SMARTMATIC-TIM CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION ********* SMARTMATIC - TIM CTA Case No. 8643 CORPORATION, Members: Petitioner, -versus- DEL ROSARIO, P. J., UY, and MINDARO-GRULLA, JJ. Promulgated: COMMISSIONER OF INTERNAL . REVENUE, 'JAN 04 2016. ~ :>;. SL\ 1'�-M� Respondent. -~- )( - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - )( DECISION UY, J..: Before Us is a Petition for Review filed by Smartmatic-TIM Corporation, petitioner, on April 18, 2013 against the Commissioner of Internal Revenue, respondent, praying that the latter refund or issue a tax credit certificate (TCC) in its favor in the aggregate amount of P193,488, 562. 15, allegedly representing its creditable input value-added tax (VAT) paid and attributable to its effectively zero-rated sales for the third (3rd) and fourth (4th) quarters of fiscal year (FY) ending June 2010. THE PARTIES Petitioner Smartmatic-TIM Corporation is a corporation duly organized under Philippine law, with principal office at Ground Floor, King's Court Building 2, 2129 Dela Rosa St., Don Chino Roces Avenue, Makati City. 1 It is registered with the Bureau of lnterna(-6 1 Par. 1, Stipulation of Facts, Joint Stipulation of Facts and Issues (JSFI), Docket, p. 366.

DECISION CTA Case No. 8643 Page 2 of24 Revenue (BIR) for VAT purposes, as evidenced by its Certificate of Registration No. OCN 9RC0000259354? On the other hand, respondent Commissioner is the head of the BIR, holding office at the BIR National Office, Diliman, Quezon City, and is represented by the Legal Division of the BIR Revenue Region No. 8. 3 THE FACTS On July 10, 2009, petitioner and the Commission on Elections (COMELEC) entered into a "CONTRACT FOR THE PROVISION OF AN AUTOMATED ELECTION SYSTEM FOR THE MAY 10, 2010 SYNCHRONIZED NATIONAL AND LOCAL ELECTIONS" ("AES Contract" for brevity).4 Subsequently, petitioner filed claims with the BIR for tax refund or issuance of TCC, representing the input VAT for the 3rd and 4th quarters of FY 2010, on April 24, 2012 and June 11, 2012, respectively. 5 On June 15, 2012, petitioner received letters dated June 14, 2012 from the BIR,6 requesting submission of certain documents in connection with the claim for refund of excess input VAT for the 3rd and 4th quarters of FY 2010.7 Thus, petitioner sent letters (both dated November 19, 2012) to the BIR on November 19, 2012, submitting certain documents. 8 On April 18, 2013, petitioner filed the instant Petition for Review before this Court. 9 p'b Respondent filed her Answer on July 23, 2013, 10 interposing the following Special and Affirmative Defenses, to wit: 2 Par. 3, Stipulation of Facts, JSFI, Docket, p. 367. 3 Par. 2, Stipulation of Facts, JSFI, Docket, p. 366. 4 Exhibit "P-9", Docket, pp. 564 to 588. 5 Pars. 4 and 5, Stipulation of Facts, JSFI, Docket, p. 367. 6 Exhibits "P-6" and "P-7", Docket, pp. 552 to 553, and 554 to 555, respectively. 7 Pars. 6 and 7, Stipulation of Facts, JSFI, Docket, p. 367. 8 Exhibits "P-8" and "P-8-1 ", Docket, pp. 556 and 557, respectively. 9 Docket, pp. 6 to 27. 10 Docket, pp. 70 to 73.

DECISION CTA Case No. 8643 Page 3 of24 "8. Respondent reproduces and repleads all the foregoing allegations insofar as they are relevant to her defenses which are discussed hereunder and incorporates them herein by way of reference and, in addition thereto, most respectfully avers THAT: 9. Petitioner's alleged claim for issuance of tax credit certificate is still subject to administrative routinary investigation/examination by the respondent's Bureau. 10. Taxes paid and collected are presumed to have been made in accordance with law, hence, not refundable. 11. Petitioner's claim for refund or issuance of tax credit certificate in the amount of Php193,488,562.15, allegedly representing input VAT for the purchase of goods and services for the 3rd and 4th quarters of fiscal year, were not fully substantiated by proper documents, such as sales invoices, official receipts and others pursuant to Revenue Regulation No. 7-95 in relation to Section 113 and 237 of the 1997 Tax Code. 12. In an action for refund/credit, the burden of proof is on the petitioner to establish its right to claimed refund and failure to adduce sufficient proof is fatal to the claim for tax refund/credit. 13. Petitioner's sales of goods and services to its client do not qualify as zero-rate VAT. 14. Petitioner failed to comply with the conditions/requirements under Section 112(A)(B)(C) of the 1997 Tax code. 15. It is incumbent upon the latter to show that it has complied with the provisions under Section 204 (c) in relation to Section 229 of the Tax Code. Otherwise, its failure to prove the same is fatal to its claim for refund. 16. Claims for refund are construed strictly against herein petitioner since the same partakes the nature of exemption from taxation (Commissioner of Internal Revenue vs. Ledesma, 31 SCRA 95) and as such, they are looked upon with disfavor (Western Minolco Corp. vs. Commissioner of Internal Revenue, 124 SCRA.i\ 1211)." ~�-

DECISION CTA Case No. 8643 Page 4 of24 Petitioner posted its Reply on August 5, 2013, 11 arguing as follows: . . 1. respondent cannot feign ignorance over the allegations in the Petition as these refer to facts borne by the records of the BIR; 2. respondent's failure to resolve the administrative claim does not, in any way, prejudice the right of petitioner to timely file a claim for VAT refund or credit with this Court. Indeed, the law allows petitioner to file a petition for review before this Court subsequent to BIR's inaction on the administrative claim; 3. petitioner was able to fully substantiate its administrative claim; 4. petitioner's services to COMELEC under Republic Act (RA) No. 9369 are subject to VAT at zero percent (0�/o ); and 5. petitioner complied with all the legal and administrative requirements to claim for VAT refund or issuance of TCC. During the Pre-Trial Conference held on November 22, 2013, both parties agreed that they shall submit their Joint Stipulation of Facts and Issues, which shall be prepared by petitioner's counsel and shall be submitted before this Court on or before December 12, 2013. 12 The parties filed their Joint Stipulation of Facts and Issues (JSFI) on December 12, 2013. 13 Additionally, as directed by the Court in the Resolution dated January, 7, 2014 14 the parties filed , their Supplemental JSFI on January 22, 201415 stating the list of documents to be presented, the names of their witnesses, and the trial dates agreed upon by the parties. Correspondingly, the JSFI and the Supplemental JSFI were approved in the Resolution dated February 10, 2014. Thereafter, the Court issued its Pre-Trial Order on February 12, 2014, 16 thereby ~ terminating the Pre-Trial Conference. 11 Docket, pp. 76 to 88. 12 Minutes of the Hearing held on November 22, 2013, Docket, pp. 333 to 336. 13 Docket, pp. 366 to 368. 14 Docket, pp. 384 to 385. 15 Docket, pp. 392 to 395. 16 Docket, pp. 403 to 409.

DECISION CIA Case No. 8643 Page 5 of24 During trial, petitioner presented as its witnesses, its Senior Accountant, Christopher Garcia, and the Court commissioned Independent Certified Public Accountant (ICPA), Antonfo 0. Maceda, Jr. After the presentation of petitioner's last witness, petitioner was given a period of thirty (30) days from March 20, 2014 within which to file its Formal Offer of Evidence. 17 Petitioner filed its Formal Offer of Documentary Evidence on April 21, 2014. 18 Respondent filed her Comment to Petitioner's Formal Offer of Evidence With Manifestation on May 8, 2014, expressing its objection to the admission of petitioner's Exhibits "P-15" and "P-17", and manifesting that she will no longer present any evidence considering that the Revenue Officers who handled the investigation of petitioner's application for refund have yet to issue a final report; and instead, requested a thirty (30)-day period within which to submit her Memorandum. 19 In the Resolution dated June 19, 2014, 20 the Court admitted petitioner's Exhibits "P-1", "P-2", "P-3", "P-4", "P-5", "P-6", "P-7", ""PP--81"7'","P"P-8-1-17"-'1""P' "-J9-"1' ""Pto-1"2J"-9' 1""P'-"1K3-"1' ""Pto-1"4K"-'15"P4-"1' 5"L" '-1""Pt-o15"-L1-"1'3"7P"-' 1"6M"-' 1" to "M-133" ' "N-1" to ""SN--81"3; 0a"n' d"0d-e1n"ietod "0-79", "Q-1" to "Q-13" ' "R-1" to "R-9", and "S-1" to the admission of petitioner's Exhibits "J" "K" "L" "M" "N" "0" "J-92" to "J-93" "K-155" to "K-161" a"Ln-d13"8R"",tofo"r'L-n1o4t'4b"e' i"n'Mg-1fo3'u4n"d' "'N-1311" to "N-138" "0' -80" to "R0e-9s5ol"u' t"ioQn",', in the records. In' the same the Court took note of respondent's manifestation that she will no longer present any evidence. However, the said denied exhibits were later admitted by the Court in the Resolution dated September 29, 201421 pursuant to petitioner's "Omnibus Motion (1. For Partial Reconsideration of the Resolution dated 19 June 2014; and 2. To Defer Submission of Memorandum) filed on July 10, 2014. 22 In the same Resolution, the Court granted the parties a period of thirty (30) days within which to submit their respective Memorandum. (' 17 Resolution dated March 20, 2014, Docket, p. 468. 18 Docket, pp. 469 to 480. 19 Docket, pp. 673 to 674. 20 Docket, pp. 677 to 678. 21 Docket, pp. 700 to 701. 22 Docket, pp. 682 to 687.

DECISION CTA Case No. 8643 Page 6 of24 Petitioner's Memorandum was filed on November 10, 2014; 23 while respondent's Memorandum was filed on January 10, 2015. 24 In view of the submission of the parties' memoranda, the instant case was submitted for decision on January 23, 2015. 25 Hence, this Decision. THE ISSUES The issues submitted by the parties for this Court's resolution are the following: "1. Whether or not Petitioner Smartmatic-TIM is entitled to its claim for refund or issuance of tax credit certificate in the amount of Php193,488,562.15, � representing excess input VAT for the purchase of goods and services for the 3rd and 4th quarters of FY 2010. 1. a. Whether the services rendered by Smartmatic-TIM to COMELEC under the 'Provision of an Automated Election System' dated 10 July 2009 or AES Contract are subject to VAT at zero percent (Oo/o ). "26 Petitioner's arguments: Petitioner argues that its services to the COMELEC under RA No. 9369 are subject to VAT at zero percent (0�/o). Moreover, petitioner avers that it is entitled to a VAT refund or TCC for its excess and/or unutilized input VAT, in view of the following circumstances, to wit: 1. the services rendered by petitioner to the COMELEC for the 3rd and 4th quarters of FY 2010 are effectively zero-rated; 2. petitioner is a VAT-registered taxpayer; 3. the administrative claim for refund filed with the BIR was filed fl within the two-year prescriptive period; 4. the judicial claim was filed within 30 days after the expiration of 23 Docket, pp. 702 to 722. 24 Docket, pp. 731 to 734. 25 Docket, p. 737. 26 Pre-Trial Order, Issues, Docket, p. 405

DECISION CTA Case No. 8643 Page 7 of24 the 120-day period within which the Commissioner may act on the claim; 5. the input taxes, which were due and accordingly paid, are neither transitional input taxes nor were applied against output taxes during and in the succeeding quarters; and 6. all the creditable input taxes due and �paid by petitioner are directly attributable to the fulfillment of its obligations under the AES Contract with the COMELEC which are effectively zero- rated transactions. Respondent's counter-arguments: Respondent contends that there is no provision of law which says that petitioner is exempted from the payment of tax or that it is entitled to refund for payments made on the contract it entered with COMELEC. Respondent contends that no BIR ruling has been secured by petitioner confirming that the sale of services to COMELEC is subject to VAT at zero percent (0%) or that the input tax accumulated by petitioner attributable to zero-rated sale of services to the COMELEC shall be available as tax credit or refund. According to respondent, absent any BIR ruling or Tax Exemption for this particular case, petitioner was assessed a 12% output tax on the entire Gross Receipts per VAT Returns for the subject sale of services. Lastly, respondent stresses that in an action for tax credit or refund, the burden is upon the taxpayer to prove that he is entitled thereto, and failure to discharge the said burden is fatal to the claim. In this case, according to respondent, petitioner has clearly failed to discharge that burden. THE COURT'S RULING The instant Petition for Review lacks merit. Legal requisites for claiming refund or issuance of a Tax Credit Certificate. or , Section 112 of the National Internal Revenue Code (NIRC)

DECISION CTA Case No. 8643 Page 8 of24 1997, as amended by RA No. 9337, 27 provides the requisites to enable the taxpayer to claim a refund or credit of its input VAT, the pertinent portions of which read as follows: "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: Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods of properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales: xxx. 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 a 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 r 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." 27 AN ACT AMENDING SECTIONS 27, 28, 34, 106, 107, 108, 109, 110, 111, 112, 113, 114, 116, 117, 119, 121, 148, 151, 236, 237 AND 288 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES.

DECISION CTA Case No. 8643 Page 9 of24 In Silicon Philippines, Inc. vs. Commissioner of Internal Revenue, 28 the Supreme Court held: "In a claim for credit/refund of input VAT attributable to zero-rated sales, Section 112(A) of the NIRC lays down four requisites, to wit: 1) the taxpayer must be VAT~registered; 2) the taxpayer must be engaged in sales which are zero-rated or effectively zero-rated; 3) the claim must be filed within two years after the close of the taxable quarter when such sales were made; and 4) the creditable input tax due or paid must be attributable to such sales, except the transitional input tax, to the extent th~t such input tax has not been applied against the output tax. To these, a fifth requisite should be added pursuant to the above-quoted Section 112(C) of the NIRC of 1997: that in case of full or partial denial of the refund claim, or the failure on the part of the Commissioner to act on the said claim within a period of 120 days from the date of submission of complete documents in support of the application, the judicial claim must be filed with this Court, within 30 days from receipt of the decision or after the expiration of the said 120-day period. Taking into consideration the foregoing legal requirements, the Court finds it necessary to first determine the timeliness of the filing of petitioner's administrative and judicial claims, as the resolution thereof is determinative as to whether or not petitioner's claim shall. ' prosper. Third and fifth requisites: Timeliness of the administrative and judicial claims. The instant case involves petitioner's claim for refund or issuance of TCC of alleged unutilized creditable input VAT attributable to its zero-rated sales for the 3'd and 41h quarters of FY 2010 ending inf 28 G.R. No. 172378, January 17, 2011.

DECISION CTA Case No. 8643 Page 10 of24 June 2010. Counting from March 31, 2010 and June 30, 2010, the close of the 3rd and 4th quarters of FY 2010, petitioner had until March 31, 2012 and June 30, 2012, respectively, within which to file its administrative claims with respondent. As jointly stipulated by the parties, petitioner's administrative claims for refund for the 3rd and 4th quarters of FY 2010 were respectively filed on April 24, 2012, 29 and on June 11, 2012. 30 Evidently, only the refund claim for the 4th quarter of FY 2010 was timely filed on June 11, 2012 at the administrative level, thus fulfilling the third requisite for the crediUrefund of input VAT. On the other hand, petitioner's refund claim for the 3rd quarter of FY 2010 was filed 24 days late on April 24, 2012, counting from March 31, 2012 and shall correspondingly fail at this point. As regards the timeliness of the filing of the judicial claim, records show that petitioner submitted the required documents in support of its claims for both quarters on November 19, 2012. 31 From said date, respondent had 120 days from submission of said documents, or until March 19, 2013, to act on petitioner's refund claim for the 4th quarter of FY 2010. Considering the failure of respondent to act on said claim, petitioner had a period of thirty (30) days, or until April 18, 2013, to file a Petition for Review before this Court. Records show that petitioner filed the instant Petition for Review on April 18, 2013, praying for the refund or issuance of a TCC in its favor for the aggregate amount�of P193,488,562.15, allegedly representing its creditable input VAT paid and attributable to its effectively zero-rated sales for the third (3rd) and fourth (4th) quarters of fiscal year (FY) ending June 2010. Clearly, the refund claim relevant to the 4th quarter of FY 2010 was timely filed at the judicial level, thus fulfilling the fifth requisite for the credit/refund claim of input VAT. As regards petitioner's refund claim for the 3th quarter of FY201 0, as mentioned earlier, the same will not prosper because its administrative claim was filed late. Consequently, only the claim for refund or issuance of TCC representing petitioner's alleged unutilized in put VAT attributable tot 29 Par. 4, Stipulation of Facts, JSFI, Docket, p. 367. 30 Par. 5, Stipulation of Facts, JSFI, Docket, p. 367. 31 Exhibits "P-8" and "P-8-1 ",Docket, p. 556 and 557, respectively.

DECISION CTA Case No. 8643 Page 11 of24 its zero-rated sales in the amount of P135,699,362.34, covering the 4th quarter of FY 2010, shall henceforth be considered by this Court, in relation with petitioner's compliance with the other legal requisites for the grant of the subject credit/refund claim for input VAT. First requisite: Taxpayer must be VAT-registered. It is noteworthy that the parties stipulated that petitioner is VAT- registered. 32 Thus, it is without question that petitioner complied with the first requisite for the credit/refund of input VAT. Second requisite: Taxpayer must be engaged in effectively zero-rated sales. It is established in this case that the subject transaction covers the provision of services by petitioner to COMELEC, which included the supply and lease of Precinct-Count-Optical Scan (PCOS) machines to be used in the 2010 synchronized national and local elections. 33 The pertinent provision of law in determining whether petitioner qualifies for zero-rating for the said transaction is Section 108(8)(3) of the NIRC of 1997, as amended by RA No. 9337, which is quoted hereunder for easy reference, to wit: "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: XXX XXX XXX ~ 32 Par. 3, Stipulation of Facts, JSFI, Docket, p. 367. See also Exhibit "P-1 ", Docket, p. 498. 33 Q15-A15, Exhibit "P-15", Docket, pp. 487 to 488; and Article 3 (Scope of the Project), Exhibit "P-9", Docket, pp. 569 to 570.

DECISION CTA Case No. 8643 Page 12 of24 (3) Services rendered to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects the supply of such services to zero percent (0�/o) rate;" Based on the aforequoted provision, it is necessary to show that petitioner rendered services to persons or entities whose exemption under special laws or international agreements, to which the Philippines is a signatory, effectively subjects the supply of such services to zero percent (0�/o) rate. In this case, the pertinent special law, is RA No. 9369, which is an Act Amending RA No. 8436, entitled "An Act Authorizing The Commission On Elections To Use An Automated Election System in the May 11, 1998 National or Local Elections and In Subsequent National and Local Electoral Exercises, To Encourage Transparency, Credibility, Fairness and Accuracy of Elections, Amending for the Purpose Batas Pambansa Big. 881, As Amended, Republic Act No. 7166 and Other Related Elections Laws, Providing Funds Therefor and For Other Purposes". The pertinent provision thereof is Section 12 which reads as follows: "SEC. 12. Procurement of Equipment and Materials. -To achieve the purpose of this Act, the Commission is authorized to procure, in accordance with existing laws, by purchase, lease, rent or other forms of acquisition, supplies, equipment, materials, software, facilities and other services, from local or foreign sources free from taxes and import duties, subject to accounting and auditing rules and regulations. With respect to the May 10, 2010 elections and succeeding electoral exercises, the system procured must have demonstrated capability and been successfully used in a prior electoral exercise here or abroad. xxx" (Emphasis and underscoring supplied) Thus, pursuant to Section 108(8)(3) of NIRC of 1997, as amended by RA No. 9337, in relation to the above-quoted provision, the services that petitioner performed to the COMELEC are effectively subject to zero percent (0�/o) VAT, so that no VAT is(' passed on to the COMELEC.

DECISION CTA Case No. 8643 Page 13 of24 However, showing the legal basis for the entitlement of VAT zero-rating is one thing; establishing the fact of zero-rating is quite another. Case law dictates that 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. 34 For effective zero-rating, the taxpayer must comply with the invoicing requirements35 under Section 113(A) and (B) of the NIRC of 1997, as amended by RA No. 9337, to wit: "SEC. 113. Invoicing and Accounting Requirements for VAT-Registered Persons. - (A) Invoicing Requirements. - A VAT-registered person shall issue: (1) A VAT invoice for every sale, barter or exchange of goods or properties; and (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: (a) The amount of the tax shall be shown as a separate item in the invoice or receipt; " JR.A. Philippines, Inc. vs. Commissioner of Internal Revenue, GR. No. 171307,(' August 28,2013. 35 Panasonic Communication Imaging Corporation of the Philippines vs. Commissioner ofInternal Revenue, G.R. No. 178090, February 8, 2010.

DECISION CTA Case No. 8643 Page 14 of24 (b) If the sale is exempt from value-added tax, the term 'VAT-exempt sale' shall be written or printed prominently on the invoice or receipt; (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; (d) If the sale involves goods, properties or services some of which are subject to and some of which are VAT zero rated or VAT exempt, the invoice or receipt shall clearly indicate the break- down of the sale price between its taxable, exempt and zero-rated components, and the calculation of the value-added tax on each portion of the sale shall be shown on the invoice or receipt: Provided, That the seller may issue separate invoices or receipts for the taxable, exempt, and zero-rated components of the sale. (3) The date of transaction, quantity, unit cost and description of the goods or properties or nature of the service; and (4) In the case of sales in the amount of One thousand pesos (P1 ,000) or more where the sale or transfer is made to a VAT-registered person, the name, business style, if any, address and Taxpayer Identification Number (TIN) of the purchaser, customer or client." An examination of the official receipts issued by petitioner to the COMELEC reveals that these contain the required information. Further, for the 4th quarter of FY 2010, it is shown that petitioner generated gross receipts of P1 ,273,459,861.8536 for services it rendered, the details of which follow: Official Exhibit Date Receipt No. Amount Q-006 April 30, 2010 Q-007 April 30, 2010 012 ~ 41,438,848.92 Q-008 April 30, 2010 Q-009 April16, 2010 013 181 ,587,243.44 Q-010 May 28, 2010 Q-011 May 28, 2010 014 428,487,245.38 015 193,929,018.53 016 13,604,858.18 017 98,382,300.30 36 Exhibit "P-3", Docket, p. 541.

DECISION CTA Case No. 8643 Page 15 of24 Q-012 1 June 23, 2010 I 018 150,385,128.66 Q-013 I April 30, 2010 I 022 165,645,218.44 TOTAL P1 ,273,459,861.85 Considering that petitioner's receipts are duly supported by official receipts which contain the information required by law, the same qualify for VAT zero-rating under Section 108(8)(3) of the NIRC of 1997, as amended by RA No. 9337, in relation to RA No. 8436, as amended by RA No. 9369. Fourth requisite: The creditable input tax due or paid must be attributable to such sales, except the transitional input tax, to the extent that such input tax has not been applied against the output tax. The aggregate amount being claimed by petitioner for refund/tax credit allegedly representing input VAT on its domestic purchases of goods and services for the 4th quarter of FY 2010 is P135,699,362.34. Based on the Amended and Final Report dated December 27, 2013 of the Court-commissioned Independent CPA, 37 the latter found that said input VAT were paid by petitioner in the ordinary course of business, 38 and that the same are not transitional input taxes. 39 However, of the said amount of P135,699,362.34, We agree with the findings of the Independent CPA noting certain exceptions in the total amount of P17,350,994.09, and should therefore be deducted from petitioner's input VAT claim, summarized as follows: EXCEPTIONS NOTED APRIL MAY JUNE TOTAL Original supporting ( Exhibit "M") (Exhibit "N") (Exhibit "0") p 14,742,128.32 documents not submitted/ available for P1, 141,493.34 P1 ,376,519.58 P12,224, 115.40 2,607,137.83 examination 609,789.41 Amount claimed is 1 ,996,323.03 1,025.39 greater than the amount in supporting documents 37 Exhibit "P-13", Docket, pp. 605 to 616. 38 Exhibit "P-13" (FINDINGS, Par. 6), Docket, p. 614. 39 Exhibit "P-13'' (FINDINGS, Par. 7), Docket, p. 614.

DECISION CTA Case No. 8643 Page 16 of24 Transactions with no '� input VAT_p_ayments - - 1,727.94 1,727.94 TOTAL P17 ,350,994.09 In addition to the exceptions found by the Independent CPA, the Court finds that the input VAT in the aggregate amount of P116,935,591.50 should also be disallowed for the reasons stated below: Exhibit Official Invoice/ Supplier Disallowed Receipt I OR Date Input VAT Invoice No. 1) Input VAT on purchases of goods and services supported by VAT invoices/official receipts but no sefJ_arate line item p_resented for VAT amount M- 003.1 5824 4/12/2010 Ace Logistics, Inc. p 3,908,292.86 M- 009.1 040245 4/14/2010 Anscor Casto Travel Corp. 733.61 M- 010.1 040388 4/20/2010 Anscor Casto Travel Corp. 1,066.71 M- 012.1 52239 4/12/2010 Asia Cargo Container Line, Inc. 19,332.30 M- 013.1 52236 4/7/2010 Asia Cargo Container Line, Inc. 28,934.92 M- 016.1 26433 4/19/2010 Bestprints Multiline 47,916.43 M- 017.1 26388 4/23/2010 Bestprints Multiline 3,214.29 M- 018.1 26397 4/29/2010 Bestprints Multiline 15,502.93 M- 019.1 0012 4/12/2010 Big "A" Force Security Agency_Inc. 52,999.69 M- 020.1 0014 4/23/2010 Big "A" Force Security Agency Inc. 49,687.22 Citra Metro Manila Tollways M- 025.2 108764 4/20/2010 Corporation 1,607.14 Citra Metro Manila Tollways M- 026.1 107586 4/13/2010 Corporation 1,607.14 M- 027.2 25221 4/14/2010 Columbia Transport, Inc. 106,051.01 M- 028.11 25257 4/23/2010 Columbia Transp_ort, Inc. 9,044.93 M- 028.49 25256 4/23/2010 Columbia Transport, Inc. M- 029.1 25274 4/27/2010 Columbia Transport, Inc. 19,770.07 M- 030.1 25301 4/29/2010 Columbia Transport, Inc. 21,880.54 Computer Network Systems M- 031.1 3339 4/23/2010 Corporation 3,539.76 M- 033.1 2207 4/23/2010 Dell's Restaurant Associates, Inc. M- 034.1 134959 4/16/2010 Diar's Assistance, Inc. 265,854.00 M- 035.1 134973 4/27/2010 Diar's Assistance, Inc. 235.71 M- 041.1 0608 4/8/2010 EPL Multiline Business, Inc. M- 042.1 0522 4/11/2010 EPL Multiline Business, Inc. 8,144.77 M- 043.1 0610 4/19/2010 EPL Multiline Business, Inc. 11,838.31 M- 044.1 0614 4/23/2010 EPL Multiline Business, Inc. 13,673.75 89,318.59 17,684.13 23,251.12 M- 051.2 2112480 4/21/2010 Globe Telecom 1,645,080.00 M- 053.1 0308402 4/19/2010 lnnove Communications 3,024,000.00 M- 054.1 0308401 4/19/2010 lnnove Communications 417,346.32 M- 055.1 0306009 5/5/2010 lnnove Communications 80,040.00 M- 057.2 4/7/2010 JPL Advertising_ 99,910.71 M- 058.1 0305 4/23/2010 JPL Advertising 79,928.57 0306 LRA Pacific Management Consulting M- 060.3 5/3/2010 Inc. 1,178,502.10 110 LRA Pacific Management Consulting M- 061.2 4/29/2010 Inc. 1,178,502.10 063.3, 109 1020 I 4/6/2010 Lucky Dumpling Enterprises 4,328.57 M- 063.4 1021

DECISION CTA Case No. 8643 Page 17 of24 M- 064.3 1022 4/12/2010 Lucky Dumpling Enterprises 3,927.86 M- 065.4 1023 4/12/2010 Lucky Dumpling_ Enterprises 19,068.75 M- 066.1 76632 5/14/2010 Mace Insurance Agency, Inc. M- 067.1 76772 6/1/2010 Mace Insurance Agency, Inc. 230.73 Manila Bulletin Publishing 25.69 M- 068.1 205492 4/22/2010 Corporation Manila Resource Development 12,587.40 M- 069.1 1165 4/14/2010 Corp. Manila Resource Development 8,596.22 M- 070.1 1167 4/23/2010 Corp. Manila Resource Development 30,803.99 M- 071.2 1168 4/3/2010 Corp. M- 074.1 24149 4/23/2010 Monica Publishing Corp. 1,915,451.54 M- 075.1 0870 4/23/2010 Northwell Corporation 5,184.00 M- 076.1 0368 4/16/2010 Pare International Travel Corp. M- 077.1 0369 4/21/2010 Pare International Travel Corp. 36,696.43 M- 078.1 0370 4/23/2010 Pare International Travel Corp. 605.36 M- 079.1 0371 4/30/2010 Pare International Travel Corp. M- 080.1 0053 4/20/2010 Peddler Tech Resources, Inc. 11,558.04 M- 081.1 0054 4/22/2010 Peddler TechResources, Inc. 1,869.64 M- 085.1 92419 4/23/2010 Phil-Data Business Systems, Inc. Philippine International Convention 803.57 M- 087.2 10489 4/30/2010 Center 19,800.00 M- 090.1 5773 4/12/2010 Philippine Long Distance Telephone 19,800.00 M- 093.1 286086 4/23/2010 PhiiStar Daily, Inc. 86,574.00 Placewelllnternational Services M- 094.1 1009 4/24/2010 Corp. 14,678.57 Placewelllnternational Services 1,491.79 M- 095.2 1010 5/3/2010 Corp. 12,247.20 M- 096.1 302 4/13/2010 Power Serve, Inc. 26,541.87 M- 097.1 301 4/13/2010 Power Serve, Inc. 2,307,272.69 M- 098.1 271 4/20/2010 Power Serve, Inc. M- 099.1 0089 4/29/2010 Powernet Systems Corp. 164,117.61 RA Lanting Security & Investigation M- 100.1 3630 4/23/2010 Agency 1,154,900.49 M- 103.2 0678 5/4/2010 Rjen Innovative IT Solutions Co. Ltd. M- 104.3 0061 4/23/2010 Sapsense Consulting Inc. 517,328.46 M- 105.2 0062 4/26/2010 Sapsense Consulting Inc. 2,871.43 M- 106.2 0735 4/6/2010 SEComp. Inc. M- 107.1 0745 4/22/2010 SEComp. Inc. 7,871.39 M- 114.1 12022 4/26/2010 SLI Software Laboratories, Inc. 7,297.39 Technology Links International 5,357.14 M- 123.13 7837 4/8/2010 Corporation 5,357.14 M- 124.1 08633 4/23/2010 Times Plaza Association, Inc. 11,250.00 Total Information Management 11,250.00 M- 125.1 14114 4/23/2010 Corporation 3,772.36 M- 126.1 2187 4/26/2010 Ventures Link International, Inc. 6,964.29 M- 127.1 2188 4/26/2010 Ventures Link International, Inc. 120.00 M- 128.1 2186 4/23/2010 Ventures Link International, Inc. 49,726.62 M- 131.1 4848 4/19/2010 Ximex Delivery Express, Inc. 22,484.73 N- 002.1 44702 5/18/2010 ACCRA Law Offices 5,180,035.35 N- 003.11 5272 5/8/2010 Ace Logistics, Inc. 25,842.24 N- 008.1 1421719 5/7/2010 Airfreight 2100, Inc. 231,792.18 N- 009.1 1429861 5/27/2010 Airfreight 2100, Inc. 13,980.56 N- 010.1 1413217 5/27/2010 Airfreight 2100, Inc. 2,931,219.64 N- 011.1 1413218 5/27/2010 Airfreight 2100, Inc. 637,252.33 69,642.86 133,654.82 7,714.28

DECISION CTA Case No. 8643 Page 18 of24 . N- 012.2 1413219 5/27/2010 Airfreight 2100, Inc. 83,785.71 N- 013.1 1413220 5/27/2010 Airfreight 21 00, Inc. 20,571.43 N- 014.1 139878 5/7/2010 Airspeed International Corporation 652,518.64 N- 016.1 5659 5/17/2010 Argo International Forwarders, Inc. 1,948,859.31 N- 017.1 5666 6/1/2010 Argo International Forwarders, Inc. 2,779,731.35 N- 018.1 52244 5/6/2010 Asia Cargo Container Line, Inc. N- 019.1 5577 6/11/2010 Asia Select, Inc. 11,825.72 N- 021.1 26441 5/6/2010 Bestprints Multiline 840.00 N- 022.1 26444 5/7/2010 Bestprints Multiline 4,102.50 N- 023.1 25555 5/20/2010 Bestprints Multiline N- 024.1 0018 5/13/2010 Big "A" Force Security Agency Inc. 139,712.14 N- 025.2 0020 5/28/2010 Big "A" Force Securit)' Agency_ Inc. 4,596.43 N- 027.1 25355 5/7/2010 Columbia Transport, Inc. N- 028.1 25354 5/7/2010 Columbia�Transport, Inc. 49,687.22 N- 029.4 3524 5/5/2010 Crosspoint Computers Inc. 33,589.29 N- 031.1 42451 5/14/2010 Dell's Restaurant Associates, Inc. N- 032.1 134988 5/17/2010 Diar's Assistance, Inc. 5,325.09 N- 033.1 135713 5/28/2010 Diar's Assistance, Inc. 4,403.24 N- 034.1 135651 6/1/2010 Diar's Assistance, Inc. 9,696.43 Digital Telecommunications Phils., 43,296.43 N- 036.1 057520 5/12/2010 Inc. 14,941.10 N- 038.2 0623 5/6/2010 EPL Multiline Business, Inc. 8,877.58 N- 039.1 0625 5/17/2010 EPL Multiline Business, Inc. 7,941.11 N- 040.1 0630 5/27/2010 EPL Multiline Business, Inc. N- 042.1 0627 5/27/2010 EPL Multiline Business, Inc. 19,742.40 N- 043.2 0622 5/6/2010 EPL Multiline Business, Inc. 47,147.92 N- 044.1 26108 6/9/2010 Explorer Freig_ht Corporation 49,140.82 67,030.85 N- 049.2 0308824 5/11/2010 lnnove Communications, Inc. 86,811.53 87,861.43 N- 050.1 0308823 5/11/2010 lnnove Communications, Inc. 61,411.94 N- 051.1 0308826 5/11/2010 lnnove Communications, Inc. 192,036.00 N- 052.1 0309522 6/8/2010 lnnove Communications, Inc. 258,866.40 N- 054.1 0319 5/11/2010 JPL Advertising N- 055.2 0309 5/13/2010 JPL Advertising 417,346.32 N- 056.1 5/14/2010 Kamahalan Publishing_ CorQ. N- 057.6 398254 5/13/2010 LBC Express-SL, Inc. 407,160.00 N- 058.2 271203 6/3/2010 LBC Ex_Qress-SL, Inc. 79,928.57 271246 LRA Pacific Management Consulting 59,946.43 N- 061.3 5/3/2010 Inc. 13,384.39 110 LRA Pacific Management Consulting 6,474.11 N- 062.2 5/14/2010 Inc. 14,026.07 N- 064.1 113 5/14/2010 Mace Insurance Agency, Inc. N- 065.1 76633 6/1/2010 Mace Insurance Agency, Inc. 1'178,502.00 76771 Manila Bulletin Publishing N- 066.1 5/14/2010 Corporation 1,178,502.10 206733 Manila Resource Development 101.32 N- 067.2 4/3/2010 Corp. 13.50 1168 Manila Resource Development N- 068.2 5/4/2010 Corp. 18,030.60 1170 Manila Resource Development N- 069.2 5/4/2010 Corp. 1,915,451.54 1169 Manila Resource Development N- 070.1 5/6/2010 Corp. 104,234.86 1172 Manila Resource Development N- 071.2 5/6/2010 Corp. 50,461.80 1171 Manila Resource Development N- 072.1 5/8/2010 Corp. 2,873,177.32 N- 073.1 1174 5/14/2010 Manila Resource Development 1175 678,216.00 67,400.61

DECISION CTA Case No. 8643 Page 19 of24 N- 074.2 50632 5/7/2010 Corp. 6,704,080.40 N- 075.3 51436 6/7/2010 New Horizon Hotel 11,025.00 New Horizon Hotel 12,228.82 N- 076.1 02618 5/8/2010 NNR Global Logistics (Philippines) N- 078.1 0001 6/11/2010 Inc. 1,007.69 N- 079.1 0373 5/7/2010 Fundamental Edge 3,600.00 N- 080.1 0374 5/7/2010 Pare International Travel Cor(). 52,631.25 N- 081.1 0377 5/20/2010 Pare International Travel Corp. 3,613.93 N- 082.1 0379 5/31/2010 Pare International Travel Corp. N- 083.1 0380 5/31/2010 Pare International Travel Corp_. 983.57 N- 084.1 0055 6/1/2010 Pare International Travel Corp. 1'160.36 N- 085.1 558221 5/14/2010 Peddler TechResources, Inc. 1,682.14 N- 088.1 287251 5/14/2010 Philippine Daily Inquirer 12,000.00 PhiiStar Dail~ Inc. 20,205.72 N- 089.2 1010 5/3/2010 Placewelllnternational Services 20,217.60 Corp. N- 090.5 1011 5/4/2010 Placewell International Services 2,307,272.69 Corp. N- 091.1 1014 5/6/2010 Placewelllnternational Services 90,108.14 Corp. N- 092.2 1013 5/6/2010 Placewell International Services 3,460,909.03 Corp. N- 093.1 15796 504,828.00 5/20/2010 Polystar General Services, Inc. N- 094.1 276 694,484.46 5/6/2010 Power Serve, Inc. N- 095.1 274 817,189.90 5/6/2010 Power Serve, Inc. N- 096.1 275 517,328.46 N- 097.1 273 5/6/2010 Power Serve, Inc. 5/6/2010 Power Serve, Inc. 689,983.84 N- 098.1 3694 RA Lanting Security & Investigation 4,147.20 N- 099.2 15699 5/17/2010 Agency N- 100.1 15710 5/6/2010 The Elephant Exhibit 3,808.74 N- 105.1 11978 5/17/2010 The Elephant Exhibit 1,185.60 N- 106.1 12101 5/7/2010 Software Laboratories, Inc. 5/14/2010 Software Laboratories, Inc. 148.80 N- 113.2 14118 Total Information Management 5,297.36 5/5/2010 Corporation 4,417.20 N- 114.2 14117 Total Information Management N- 117.1 0033952 5/5/2010 Corporation 232,714.82 N- 118.1 0033953 5/17/2010 UPSI Property Holdings, Inc. 5/17/2010 UPSI Property Holdings, Inc. 514,184.69 N- 119.2 2189 853.39 5/5/2010 Ventures Link International, Inc. N- 120.1 2190 1,422.32 5/5/2010 Ventures Link International, Inc. N- 121.2 2191 2, 192,569.44 5/6/2010 Ventures Link International, Inc. N- 122.1 2192 110,494.06 5/7/2010 Ventures Link International, Inc. N- 123.1 2193 3,288,854.16 N- 124.1 2195 5/14/2010 Ventures Link International, Inc. N- 125.1 18591 6/7/2010 Ventures Link International, Inc. 734,112.00 5/11/2010 Via Mare Corporation N- 127.1 1539 7,673,993.04 5/17/2010 We Are I.T. Phils., Inc. 30,533.40 N- 129.1 4952 7,020.00 5/8/2010 Ximex Delivery Express, Inc. N- 130.1 4953 1,299,456.00 N- 131.1 0508 5/14/2010 Ximex Delivery Express, Inc. N- 133.1 24974 5/7/2010 Ace Millenium Graphic Printers 234,168.00 N- 134.1 42476 5/19/2010 Columbia Transport, Inc. 5/31/2010 Dell's Restaurant Associates, Inc. 465,960.18 2,535.00 2,760.69 45,198.22

DECISION CTA Case No. 8643 Page 20 of24 N- 135.1 112 5/7/2010 LRA Pacific Management Consulting 1,060,651.89 Inc. N- 137.1 280 517,328.46 5/20/2010 Power Serve, Inc. N- 138.2 1635 372,060.00 0519 5/28/2010 We Are I.T. Phils., Inc. 4,178.57 0- 003.1 0116 6/25/2010 0- 006.1 52311 6/22/2010 Ace Millenium Gra_2_hic Printers 30,859.50 0- 007.1 0028 6/25/2010 AMCA Smart Solutions, Inc. 321.43 0- 009.1 15812 6/21/2010 Asia Cargo Container Line, Inc. 0- 014.1 135664 6/21/2010 Big "A" Force Security Agency Inc. 52,999.70 0- 015.1 135679 6/15/2010 DDB Phils., Inc. 4,285.71 0- 016.1 0634 6/28/2010 Diar's Assistance, Inc. 712.47 0- 019.1 0635 6/5/2010 Diar's Assistance, Inc. 0- 020.1 0529 6/5/2010 EPL Multiline Business, Inc. 17,738.39 0- 021.1 0595 6/17/2010 EPL Multiline Business, Inc. 8,885.30 0- 022.1 23551 6/22/2010 EPL Multiline Business, Inc. 0- 024.1 0312 6/22/2010 EPL Multiline Business, Inc. 60,438.34 0- 032.1 9903 6/7/2010 Germalin Enterprises, Incorporated 19,988.84 0- 034.1 6/21/2010 JPL Advertising 45,857.14 115 LearningLitz, Inc. 0- 035.2 1155 6/7/2010 LRA Pacific Management Consulting 2,228.54 ~ 0- 036.1 6/29/2010 Inc. 39,964.29 1178 Metermaster Media Services 30,538.90 0- 038.1 6/22/2010 Manila Resource Development 1180 Corp. 19,049.40 0- 039.2 6/29/2010 Manila Resource Development 36,000.00 1177 Corp. 0- 041.2 6/2/2010 Manila Resource Development 60,368.47 02644 Corp. 0- 042.1 0382 6/28/2010 NNR Global Logistics (Philippines) 680,652.00 0- 046.1 0381 6/7/2010 Inc. 0- 047.1 0385 6/7/2010 Pare International Travel Corp. 1,855,083.08 0- 048.1 0056 6/22/2010 Pare International Travel Corp. 0- 049.1 58552 6/22/2010 Pare International Travel Corp. 3,216.00 0- 051.1 6/18/2010 Peddler TechResources, Inc. 5,804.36 305 Philippine Vending Corporation 1,414.29 0- 052.1 304 0- 053.1 6/8/2010 Power Serve, Inc. 498.21 281 6/8/2010 Power Serve, Inc. 5,451.43 0- 054.1 1,260.11 3758 6/29/2010 Power Serve, Inc. 0- 056.1 RA Lanting Security & Investigation 1,013,368.10 3649 6/15/2010 A_gency 34,242.86 0- 057.2 15742 RA Lanting Security & Investigation 0- 058.1 15745 6/23/2010 759,666.37 0- 059.2 12160 6/14/2010 Agency 0- 067.1 6/11/2010 3,808.74 39147 6/7/2010 The Elephant Exhibit 070.1, 39261 The Elephant Exhibit 4,062.65 08793 Software Laboratories, Inc. 11,556.60 0- 071.2 0033982 2,220.00 0- 072.1 2302 6/16/2010 The New Albergus, Inc. 0- 073.1 6/23/2010 The New Albergus, Inc. 5,410.81 0- 075.1 4954 6/23/2010 Times Plaza Association, Inc. 0- 076.2 139812 6/22/2010 UPSI Property Holdings, Inc. 33,814.18 6/15/2010 Ventures Link International, Inc. 8,698.45 0- 079.1 139818 276.48 0- 081.2 6/2/2010 Ximex Delivery Express, Inc. 1,442.82 139819 5/27/2010 Airspeed International Corporation 0- 082.2 55,517.76 5679 5/27/2010 Airspeed International Corporation 0- 083.2 815,430.32 5/27/2010 Airs_peed International CorQoration 60,529.34 0- 084.1 6/21/2010 Argo International Forwarders, Inc. 581,301.69 318,567.52 1,461,644.48

DECISION CTA Case No. 8643 Page 21 of24 0- 086.1 14138 6/7/2010 Total Information Management 16,325.83 Corporation 0- 087.1 14139 6/7/2010 Total Information Management 118,058.76 Corporation 0- 088.1 14144 6/15/2010 Total Information Management 180,462.15 Corporation Subtotal 87,129,768.54 2) Input VAT onpurchases of services supported by undated VAT official receipts. M- 011.3 5635 - Argo International Forwarders, Inc. 11,821,476.63 M- 037.2 138702 321,428.57 N- 035.2 138702 - Digitel Mobile Philippines, Inc. 321,428.57 139816 435,012.43 0- 080.2 - Digitel Mobile Philippines, Inc. - Airspeed International Corporation Subtotal 12,899,346.20 3) Input VAT on purchases of services supported by documents imprinted with " the statement "not a valid source of input tax"l"not a valid source to claim input tax". M- 006.1 0126 4/21/2010 All Corners EnterpJises 375.00 M- 007.1 0127 4/30/2010 All Corners Enterprises 262.50 176271 to 75 4/26/2010 PLOT Co. 2,946.43 089.1 to M- 089.3 M- 091.2 29758 5/4/2010 PLOT Co. 72,321.43 M- 111.1 007417 4/22/2010 Smart Communications, Inc. 3,696.43 M- 112.1 007267 4/19/2010 Smart Communications, Inc. 1,472,464.29 M- 113.1 007416 4/22/2010 Smart Communications, Inc. 71,464.29 N- 015.1 0161 5/17/2010 All Corners Enterprises 776.79 0- 004.1 0186 6/25/2010 All Corners Enterprises 75.00 0187 6/25/2010 All Corners Enterprises 385.71 0- 005.1 212835 to 41 6/18/2010 PLOT Co. 1,731.41 050.1 to Subtotal 1, 626,499.28 0- 050.6 4) Input VAT on purchases of goods and services supported by VAT invoices/official receipts but dated outside the period of claim M- 040.12 37800 12/12/2009 Eastern Gold Corporation 1,144.34 M- 062.3 1014 3/31/2010 Lucky Dumpling Enterprises 787.50 M- 072.10 29658 3/24/2010 Microphase Corporation 396.43 M- 115.1 7209 11/30/2010 Sostanza, Inc. 21,401.79 M- 118.2 0792 3/29/2010 Techill Technologies Corgoration 1,537.50 M- 118.7 0802 3/30/2010 Techill Technologies Corporation 750.00 M- 122.4 7789 3/26/2010 Technology Links International 1,607.14 Corporation M- 123.5 7767 3/24/2010 Technology Links International 3,214.29 Corporation M- 129.5 0016 3/16/2010 Wave 2 Enterprises 439,211.87 N- 063.1 1016 3/31/2010 Lucky Dumpling Enterprises 3,257.14 N- 060.2 0504 5/7/2011 Litrad Inc. 2,528.57 0- 001.1 45727 7/5/2010 ACCRA Law Offices 59,325.00 0- 002.1 6158 7/1/2010 Ace Logistics Incorporated 1,954,146.43 0- 008.1 25459 7/2/2010 Bestprints Multiline 23,631.28 0- 013.1 24987 7/1/2010 Columbia Transport, Inc. 10,692.13 0- 017.1 135695 7/*/2010 Diar's Assistance, Inc. 8,826.32 0- 023.1 0638 7/2/2010 EPL Multiline Business, Inc. 13,326.99 0- 025.1 23292 7/2/2010 Germalin Enterprises, Incorporated 288,545.56 0- 030.1 2001789 7/2/2010 Globe Telecom, Inc. 86,494.95 0- 033.1 258964 7/9/2010 LBC Express-SL, Inc. 4,232.14 0- 037.1 1163 7/8/2010 Metermaster Media Services 36,000.00 0- 040.1 1181 7/2/2010 Manila Resource Development Corp. 2,181,818.18 0- 043.9 112067 2/19/2010 Office Basics Corp. 101.79 0- 043.10 112042 2/18/2010 Office Basics Corp. 46.61 0- 043.11 112021 2/17/2010 Office Basics Corp. 485.84 0- 044.20 113041 3/15/2010 Office Basics Corp. 444.64 0- 044.22 113093 3/16/2010 Office Basics Corp. 95.46 0- 044.24 112960 3/11/2010 Office Basics Corp. 47.57 0- 044.26 116144 3/9/2010 Office Basics Corp. 357.54 0- 044.28 112691 3/5/2010 Office Basics Corp. 241.07

DECISION CTA Case No. 8643 Page 22 of24 0- 044.30 112557 3/2/2010 Office Basics Corp. 377.25 0- 044.32 112544 3/1/2010 Office Basics Corp. 536.79 0- 044.34 112107 2/21/2010 Office Basics Corp. 0- 044.36 110690 1/28/2010 Office Basics CorQ. 85.71 0- 045.1 0704 7/1/2010 Cutad, Inc. 120.00 0- 055.1 13949 7/9/2010 Protemps, Inc. 10,800.00 RHL Properties & Development 4,166.33 0- 063.1 16293 7/13/2010 Corporation 0- 074.1 08816 7/1/2010 Times Plaza Association, Inc. 21,743.40 240.00 Subtotal 5, 182,765.55 5) Input VAT on purchases of services supported by NON-VAT, TIN only, Zero Rated official receipts M- 021.1 0592 5/11/2010 Bigbest Employment & Manpower 1,800.00 Services M- 046.1 23356 4/20/2010 Germalin Entergrises, Inc. 3,335.14 M- 092.1 54068 4/23/2010 Philipeine Vending_ Corporation 1,121.25 M- 109.1 0027 5/7/2010 Shinsei Industries Philippines, Inc. 18,692.14 M- 110.1 0030 5/7/2010 Shinsei Industries Philip~nes, Inc. 20,200.71 N- 045.1 23261 4/6/2010 Germalin Entergrises, Inc. 5,582.14 N- 046.1 23262 5/7/2010 Germalin Enterprises, Inc. 288,545.47 N- 047.1 23271 5/20/2010 Germalin Enterprises, Inc. 9,878.57 N- 048.1 23274 5/22/2010 Germalin Enterprises, Inc. 334,808.94 N- 102.1 0029 5/7/2010 Shinsei Industries Philippines, Inc. 7,071.43 N- 103.1 0031 6/2/2010 Shinsei Industries Philippines, Inc. 1,178.57 N- 104.1 0032 6/2/2010 Shinsei Industries Philippines, Inc. 1,013.57 0- 062.1 5226 6/23/2010 RHL Properties & Development 1,296.00 Corporation 0- 066.1 3025 6/16/2010 SNS Audio Video 6,964.29 Subtotal 701,488.22 6) Input VAT on purchases of goods and services supported by documents other than VAT invoices/official receipts M- 001 - - Abenson, Inc. 5,464.29 M- 050 - - Globe Telecom 27,530.12 19,956.00 N- 030 - - Dell's Restaurant Associates, Inc. 1,852.20 N- 086 - - PLOT Co. 20,892.86 N- 087 - - PLOT Co. 7,680.54 N- 116 - - UPSI Property Holdings, Inc. Placewell International Services N- 136 Corporation 8,075,454.40 10,311.51 0- 012 - - CENTREX Corporation 0- 027 - - Globe Telecom Inc. 1,038.41 4,285.71 0- 060 - - Ramon Jose A. Cruz 7,596.96 1,213,660.71 0- 068 - - Soriano Arts Design and ConcepJ 0- 085 - - LOLA Marketing Subtotal 9,395,723.71 Grand Total p 116,935,591.50 As a result, out of the total input VAT claim of P135,699,362.34, only the amount of P1,412,776.75, as computed below, represents claimable input tax for the 4th quarter of FY 2010: Total Input VAT claim for refund for the 4m P135,699,362.34 _guarter of FY 2010 134,286,585.59 P-1,412,776.75 Less: Not properly substantiated input VAT (a) Per Independent CPA p 17,350,994.09 (b) Per this Court's further verification 116,935,591.50 Substantiated input VAT for the 4tn quarte~ of FY 2010

DECISION CTA Case No. 8643 Page 23 of24 Nevertheless, to be entitled to the said amount of P1 ,412, 776.75, it must be shown that the input VAT claimed for refund remained unutilized. As evidenced by its Quarterly VAT Return for the 4th quarter of FY 2010, 40 petitioner had no output tax liability against which the claimable input VAT of P1 ,412, 776.75 may be applied or credited. Petitioner failed to show that its total claim for refund in the amount of P193,488,562.15, or at least its claim for the 4th quarter of FY 2010 in the amount P135,699,362.3441 , was not fully utilized in the succeeding periods. Even though petitioner deducted the amount of P265,852,513.5242 from the total allowable input tax of P304,422,739.08, it cannot be ascertained by this Court whether or not the instant claim forms part of the said amount reflected as "VAT Refund/TCC claimed" in the 4th quarter of FY 2012. Thus, there is a possibility that petitioner could have utilized the said input VAT in the amount of P1 ,412,776.75 in the succeeding quarters. As cases filed before this Court are litigated de novo, party- litigants should prove every minute aspect of their cases. 43 Furthermore, statutes that grant tax exemptions are construed strictissimi juris against the taxpayer and liberally in favor of the taxing authority. Tax refunds in relation to VAT are in the nature of such exemptions. 44 Petitioner has the burden of proof to establish the factual basis of its claim for tax refund. 45 In this regard, petitioner failed to convince this Court as to its right to refund or tax credit being claimed in the instant case. WHEREFORE, all the foregoing considered, the instant Petition for Review is hereby DENIED for insufficiency of evidence. 40 Exhibit "P-3", Docket, p. 541. 41 P135,240,534.35 + P458,827.98 ~ 42 Line 23D, Exhibit "S-008". \ 43 Dizon vs. Court of Tax Appeals, et al., G.R. No. 140944, April 30, 2008; Atlas Consolidated Mining and Development Corporation vs. Commission_er of Internal Revenue, G.R. No. 145526, March 16, 2007; and Commissioner o.fInternal Revenue vs. Manila Mining Corporation, G.R. No. 153204, August 31,2005. 44 Panasonic Communication Imaging Corporation of the Philippines vs. Commissioner oflnternal Revenue, G.R. No. 178090, February 8, 2010. 45 Citibank, NA. vs. Court o.fAppeals, et al., G.R. No. 107434, October 10, 1997.

DECISION t CTA Case No. 8643 Page 24 of24 AEssR~~~~.stUiYce SO ORDERED. (tdJ; \1. M~~:.C~ WE CONCUR: CIELITO N. MINDARO-GRULLA Associate Justice Presiding Justice CERTIFICATION I hereby certify that this Decision was reached after due consultation among the members of this Division in accordance with the provisions of Section 13, Article VIII of the Constitution. ( /~.~ ~MAN G. DE (~~ Chairperson Presiding Justice