COLT COMMERCIAL INC. v. THE COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SECOND DIVISION COLT COMMERCIAL, INC., CTA CASE NO. 9110 Petitioner, Members: -versus- CASTANEDA, JR., Chairperson, CASANOVA, and MANAHAN, JJ. THE COMMISSIONER OF Promulgated: /D :07J tffll INTERNAL REVENUE, MAR Z7 1018 Respondent. x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ~ - - - - x AMENDED DECISION CASANOVA, J.: For the Court's resolution is petitioner's Motion for Reconsideration (of the Decision dated November 17, 2017), filed on December 4, 2017, with respondent's Comment (To Petitioner's Motion for Reconsideration of the Decision dated November 17, 2017), filed by registered mail on December 27, 2017 and received by the Court on January 4, 2018. Petitioner moves for the reconsideration of the Decision dated November 17, 2017 (assailed Decision), the dispositive portion of which reads: WHEREFORE, premises considered, the instant Petition for Review is DENIED for insufficiency of evidence. SO ORDERED~

AMENDED DECISION CTA CASE NO. 9110 The denial of the instant petition was mainly due to petitioner's failure to prove that it had zero-rated sales of goods in accordance with Section 106(A)(2)(c) of the National Internal Revenue Code of 1997, as amended (Tax Code). More particularly, the Court found that the authenticity and veracity of the Philippine Economic Zone Authority (PEZA), Subic Bay Metropolitan Authority (SBMA) and Board of Investment (BOI) Certificates of Registration, and PEZA ERD Forms No. 97-01 and BOI Certificates of Tax Exemption of petitioner's clients were not confirmed by the Court-commissioned Independent Certified Public Accountant (ICPA) as petitioner failed to provide the originals thereof for verification. Thus, the said documents were not given credence by the Court. Further, the Court found that the Certificate dated February 16, 20161 which the !CPA used as basis to confirm the PEZA registration of petitioner's clients2 was not formally offered. The Court observed that a mere copy of the said document was only introduced by the !CPA as attachment to his report. Nowhere can it be seen from the said report that the !CPA examined its original or that the same is a faithful reproduction of the original document. In the instant motion, petitioner alleges that there is no basis in the findings of this Court that it failed to discharge the burden to prove that it had zero-rated sales for first quarter of the taxable year 2013. According to petitioner, the !CPA, Mr. Garry Pagaspas, attested to the authenticity and due execution of the documents attached to his Judicial Affidavit, including the !CPA Report and its exhibits as shown in his Sworn Statement dated December 1, 2017, a copy of which was attached to the motion as Annex "A"-MR. Petitioner further claims that the PEZA Certificate dated February 16, 2016 was attached as Exhibit "P-60" of the !CPA Report dated April 6, 2016 and that this documentary exhibit, together with its attached exhibits, were marked and formally offered as Exhibit "P- 36". These documents were allegedly admitted as part of the evidence in chief of the petitioner as stated in the Resolution of this Court dated July 15, 2016. Thus, there is no basis for the Court to rule that petitioner was not able to adduce sufficient evidence that its clients are PEZA and/or SBMA-registered entities.~ 1 Exhibit "P-60". 2 Page 9 of Exhibit "P-36".

AMENDED DECISION CTA CASE NO. 9110 On the other hand, respondent, in his comment, submits that he completely agrees with the assailed Decision denying the instant Petition for Review for insufficiency of evidence. The Court finds the motion to be partly meritorious. As found by the Court, the PEZA Certification dated February 16, 2016, stating that the entities listed therein are registered with PEZA, which the ICPA used as basis to confirm the PEZA registration of petitioner's clients, was not formally offered. Thus, the Court did not consider the same in the assailed Decision, pursuant to Section 34 of Rule 132, which provides that no evidence which has not been formally offered shall be considered3� However, the above rule may be relaxed, as held by the Supreme Court in the case of Dizon vs. Court of Tax Appeal# to wit: "Under Section 8 of RA 1125, the CTA is categorically described as a court of record. As cases filed before it are litigated de novo, party-litigants shall prove every minute aspect of their cases. Indubitably, no evidentiary value can be given the pieces of evidence submitted by the BIR, as the rules on documentary evidence require that these documents must be formally offered before the CTA. Pertinent is Section 34, Rule 132 of the Revised Rules on Evidence which reads: SEC. 34. Offer of evidence. - The court shall consider no evidence which has not been formally offered. The purpose for which the evidence is offered must be specified. The CTA and theCA rely solely on the case of Vda. de Ofiate, which reiterated this Court's previous rulings in People v. Napat-a and People v. Mate on the admission and consideration of exhibits which were not formally offered during the trial. Although in a long line of cases many of which were decided after Vda. de Ofiate, we held that courts cannot consider evidence which has not been"'" 3 Atlas Consolidated Mining and Development Corporation vs. Commissioner ofInternal Revenue, G.R. No. 159490, February 18, 2008. 4 G.R. No. 140944, April 30, 2008.

AMENDED DECISION CTA CASE NO. 9110 formally offered, nevertheless, petitioner cannot validly assume that the doctrine laid down in Vda. de Onate has already been abandoned. Recently, in Ramos v. Dizon, this Court, applying the said doctrine, ruled that the trial court judge therein committed no error when he admitted and considered the respondents' exhibits in the resolution of the case, notwithstanding the fact that the same were not formally offered. Likewise, in Far East Bank & Trust Company v. Commissioner ofInternal Revenue, the Court made reference to said doctrine in resolving the issues therein. Indubitably, the doctrine laid down in Vda. De Onate still subsists in this jurisdiction. In Vda. de Onate, we held that: From the foregoing provision, it is clear that for evidence to be considered, the same must be formally offered. Corollarily, the mere fact that a particular document is identified and marked as an exhibit does not mean that it has already been offered as part of the evidence of a party. In Interpacific Transi~ Inc. v. Aviles [186 SCRA 385], we had the occasion to make a distinction between identification of documentary evidence and its formal offer as an exhibit. We said that the first is done in the course of the trial and is accompanied by the marking of the evidence as an exhibit while the second is done only when the party rests its case and not before. A party, therefore, may opt to formally offer his evidence if he believes that it will advance his cause or not to do so at all. In the event he chooses to do the latter, the trial court is not authorized by the Rules to consider the same. However, in People v. Napat-a [179 SCRA 403] citing People v. Mate [103 SCRA 484], we relaxed the foregoing rule and allowed evidence not formally offered to be admitted and considered by the trial court provided the following requirements are present, viz.: first, the same must have been duly identified by testimony duly recorded and, second,.?-

AMENDED DECISION CTA CASE NO. 9110 the same must have been incorporated in the records of the case. From the foregoing declaration, however, it is clear that Vda. de Ofiate is merely an exception to the general rule. Being an exception, it may be applied only when there is strict compliance with the requisites mentioned therein; otherwise, the general rule in Section 34 of Rule 132 of the Rules of Court should prevail." (Emphasis supplied) From the foregoing, evidence not formally offered may be admitted and considered by the Court, so long as the same has been duly identified by testimony duly recorded, and has been incorporated in the records of the case. Here, the PEZA Certification dated February 16, 2016, pre- marked as Exhibit "P-60", was not formally offered by petitioner. Nonetheless, said exhibit was identified by the ICPA, Mr. Garry S. Pagaspas, in his Judicial Affidavit dated April 22, 20165, as stated in his Sworn Statement attached to the instant motion. In the same Sworn Statement, the ICPA further attested that the said certification is a faithful reproduction of the original and was submitted to this Court as part of the records of this case. Thus, the Court deems it proper to apply in this case the exception to the general rule in Section 34 of Rule 132 of the Rules of Court. Accordingly, the Court shall now proceed to the determination of petitioner's refundable claim, taking into consideration the PEZA Certification dated February 16, 2016. As previously stated in the assailed Decision, petitioner must prove the following in order to be entitled to a refund or issuance of a tax credit certificate of input VAT paid6: 1) the taxpayer is VAT registered; 2) the taxpayer is engaged in zero-rated or effectively zero- rated sales; t1- 5 Exhibit "P-35". 6 Page 6 of the Assailed Decision.

AMENDED DECISION CTA CASE NO. 9110 3) the input taxes are due or paid; 4) the input taxes are not transitional input taxes; 5) the input taxes have not been applied against output taxes during and in the succeeding quarters; 6) the input taxes claimed are attributable to zero-rated or effectively zero-rated sales; 7) for zero-rated sales under Section 106(A)(2)(a)(1) and (2); and 106(8); and 108(8)(1) and (2), the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with the rules and regulations of the 8angko Sentral ng Pilipinas; 8) where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes cannot be directly and entirely attributable to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume; and 9) The claim is filed within two years after the close of the taxable quarter when such sales were made.7 1stand 9th requisites: As discussed in the November 17, 2017 Decision, petitioner complied with the first and ninth requisites.8 2nd requisite: Petitioner is engaged in zero-rated or effectively zero-rated sales. Petitioner is a stock corporation duly registered with the Securities and Exchange Commission (SEC) under Company Registration No. CS201212819 issued on July 17, 20129 with the following primary purposes: 1~ 7 Luzon Hydro Corporation vs. Commissioner of internal Revenue, G.R. No. 188260, November 13, 2013. 8 Pages 6 to 9 of the Assailed Decision. 9 Exhibit "P-1". 10 Exhibit "P-2".

AMENDED DECISION CTA CASE NO. 9110 1.) To engage in the business of merchandising, distributing and marketing, whether as principal, agent, indenter or manufacturer's representative, wholesale or retail, such as but not limited to industrial, agricultural, manufacturing tools and equipment, engineering products, hardware items, construction materials, and electrical supplies, and or any and all kinds of goods, wares and merchandise; and, 2.) To engage in the business of import and export as principals, factors, representatives, agents or commissioned merchants with respect to buying, selling, trading or dealing in any and all kinds of goods, wares, products of all classes and description, distribution, import and export business. For the first quarter of 2013, petitioner reflected total sales of P18,129,609.70 in its amended Quarterly VAT Return: 11 Sales Type Amount VA Table Zero-Rated p 4,860,974.98 Total 13,268,634.72 p 18,129,609.70 Petitioner alleges that majority of its clients are entities doing business within the economic zone and registered with the PEZA and SBMA. Indeed, these sales are entitled to the benefit of VAT zero- rating pursuant to Section 106(A)(2)(c) of the Tax Code, to wit- "SEC. 106. Value-Added Tax on Sale of Goods or Properties. - (A) Rate and Base of Tax. - x x x~ 11 Exhibit "P-21".

AMENDED DECISION CTA CASE NO. 9110 (2) The following sales by VAT-registered persons shall be subject to zero percent (0�/o) rate: XXX XXX XXX (c) Sales to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects such sales to zero rate." Thus, to qualify for VAT zero-rating, petitioner must prove by sufficient evidence that its reported zero-rated sales are valid sales to entities duly registered and accredited with the PEZA and SBMA under Section 106 (A)(2)(c) of the Tax Code, in relation to Section 113(A)(1), (8)(1), (2)(c) and (3) of the same Code; and Section 4.113-1 (A)(1), (8)(1) and (2)(c) of Revenue Regulations (RR) No. 16-05, by presenting the following documents: 1. The sales invoice as proof of sale of goods; 2. Any proof of the buyer's entitlement to tax incentives under special laws (i.e. Certificates of Registration with the PEZA or SBMA pursuant to Republic Act (RA) No. 791612 and RA 722713, respectively, for the corresponding taxable year)" Out of the P13,268,634. 72 zero-rated sales reported for the first quarter of 2013, petitioner was only able to account for a total of P13,221,188.53, which is broken down in the Summary of Zero-Rated Sales,14 while the balance of P47,446.19 remained unaccounted. Considering the Certification15 issued by PEZA dated February 16, 2016, petitioner was able to prove that the following entities, with which it had sales during the first quarter of 2013, were issued VAT zero-rating certifications and were entitled to VAT zero-rating on their local purchases of goods, properties and services for the year 2013: Customer Name Zone Location VAT Cert. No. VAT Cert. Date 1 Applied Machining Corporation Laguna Technopark-SEZ 939 28-Jan-13 2 Daitoh Precisions, Inc. Mactan Economic Zone 1578 22-Apr-13 --~ ------- ----------�- 12 The Special Economic Zone Act of 1995. 13 Bases Conversion and Development Act of 1992. 14 Exhibit "P-36". 15 Exhibit "P-60".

AMENDED DECISION CTA CASE NO. 9110 3 Delta Design Philippines, LLC. Carmelray Industrial Park 782 18-Jan-13 11-SEZ; Baguio City 4 Exas Philippines, Inc. Economic Zone 1358 27-Feb-13 5 Famous Secret Precision Machining, Mactan Economic Zone 362 03-Jan-13 450 07-Jan-13 Inc. Daiichi Industrial Park-SEZ 313 28-Dec-12 6 Fujitsu Die-Tech Corporation of the 121 13-Dec-12 Laguna Technopark Inc.- 1367 01-Mar-13 Phils. SEZ 1459 13-Mar-13 7 Gunma Gohkin Philippines Corporation Light Industry & Science 79 10-Dec-12 Park I-SEZ 286 28-Dec-12 8 Imasen Philippine Manufacturing Laguna Technopark Inc.- 167 17-Dec-12 Corp. SEZ 1694 27-Jun-13 Mactan Economic Zone II- 734 17-Jan-13 9 Ina Micro Opto Corporation SEZ 887 23-Jan-13 Cavite Economic Zone 428 07-Jan-13 10 Kodachi Seiki Philippines, Inc. 443 07-Jan-13 11 Laguna Auto-Parts Manufacturing Laguna Technopark Inc.- 1263 18-Feb-13 SEZ 747 07-Jan-13 Corp. Laguna Technopark Inc.- 861 22-Jan-13 12 Laguna Metts Corporation SEZ 879 22-Jan-13 Madan Economic Zone II- 1313 20-Feb-13 13 Makoto Metal Technology SEZ 1827 27-Aug-13 Incorporated Calamba Premier 355 02-Jan-13 International Park-SEZ 30 05-Dec-12 14 Manufacturing Automation Solutions Laguna Technopark Inc.- 1939 11-Nov-13 International Inc. SEZ 1001 29-Jan-13 Cavite Economic Zone 718 17-Jan-13 15 Meinan Philippines Inc. 395 04-Jan-13 Laguna Technopark Inc.- 16 MKP, Inc. SEZ 17 Nidec Philippines Corporation Laguna Technopark Inc.- SEZ 18 Nidec Precision Philippines Cavite Economic Zone Corporation Laguna Technopark Inc.- 19 Parts Philippines Inc. SEZ 20 Penta Technological Products, Inc. People's Technology Complex-SEZ 21 Philippine Nagano Seiko, Inc. Lima Technology Center- SEZ 22 Philippine TRC, Inc. Cavite Economic Zone 23 Precise Techno Inc. Laguna Technopark Inc.- 24 Sinag Precision Manufacturing SEZ First Cavite Industrial Laguna Inc. Estate-SEZ 25 Suminac Philippines, Inc. First Philippine Industrial Park-SEZ 26 T&S Laser Solutions, Inc. Madan Economic Zone II- SEZ 27 Tamiya Philippines, Inc. Madan Economic Zone 28 TMX Philippines, Cavite Economic Zone Inc. Laguna Technopark-SEZ 29 Tsukuba Philippine Diecasting Corporation 30 Vitalo Packaging International, Inc. Petitioner likewise submits sales invoices of goods16 supporting the Summary of Zero-Rated Sales for the first quarter of 2013 which were examined by the ICPA to be in compliance with the VAT invoicing requirements under Section 113(A) and (B) of the Taxo.- 16 Exhibits "P-10" sub-series.

AMENDED DECISION CfA CASE NO. 9110 Code, as implemented by Sections 4.113-1(A) and (B) of RR No. 16- 05. Based on this summary and further scrutiny of the documents submitted to prove zero-rated sales during the first quarter of 2013, the amount of P411,905.00 shall be disallowed due to the following reasons: Exhibit No. Client/ Customer Invoice Invoice Amount No. Date Sales to clients without proofofPEZA VAT exemption P-10.1 Histotech Precision (Ph) Inc. 9 1/8/2013 p 2 160.00 P-10.2 Histotech Precision (Ph) Inc. 10 1/8/2013 800.00 P-10.98 Histotech Precision (Ph) Inc. 207 2/1/2013 2 505.00 P-10.318 Histotech Precision (Ph) Inc. 623 3/5/2013 3 500.00 P-10.380 to 381 Histotech Precision (Ph) Inc. 747 to 748 3/12/2013 2 560.00 P-10.451 Histotech Precision (Ph) Inc. 860 3/20/2013 4 240.00 P-10.494 Histotech Precision (Ph) Inc. 970 3/25/2013 8 000.00 P-10.496 Histotech Precision (Ph) Inc. 972 3/25/2013 420.00 P-10.73 to 75 Polarmarine Incorporated 176 to 178 1/31/2013 90 850.00 P-10.217 Polarmarine Incorporated 452 2/20/2013 350.00 P-10.261 to 262 Polarmarine Incorporated 524 to 525 2/26/2013 60 050.00 P-10.490 to 493 Polarmarine Incorporated 966 to 969 3/25/2013 21 900.00 P-10.497 Polarmarine Incorporated 974 3/25/2013 62 700.00 P-10.501 to 502 Polarmarine Incorporated 987 to 989 30 875.00 P-10.55 Silan Technologies Corporation 141 1/28/2013 1440.00 P-10.122 Silan Technologies Corporation 259 2/5/2013 6 505.00 P-10.142 Silan Technologies Corporation 300 2/8/2013 350.00 P-10.401 Silan Technologies Corporation 777 3/14/2013 2 400.00 P-10.121 Turu Santechno Corp: 258 2/5/2013 2 055.00 P-10.136 Turu Santechno Corp. 291 2/5/2013 1 800.00 P-10.335 Turu Santechno Corp. 654 3/7/2013 1,780.00 P-10.495 Turu Santechno Corp. 971 3/25/2013 1,880.00 P-10.220 to 221 Delfingen West Inc. 458 to 459 2/20/2013 13 880.00 Subtotal , 323 000.00 Copy ofsales invoice on records is incomplete P-10.104 Precise Techno Inc. 225 2/4/2013 p 14,500.00 Sales invoice date was altered without corresponding authorized countersignature P-10.648 Precise Techno Inc. 648 3/6/2013 p 465.00 P-10.347 Delta Design Philippines Inc , 3/8/2013 Subtotal 676 50,500.00 50,965.00 No sales invoice found on records; Sales to clients without proofofPEZA , VAT exemption Silan Technologies Corporation 512 15.580.00 - 6,390.00 No sales invoice found on records 1,470.00 Precise Techno Inc. 439 p ----- Copy ofsales invoice on records is incomplete , P-10.171 Nidec Precision Philippines Corp L_ 339 2/13/2013 ~ ----- I

AMENDED DECISION IP 411,9os.oo I erA CASE NO. 9110 l Grand Total To summarize, out of the P13,268,634. 72 zero-rated sales declared by petitioner in its amended Quarterly VAT Return for the first quarter of TY 2013, only P12,809,283.53, as computed below, can be considered as valid zero-rated sales: Total Reported Zero-Rated Sales p 13,268,634.72 Less: p 47,446.19 Unaccounted by petitioner Disallowed by this Court 411,905.00 459,351.19 Total Valid Zero-Rated Sales p 12,809,283.53 7th requisite: For 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 have been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas Note that only zero-rated sales under Sections 106(A)(2)(a)(1), (2) and (B) and Section 108 (8)(1) and (2) of the Tax Code are required to be paid for in acceptable foreign currency duly accounted for in accordance with the BSP rules and regulations. Since the claimed zero-rated sales fall under Section 106(A)(2)(c) of the Tax Code, the seventh requisite for VAT refund is, therefore, not applicable to the present case. 3rd to 6th and Bth requisites: The input taxes due or paid do not include transitional input taxes, were attributable to zero-rated sales and were not applied against any output VAT liability. Petitioner's amended first Quarterly VAT Return for TY 2013 reflected excess input taxes amounting to P811,768.91, which is the subject of the present claim, computed as follows: Input Taxes on Local Purchases of Goods Other Than Capital p 1,315,864.90 Goods Input Taxes on Importations of Goods Other Than Capital 79,221.00 Goods Total Input Taxes P1,395,085.90 Less: Output Taxes on VATable Sales 583,316.99 Excess Input TaXE!S for the 1st Quarter of TV 2013 p 811,768.91 @--

AMENDED DECISION CTA CASE NO. 9110 As can be seen in the return, the above input taxes do not include transitional input taxes provided under Section 111 of the Tax Code17, as petitioner had already been registered as a VAT taxpayer since its registration date with the BIRon August 31, 2012. 18 To support the total input taxes of P1,395,085.90, petitioner submits suppliers' invoices, and Bureau of Customs (BOC) Statements and Receipts of Duties Collected on Informal Entry19 which were examined by the ICPA. These documents only accounted for a total of P1,390,711.71. Thus, the unsupported input VAT amounting to P4,374.1920 shall be disallowed for refund. Out of the total accounted input VAT of P1,390,711.71, the ICPA found the following exceptions totaling P170,929.26: Findings I CPA Amount Invoices with alteration Report p 3,660.34 Invoices not under petitioner's complete name Reference21 Invoices not under petitioner's registered address Table 6 29 798.70 Invoices nor under petitioner's TIN Table 7 100,906.88 Invoices claimed out of period Table 8 Total Table 9 273.18 Table 11 361290.16 P170,929.26 In addition to the above findings by the ICPA, an examination of the documents supporting the Summary of Domestic Purchases and Importation22 leads us to the disallowance of the amount of P47,114.84 for non-compliance with the substantiation requirements under Sections 110(A) and 113(A) and (B) of the Tax Code, in relation to Sections 4.110-2, 4.110-3, 4.110-8 and 4.113-1 of RR No. 16-05, as amended. Below is the detailed breakdown of the disallowed input VAT of P47,114.84:~ 17 SEC. 111. Transitional/Presumptive Input Tax Credits. - (A) Transitional Input Tax Credits. -A person who becomes liable to value-added tax or any person who elects to be a VAT-registered person shall, subject to the filing of an inventory according to rules and regulations prescribed by the Secretary of Finance, upon recommendation of the Commissioner, be allowed input tax on his beginning inventory of goods, materials and supplies equivalent to two percent (2%) of the value of such inventory or the actual value-added tax paid on such goods, materials and supplies, whichever is higher, which shall be creditable against the output tax. 18 Exhibit "P-5". 19 Exhibits "P-12" sub-series. 20 P1,395,085.90 less P1,390,711.71. 21 Exhibit "P-36". 22 Exhibit "P-36".

AMENDED DECISION CTA CASE NO. 9110 Exhibit Supplier Invoice No. Invoice VAT Amount No. Date Unsupported domesticpurchase ofgoods other than capital goods Grind Tech Abrasives Co!'Q. 9591 3/7/2013 p 208.13 Guan Yian Hardware 127417 2/22/2013 , 232.20 Oriental Construction & Electrical Supply Co., Inc. 410.36 597633 3/6/2013 850.69 Subtotal Domestic purchase ofgoods other than capital goods supported by VAT Reg. TIN Invoice but with wrong petitioner's address P-12.3 Colt Commercial 81903 1/15/2013 p 2,404.01 P-12.6 Colt Commercial 81906 1/13/2013 8,147.86 P-12.20 Colt Commercial 81923 1/28/2013 1,161.50 P-12.21 Colt Commercial 81924 1/28/2013 5,067.67 P-12.25 Colt Commercial 81929 270.37 , 1/11/2013 Subtotal 17,051.41 Domestic purchase ofgoods other than capital goods supported by VAT Reg. TIN Invoice but with incomplete petitioner's address P-12.180 Valqua Industrial Corporation 177110 3/22/2013 280.71 Domestic purchase ofgoods other than capital goods supported by VAT Reg. TIN Invoice but VAT amount is not shown separately P-12.1 Colt Commercial 81901 1/8/2013 p 6.56 P-12.36 GYH Industrial Sales Corp. 646481 1/30/2013 158.36 P-12.126 Colt Commercial , 10,629.64 82256 3/4/2013 10,794.56 Subtotal Domestic purchase ofgoods other than capital goods supported by VAT Reg. TIN Invoice but VAT , amount is not shown separately and with incomplete petitioner's address P-12.181 Cham Samco & Sons, Inc. 5215 3/20/2013 I 156.38' , Imp_ortation ofg_oods with_l!!'oofof VATPll~'ment but issued to Colt Commercial not to petitioner I P-12.189 YG-1 Tools Asia Pte Ltd. 800238442CM 3/12/2013 1,894.00 Overclaimed input VAT P-12.82 Colt Commercial 82171 2/12/2013 Amount claimed p 4,742.00 Amount Q_er sales invoice 41233.93 p 508.07 P-12.184 Micronphil Industrial Sales Co. 1461 3/11/2013 Amount claimed p 2,100.00 Amount per sales invoice , 1 875.00 225.00 Subtotal 733.07 Domestic purchase ofgoods other than capital goods supported by VAT Reg. TIN Invoice but the copy of the invoice is incomplete, the amount ofpurchase price and VAT cannot be seen P-12.5 Colt Commercial 81905 1/3/2013 p 13 259.11 P-12.109 Anglingco Sons Marketing Corp 792267 2121/2013 59.20 P-12.183 Maxilite Merchandising Inc. 49921 3/26/2013 Subtotal , 2 035.71 15.354.02 Grand Total ~ . 47,114.84_ -- Based on the foregoing, petitioner's input VAT allowable as tax credits for the first quarter of TY 2013 only amounted to P1,172,667.61, as computed below: Total Input VAT reported in 1Q of TY 2013 p 1,395,085.90 Less: p 4,374.19 I Unaccounted Input VAT 170,929.26 ! 47,114.84 Disallowances by the ICPA w 222,418,29 I Disallowances by the Court

AMENDED DECISION p 1,172,667.61 CTA CASE NO. 9110 Allowable Input VAT for the 1Q of TY 2013 However, a portion of the P1,172,667.61 shall be applied against the reported output VAT liability of P583,316.99. Consequently, only the remaining input VAT of P589,350.62 can be attributed to the entire zero-rated sales amounting to P13,268,634.72 and only the input VAT of P568,947.70 is attributable to the valid zero-rated sales of P12,809,283.53, computed as follows: Allowable Input VAT p 1,172,667.61 Less: Output VAT 583,316.99 Excess Input VAT Available for Refund p 589,350.62 Multiply by Percentage of Valid Zero-Rated Sales over Total Zero-Rated Sales: Valid Zero-Rated Sales p 12,809,283.53 Divided by Total Reported Zero-Rated Sales 13,268,634.72 96.54% Excess Input VAT Attributable to the Valid p 568,947.70 I Zero-Rated Sales Moreover, although the claimed input VAT was carried-over by petitioner in its succeeding Quarterly VAT Returns,23 the same remained unutilized until it was deducted as "VAT Refund/TCC Claimed" in its Quarterly VAT Return for the 4th quarter of TY 2014. 24 Consequently, the subject claim no longer formed part of the excess input VAT of P13,535,267.0125 as of the end of the 4th quarter of TY 2014 which was to be carried over/applied to the succeeding quarters. As such, it eliminates the possibility that the present claim would be applied to future output VAT liability. WHEREFORE, petitioner's Motion for Reconsideration (of the Decision dated November 17, 2017) is PARTIALLY GRANTED. Accordingly, the assailed Decision dated November 17, 2107 is amended to read as follows: WHEREFORE, the instant Petition for Review is PARTIALLY GRANTED. Accordingly, respondent is ORDERED TO REFUND to petitioner the amount of P568,947.70, representing its unutilized input taxes.c;t- 23 Exhibits "P-21", "P-22", "P-23" and "P-20". 24 Exhibit "P-20", Line 23D. 25 Exhibit "P-20", Line 29.

AMENDED DECISION CTA CASE NO. 9110 attributable to its zero-rated sales for the period covering January 1 to March 31, 2013. SO ORDERED. SO ORDERED. CAESAR~ANOVA Associate Justice WE CONCUR: {"aAtt-1';-: /!~~ ~~ c: .GLf-~~/~. CATHERINET.MANAHAN JlfANITO C. CASTANitbA, JR. Associate Justice Associate Justice

AMENDED DECISION CTA CASE NO. 9110 CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Amended Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. ~~C,Q.Y-c-A~. ~ .fuANITO C. CASTANEtJA, JR. Acting Presiding Justice