributable to its zero-rated sales, the CTA First Division shall now determine whether NYBPI was able to comply with the ninth requisite i.e., whether the valid input VAT attributable to its zero-rated sales was applied against its output VAT liability during and in the succeeding quarters. For the periods under consideration , NYBPI had an output VAT liability in the amount of P1 0,650.21. 26 As can be gleaned from NYBPI 's Amended VAT Return for the 4th quarter of 2015,27 petitioner utilized its input VAT for CY 2015 to pay for its P10,650.21 output VAT. Since NYBPI's valid input VAT in the amount of P6,512.05 allocated to sales subject to the 12% VAT is not enough to cover the said output VAT liability, the output VAT still due against NYBPI is computed as follows: Output VAT liabilities for the CY 2015 p 10,650.21 Less: Valid Input VAT allocated to Sales subject to the 12% VAT 6,51 2.05 Output VAT Still Due p 4,138.16 The 2015 valid input VAT attributable to val id zero-rated sales in the amount of P46,304,214.40, as earlier determined, shall then be utilized against the said remaining output VAT liability of NYBPI in the amount of P4,138.16. Correspondingly, on ly the rema ining input VAT of P46,300,076.24 represents NYBPI's unapplied/excess input VAT attributable to its valid zero-rated sales, as determined below: Valid Input VAT Allocated to Zero-Rated Sales p 46 ,304 ,214.40 4 ,138.16 Less: Output VAT still due 46,300,076.24 Excess input VAT attributable to valid zero-rated sales p 26 Line 198 of Exhibit "P-9", CTA Division Docket, Vol. I, p. 396. 21 Exhibit "P-9", CTA Division Docket, Vol. I, p. 396{)1

Amended Decision New York Bay Philippines, Inc. vs. Commissioner of Internal Revenue CTA Case No. 9669 Needless to state, the said amount of P46,300,076.24 is included in the amount of the subject refund claim , i.e., the amount of P46,835,732.67. Although the input VAT in the amount of P46,835,732.67 was initially carried-over by NYBPI to its succeeding Quarterly VAT Returns,28 the same remained unutilized until the same was deducted as "VAT Refund/TCC Claimed" in its Amended 4th Quarterly VAT Return of CY 2015. 29 It bears stressing that after deducting the aforesaid input VAT in the amount of P46,835,732.67, NYBPI had a P0.01 30 amount of output tax still payable as of the end of the 4th quarter of CY 2015. Moreover, only the amount of "P0.00"31 was reflected as Input Tax Carried Over from Previous Period in the succeeding Amended Quarterly VAT Return for the 1st Quarter of CY 2016. In fine, NYBPI is deemed to have fulfilled the said ninth requisite in the refund of input VAT under Section 112(A) of the NIRC of 1997, as amended. All told, NYBPI has established by preponderance of evidence that it is entitled to a modified refundable amount of P46,300,076.24, representing its excess and unutilized input VAT attributable to its zero-rated sales for the four (4) quarters of CY 2015. WHEREFORE, premises considered, the Petition for Review filed by New York Bay Philippines, Inc. on August 25, 2017 is hereby PARTIALLY GRANTED. The dispositive portion of the CTA First Division's Decision dated July 9, 2020 is hereby MODIFIED to read as follows: "WHEREFORE, the instant Petition for Review filed by petitioner New York Bay Philippines, Inc., on August 25, 2017, is hereby PARTIALLY GRANTED. Accordingly, respondent Commissioner of Internal Revenue is DIRECTED TO REFUND, or TO ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner New York Bay Philippines, Inc. the amount of P46,300,076.24, representing its excess and unutilized input VAT attributable to its zero-rated sales for the four (4) quarters of CY 2015. SO ORDERED." 2s Exhibits "P-5", "P-7" and "P-9", CTA Division Docket, Vol. I, pp. 388 to 389, 392 to 393, and 396 to 397, respectively . 29 Line 230 of Exhibit "P-9", CTA Division Docket, Vol. I, p. 397. 3o Line 29 of Exhibit "P-9", CTA Division Docket, Vol. I, p. 397. 31 Line 20A of Exhibit "P-10", CTA Division Docket, Vol. I, p. 398"}.

Amended Decision New York Bay Philippines, Inc. vs. Commissioner of Internal Revenue CTA Case No. 9669 SO ORDERED. Presiding Justice WE CONCUR: ~ /; ~~--ffdl#'di'V. ~ f. ~ v f~ ~ MARIAN IVY'F. REY~S-FAJARDO CATHERINE T. MANAHAN Associate Justice Associate 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. 10 Presiding Justice