CHEVRON HOLDINGS, INC. v. COMMISSIONER OF INTERNAL REVENUE (CONSOLIDATED WITH CTA CASE NO. 9430)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS Quezon City Third Division CHEVRON HOLDINGS, INC., CTA CASE NOS. 9350 & 9430 Petitioner, Iviembers: - versus - UY, Chairperson RINGPIS-LIBAN, and MODESTO-SAN PEDRO, .Jl. COMMISSIONER OF INTERNAL REVENUE, Promulgated: FF 8 1 2 2020 Respondent. .e� X---------------------------------------------------------------c-------------.:-r-.:-:-;;-.-o- ---V->-1--� ---X DECISION RINGPIS-LIBAN, ].: The Case These Petitionsfor Review flied by Petitioner Chevron Holdings Inc. against Respondent Commissioner of Internal Revenue o n May 16, 2016 (CTA Case N o. 9350) and August 17, 2016 (CTr\ Case No. 9430), pray for the refund of unutilized input taxes allegedly attributable to Petitioner's zero-rated sales/receipts for the first quarter of taxable year ("TY") 2015 in the amount of Php14,516,165.27 covered by CTA Case No. 9350; and for the second quarter of the same TY in the amount of Php18,968,294.79 covered in CTA Case N o. 9430 .1 The Partie/ / ' Docket (CTA Case No. 9350), Pre-Trial Order dated May 02, 2017, Statement of the Case, p. 1771.

DECISION CTA CASE NOS. 9350 & 9430 Petitioner Chevron Holdings Inc. is represented herein by its counsel Du- Baladad & Associates with office at 20'h Floor, Chatham House, Rufino corner Valero Streets, Salcedo Village, Makati City, where it may be served notices and other processes of this Court2 Petitioner Chevron Holdings, Inc., formerly known as Caltex (Asia Limited), is a corporation organized and existing under the laws of the State of Delaware, United States of America (U.S.A.). It was granted a license to transact business in the Philippines by the Philippine Securities and Exchange Commission ("SEC") under SEC Reg. No. A199802486. 3 It is registered with the Bureau oflnternal Revenue ("BIR") as a value-added tax ("VAT") taxpayer, with Tax Identification Number ("TIN") 201-056-391-0000.4 Respondent Commissioner of Internal Revenue is sued in his official capacity, having been duly appointed and empowered to perform the duties of his office, including, among others, the duty to act on and approve claims for refund as provided by law. He may be served with summons, notices and other court processes at his office at the BIR National Office Building, Diliman, Que7.on City. 5 The Facts Antecedents (administrative level) On December 18, 2015, Petitioner filed with the BIR an Applicationfor Tax Credits/ Refunds (BIR Form No. 1914),6 and the letter dated December 16, 2015,7 requesting for the issuance of tax credit certificates and/ or tax refund of its unutilized and excess input VAT in the total amount ofPhp14,516,165.27, for the first quarter ofTY 2015. Thereafter, on April 01, 2016, Petitioner filed with the BIR another Application for Tax CreditJ / Rejitndr (BIR Form No. 1914),8 and the letter dated December 16, 2015,9 requesting for the issuance of tax credit certificates and/ or tax refund of its unutilized and excess input VAT in the total amount of Php18,968,294.79, this time for the second quarter ofTY 2015/ 2 !d., Joint Stipulation of Facts and Issues (JSFI), Summary of Admitted Facts, Par. 1, p. 1725. 3 !d., Exhibits "P-1", "P-2", "P-4", and "P-5", pp. 3658 to 3680, and 3683 to 3695. 4 !d., Exhibit "P-3", pp. 3681 to 3682. !d., JSFI, Summary of Admitted Facts, Par. 2, p. 1725. 6 !d., Exhibit "P-8", p. 3716. 7 !d., Exhibit "P-6", pp. 3696 to 3705. 8 !d., Exhibit "P-7", p. 3717. 9 !d., Exhibit "P-7", pp. 3706 to 3715.

DECISION CTA CASE NOS. 9350 & 9430 Proceedings before this court On May 16, 2016, Petitioner filed a Petition for Review before this Court. 10 The case was docketed as CTA Case No. 9350 and was initially raffled to this Court's First Division. In the said Petition, Petitioner prays that judgment be rendered ordering Respondent to refund in its favor the amount of Php 14,516,165.27, allegedly representing unutilized input VAT for the first quarter ofTY 2015. Respondent then ftled its Answer in CTA Case No. 9350 on July 15,2016,11 interposing the following special and affirmative defenses, to wit: "SPECIAL AND AFFIRMATIVE DEFENSES 4. Petitioner's alleged claim for refund is subject to administrative routinary investigation/ examination by the Bureau. 5. The amount of P14,516,165.27 representing alleged unutilized VAT input taxes for the first quarter of taxable year 2015, was not properly documented. 6. In an action for refund, the burden of proof is on the taxpayer to establish its right to refund, and failure to sustain the burden is fatal to the claim for refund/ credit. 7. Petitioner must show that it has complied with the provisions of Section 112 of the NIRC of 1997 on the prescriptive period for claiming tax refund/credit. 8. There is no record of Petitioner ever submitting complete documents to substantiate its administrative claim for refund. Such is a requirement, otherwise, the administrative body will have sufficient reason to deny the claim. As held by the Honorable Supreme Court in the case of Atlas Consolidated lvf.ining and Development Corporation vs. Commissioner of Internal Revenue, G.R 145526, 16 March 2007: 'Petitioner's contention that non-compliance with Revenue Regulations 3-88 could not have adversely affected its case in the CTA indicates a failure on its part to appreciate the nature of the proceedings in that court. First, a judicial claim for ~ 10 !d., pp. 10 to 24. 11 Id., pp. 102 to 109.

DECISION CTA CASE NOS. 9350 & 9430 refund or tax credit in the CTA is by no means an original action but rather an appeal by way of petition for review of a previous, unsuccessful administrative claim. Therefore. as in every appeal or petition for review. a Petitioner has to convince the appellate court that the quasi-judicial agency a quo did not have any reason to deny its claims. In this case. it was necessary for Petitioner to show the CTA not only that it was entitled under substantive law to the grant of its claims but also that it satisfied all the documentary and evidentiary requirements for an administrative claim for refund or tax credit. Second, cases filed in the CTA are litigated de novo. Thus, a Petitioner should prove every minute aspect of its case by presenting, formally offering and submitting its evidence to the CTA. Since it is crucial for a Petitioner in a judicial claim for refund or tax credit to show that its administrative claim should have been granted in the first place. part of the evidence to be submitted to the CTA must necessarily include whatever is required for the successful prosecution of an administrative claim. (emphasis and underscoring supplied) The implementing rule for these complete documents required by law is RMO No. 53-98. Annex B-1 of said RMO lists all the required documents as follows: VALUE-ADDED TAX (For audit involving Claim for Refund / TCC) A.) Requirements from Taxpayer I. Requirements mention in Annex B II. Additional General Requirements 1) 3 copies of 'Application for VAT Credit/Refund' 2) Summary List of Local Purchases specifying the following: XXX X,~ XXX 3) Photocopies of VAT purchases invoices for purchase of goods and official receipts for purchase of services. (l'he invoices/official receipts must be arranged according to the summary list) /

DECISION CTA CASE NOS. 9350 & 9430 4) Summary of importations made during the period with the following details: 2CXX X2C'\ XXX 5) Photocopies of invoices, import entry documents, official receipts or confirmation receipts evidencing payment of VAT. (Segregate documents paid by cash from those paid by tax debit memo) 6) VAT returns ftled for the quarter showing that the amount applied for refund/TCC has been reflected as a deduction from the total available input tax, as well as VAT Return for the succeeding quarter 7) Certification of taxpayer showing the amount of Zero-rated Sales, Taxable Sales and Exempt Sales 8) A statement showing the amount and description of the sale of goods and services, name of persons or entities (except in case of exports) to whom the goods or services were sold and date of the transaction, where the applicant's zero-rated transactions are regulated by certain government agency. 9) Articles of Incorporation - for first time filers 10) Sales Contract/Agreement 11) BOI Certificate of Registration 12) BIR Certificate of Registration 13) Certification from BOI, DOF, BOC, EPZA, etc., that subject taxpayer has not filed similar claim for refund covering the same period. 14) Sworn statement that ending inventory as of the close of the period covered by the Claim has been used direcdy or indirecdy in the products subsequendy exported as supported by export documents, if the applicant is 100% exporte~

DECISION CTA CASE NOS. 9350 & 9430 15) Documents of liquidation evidencing the actual utilization of the raw materials in the manufacture of goods at least 70% of which has been actually exported, if the applicant is an indirect exporter. 16) Copy of the ITR and Certified Financial Statement, if applicable. 17) Beginning and ending inventory of raw materials, work-in-process, finished goods, supplies and materials. Additional Specific Requirements 1) For Zero-Rated Sales of Services (contractors, mining, etc) a. Authenticated copy/ies of the contract/ s showing the person/s for whom the services were rendered, amount of consideration, description of the services and documents evidencing actual payments. b. Photocopies of official receipts and billings together with a summary of the date of billing, name of principal, official receipt number, date of receipt, amount in foreign currency and the corresponding value thereof, date of remittance, name of bank, bank credit memo number and amount remitted in pesos. c. Bank credit memoranda and certificate from the BSP with information similar to 1-c (export sales) As stated above, the first documentary requirement is that provided in Annex B of the same RMO. Annex B provides for more requirements as follows: VALUE-ADDED TAX A) Requirements from Taxpayers 1) Proof of claimed tax credits 2) Proof of Tax Compliance Certificates applied 3) Xerox copy of used Tax Credit Certificate (TCC) with annotation of issued TDM at the back, if applicable /v'

DECISION CTA CASE NOS. 9350 & 9430 4) Proof of payment of deficiency tax, if any a) current year / period b) previous year / period 5) Certification of the appropriate government agency as to taxpayer's entitlement to tax incentives, if applicable 6) Xerox copies of the Official Receipts evidencing VAT payment on imported purchases, if applicable 7) Proof of exemption under special law, if applicable 8) Certification of the appropriate regulatory agency as to the exempt or zero-rated sales of the taxpayer under its regulatory supervision, if applicable 9) Certificate of Registration issued by the appropriate regulatory agency, together with the conditions attached to such registration, if applicable 10) Proof of 'Approval for Effective Zero-Rating of Sales', if applicable 11) Sample invoice / s for 'Export/Exempt Sales', if applicable 12) Proof that the acceptable foreign currency exchange proceeds on export/ sales foreign currency denominated sales had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP), if applicable. 9. The power to tax is the most effective instrument to raise needed revenues to finance and support the myriad activities of the government for the delivery of basic services essential to the promotion of the general welfare and enhancement of peace, progress, and prospenty of the people (Mactan Cebu International Airport Authority vs. Marcos, 261 SCRA 667, 690). Consequently, any delay in implementing tax measures would be to the detriment of the public. It is for this reason that claims for refund are required to be done within certain time frames. Tn the instant petition, the failure of Petitioner to comply with such periods is fatal to its cause. 10. Moreover, Petitioner's failure to submit documents supporting its claim for refund makes its administrative claim for refund pro-forma. This pro-forma administrative claim should not be taken as proper compliance with the requirements of the law that an administrative claim for refund should have been f!l.ed prior to the institution of a judicial claim for refund. Thus, without a validly and duly filed administrative claim for refund, the Honorable Court is without jurisdiction to entertain the Petition for Review. Petitioner's failure to comply with a condition precedent prior to the institution of its petition for review makes it ~

DECISION CTA CASE NOS. 9350 & 9430 dismissible for absence of jurisdiction on the part of the Honorable Court. 11. The claimant has the burden of proof to establish the factual basis of his claim for tax credit or refund. After all tax refunds, like tax exemptions, are construed stricdy against the taxpayer (Citibank N.A. vs. Court of Appeals and Commissioner of Internal Revenue, 280 SCRA 459; Commissioner of Internal Revenue vs. Tokyo Shipping Co., Ltd., 244 SCRA 332, both cited in Benguet Corporation vs. Commissioner of Internal Revenue, CTA Case No. 5392 promulgated October 30, 1998). 12. Partaking of the nature of exemptions, claims for refund are stricdy construed against the claimant and cannot be allowed unless granted in the most explicit and categorical language (Sps. Aguilar vs. Commissioner of Internal Revenue, et al., G.R.SP No. 16432, March 30, 1999). Being in the nature of tax exemptions, these claims are regarded as in derogation of sovereign authority and to be construed strictissimi juris against the claimant and liberally in favor of the taxing authority (Commissioner of Internal Revenue vs. Procter and Gamble Philippines Manufacturing Corporation, 204 SCRA 377). Claims for refund are construed stricdy against the claimant for the same partake the nature of exemption from taxation (Commissioner ofInternal Revenue vs. Ledesma, 31 SCRA 95) and such, they are looked upon with disfavor (Western Minolco Cory. vs. Commissionerojlnterna/Revenue, 124SCRA 1211)." The Pre-Trial Conference for CTA Case No. 9350 was initially set on September 14, 2016.12 The Respondent's Pre-Trial Brie[ for the said case was filed on July 29, 201613 Thereafter, Respondent transmitted to this Court the BIR Records for the same case on August 03, 2016.'4 On August 17, 2016, Petitioner flied another Petition for Review before this Court. 15 The case was docketed as CTA Case No. 9430 and was likewise initially raffled to this Court's First Division. In the said Petition, Petitioner prays that judgment be rendered ordering Respondent to refund in its favor the amount of Php18,968,294.79, allegedly representing unutilized input VAT for the second quarter ofTY 2015.;-V 12 Id., Notice of Pre-Trial Conference dated July 26, 2016, pp. 111 to 112. 13 Id., pp. 115 to 117. 14 Id., Compliance dated July 02, 2016, pp. 121 to 123. 15 Docket (CTA Case No. 9430), pp. 10 to 24.

DECISION CTA CASE NOS. 9350 & 9430 Subsequently, on September 02, 2016, Petitioner filed a Motion to Comolidate (With Urgent Motion to Deftr Pre-Trial Conference) in CTA Case No. 9350,16 praying for the consolidation of the said case with CTA Case No. 9430, and the deferral of the Pre-Trial Conference. Simultaneously, Petitioner filed a Motion to Consolidate in CTA Case No. 9430,17 praying for the consolidation thereof with CTA Case No. 9350. Thus, in the Resolutions dated September 21, 2016 separately promulgated for the said cases,18 the Court granted the said Motion to Consolidate, and ordered the consolidation of the said cases. On November 04, 2016, Respondent filed his Answer in CTA Case No. 9430,19 interposing the following special and affirmative defenses, to wit: "SPECIAL AND AFFIRMATIVE DEFENSES On the basis of the foregoing allegations and in further support of the Specific Denials herein set forth, Respondent respectfully alleged as her defenses that: 4. Taxes collected are presumed to be in accordance with laws and regulations. 5. Petitioner's alleged claim for refund is subject to administrative routinary investigation/examination by the Bureau of Internal Revenue. A claim for refund is not ipso facto granted because Respondent still has to investigate and ascertain the validity of the claim. 6. Taxes arc essential to government's very existence; hence, the dictum that 'taxes are the lifeblood of the government.' For this reason, the right of taxation cannot easily be surrendered; statutes granting tax exemptions are considered as a derogation of the sovereign authority. Since tax refunds are regarded as tax exemptions therefore, these are to be construed strictissimi juris against the person or entity claim the exemption. 7. In action for refund, the burden of proof is on the taxpayer who claims the exemption and he must justify his claim by the clearest grant under the Constitutional or statutory law and cannot be permitted by vague implications. The taxpayer is charged with the heavy burden of proving that he has complie/ 16 Docket (CTA Case No. 9350), pp. 127 to 130. 17 Docket (CTA Case No. 9430), pp. 82 to 85. 18 Docket (CTA Case No. 9350), p. 136; Docket (CTA Case No. 9430), p. 91. 19 Docket (CTA Case No. 9350), pp. 143 to 147; Docket (CTA Case No. 9430), pp. 93 to 97.

DECISION CTA CASE NOS. 9350 & 9430 with and satisfied all the statutory and administrative requirements to be entided to the tax refund. 8. To support its claim, it is imperative for Petitioner to prove the following, viz: a. The registration requirements of a value-added taxpayer in compliance with section 6 (a) and (b) of Revenue Regulations No. 6-97 in relation to Section 4.107-1 (a) of Revenue Regulations No. 7-95, and Section 236 of the Tax Code, as amended; b. The invoicing and accounting requirements for VAT-registered persons, as well as the filing and payment of VAT in compliance with the provisions of Section 113 and 114 of the Tax Code, as amended; c. Proof of compliance with the prescribed checklist of requirements to be submitted involving claim for VAT refund pursuant to Revenue Memorandum Order No. 53-98, otherwise there would be no sufficient compliance with the filing of an administrative application for refund which is a condition sine qua non prior to the filing of a judicial claim in accordance with Section 112 of the Tax Code, as amended. This requires the submission of complete documents in support of the application filed with the Bureau of Internal Revenue before the 120-day audit period shall apply, and before the taxpayer could avail of the judicial remedies as provided for in the law. Hence, Petitioner's failure to submit proof of compliance with the above-stated requirements warrants immediate dismissal of the Petitioner for review; d. That the input taxes of P 18,968,294.79 allegedly incurred by Petitioner for the second quarter of taxable year 2015 were attributable to its zero-rated sales and such have not been applied against any output taxes and were not carried over to the succeeding taxable quarter or quarters; e. That Petitioner's administrative and judicial claims for tax credit or refund of the unutilizcd input tax (VAT) was filed within the periods provided in Sections 112(A) and (C) of the Tax Code, as amended; /

DECISION CTA CASE NOS. 9350 & 9430 f. That Petitioner's domestic purchases of goods and services were made in the course of its trade or business, properly supported by VAT invoices and /or official receipts and other documents, such as subsidiary purchase Journal showing that it actually paid VAT in accordance with Sections 110(A) (2) and 113 of the Tax Code, as amended, and pursuant to Section 4.105-5 (a) and (b) of Revenue Regulations No. 7-95 (Re: Substantiation of Claims for Input Tax Credits); g. The requirements as enumerated under Section 4.105-5 of Revenue Regulations No. 7-95. (Re: Substantiation of Claims for Input Tax Credits) 9. Petitioner must prove that the aggregate amount of P18,968,294.79 being claimed by Petitioner arising from alleged excess and unutilized input VAT for the second quarter of taxable year 2015 is properly documented. 10. Following the premise above-mentioned, Petitioner has the burden of proving that the right to such tax refund indubitably exists and well-founded doubt is fatal to the claim." The Pre-Trial Conference for the consolidated cases was set to, and held on, February 22, 2017. 20 Respondent filed its Pre-Tn'al Bn'ef on December 19, 2016;'1 while Petitioner submitted its Consolidated Pre-Tn'al Briefon February 17, 2017. 22 On March 13, 2017 the parties filed their joint Stipulation ofFacts and !JJttes GSFI). 23 In the Resolution dated March 23,2017,24 the Court approved the said JSFI, and deemed the Pre-Trial terminated. Thereafter, the Pre-Trial Order dated May 02, 2017 was issued by this Court. 25 The trial of the case then proceeded// 20 Docket (CTA Case No. 9350), Notice of Pre-Trial Conference dated November 11, 2016 and Minutes of the hearing held on and Order dated February 22, 2017, pp. 149 to 150 and 1654 to 1661. " Id., pp. 153 to 156. 22 Id., pp. 164 to 175. 23 Jd., pp. 1725 to 1740. 24 !d., p. 1747. 2s Id., pp. 1771 to 1799.

DECISION CTA CASE NOS. 9350 & 9430 During trial, Petitioner presented its documentary and testimonial evidence. It offered the testimonies of the following individuals, namely: (1) Ms. Carolyn C. Ardina,26 Pinance Coordinator of Petitioner; (2) Mr. Benedicto A. Santos,27 Manager - Business Analysis and Support; and (3) Atty. Walter L. Abela, Jr./8 the court-commissioned Independent Certified Public ;\ccountant (ICPA). 29 On November 5, 2017, Petitioner ftled its FormaJOffirofEvidence.30 Thus, in the Resolution dated February 26, 2018,31 the Court admitted Petitioner's Exhibits, except for the following: 1. Exhibits "P-174" and "P-188", for failure of the exhibit formally offered and identified to correspond with the document actually marked; 2. Exhibits "P-252.127", "P-252.486", "P-252.1 050", "P- 252.1397", "P-253.58", "P-259.8", "P-259.9", "P-259.49", "P- 200", "P-201", "P-202", and "P-203", for not being found in the records; 3. Exhibits "P-252.492", "P-252.494", "P-252.496", "P-252.498", "P-252.500", "P-252.502", "P-252.504", "P-252.506", "P- 252.542", and "P-252.978", for being blurred/unreadable; and 4. Exhibits "P-48", "P-58", "P-105", "P-109", "P-112", "P-116", "P-122" ' 1"5P2-1"'2"6P"'-1"5P6-"1'3"0P"-' 1"6P1-"1' 3"6P"-'16"P5"-1' 40" "P-144" "P- 148"' "P- "P-1' 69"' "P-1' 73" ' "suPb-1m7i8t "t'h"ePir-1o8ri1g"in' a"lPs-f1o8r5c"o' m"Pp-a1r9is4o"n' .and "P-198"' for failure to Thus, Petitioner filed a Motion for Reconsideration (With Motion to Set Additional Commissioner's Hearing) on March 13, 201832 In the Resolution date~ 26 Id., Exhibit "P-212" and Minutes of the hearing held on and Order dated May 09, 2017, pp. 209 to 222 and 1921 to 1923, and 1925 to 1926, respectively. 27 Id., Exhibit "P-214" and Minutes of the hearing held on and Order dated June 08, 2017, pp. 1944 to 1964 and 3395 to 3398. 28 !d., Exhibit "P-215" and Minutes of the hearing held on and Order dated August 17, 2017, pp. 3551 to 3570 and 3596 to 3599. 29 Id., Oath of Commission dated May 09, 2017 and Minutes of the hearing held on and Order dated May 09, 2017, p. 1924 and 1921 to 1923, and 1925 to 1926, respectively. 3o Id., pp. 3625 to 3656. 31 Id., pp. 4609 to 4612. 32 Id., pp. 4628 to 4636.

DECISION CTA CASE NOS. 93SO & 9430 October 22, 2018,33 the Court partially granted Petitioner's Motion for Recomideration, but still denied the admission of the following: 1. Exhibits "P-174" and "P-188", for failure to submit the duly marked exhibits; 2. Exhibits "P-259.8", "P-259.9", "P-200", "P-201", "P-202" and "P- 203", for not being found in the records of the case; and 3. Exhibits "P-48"' "P-58"' "P-105"' "P-109"' "P-112"' "P-116"' "P- 111825122""",'' """PPP---111258665""",'' "P-130" "P-136" ""PP--116490""' ""PP--114743""'' ""sPPu--b11m4788i t"" '' th""ePPi--r "P-161" ' "P-165"'' "P-194"' ' and "P-198", for failure to originals for comparison. For his part, Respondent likewise presented his documentary and testimonial evidence. He offered the testimonies of Revenue Officer ("RO") Melinda M. Rugayan for CTA Case No. 9350,34 and RO Romualdo I. Plocios for CTA Case No. 9430,35 by way of their judicial affidavits. Respondent filed his Formal Offer ofEvidence on March 01, 2018."' Thus, in the Resolution dated December 04, 2018,37 the Court admitted all the evidence offered by Respondent. In the meantime, the instant consolidated cases were transferred to this Court's Third Division, pursuant to the Order dated October 01, 2018.38 Subsequently, Respondent filed its Memorandum on January 09, 2019;39 while Petitioner filed its Memorandum on February 18, 2019. 40 The case was deemed submitted for decision on February 21, 2019. 41 The Issues// 33 Jd., pp. 4690 to 4694. 34 !d., Exhibit "R-3" and Order dated February 27, 2018, pp. 1669 to 1672 and 4613 to 4614. 35 !d., Exhibit "R-4" and Order dated February 27, 2018, pp. 1692 to 1695 and 4613 to 4614. 36 Jd., pp. 4615 to 4618. 37 !d., pp. 4696 to 4697. 38 !d., p. 4687. 39 !d., pp. 4698 to 4707. 40 !d., pp. 4718 to 4750. 41 Jd., Resolution dated February 21, 2019, p. 4753.

DECISION CTA CASE NOS. 9350 & 9430 The parties submitted the following issues42 for this Court's resolution, to wit: "A. Whether the Petitioner is entitled to the refund of unutilized input VAT it paid in the amount of Fourteen Million Five Hundred Sixteen Thousand One Hundred Sixty Five Pesos and Twenty Seven Centavos (Php14,516,165.27) for the first quarter of taxable year 2015 (CTA Case No. 9350); and B. Whether the Petitioner is entitled to the refund of unutilized input VAT it paid in the amount of Eighteen Million Nine Hundred Sixty Eight Thousand Two Hundred Ninety Four Pesos and Seventy Nine Centavos (Php 18,968,294.79) for the second quarter of taxable year 2015 (CTA Case No. 9430)". Petitioner's arguments: Petitioner argues that it is VAT-registered; that it is engaged in zero-rated sales; that the input taxes are due or paid and have not been applied against output taxes during the quarter and in the succeeding quarters; that the input taxes being claimed are attributable to zero-rated sales; that the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with Bangko Sentral ng Pilipinas ("BSP") rules and regulations; that the input taxes were proportionately allocated on the basis of sales volume; that the claim is flied within two (2) years after the close of the taxable quarter when the sales were made; and that Petitioner is entitled to a claim for refund in the total amount of Php33,484,460.06, representing unutilized input taxes related to zero-rated sales/ receipts for the first and second quarters of 2015. Respondent's counter-arguments: Respondent counter-argues that the law requires that only "creditable input taxes" that are "directly attributable" may be refunded; that Petitioner failed to prove that all of its clients are non-resident foreign corporations doing business outside the Philippines; that it chose to carry-over the unutilized input tax to the succeeding period; and that partaking of the nature of exemptions, claims for refund are strictly construed against the claimant and cannot be allowed unless granted in the most explicit and categorical language. Discussion/Ruling The Court partially grants the instant consolidated Petitions for Revie~ 42 Id., JSFI, Statement of Issues, p. 1726.

DECISION CIA CASE NOS. 9350 & 9430 Section 112 of the National Internal Revenue Code ("NIRC") of 1997, as amended by Republic Act (RA) No. 9337,43 provides: "SEC. 112. Refunds or Tax Credits ofInput Tax.- (A) Zero-rated or Effectively Zero-rated Sales. - i\ny VAT- registered person, whose sales arc zero-rated or effectively zero- rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales under Section 106(A)(2)(a)(1), (2) and (b) and Section 108(B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods or properties or services, and the amount of creditable input tax due or paid cannot be direcdy and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales: Provided, finally, That for a person making sales that arc zero-rated under Section 108(B)(6), the input taxes shall be allocated ratably between his zero-rated and nonzero-rated sales. XXX XXX XXX (C) Period within which Refund or Tax Credit ofInput Taxes shall be Made. - In proper cases, the Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in accordance with Subsection (A) hereof. In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision/"V"' 43 AN ACI 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 NOS. 9350 & 9430 denying the claim or after the expiration of the one hundred twenty day-period, appeal the decision or the unacted claim with the Court of Tax Appeals." Based on the foregoing provision, jurisprudence has laid down certain requisites which the taxpayer-applicant must comply with to successfully obtain a credit/refund of input VAT. Said requisites are classified into certain categories, to wit: As to the timeliness of the filing of the administrative and judicial claims: 1. the claim is flied with the BIR within two (2) years after the close of the taxable quarter when the sales were made;44 2. 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 one hundred twenty (120) days, the judicial claim has been filed with this Court, within thirty (30) days from receipt of the decision or after the expiration of the said 120- day period;45 With reference to the taxpayer's registration with the BIR: 3. the taxpayer is a VAT-registered person;46 In relation to the taxpayer's output VAT: 4. the taxpayer is engaged in zero-rated or effectively zero-rated sales.,47 5. for zero-rated sales under Sections 106(A)(2)(1) and (2); 106(B); and 108(B)(1) and (2), the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with BSP rules and regulations;48 As regards the taxpayer's input VAT being refunded/ 44 Intel Technology Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 155732, April 27, 2007; San Roque Power Corporation v. Commissioner of Internal Revenue, G.R. No. 180345, November 25, 2009; and AT&T Communications Services Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 182364, August 03, 2010. 45 Steag State Power, Inc. (Formerly State Power Development Corporation) v. Commissioner of Internal Revenue, G.R. No. 205282, January 14, 2019; Rohm Apollo Semiconductor Philippines v. Commissioner of Internal Revenue, G.R. No. 168950, January 14, 2015. 46 Intel Technology Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 155732, April 27, 2007; San Roque Power Corporation v. Commissioner of Internal Revenue, G.R. No. 180345, November 25, 2009; and AT&T Communications Services Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 182364, August 03, 2010. 47 Id. 48 Id.

DECISION CTA CASE NOS. 9350 & 9430 6. the input taxes are not transitional input taxes;49 7. the input taxes are due or paid;50 8. the input taxes claimed are attributable to zero-rated or effectively zero-rated sales. However, where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes cannot be direcdy and entirely attributable to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume;51 and 9. the input taxes have not been applied against output taxes during and in the succeeding quarters. 52 Petitioner's administrative and judicial claims were timely filed. The first requisite pertains to the filing of the refund claim for tax credit or refund of input VAT before the BIR, within two (2) years from the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made. The present claim covers the first and second quarters ofTY 2015, which closed on March 31,2015 and June 30,2015, respectively. Counting two years from the said dates, Petitioner had until March 31, 2017 and June 30, 2017, respectively, within which to file its administrative claim for tax credit certificate or refund. Thus, Petitioner's administrative claims for the said quarters were seasonably filed, as shown below: CTA Period Close of the Last Day to File Date of Filing of Case Covered Taxable Administrative Administrative No. Quarter 9350 first Quarter of TY March 31, Claim Claim 2015 2015 March 31,2017 December 18, 9430 second Quarter of TY June 30, 2015 June 30, 2017 2015 51 2015 April1, 201654 I I The second requisite is to the effect that the judicial claim must have been filed within thirty (30) days from receipt of Respondent's decision or after t~ 49 !d. 50 !d. 51 Intel Technology Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 155732, April 27, 2007; and San Roque Power Corporation vs. Commissioner of Internal Revenue, G.R. No. 180345, November 25, 2009. 52 Intel Technology Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 155732, April 27, 2007; San Roque Power Corporation vs. Commissioner of Internal Revenue, G.R. No. 180345, November 25, 2009; and AT&T Communications Services Philippines, Inc., G.R. No. 182364, August 03, 2010. 53 Docket (CTA Case No. 9350), Exhibits "P-6" and "P-8", pp. 3696 to 3705, and 3716. 54 !d., Exhibits "P-7" and "P-9", pp. 3706 to 3715, and 3717.

DECISION CTA CASE NOS. 9350 & 9430 expiration of the 120-day period under Section 112(C) of the NIRC of 1997, as amended. Considering that there is no indication that Respondent issued a decision relative to Petitioner's administrative claim, the determination of the 120+30-day period, as applied to this case, is shown as follows: CTA Date of Filing of End of 120 days End of30 - Case Administrative for BIR days from No. expiration of Date of Filing of ! Claim Commissioner to the 120 days Petition for Review 9350 decide the claim May 16,2016 December 18,2015 August 29, May 16, 2016 9430 April 16, 2016 August 17,2016 April 1, 2016 2016 July 30, 2016 I As shown above, the instant Petitions for Review covering the first and second quarters of lY 2015 were flied on May 16, 2016 and August 17, 2016 respectively. Thus, Petitioner's judicial claims were likewise timely made. Such being the case, Petitioner fulfilled the above-stated first and second requisites. Petitioner is a VAT-registered person. Petitioner complied with the third requisite considering that it is a VAT registered taxpayer under BIR Certificate of Registration No. OCN 8RC0000385300 with TIN 201-056-391-0000055 Petitioner was able to establish that it was engaged in zero-rated sales or effectively zero-rated sales during the first and second quarters of TY 2015, albeit only in the amount of Php1,655,274,685. 71. The fourth andfifth requisites require that the taxpayer is engaged in zero- rated or effectively zero-rated sales, and for zero-rated sales under Section 106(A)(2)(a)(1) and (2), 106(B), and 108(B)(1) and (2) of the NIRC of 1997, as amended by RA No. 9337, the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with the BSP rules and regulatio/ 55 Jd., Exhibit "P-3", pp. 3681 to 3682.

DECISION CTA CASE NOS. 9350 & 9430 In this case, Petitioner claims that its sale of services to its affiliates located and doing business outside the Philippines is a transaction subject to zero percent (0%) VAT, pursuant to Section 1OS(B) (2) of the NIRC of 1997, as amended, to wit: "SEC. 108. Value-added Tax on Sale ofServia1s and Use or Lease ofProperties. - XXX XXX XXX (B) Transactions Subject to Zero Percent (0%) Rate. - The following services performed in the Philippines by VAT- registered persons shall be subject to zero percent (0%) rate: (1) Processing, manufacturing or repacking of goods for other persons doing business outside the Philippines which goods are subsequendy exported, where the services are paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP); (2) Services other than those mentioned in the preceding paragraph rendered to a person engaged in business conducted outside the Philippines or to a nonresident person not engaged in business who is outside the Philippines when the services are performed, the consideration for which is paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);"(Empham ours) Based on the foregoing provision, certain essential elements must be present for a sale or supply of services to be subject to the VAT rate of zero percent (0%), under Section 108(B)(2) of the NIRC of 1997, as amended, to wit: 1) The services fall under any of the categories under Section 108(8)(2),56 or simply, the services rendered should be other than "processing, manufacturing or repackinggoodl';;v 56 Commissioner of Internal Revenue v. American Express International, Inc. (Philippine Branch), G.R. No. 152609, June 29, 2005. 57 Commissioner of Internal Revenue v. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., G.R. No. 153205, January 22, 2007.

DECISION CTA CASE NOS. 9350 & 9430 2) The service must be performed in the Philippines58 by a VAT-registered person; 3) The recipient of the services is a foreign corporation, and the said corporation is doing business outside the Philippines, or is a non-resident person not engaged in business who is outside the Philippines when the services were performed;59 and 4) The payment for such services should be in acceptable foreign currency accounted for in accordance with BSP rules. 60 Anent the first essential element, Petitioner entered into a number of Service Agreements61 with the following foreign affiliates, to wit: Customer's Name AgSrreerevmic~ eent I Chevron USA, Inc. Chevron Information Technology Company (a Chevron USA, In~-:-- Division) I Chevron Services Company (a Chevron USA, Inc. Division) Chevron Products Company (a Chevron USA, Inc. Division) Chevron Africa and Latin America Exploration and Production "P-30" Company (a Chevron USA, Inc. Division)-FEABU HQ Branch (a CheYron USA, Inc. Division) Chevron Energy Technology Company (a Chevron USA, Inc. Division) Chevron Upstream (a division of Chevron USA, Inc.) Chevron Australia Pty Ltd "P-31" Chevron New Zealand "P-32" Chevron USA Inc. Singapore Operations (Branch) "P-33" Chevron North Sea Limited "P-34" Chevron (fhailand) Limited "P-35" Chevron Singapore Pte. Ltd. "P-36" I 58 Commissioner of Internal Revenue v. Burmeister and Wain Scandinavian Contractor Mindanao, ;I Inc., G.R. No. 153205, January 22, 2007; Commissioner of Internal Revenue v. American Express International, Inc. (Philippine Branch), G.R. No. 152609, June 29, 2005. 59 Sitel Philippines Corporation (Formerly Clientlogic Phils. Inc.) v. Commissioner of Internal Revenue, G.R. No. 201326, February 8, 2017; Commissioner of Internal Revenue v. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., G.R. No. 153205, January 22, 2007; � Accenture, Inc. v. Commissioner of Internal Revenue, G.R. No. 190102, July 11,2012. 6 Commissioner of Internal Revenue v. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., G.R. No. 153205, January 22, 2007; Commissioner of Internal Revenue v. American Express International, Inc. (Philippine Branch), G.R. No. 152609, June 29, 2005. 61 Docket (CTA Case No. 9350), Exhibit "P-30" to "P-60", pp. 3758 to 4230.

DECISION CTA CASE NOS. 9350 & 9430 Chevron Products UK Limited "P-37" Chevron Hong Kong Ltd. "P-38" Chevron Iraq (Sarta) Limited "P-39" Chevron Malaysia Limited "P-40" Chevron Overseas Services Corporation - Argentina Home Office (Branch) "P-41" Chevron Canada Resources Chevron International Pte Ltd "P-42" Chevron South Africa (Pty) Limited "P-43" Chevron (Cambodia) Limited "P-44" Chevron Global Energy Inc. "P-45" Chevron Trading Pte Ltd "P-46" Chevron Asia Pacific Holdings Limited "P-47" Chevron Denmark Inc. - Denmark Branch "P-49" Chevron Khazar, Ltd "P-50" Chevron Nebitgaz BV "P-51" Chevron (China) Investment Co. Ltd - Services "P-52" Chevron Canada Limited (Products Division) "P-53" Chevron Middle East Business Development Ltd "P-54" Campania Chevron de Panama S.A. "P-55" Chevron Overseas Services Corporation "P-56" Chevron Lubricants Lanka PLC "P-57'' Chevron Pakistan Limited "P-59" 'P-60" The Service Agreements provide in part the following services to be rendered by Petitioner: 1) Finance Services/Business Support; 2) Information Technology (IT) Services-PAD; 3) Information Technology (IT)-Infrastructure Assets (IA); 4) Manila Downstream Services Center; 5) Training and Human Resources Management; 6) Retail System Support; 7) Manila Procurement/Supply Chain Shared Services; and 8) Business Real Estate Services. Evidently, Petitioner complied with the first requisite, as the said services are not in the same category as ''processing, mamt[acturing or repacking ofgoods". As for the second essential element, the contracts or Service Agreements Petitioner entered into with its foreign affiliates establish that the parties to the contracts have agreed that Petitioner's services shall be performed in the Philippines, to wi~

DECISION CTA CASE NOS. 9350 & 9430 "11. Location of Services CHI shall perform the Services in the Philippines unless OPCO reasonably requests that some Services be performed in another location subject to, in all cases, to the prior written consent of CHI. xxx"62 (Emphasis ours) Thus, there being no indication that the services were not performed in the Philippines, Petitioner complies with the said second essential element. Anent the third requisite, Petitioner presented the following documents1'1 to prove that its clients/affiliates whom it had Service Agreements with, are non- resident foreign corporations doing business outside the Philippines: 1. Certification of Non- Registration of Company issued by the Philippine Securities and Exchange Commission (SEC); 2. Certificate/ Articles of Foreign Incorporation/Registration; 3. Service Agreements; 4. Screenshots of Foreign Government Website; and 5. Screenshots of Chevron Subsidiary Governance Website. However, each of the aforesaid documents, standing alone, is inadequate proof that Petitioner's client is a non-resident foreign corporation doing business outside the Philippines. While the SEC Certificates of Non-Registration show that the named entities therein are not registered corporations/partnerships in the Philippines, the same do not prove that such entities are non-resident foreign corporations doing business outside the Philippines. The same holds true with Certificates/Articles of Foreign Incorporation/Registration which only prove that the entities named therein were incorporated/organized/domiciled abroad but do not necessarily establish that such entities arc not doing business in the Philippines. Likewise, the Service Agreements only show the names and addresses/incorporation of Petitioner's clients to whom it renders services bu~ 62 !d., Exhibits ''P-30", "P-31", ''P-32", "P-33", ''P-34", "P-35", "P-36", "P-37", "P-38", "P-39" (Paragraph 12), Exhibit "P-40", Exhibit "P-41" (Paragraph 12), "P-42", "P-43", "P-44", "P-45", "P-46", "P-47", "P-49", "P-50" (Paragraph 12), "P-51" (Paragraph 12), "P-52" (Paragraph 12), "P-53", "P-54", "P-55", "P-56", "P-57", Exhibit "P-59", "P-60", p. 3765, 3781, 3807, 3822, 3839, 3858,3877,3896,3765,3930,3945,3965,3977,3992,4006,4020,4036,4052,4067,4083, 4099,4116,4142,4158,4178,4191,4210,4220. 63 Id., Exhibits "P-30" to P-199", "P-205", pp. 3758 to 4602.

DECISION CTA CASE NOS. 9350 & 9430 the same do not establish that such clients are non-resident foreign corporations doing business outside the Philippines. In the case of Site! Philippines Corporation (formerly C!ientlogic Phi!s., Inc.) vs. Commissioner of Internal Revenue,64 the Supreme Court held that while Sitel's documentary evidence, which included Certifications issued by the Securities and Exchange Commission and Agreements between Site! and its foreign clients, may have established that Site! rendered services to foreign corporations and received payment therefor through inward remittances, said documents failed to specifically prove that such foreign clients were doing business outside the Philippines or have a continuity of commercial dealings outside the Philippines. Therefore, to be considered as non-resident foreign corporation doing business outside the Philippines, each entity must be supported at the very least by both SEC certificate of Non-Registration of Corporation/Partnership and proof of incorporation/ registration in a foreign country (e.g., Articles/ Certificate of Incorporation/Registration and/or Tax Residence Certificate) and that there is no other indication which would disqualify said entity in being classified as a non-resident foreign corporation. In this regard, the Court cannot give credence or probative value to the printed screenshots of Chevron Subsidiary Governance Website as the information contained therein were retrieved from the database made and maintained by Petitioner's group of companies. Thus, the said documents arc self-serving and can be easily manipulated to favor Petitioner in view of its affinity with the entities that maintain or keep the said database. This is also true with the screenshots of Foreign Government \JC'ebsites which can also be easily manipulated, considering that none from the said foreign government attested to the authenticity of the said website and as to the registration of the purported Petitioner's foreign clients found therein. As a result, only the following clients of Petitioner for the first and second quarters of TY 2015 shall be considered non-resident foreign corporations doing business outside the Philippines: ~Customer's Name Service SEC Certification of Articles/ Certificate Agreement Non-Registration of I Chevron USA, Inc. of Incorporation/ "P-30" Company "P-205" Re2:istration I "P-62"(>S i 64 G.R. No. 201326, February 08, 2017. / 65 This Exhibit pertains to the Amended and Reinstated Articles of Incorporation of Chevron USA, Inc. Article I (Management) of the Company By-Laws, the corporation shall operate through its several divisions as enumerated therein; and that each division shall have all requisite

DECISION CTA CASE NOS. 9350 & 9430 Chevron Information Technology ''P-61" I Company (a Chevron USA, Inc. Division) Chevron Services Company (a Chevron "P-66" I USA, Inc. Division) I Chevron Products Company (a Chevron "P-68" US1\, Inc. Division) "P-31" " P - 7 5" Chevron Africa and Latin 1\mcrica "P-32" "P-119" Exploration and Production Company (a "P-79" Chevron USA, Inc. Division)-FEABU HQ "P-33" "P-133" Branch (a Chevron USA, Inc. Division) "P-83" Chevron Energy Technology Company (a "P-34" "P-191" Chevron USA, Inc. Division) "P-35" "P-7 4" "P-86" Chevron Upstream (a division of Chevron "P-36" "P-78" USA, Inc.) "P-90" ' "P-37" "P-82" Chevron Australia Pty Ltd. "P-85" "P-93" i "P-38" "P-89" Chevron New Zealand "P-92" "P-97" I Chevron USA Inc. (Singapore Branch) "P-96" Chevron North Sea Limited I Chevron (rhailand) Limited "P-1 00" Chevron Singapore Pte Ltd I Chevron Products UK Limited - Trading -i and Marine Lubricants Branch "P-101" Chevrof} Hong Kong Limited I Relative to the fourth requisite, Petitioner presented the Certificate of Bank Inward Remittances66 issued by JPMorgan Chase Bank N.A.-Manila Branch for the period January 2015 to June 2015, purportedly showing the remittances of its foreign clients/affiliates. Considering that the certification (or proof) of inward remittances attests to the fact of payment "in acceptable foreign mrrency and accounted for in accordance with the rules and regulations of the BSP', Petitioner is considered to have complied with the above-stated fourth essential element. In any event, equally important to consider is that the said foreit,rn currency remittances referred to under Section 108(B)(2) must be duly supported by VAT zero-rated official receipts in accordance with Section 113(A)(2), (B)(1), (2)(c) and (3) of the NIRC of 1997, as amended, as implemented by Section 4.113-l(A)(Z), B(1) and (2)(c) of Revenue Regulations ("RR") No. 16-05 which provide that a VAT taxpayer, like herein Petitioner, shall for every lease of goods or properties, and for every sale, barter or exchange of services, issue a VAT official receipt which must contain the information stated in the said provisions, towij/ corporate authority to take all such actions as it deems appropriate, and to fully obligate the corporation accordingly. 66 Exhibits "P-271.1" to "P-271.73."

DECISION CTA CASE NOS. 9350 & 9430 "SEC. 113. Invoicing and Arco11nting Requi1?ments for VAT- registered Persons. - (A) Invoicing Requirements. -A VAT-registered person shall 1ssue: XXX XXX XXX (2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services (B) Information Contained in the VAT Invoice or VAT Official Rempt. -The following information shall be indicated in the VAT invoice or VAT off1cial receipt: (1) A statement that the seller is a V,\T-registered person, followed by his Taxpayer's Identification Number (TIN); (2) The total amount which the purchaser pays or 1s obligated to pay to the seller with the indication that such amount includes the value-added tax: Provided, That: XXX XXX XXX (c) If the sale is subject to 7-ero percent (0%) value-added tax, the term 'zero-rated sale' shall be written or printed prominently on the invoice or receipt; XXX XXX XXX (3) The date of transaction, quantity, unit cost and description of the goods or properties or narure of the service; and xxx" (Underscoring ours) "SEC. 4.113-1. Invoidng Requirements. - (A) A VAT-registered person shall issue:- XXX XXX XXX /

DECISION CTA CASE NOS. 93SO & 9430 (2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services. Only VAT-registered persons arc required to print their TIN followed by the word "VAT" in their invoice or official receipts. Said documents shall be considered as a 'VAT Invoice' or VAT official receipt. All purchases covered by invoices/ receipts other than VAT Invoice/VAT Official Receipt shall not give rise to any !nput tax. VAT invoice/official receipt shall be prepared at least in duplicate, the original to be given to the buyer and the duplicate to be retained by the seller as part of his accounting records. (B) Information contained in VAT invoice or VAT official receipt. -The following information shall be indicated in VAT invoice or VAT official receipt: (1) A statement that the seller is a Vi\T-registered person, followed by his TIN; (2) The total amount which the purchaser pays or is obligated to pay to the seller with the indication that such amount includes the VAT; Provided, That: XXX XXX XXX (c) If the sale is subject to zero percent (0%) Vi\T, the term 'zero-rated sale' shall be written or printed prominently on the invoice or receipt;" (Underscoring ours) In the instant case, aside from the certificate of bank inward remittances, Petitioner also presented its Summary List of Sales07 and the related official receipts68 purportedly supporting its total declared zero-rated sales of Php1,862,756,405.59 for the first and second quarters of TY 2015, detailed as follows: Period Covered Zero-Rated Sales first Quarter Phfl 968,689,035.61 second Quarter 894,067,369.98 67 Exhibits "P-268.1" to "P-268.4" and "P-268.25" to "P-268.28". ~ 68 Exhibits "P-262.1" to "P-262.101".

DECISION Php1,862,756,405.59l CTA CASE NOS. 9350 & 9430 [Total However, upon verification of the submitted documents, the Court finds that only the zero-rated sales of Php1,655,274,685.71 are duly supported by certificate (or proof) of inward remittances and zero-rated official receipts, detailed as follows: Customer's Exhibit Official OR Date Zero -rated Zero -rated Proof of Name No. Receipt sales in PhP sales in USD Inward Remittance (OR) (P-271.1 to No. P-271. 73) Chevron P- 5405 2/25/2015 6,855,485.61 154,865.42 T37SWIC055982 (Thailand) 262.19 5422 3/25/2015 Limited 5454 4/24/2015 4, 715,782.49 105,586.37 T37SWIC056337 Chevron P- 5470 5/26/2015 (Thailand) 262.35 5484 6/25/2015 4,665,770.66 105,586.39 T37SWIC056755 Limited Chevron P- 4,709,473.24 105,586.39 T37SWIC:057158 (Thailand) 262.67 Limited 4,760,430.57 105,586.35 T37SWIC057581 Chevron P- 25,706,942.57 577,210.92 (Thailand) 262.82 14,846,792.31 335,982.91 T37SWIC:055558 Limited Chevron P- (fhailand) 262.95 Limited P-262.7 5390 1/26/2015 Sub-total Chevron P- 5400 2/25/2015 12,654,157.15 285,857.41 T37SWIC05597 5 Australia Pty 262.15 Ltd Chevron P- 5415 3/25/2015 12,556,422.06 281,138.29 T37SWIC056327 Australia Pty 262.28 Ltd Chevron P- 5449 4/24/2015 12,423,256.30 281,138.29 T37SWIC056749 1\ustralia Pty 262.62 Ltd Chevron P- 5464 5/26/2015 12,539,620.43 281,138.29 T37SWIC057159 Australia Pty 262.76 Ltd Chevron P- 5479 6/25/2015 12,675,306.13 281,138.29 T37SWIC057571 Australia P ty 262.90 77,695,554..}�_ Ltd 1, 746,393.48 Chevron -- - - - - �- - ,\ustralia Pty r Ltd Sub-total

DECISION CTA CASE NOS. 9350 & 9430 Chevron P- 5435 3/26/2015 952,668.31 21,311.19 T37SWIC056359 Energy 262.48 Technology 5468 5/26/2015 4,135,004.02 92,706.79 T37SWIC057152 Company (a P- 5403 2/25/2015 Chevron 262.80 5428 3/25/2015 5,087,672.33 114,017.98 U.S.A. Inc. 5467 5/26/2015 7,217,681.27 163,047.42 T37SWIC055976 division) P- 5386 1/26/2015 Chevron 262.17 931,292.54 20,851.64 T37SWIC056324 Energy 5475 6/25/2015 Technology P- 6,398,802.41 143,461.15 T37SWIC057140 Company (a 262.41 5417 3/26/2015 14,547,776.22 327,360.21 Chevron 5444 4/24/2015 U.S.A. Inc. P- 179,993,262.48 4,073,247.53 T37SWIC055581 division) 262.79 244,301,042.83 5,418,597.13 T37SWIC057584 Sub-total P-262.3 Chevron 254,252,955.29 5,687,638.61 T37SWIC056362 Hong Kong P- Limited 262.87 128,658,188.24 2,911,534.80 T37SWIC056764 Chevron Hong Kong P- r Limited 262.30 Chevron Hong Kong P- Limited 262.58 Sub-total Chevron Information 1'echnology Company (a Chevron U.S.,\. Inc. division) Chevron Information Technology Company (a Chevron U.S.A. Inc. division) Chevron Information Technology Company (a Chevron U.S.A. Inc. division) I Chevron Information Technology l Company (a

DECISION CfA CASE NOS. 9350 & 9430 Chevron P-262.9 5393 1/26/2015 807,205,448.84 18,091,018.07 U.S.A Inc. P- 5402 2/25/2015 5,479,041.10 123,990.70 T37SWIC055554 division) 5419 3/25/2015 7,239,041.17 163,529.94 T37SWIC055977 262.16 5450 4/24/2015 7 ,303, 704.33 163,529.94 T37SWIC056330 Sub-total P- 5465 5/26/2015 7,226,246.13 163,529.95 T37SWIC056751 Chevron New 5482 6/25/2015 7,293,931.31 163,529.94 T37SWIC057139 Zealand 262.32 5394 1/26/2015 7,3 72,855.28 163,529.93 T37SWIC057567 Chevron New P- 5406 2/25/2015 41,914,819.32 941,640.40 Zealand 5416 3/25/2015 Chevron New 262.63 5453 4/24/2015 4,820,413.61 109,085.96 T37SWIC055574 Zealand P- 5469 5/26/2015 Chevron New 5483 6/25/2015 5,721,199.20 129,241.89 T37SWIC055972 Zealand 262.77 Chevron New P- 5388 1/26/2015 9,798,016.08 219,377.58 T37SWIC056334 Zealand Chevron New 262.93 5399 2/25/2015 4,847,052.14 109,688.79 T37SWIC056745 Zealand P- 4,892,452.72 109,688.79 T37SWIC057147 Sub-total 262.10 Chevron 4,945,391.79 109,688.79 T37SWIC057566 North Sea P- 35,024,525.54 786,771.80 Limited 262.20 Chevron 21,963,899.25 497,043.04 T37SWIC055579 North Sea P- Limited 262.29 24,776,030.99 559,690.54 T37SWIC055987 Chevron North Sea P- Limited 262.66 Chevron North Sea P- Limited 262.81 Chevron North Sea P- Limited 262.94 Chevron North Sea P-262.5 Limited P- Sub-total 262.14 Chevron Products Company (a Chevron U.S.A. Inc. division) Chevron Products Company (a Chevron U.S.A. Inc. division) r

DECISION CTA CASE NOS. 9350 & 9430 Chevron P- 5413 3/25/2015 25,499,174.19 570,926.51 T37SWIC056344 Products 262.27 5446 4/24/2015 Company (a 5462 5/26/2015 24,980,492.71 565,308.55 T37SWIC056763 Chevron P- 5476 6/25/2015 U.S.A. Inc. 262.60 5411 2/26/2015 25,214,475.47 565,308.54 T37SWIC057154 division) 5491 3/31/2015 Chevron P- 5473 5/26/2015 25,487,310.64 565,308.55 T37SWIC057580 Products 262.74 5387 1/26/2015 Company (a 147,921,383.25 3,323,585. 73 Chevron P- U.S.A. Inc. 262.88 7,448,042.29 169,070.56 T37SWIC055991 division) Chevron P- 3,516,239.03 78,552.78 T37SWIC056351 Products 262.25 Company (a 7,007,384.48 157,105.56 T37SWIC057168 Chevron P- U.S.A. Inc. 262.57 17,971,665.80 404,728.90 division) Chevron P- 69,324,483.87 1,568,813.07 T37SWIC055582 Products 262.85 Company (a r Chevron P-262.4 U.S.A. Inc. division) Sub-total Chevron Products UK Limited- Trading and 1\larinc Lubricants Branch Chevron Products UK Limited- Trading and i\larine Lubricants Branch Chevron Products UK Limited- Trading and i\Iarinc I ,ubricants Branch Sub-total Chevron Services Company (a

DECISION CTA CASE NOS. 93SO & 9430 Chevron P- 5409 2/26/2015 68,166,518.95 1,547,379.98 T37SWIC055993 U.S.A. Inc. 262.23 division) 5487 6/26/2015 70,374,821. 91 1,560,913.55 T37SWIC057589 Chevron P- Services 262.98 5431 3/26/2015 69,910,451.05 1,563,896.79 T37SWIC056361 Company (a Chevron P- 5445 4/24/2015 68,998,252.32 1,561,430.45 T37SWIC056760 U.S.A. Inc. 262.44 division) 5461 5/26/2015 69,677,205.62 1,562,162.95 T37SWIC057155 Chevron P- Services 262.59 416,451,733.72 9,364,596. 79 Company (a Chevron P- 5407 2/25/2015 4,833,949.98 109,198.93 T37SWIC055971 U.S.A. Inc. 262.73 division) 5421 3/25/2015 5,160,065.65 115,533.87 T37SWIC056316 Chevron P- Services 262.21 5452 4/24/2015 5,105,339.81 115,533.84 T37SWIC056741 Company (a Chevron P- 5480 6/25/2015 10,417,840.85 231,067.71 T37SWIC057564 U.S.A Inc. 262.34 5433 571,334.35 division) 25,517,196.29 Chevron P- 9,101.38 T37SWIC056357 262.65 3/26/2015 406,856.50 Services r P- Company (a 262.91 Chevron U.S.A.. Inc. P- division) 262.46 Chevron Services - - -'--------�- Company (a Chevron U.S.A. Inc. division) Sub-total Chevron Singapore Pte. Ltd. Chevron Singapore Pte. Ltd. Chevron Singapore Pte. Ltd. Chevron Singapore Pte. J,td. Sub-total Chevron Upstream (division of

DECISION CTA CASE NOS. 9350 & 9430 Chevron 406,856.50 9,101.38 U.S.A Inc.) 5,363,612.91 P-262.8 5392 1/26/2015 121,378.56 I Sub-total 5404 Chevron P- 5418 T37SWIC055576 U.S.A. Inc. 262.18 5451 (Singapore 5466 2/25/2015 6,846,394.86 154,660.06 T37SWIC0559861 Branch) P- 5481 3/25/2015 6,907,550.69 Chevron 262.31 J U.S.A. Inc. (Singapore P- I Branch) 262.64 Chevron 154,660.06 T37SWIC056343 U.S.A. Inc. P- (Singapore 262.78 4/24/2015 6,834,293.42 154,660.06 I Branch) Chevron P- T37SWIC056762 U.S.A. Inc. 262.92 (Singapore 5/26/2015 6,898,307.76 154,660.06 T37SWIC057151 Branch) Chevron 6/25/2015 6,972,951.31 154,660.06 T37SWIC057 578 U.S.A. Inc. (Singapore 39,823,110.95 894,678.86 Branch) Chevron 1,655,274,685.71 37,152,438.87 U.S.A Inc. (Singapore Branch) Sub-total Total Therefore, out of the Php1,862,756,405.59 zero-rated sales declared per VAT Returns for the first and second quarters of TY 2015, only the amount of Php1,655,274,685.71, as presented above, qualifies for VAT zero-rating under Section 108(B)(2), in relation to Section 113(A)(2), (B)(1), (2)(c) and (3), both of the NIRC of 1997, as amended. The rest of Petitioner's declared zero-rated sales in the amount of Php207,481,719.88, as detailed below, shall be denied VAT zero-rating for the herein stated reasons: Proof of Inward Customer' Name Exhibit OR OR Date Zero -rated Remittance No. No. sales in PhP (P-271.1 to P-271.73) Without Service Agreements proving the nature ofservices provided and that the purported services were performed in the Philippines Chevron Corporation __ � - L_J>-262.6 [_2389j_1)26/201_ti __1_')_,810,836.50 T37SWIC055577 t

DECISION CTA CASE NOS. 9350 & 9430 Chevron Corporation P-262.24 5410 2/26/2015 18,255,882.38 T37SWIC055992 Chevron Corporation P-262.45 5432 3/26/2015 18,488,586.94 T37SWIC056360 Chevron Corporation P-262.61 5447 4/24/2015 18,418,104.73 T37SWIC056761 Chevron Corporation P-262.75 5463 5/26/2015 18,348,613.29 T37SWIC057153 Chevron Corporation P-262.89 5477 6/25/2015 18,811,716.41 T37SWIC057579 Sub-total 112,133,740.25 Without Service Agreements proving the nature ofservices provided and that the purported services were performed in the Philippines; Without proofthat the named clients were non- resident foreign corporation doing business outside the Philippines Asia Pacific Marine Services (EF) P-262.1 5384 1/14/2015 581,383.86 T37SWIC055421 B.V. Asia Pacific Marine Services (EF) P-262.54 5441 3/26/2015 65,408.14 T37SWIC056363 B.V. Asia Pacific Marine Services (EF) P-262.55 5442 3/26/2015 65,408.14 T37SWIC056364 B.V. Sub-total 712,200.14 Without Service Agreements proving the nature ofservices provided and that the purported services were performed in the Philippines; Without proofthat the named clients were non- resident foreign corporation Chevron Global Energy Inc. - Global Downstream Cost P-262.49 5436 3/26/2015 2,332,864.10 T37SWIC056358 Allocation Branch Chevron Al Khalij, a branch of Chevron Asia Pacific Holdings P-262.47 5434 3/26/2015 3,441,349.13 T37SWIC:056391 Limited Chevron Canada Limited - P-262.38 5425 3/25/2015 1,528,358.64 T37SWIC024609 Downstream Branch Sub-total 7,302,571.87 Without proofthat the named clients were non-resident foreign corporations Chevron (Cambodia) Limited P-262.40 5427 3/25/2015 1,059,310.85 T37SWIC056320 Chevron (Cambodia) Limited P-262.68 5455 4/24/2015 2,846,509.06 T37SWIC056752 Chevron (Cambodia) Limited P-262.96 5485 6/25/2015 1,248,830.93 T37SWIC057568 92,605.73 T37SWIC055639 Chevron (China) Investment - P-262.13 5397 1/28/2015 Services 400,472.06 T37SWIC056383 Chevron (China) Investment Co., P-262.53 5440 3/26/2015 Ltd - Services 799,157.45 T37SWIC057164 Chevron (China) Investment Co., P-262.86 5474 5/26/2015 403,902.16 T37SWIC057606 Ltd - Services Chevron (China) Investment- P- 5489 6/29/2015 1,048,234.24 T37SWIC056367 Services 262.100 Chevron Asia Pacific Holdings 7,690,778.63 T37SWSW024700 Limited P-262.50 5437 3/26/2015 4,322,544.93 T37SWIC055970 1,755,329.61 T37SWIC056315 � Chevron Canada Resources P- 5490 6/30/2015 4,629,626.16 T37SWIC055593 I 262.101 Chevron International Pte. Ltd. P-262.22 5408 2/25/2015 f Chevron International Pte. Ltd. P-262.36 5423 3/25/2015 Chevron Iraq (Sarta) Limited- Branch P-262.12 5396 1/27/2015

DECISION CfA CASE NOS. 9350 & 9430 Chevron Iraq (Sarta) Limited- P-262.39 5426 3/25/2015 1,331,872.71 T37SWIC056340 Branch Chevron Iraq (Sana) Limited- P-262.99 5488 6/26/2015 5,298,355.28 T37SWIC057588 Branch Chevron Khazar, Ltd. P-262.2 5385 1/14/2015 1,408,458.30 T37SWIC055535 Chevron Khazar, I ,td. P-262.69 5456 4/24/2015 770,148.92 T37SWIC056759 Chevron Khazar, Ltd. P-262.97 5486 6/25/2015 523,849.41 T37SWIC057577 Chevron Lubricants Lanka PLC P-262.43 5430 3/25/2015 186,052.26 T37SWIC056298 Chevron Lubricants Lanka PLC P-262.72 5459 4/28/2015 78,482.10 T37SWIC056809 Chevron Malavsia Limited P-262.33 5420 3/25/2015 5,113,109.42 T37SWIC056319 Chevron Malavsia Limited P-262.83 5471 5/26/2015 4,527,404.10 T37SWIC057148 Chevron Nebitgaz B.V. P-262.71 5458 4/27/2015 1,813,321.55 T37SWIC056768 Chevron Overseas Services P-262.51 5438 3/26/2015 803,857.40 T37SWIC056369 Corporation Chevron Pakistan Limited - P-262.84 5472 5/26/2015 75,987.96 T37SWIC057129 branch Chevron South Africa (Pty) P-262.26 5412 2/27/2015 4,860,923.45 T37SWIC056017 Limited Chevron South Africa (Pty) P-262.56 5443 3/30/2015 1,133,876.74 T37SWIC056413 Limited Chevron Trading_Pte. Ltd. P-262.11 5395 1/26/2015 3,282,441.89 T3 7SWIC055562 Chevron Trading Pte. Ltd. P-262.42 5429 3/25/2015 262,270.21 T37SWIC056317 Chevron Trading Pte. Ltd. P-262.70 5457 4/24/2015 259,488.73 T37SWIC056742 Chevron U.S.A.. Inc.- Chevron P-262.37 5424 3/25/2015 662,735.15 T37SWIC:056345 Global Downstream Compania Chevron de Panama, P-262.52 5439 3/26/2015 967,560.13 T37SWIC056378 I S.A Sub-total 59,657,497.52 Without proofthat the name clients are non-resident foreign corporations; without supporting ORs and proofofinward remittances Chevron Denmark Inc. january 415,875.61 Chevron Denmark Inc. February 512,892.07 Chevron Denmark Inc. March 520,690.97 Chevron Denmark Inc. April 514,251.33 Chevron Denmark Inc. May 519,297.50 Chevron Denmark Inc. June 523,500.45 Chevron Global Energy Inc. January 831,033.52 Chevron Global Energy Inc. February 761,876.65 Chevron Global Energy Inc. March 773,461.54 Chevron Global Energy Inc. "\pril 763,895.76 Chevron Global Energy Inc. May 771,391.61 I Chevron Global Energy Inc. June 777,634.89 I Chevron Middle East Business March 601,660.11 Develo]J_ment Ltd Chevron Middle East Business April 297,109.54 Development Ltd Chevron Middle East Business May 300,024.98 I Development Ltd r

DECISION CTA CASE NOS. 9350 & 9430 Chevron Middle East Business June 302,453.24 Development Ltd Chevron Overseas Services February 4,884,546.70 Corporation-Argentina Chevron Overseas Services March 769,885.51 Corporation-Argentina Chevron Overseas Services April 760,363.96 Corporation-Argentina Chevron Overseas Services May 767,825.16 Corporation-Argentina Chevron Overseas Services June 774,039.57 Corporation-Argentina Sub-total 17,143,710.67 Without Service Agreements proving the nature ofservices provided and that the purported services were performed in the Philippines; without proofthat the named clients are non-resident foreign corporation; without supporting ORs and oroofofinward remittances Chevron Liberia Limited May 735,764.94 Chevron Munaigas Inc. Home Office Janual)' 502,040.14 Chevron Munaigas Inc. Home Office February 600,288.99 Chevron Munaigas Inc. Home Office March 609,416.82 Chevron Munaigas Inc. Home Office April 601,879.86 Chevron Munaigas Inc. Home May 607,785.91 I Office Chevron Munaigas Inc. Home Office june 612,705.04 Sub-total 4,269,881. 70 Without supporting ORs and proofofinward remittances Chevron Africa and Latin ,'\merica January 1,754,368.77 Exploration Chevron Africa and Latin 1\merica February 892,441.85 Exploration Chevron Africa and Latin America March 906,012.08 Exploration Chevron Africa and Latin ,'\merica April 894,806.98 Exploration Chevron Africa and Latin 1\merica May 903,587.42 Exploration Chevron Africa and Latin America June 910,900.63 Exploration Sub-total 6,262,117. 73 TOTAL 207,481,719.88 Having found that Petitioner had valid V1\T zero-rated sales on!J in the total amount of Php1,655,274,685.71 for the subject period of claim, the Court (

DECISION CTA CASE NOS. 9350 & 9430 shall proceed to determine whether Petitioner complied with the remammg requisites pertaining to the input VAT being claimed for refund or issuance of a tax credit certificate. The input VAT being claimed does not appear to be transitional input taxes. In its Quarterly VAT Returns for the first and second quarters ofTY 2015, Petitioner declared total input VAT of Php40,889,343.15 from its current domestic purchases and importation of goods and services and input VAT on purchases of capital goods from previous quarters, as shown below: first Quarter of second Quarter ofTY 2015 TY2015 Total Exhibit P-1470 Exhibit P-1269 Php47,546,832.30 Php22,179,769.48 41,238,471.49 Input Tax Due on Previous Quarters' 19,058,702.00 Php 6,308,360.81 Purchases Php 3,121,067.48 311,478.08 Deferred on Capital Goods exceeding Php25,367 ,062.82 113,658.10 Php1 l'viillion from Previous Quarter Pbp 6,619,838.89 Pbp 3,234,725.58 Deferred for the succeeding period 22,179,769.49 Php191,565.00 Php 128,902.00 29,822,792.02 Amortization of Input Tax Due on Php 3,187,293.33 17,762,134.76 4,255,147.24 Capital Goods exceeding Php 1 Million 2,122,250.69 Pbp34,269,504.26 Input Tax Due on Current Domestic Pbp20,013,287.45 Php40,889,343.15 Purchases of Goods Other than Capital 197,819.98 Php23,248,013.03 7,404,883.09 4,279,718.24 Coods Php33,484,460.06 Php18,968,294. 79 Sub-total Pbp 3,385,113.31 lflJJ_ut Tax Paid on Current: Importation of Goods Other than Php 62,663.00 Capital Goods Domestic Purchase of Services 12,060,657.26 Services Rendered bv Non-Residents 2,132,896.55 Sub-total Pbp/4,256,216.81 Total Input Tax for the Period P h p 1 7 ,641,330.12 Less: Output Tax 3,125,164.85 Excess input tax claimed for refund/TCC Php14,516,165.27 - - � - � - - �--_.l....._ The above input taxes do not appear to be transitional input taxes, as understood under Section 111 (A) of the NIRC of 1997, as amended, to wit: "SEC. 111. Transitional/Presumptive Input Tax Credits.- r 69 Id., pp. 3722 to 3723. 'o Id., pp. 3726 to 3727.

DECISION CTA CASE NOS. 9350 & 9430 (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 the 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." Apropos, transitional input tax credit operates to benefit newly VAT- registered persons, whether or not they previously paid taxes in the acquisitions of their beginning inventory of goods, materials and supplies. During the period of transition from non-VAT to VAT status, the transitional input tax credit serves to alleviate the impact of the VAT on the taxpayer71 Since there is no showing that the above-stated input VAT are transitional input VAT, Petitioner has complied with the sixth requisite for the grant of an input VAT refund under Section 112 of the NIRC of 1997, as amended. The input taxes being claimed are due andpaid. Out of the reported total input VAT of Php40,889,343.15, Petitioner claims for refund the excess input VAT amount of Php33,484,460.06, determined as follows: Total Input Tax for the Period first Quarter of second Quarter Total Less: Output Tax TY2015 ofTY 2015 Excess input tax claimed for Php40,889,343.15 refund/TCC Php17,641,330.12 Php23,248,013.03 7,404,883.09 3,125,164.85 4,279,718.24 Php14,516,165.27 Php18,968,294.79 Php33,484,460.06 In support of its input VAT due on purchases of capital goods exceeding Php1M from previous quarters and input VAT due on current domestic purchases of goods other than capital goods in the aggregate amount of Php6,619,838.89, Petitioner submitted in evidence various sales invoices and r official receipts72 issued by its suppliers. t Corporation Commissioner of Internal Revenue, G.R. Nos. 158885 and 170680, April 02, 2008. 72 Exhibits "P-254.1" to "P-254.535"; "P-259.1" to "P-259-150"; "P-253.1" to "P-253.108"; "P- 258.1" to "P-258.9".

DECISION CTA CASE NOS. 9350 & 9430 However, upon verification, the Court shall disallow the input VAT amounting to Php926,169.25 for not being properly substantiated by VAT invoices and official receipts, as prescribed under Sections 113(A)(1) and (2), (B)(2)(a)and 237 of the NIRC of 1997, as amended, and as implemented by Section 4.113-1 (A)(1) and (2), (B)(2)(a)of RR No. 16-05, as amended, detailed as follows: Disallowed Date N arne of Vendor Input VAT Input VAT Exhibit �neferred.~on Cap,it~FG~d~ir~ifi*P,r~~~~el'g:'; ..�. ~ "'i{~1"';. ,, ., ,,. -'"''�'*.:'.' .� Purchase ofGoods/Services without supporting VAT lnvoice/Oflicial Receipt DHL EXPRESS (PHILIPPINES) May-10 CORPORATION Php 83.33 Php 5.56 - ROMULO PRINCILLO FREEZE- AIRE 1\IR CONDITIONING Aug-10 CENTER 8,035.71 803.57 - INTEGIV\TED COMPUTER Oct-1 0 SYSTEMS, INC. 87,993.86 8,799.39 - Dec-10 C1\TS MOTORS, INC. 255,535.71 25,553.57 - Dcc-10 EQUICOM INC. 470,340.94 47,034.09 - Dcc-10 EQUICOM INC. 364,901.51 36,490.15 - Dec-10 EQUICOM INC. 95,558.65 9,555.87 - Dec-10 EQUICOM INC. 236,117.50 23,611.75 - INTEGRATED COMPUTER Dcc-10 SYSTEMS,INC. 111,743.25 11,174.33 - MICRODATA SYSTEMS AND Dec-10 MANAGEMENT, INC 283,281.69 28,328.17 - PERSONAL COMPUTER Dec-10 SPECIALISTS, INC. 48,053.61 4,805.36 - PHIL-DAT1\ BUSINESS SYSTEMS, I Dcc-10 INC. 128,945.65 12,894.57 - PHIL-DATA BUSINESS SYSTEMS, Dec-10 INC. 518,814.98 51,881.50 - TRENDS AND TECHNOLOGIES, Dec-10 INC. 609,434.40 60,943.44 - ADTECH CONSTRUCTION AND Mar-11 INDUSTRIAL SERVICES CORP. 197,459.25 19,745.93 - TRENDS AND TECHNOLOGIES, Oct-11 INC. 1,867,488.84 186,748.88 - CB RICHARD ELLIS Nov-11 PHILIPPINES, INC. 35,919.64 3,591.96 - CB RICHARD ELLIS Nov-11 PHILIPPINES, INC. 16,489.29 1,648.93 - ALECTO GENERAL Dec-11 TECHNOLOGY CORPORATION 29,183.37 2,918.34 - r

DECISION CTA CASE NOS. 9350 & 9430 ALECTO GENERAL I Dec-11 TECHNOLOGY CORPORATION 213,513.85 21,351.39 - ALECTO GENERAL Dec-11 TECHNOLOGY CORPO!U\TION 114,077.85 11,407.79 - ALECTO GENERAL Dcc-11 TECHNOLOGY CORPORATION 101,844.91 10,184.49 - l\lASTER AUTOMATED Dec-11 SYSTEMS INC 190,502.25 19,050.23 - I Dec-11 RON},LD Mi\GBITANG 326,163.26 32,616.33 - Mar-12 RONALD MAGBITANG 530,430.23 53,043.02 - PLATON MARTINEZ FLORES SAN PEDRO AND LEANO LAW Mav-12 OFFICES 360.00 36.00 - Jul-12 RONALD MAGBITANG 151,029.28 15,102.93 - Jul-12 RONALD Mi\GBITANG 234,618.75 23,461.88 - Jul-12 RONALD MAGBITANG 43,908.00 4,390.80 - Sep-12 JLGT MARKETING 9,168.00 916.80 - Sep-12 JLGT MARKETING 3,984.00 398.40 - Nov-12 RONALD MAGBITANG 152,400.68 15,240.07 - Dcc-12 RONALD MAGBITANG 15,000.00 1,500.00 - I SUBTOTAL Php 745,235.45 Purchase ofservices supported by VATORs but the amount ofinput VAT is not separately indicated P-259.125 toP- I May-12 RONALD MAGBITANG 292,744.82 Php 29,274.48 259.126 I P-259.127 toP- May-12 RONALD MAGBITANG 205,191.43 20,519.14 259.128 I P-259.129 toP- May-12 RONALD MAGBITANG 604,117.11 60,411.71 259.130 I P-259.131 toP- Mav-12 RONALD MAGBITANG 424,344.18 42,434.42 259.132 SUB1DT/JL Php 152,639.75 Input VAT supported by invoice but it cannot be ascertained whether it is a purchase ofservice or goods (not readable) NETWORK SOLUTIONS AND P-259.101 toP- Nov-11 INTERFACES CORPORATION 128,758.38 Php 12,875.84 259.102 Over-claimed Input VAT Mar-12 PLATON MARTINEZ FLORES Php P-259.117 to P- S1\N PEDRO AND LEANO LAW 80.10 259.118 OFFICES [(Php1,200.00- Php399.00) / 60mos.x6mos.] P-259.145 toP- Nov-12 RONALD MAGBITANG 769.33 259.146 [(Php29,332.80- Php21,639.52)/60mos.x6mos.] I P-259.147 to P- Nov-12 RONALD MAGBITANG 14,568.78 259.148 ---- .. r- -

DECISION CTA CASE NOS. 9350 & 9430 [(Php166,473.42- Php20,785.62)/60mos.x6mos.] SUBTOTAL 15,418.21 Total disallowed input VAT deferred from previous quarters Php926,169.25 Current Domestk:Pur�hases.6f Goods"Offier'tllartCapitl!l ~l:iod.s.� . 7 " .� Supported by collection receipt 20-Apr- 15 EQUICOM INC. Php 660.00 P-258.1 Supported by invoice dated outside the period ofclaim 17-Dec- PERSONAL COMPUTER 14 SPECIALISTS, INC. Php 37,668.00 P-258.6 PERSONAL COMPUTER 3-Dec-14 SPECIALISTS, INC 354.00 P-25.8 SUBTOTAL 38,022.00 Total disallowed input VAT on domestic purchases of goods Php 38,682.00 Total Disallowed input VAT on purchases of goods �-- - - - - - - - - Plp964,851.25 L__ _ _ As to the input VAT paid on its importations of goods other than capital goods, domestic purchases of services, and services rendered by non-residents in the total amount of Php34,269,504.26, Petitioner submitted in evidence various sales invoices and official receipts73 issued by its suppliers, special bank receipts and various import documents issued by the BOC,74 and the Monthly Remittance Return of Value-Added Tax and Other Percentage Taxes Withheld (BIR Form 16oors it filed with the BIR for its payments to non-resident suppliers. However, upon verification, the Court shall disallow the input VAT amounting to Php755,826.22 for not being properly substantiated by VAT official receipts as prescribed under Sections 113(A)(2) and (B)(2), and 237 of the NIRC of 1997, as amended, and as implemented by Section 4.113-1 (A)(2) and (B)(2) ofRR No. 16-05, as amended, detailed as follows: OCTANNER P-260.1 toP- Domestic Purchase~'of SerVice~;;' 260.12 r SUBTOTAL 73 Exhibits "P-252.1" to "P-252.1,580"; "P-257.1" to "P-257.342"; "P-255.1" to "P-255.104" 74 Exhibits "P-255.1" to "P-255.104"; "P-260.1" to "P-260.12" 75 Exhibits "P-256.1" to "P-256.18".

DECISION CTA CASE NOS. 9350 & 9430 Purchase ofservices supported by OR with notation "This document is not valid for claiminR' input taxes" AQUEOUS PURIFIED DRINKING P-257.1 20-Jan-15 WATER Php 5,814.64 P-257.3 "\QUEOUS PURIFIED DRINKING P-257.5 7-Jan-15 WATER 5,814.64 P-257.7 AQUEOUS PURIFIED DRINKING P-257.9 6-Mar-15 WATER 4,946.79 P-257.11 10-1\pr- AQUEOUS PURIFIED DRINKING P-257.13 15 WX!'ER 5,641.07 P-257.14 AQUEOUS PURIFIED DRINKING P-257.15 8-Mav-15 WATER 6,335.36 P-257.16 18-Jun- AQUEOUS PURIFIED DRINKING P-257.17 toP- 257.18 15 WATER 5,554.29 P-257.19 toP- SUBTOTAL Php 34,106.79 257.20 Purchase ofservices supported by documents other than VAT DRs P-257.21 toP- 257.22 11-Dec- P-257.23 toP- 14 JLGT MARKETINC Php 21,298.29 257.24 12-Dcc- P-257.25 toP- 257.26 14 JLGT MARKETINC 5,328.00 P-257.27 toP- 10-Dec- 257.28 14 JLGT l'vL\RKETING 93,205.30 P-257.29 toP- 257.30 30-Sep- P-257.31 toP- 14 SMART COMMUNICATIONS INC. 117,700.45 257.32 SUBTOTAL Php237,532.04 P-257.33 toP- 257.34 Input VAT claimed for VAT exempt/zero-rated sales P-257 .35 toP- 22-Jan-15 ANGARA ABELLO CONCEPCION Php 476.76 257.36 REGAL\ I\ND CRUZ P-257.37 toP- 22-Jan-15 ARDENT COMMUNICATIONS, INC. 2,550.00 r257.38 14-Jan-15 1\SIAN RELOCATION MANAGEMENT 3,000.29 INC. 12-Jan-15 ATM PER-SONNEL ASSISTANCE, INC. Php2, 115.45 12-Jan-15 ATM PERSONNEL ASSIST,\NCE, INC. 1,884.60 4,000.05 6-Jan-15 ATM PERSONNEL ASSISTANCE, INC. 1,513.20 26-Jan-15 X I'M PERSONNEL ASSISTANCE, INC. 3,761.37 14-Jan-15 ATM PERSONNEL ASSISTANCE, INC. 1,381.37 14-Jan-15 1\TM PERSONNEL ASSISTANCE, INC. 1,139.41 14-Jan-15 1\TM PERSONNEL ASSISTANCE, INC. 2,580.80 14-Jan-15 ,\TM PERSONNEL ASSISTANCE, INC. 1,173.63 - - - �-

DECISION CTA CASE NOS. 9350 & 9430 14-Jan-15 1\TM PERSONNEL ASSISTANCE, INC. 2,230.92 P-257.39 toP- 2,230.92 257.40 14-Jan-15 ATM PERSONNEL ASSISTANCE, INC. 1,210.95 1,208.30 P-257.41 toP- 14-Jan-15 ATM PERSONNEL ASSISTANCE, INC. 2,301.69 257.42 1,848.09 14-Jan-15 ATM PERSONNEL 1\SSISTANCE, INC. P-257.43 toP- 535.71 257.44 14-Jan-15 ATM PERSONNEL ASSISTANCE, INC 926.79 P-257.45 toP- 14-Jan-15 "\TM PERSONNEL ASSISTANCE, INC 535.71 17,306.08 257.46 926.79 535.71 7-Jan-15 BIO-TECH ENVIRONMENTAL 535.71 P-257.47 toP- 7-Jan-15 SERVICES PHILS. INC 926.79 1,462.50 257.48 7-Jan-15 BIO-TECH ENVIRONMENTAL 926.79 7-Jan-15 SERVICES PHILS. INC 1,348.95 P-257.49 toP- 7-Jan-15 BIO-TECH ENVIRONMENTAL 3,730.28 2,925.00 257.50 7-Jan-15 SERVICES PHILS. INC 16,345.24 4,320.00 7-Jan-15 BIO-TECH ENVIRONMENTAL 1,348.95 P-257.51 toP- 7-Jan-15 SERVICES PHILS. INC 8,906.60 257.52 BIO-TECH ENVIRONMENTAL 14,752.31 SERVICES PHILS. INC P-257.53 toP- BIO-TECH ENVIRONMENTAL 528.00 257.54 SERVICES PHILS. INC 528.00 BIO-TECH ENVIRONMENTAL 528.00 P-257.55 toP- SERVICES PHILS. INC 257.56 BI0-TECH ENVIRONMENTAL SERVICES PHILS. INC P-257.57 toP- 257.58 13-Jan-15 CHEF LAUDICO CULINARY SERVICES P-257.59 toP- 7-Jan-15 GLOBAL BUSINESS SUPPORT 257.60 7-Jan-15 SERVICES, INC 7-Jan-15 GLOBAL BUSINESS SUPPORT P-257.61 toP- 7-Jan-15 SERVICES, INC 257.62 7-Jan-15 GLOBAL BUSINESS SUPPORT 7-Jan-15 SERVICES, INC P-257.63 toP- 7-Jan-15 GLOBAL BUSINESS SUPPORT 257.64 7 -Jan-15 SERVICES, INC 7-Jan-15 GLOBAL BUSINESS SUPPORT P-257.65 toP- SERVICES, INC 257.66 GLOBAL BUSINESS SUPPORT SERVICES, INC P-257.67 toP- GLOBAL BUSINESS SUPPORT 257.68 SERVICES, INC GLOB1\L BUSINESS SUPPORT P-257.69 toP- SERVICES, INC 257.70 GLOBAL BUSINESS SUPPORT SERVICES, INC P-257.71 toP- 257.72 P-257.73 toP- 257.74 P-257.75 toP- 257.76 P-257.77 toP- 257.78 P-257.79 toP- 257.80 P-257.81 toP- 257.82 P-257.83 toP- 257.84 P-257.85 toP- r257.86

DECISION CTA CASE NOS. 9350 & 9430 7-Jan-15 GLOBAL BUSINESS SUPPORT 1,204.05 69,914.51 P-257.87 toP- 7-Jan-15 SERVICES, INC. 3,730.28 1,182.36 257.88 7-Jan-15 GLOBAL BUSINESS SUPPORT 16,963.85 1,367.64 SERVICES, INC. 1,182.36 P-257.89 toP- GLOBJ\L BUSINESS SUPPORT 1,367.64 257.90 SERVICES, INC. 1,182.36 3,917.64 1,367.64 3,000.00 P-257.91 toP- 12-Jan-15 MASTER AUTOMATED SYSTEMS, INC. 257.92 1,489.89 2,979.78 12-Jan-15 MASTER AUTOMATED SYSTEMS, INC. 1,489.89 4,936.15 P-257.93 toP- 4,689.34 257.94 12-Jan-15 MASTER J\UTOMATED SYSTEMS, INC. 216.00 7,868.85 1,350.00 P-257.95 toP- 5-Jan-15 MASTER AUTOM1\TED SYSTEMS, INC. 510.00 257.96 360.00 312.00 5-Jan-15 MASTER AUTOMATED SYSTEMS, INC. 2,004.00 P-257.97 toP- 19,680.00 1,566.00 257.98 5-Jan-15 MASTER J\UTOMATED SYSTEMS, INC. 2,400.00 47,028.00 2,364.00 P-257.99 toP- 22-Jan-15 MISNET EDUCATION INC. 257.100 20-Jan-15 NETWORK SOLUTIONS AND P-257.101 toP- 20-Jan-15 INTERFACES CORPORATION 257.102 12-Jan-15 NETWORK SOLUTIONS AND 5-Jan-15 INTERFACES CORPORATION P-257.103 toP- 6-Jan-15 PERSONAL COMPUTER SPECIALISTS, 257.104 23-Jan-15 INC. 23-Jan-15 PERSON1\L COMPUTER SPECIALISTS, P-257.105 toP- 23-Jan-15 INC. 257.106 23-Jan-15 PHILIPPINE INTERNATIONAL 23-Jan-15 CONVENTION CENTER P-257.107 toP- 23-Jan-15 PLATON MARTINEZ FLORES SAN 257.108 PEDRO AND LEi\NO LAW OFFICES PLATON MARTINEZ FLORES SAN P-257.109 toP- PEDRO AND LEANO LAW OFFICES 257.110 PL1\TON MARTINEZ FLORES SAN PEDRO AND LEJ\NO LAW OFFICES P-257.111 toP- PLATON MARTINEZ FLORES SAN 257.112 PEDRO i\ND LEi\NO LAW OFFICES PLATON MARTINEZ FLORES SAN P-257.113 toP- PEDRO AND LEANO LAW OFFICES 257.114 PLATON MARTINEZ FLORES SAN PEDRO AND LEANO LAW OFFICES P-257.115 toP- 257.116 12-Jan-15 RONALD M},GBITANG P-257.117 toP- 12-Jan-15 RONALD MAGBITANG 257.118 12-Jan-15 RONALD MAGBITANG P-257.119 toP- 257.120 P-257.123 toP- 257.124 P-257.125 toP- 257.126 P-257.127 toP- 257.128 P-257.129 toP- 257.130 P-257.131 toP- 257.132 P-257.133 toP- 257.134 P-257.135 toP- 257.136 r

DECISION CTA CASE NOS. 9350 & 9430 12-Jan-15 RONALD MAGBITANG 9,840.00 78,948.00 P-257.137 toP- 257.138 23-Jan-15 TECHEDGE SOLUTIONS INC. 2,486.07 P-257.1.19 to P- 257.140 23-Jan-15 TECHEDGE SOLUTIONS INC. 6,407.52 P-257.141 toP- 257.142 5-Feb-15 ACTS DANCE AND ARTS ACADEMY 1,560.00 P-257.143 toP- STUDIO CORP 257.144 5-Feb-15 ACTS DANCE AND ARTS ACADEMY 19-Fcb- STUDIO CORP 2,280.00 P-257.145 toP- ANGARA ABELLO CONCEPCION 257.146 15 REGAL1\ AND CRUZ 6,102.00 P-257.147 toP- 257.148 4-Fcb-15 ATM PERSONNEL ASSIST1\NCE, INC. 4,404.35 P-257.149 toP- 3,483.60 4,700.03 257.150 3,578.10 4-Fcb-15 ATM PERSONNEL ASSISTANCE, INC. 1,146.37 P-257.151 toP- 1,049.28 1,848.63 257.152 1,504.35 4-Feb-15 1\TM PERSONNEL ASSISTANCE, INC. 1,507.26 P-257.153 toP- 1,347.66 2,443.67 257.154 2,787.85 4-Feb-15 ATM PERSONNEL ASSISTANCE, INC. P-257.155 toP- 257.156 4-Feb-15 ATM PERSONNEL 1\SSISTANCE, INC. P-257.157 toP- 257.158 4-Fcb-15 ATM PERSONNEL ASSISTANCE, INC. P-257.159 toP- 257.160 4-Fcb-15 ATM PERSONNEL ASSISTANCE, INC. P-257.161 toP- 257.162 4-Fcb-15 AfM PERSONNEL ASSISTANCE, INC. P-257.163 toP- 257.164 4-Feb-15 ATM PERSONNEL ASSISTANCE, INC. P-257.165 toP- 257.166 4-Feb-15 ATM PERSONNEL ,\SSISTA.NCE, INC. P-257.167 toP- 257.168 4-Feb-15 1\TM PERSONNEL ASSISTANCE, INC. P-257.169 toP- 257.170 4-Feb-15 ATM PERSONNEL ASSISTANCE, INC. 29,801.15 P-257.171 toP- 257.172 4-Fcb-15 ATM PERSONNEL ASSISTANCE, INC. 2,108.87 P-257.173 toP- 257.174 16-Feb- F AND A OUTSOURCING HUB PHILS 2,386.43 P-257.175 toP- 15 INC 2,686.71 F AND 1\ OUTSOURCING HUB PHILS 257.176 16-Feb- INC 15 5,073.14 P-257.177 toP- 257.178 6-Feb-15 G AND P C\R SERVICE CENTER 330.00 P-257.179 toP- 257.180 6-l'eb-15 G AND P CAR SERVICE CENTER 240.00 P-257.181 toP- 257.182 6-Fcb-15 G AND P CAR SERVICE CENTER 270.00 510.00 P-257.183 toP- - L__ ��--- - - - - - �- - - -- - 257.184 f

DECISION erA CASE NOS. 9350 & 9430 11-Mar- ASIAN RELOCXfiON MANAGEMENT 11,240.20 39,395.18 P-257.185 toP- 15 INC. 11,240.20 8,640.00 257.186 ASIAN RELOCATION MANAGEMENT 7,206.78 11-Mar- INC. 9,708.00 24,080.42 P-257.187 toP- 15 ASIAN RELOCATION l'vL>\NAGEMENT 4,320.00 257.188 INC. 4,320.00 2,223.34 11-Mar- ASIAN RELOCATION l'vL'\NAGEMENT 12,040.21 960.00 P-257.189 toP- 15 INC. 12,040.21 257.190 ,\SIAN RELOCATION MANAGEMENT 2,160.00 11-Mar- INC. 776.84 1,200.00 P-257.191 toP- 15 ASIAN RELOCATION MANAGEMENT 687.80 257.192 INC. 555.89 11-Mar- SCHNEIDER ELECTRIC IT 202.81 P-257.193 toP- 15 PHILIPPINES, INC. 257.194 SCHNEIDER ELECTRIC IT 1,914.19 11-Mar- PHILIPPINES, INC. 1,061.62 P-257.195 toP- 15 2,093.26 257.196 ATM PERSONNEL ASSISTANCE, INC. 1,403.93 19-Mar- 2,867.56 P-257.197 toP- 15 AH.l PERSONNEL ASSISTANCE, INC. 2,216.74 257.198 1,822.83 19-Mar- XfM PERSONNEL ASSISTANCE, INC. 1,037.34 P-257.199 toP- 15 1,146.37 257.200 KfM PERSONNEL ASSISTANCE, INC. 12-l'v!ar- P-257.201 toP- 15 PLATON MARTINEZ FLORES SAN 257.202 PEDRO AND LEANO LAW OFFICES 12-Mar- P-257.203 toP- 15 PUNONGBAYAN AND J\RAULLO 257.204 12-Mar- ANG1\RA ABELLO CONCEPCION P-257.205 toP- 15 REG ALA AND CRUZ 257.206 12-Mar- P-257.207 toP- 15 257.208 20-Mar- P-257.209 to P- 15 257.210 17-Mar- P-257.211 toP- 15 257.212 3-Mar-15 P-257.213 toP- 257.214 9-Mar-15 1\TM PERSONNEL ASSISTANCE, INC. P-257.215 toP- 9-Mar-15 ATM PERSONNEL ASSISTANCE, INC. 257.216 9-Mar-15 ATM PERSONNEL ASSISTANCE, INC. P-257.217 toP- 257.218 9-Mar-15 ATM PERSONNEL ,'\SSISTANCE, INC. P-257.219 toP- 9-Mar-15 ATM PERSONNEL ASSISTANCE, INC. 257.220 9-Mar-15 ATM PERSONNEL ASSISTANCE, INC. P-257.221 toP- 257.222 9-Mar-15 X I'M PERSONNEL ASSISTANCE, INC. P-257.223 toP- 9-Mar-15 ATM PERSONNEL ASSIST1\NCE, INC. 257.224 9-Mar-15 ATM PERSONNEL ASSISTANCE, INC. P-257.225 toP- 257.226 P-257.227 toP- 257.228 P-257.229 toP- 257.230 P-257.231 toP- r257.232

DECISION CTA CASE NOS. 9350 & 9430 9-Mar-15 ATM PERSONNEL ASSISTANCE, INC. 3,647.88 19,211.72 P-257.233 toP- 257.234 10-Mar- ATM PERSONNEL ASSISTANCE, INC. 2,230.92 15 P-257.235 toP- ATM PERSONNEL ASSISTANCE, INC. 1,252.76 257.236 10-Mar- 15 ATM PERSONNEL ASSISV,NCE, INC. 1,370.24 4,853.92 P-257.237 toP- 257.238 10-Mar- ATM PERSONNEL ASSISTANCE, INC. 794.10 15 P-257.239 to P- "\TM PERSONNEL ASSISTANCE, INC. 1,638.14 257.240 11-i\!ar- 15 ATM PERSONNEL ASSISTANCE, INC. 2,847.06 5,279.30 P-257.241 toP- 257.242 11-Mar- PL\TON i\L\RTINEZ FLORES SAN 1,200.00 15 PEDRO AND LE,\NO LAW OFFICES P-257.243 toP- PLATON MARTINEZ FLORES SAN 312.00 1,512.00 257.244 11-l'v!ar- PEDRO AND LEANO LAW OFFICES 15 PL\TON MARTINEZ FLORES SAN 624.00 P-257.245 toP- PEDRO AND LEANO LAW OFFICES 257.246 6-Mar-15 PLATON MARTINEZ FLORES SAN 720.00 1,344.00 PEDRO AND LEANO LAW OFFICES P-257.247 toP- 6-Mar-15 2,149.99 257.248 ,\TM PERSONNEL ASSISD\NCE, INC. 20-Mar- P-257.249 toP- 15 ATM PERSONNEL ASSISTANCE, INC. 1,378.79 257.250 20-Mar- ,\TM PERSONNEL ASSISTANCE, INC. 1,274.65 4,803.43 P-257.251 toP- 15 257.252 ARKIGRAFIX CORPORATION 234.00 23-Mar- P-257.253 toP- 15 ATM PERSONNEL ASSISTANCE, INC. 1,154.50 257.254 23-Mar- MISNET EDUCATION INC. 3,171.43 P-257.255 toP- 15 257.256 MISNET EDUCATION INC. 2,142.86 23-Mar- P-257.257 toP- 15 PERSONAL COMPUTER SPECIALISTS, 4,676.35 257.258 8-Apr-15 INC. P-257.259 toP- 257.260 13-Apr- PERSONAL COMPUTER SPECIALISTS, 4,936.15 9,612.50 15 P-257.261 toP- INC. 257.262 13-Apr- 15 PLATON MARTINEZ FLORES SAN 525.00 P-257.263 toP- 257.264 27 -"\pr- PEDRO AND LEANO LAW OFFICES 15 P-257.265 toP- PLATON MARTINEZ FLORES SAN 120.00 257.266 8-Apr-15 PEDRO AND LEANO LAW OFFICES P-257.267 toP- 8-"\pr-15 257.268 PLATON MARTINEZ FLORES SAN 480.00 17-Apr- P-257.269 to P- 15 PEDRO "\ND LEANO L1\W OFFICES 257.270 17-Apr- PL\TON MARTINEZ FLORES SAN 120.00 P-257.271 toP- 15 257.272 PEDRO "\ND LE,\NO LAW OFFICES 17-A.pr- -- - �- �- �- �- �- - -- P-257.273 toP- 15 257.274 17-c\pr- P-257.275 toP- 15 257.276 P-257 .277 to P- 257.278 P-257.279 toP- 257.280 f

DECISION CTA CASE NOS. 9350 & 9430 17 ~1\pr~ PLATON MARTINEZ FLORES SAN 135.00 855.00 P~257.281 toP~ 15 PEDRO AND LEANO LAW OFFICES 2,832.00 SYNERGY EXPERTISE INC. 2,513.90 1,200.00 257.282 21~Apr~ ANGAlV\ ABELLO CONCEPCION 2,906.59 P~257.283 to P~ REGALA AND CRUZ 5,420.49 15 ATM PERSONNEL ASSISTANCE, INC. 16.61 16.07 257.284 11 ~May~ 16.61 ATM PERcSONNEL ASSISTANCE, INC. 16.61 49.83 P~257.285 toP~ 15 16.61 DMJ MULTI~PRINT AND SERVICES 33.21 257.286 21~May~ 16.61 199.28 149.46 8,250.00 P~257.287 toP~ 15 4,936.15 3,048.19 257.288 21~May~ 12,040.21 1,200.00 P~257.289 toP~ 15 1,861.11 257.290 19~May~ 567.86 P~257.291 toP~ 15 ---- 257.292 4~May~15 DMJ MULTI~PRINT AND SERVICES P~257.293 toP~ 4~Mav~15 DMJ MULTI~PRINT AND SERVICES 257.294 4~May~15 DMJ MULTI~PRINT AND SERVICES P~257.295 toP~ 4~May~ 15 DMJ MULTI~PRINT AND SERVICES 257.296 19~May~ DMJ MULTI~PRINT AND SERVICES DMJ MULTI~PRINT 1\ND SERVICES P~257.297 toP~ 15 DMJ MULTI~PRINT AND SERVICES 257.298 19~May~ P~257.299 toP~ 15 257.300 19~Mav~ P~257.301 toP~ 15 - 257.302 7~May~ 15 MSIECS PHILS INC P~257.303 toP~ 8~May~ 15 PERSONA.L COMPUTER SPECIALISTS, 1,553.57 INC. 257.14 257.304 26~May~ 50.40 RONALD MAGBITANG P~257.305 toP~ 15 SCHNEIDER ELECTRIC IT 257.306 14~May~ PHILIPPINES, INC. i\NGARA ABELLO CONCEPCION P~257.307 toP~ 15 REGI\LA AND CRUZ 257.308 5~Jun~15 ARKIGRAFIX CORPORATION P~257.309 toP~ 11~Jun~ ARKIGRAFIX CORPORATION 257.310 15 ARKIGRAFIX CORPORATION P~257.311 toP~ 11~Jun~ BENIPAYO VILI'vL\ BOBIS 257.312 15 BIO~TECH ENVIRONMENTAL 535.71 P~257.313 toP~ 11~Jun~ SERVICES PHILS. INC. 257.314 15 BIO~TECH ENVIRONMENTAL 926.79 1O~Jun~ P~257.315 toP~ SERVICES PHILS. INC. 15 257.316 4~Jun~15 P~257.317 toP~ 4~Jun~15 257.318 ------ -- - - - -- P~257.319 toP~ 257.320 P~257.321 toP~ 257.322 P~257.323 toP~ 257.324 P~257.325 toP~ 257.326 P~257.327 toP~ r257.328

DECISION CTA CASE NOS. 9350 & 9430 4-Jun-15 BIO-TECH ENVIRONMENTAL 535.71 2,925.00 P-257.329 to P- I 4-Jun-15 SERVICES PHILS. INC. 926.79 16.61 257.330 BIO-TECH ENVIRONMENTi\L SERVICES PHILS. INC. 66.43 116.25 P-257.331 toP- I 49.82 257.332 5-Jun-15 DMJ MULTI-PRINT A.ND SERVICES Php 462,229.39 P-257.333 toP- I 5-Jun-15 DMJ MULTI-PRINT AND SERVICES 257.334 5-Jun-15 DMJ MULTI-PRINT i\ND SERVICES P-257.335 toP- I 257.336 SUBTOTAL Total disallowed input VAT on domestic purchase of P-257.337 toP- ' services and importations of goods 257.338 I Php755,826.22 Thus, out of the total declared input VAT of Php40,889,343.15 for the first and second quarters ofTY 2015, only the amount ofPhp39,168,665.68, as computed below, represents Petitioner's valid input VAT for the same period: Total declared input VAT for the period Php 40,889,343.15 Less: Disallowances Php964,85 1.25 I Input VAT due on purchases of goods 755,826.22 Input VAT paid on importations of 1,720,677.47 I goods, domestic purchases of services Php39,168,665.68 and services rendered by non-residents Valid input VAT for the period Since there are both zero-rated or effectively zero-rated sales and taxable sales, the said amount of Php39,168,665.68 shall be proportionately allocated on the basis ofsales volume. To reiterate, the eighth requisite is to the effect that the input taxes claimed are attributable to zero-rated or effectively zero-rated sales. However, where there are both 7:ero-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. In this case, for the subject periods of the claim, there exists a zero-rated or effectively zero-rated sales and taxable sales. Specifically, in the amended Quarterly VAT Return for the first quarter ofTY 2015, Petitioner reported total r

DECISION CTA CASE NOS. 93SO & 9430 sales in the amount of Php994,732,076.01;76 while in the amended Quarterly VAT Return for the second quarter ofTY 2015, Petitioner declared its total sales in the amount of Php929,731,688.6877 In other words, Petitioner had sales for the said periods in the aggregate amount ofPhp1,924,463,764.69. However, since its input VAT cannot be directly or entirely attributed to any of the transactions, this Court shall allocate the valid input VAT of Php39,168,665.68 proportionately on the basis of the volume of its sales, as shown below: Taxable Sales for the first and second quarters ofTY 201578 Phr_ 61,707,359.10 Divided by the Reported Total Sales per Amended Quarterly Vi\T Php1,924,463,764.69 Returns Multiplied by Total Valid Input VAT Php 39,168,665.68 Valid input VAT allocated to sales subject to the 12% VAT Php 1,255,931.63 Total Valid Zero-Rated Sales Php 1,655,274,685.71 Divided by the Reported Total Sales per Amended Quarterly VAT Return Php1,924,463,764.69 Multiplied by Total Valid Input VAT Php 39,168,665.68 Valid Input VAT allocated to valid zero-rated sales Php 33,689,852.71 Thus, for purposes of, and with regard to Petitioner's compliance with, the eighth requisite, only the amount of Php33,689,852.71 represents valid input VAT attributable to valid zero-rated sales. Determination of the refundable amount. Having determined that Petitioner had valid input VAT attributable to its zero-rated sales, this Court shall now determine whether the same was applied against its output VAT liability during and in the succeeding quarters, relative to the ninth requisite for the successful prosecution of an input VAT refund claim. For the periods under consideration, Petitioner has output VAT liabilities in the amount of Php7,404,883.0979 Since Petitioner's valid input VAT in the 76 Docket (CTA Case No. 9350), Exhibit "P-12", pp. 3722 to 3723. 77 !d., Exhibit "P-14", pp. 3722 to 3723. 78 !d., Line 15A of Exhibit "P-12" and Line 15A of Exhibit "P-14", pp. 3722 to 3723. 79 Com outed as foil ~ ......... Exhibit Cutout VAT 1" nuarter TY 2015 P-12 Pho 3 125 164.85 2nd nuarter TY 2015 P-14 4 279 718.24 Total Php 7,404,883.09 r'

DECISION CTA CASE NOS. 9350 & 9430 amount of Php1,255,931.63 (supra) allocated to sales subject to the 12% VAT is not enough to cover the said output VAT liability, the output VAT still due against Petitioner is computed as follows: Output VAT liabilities for the first and second quarters of TY Php7,404,883.09 2015 Less: Valid Input VAT allocated to Sales subject to the 12% 1,255,931.63 VAT Php6,148,951.46 Output VAT Still Due As shown earlier, the valid input VAT attributable to valid zero-rated sales 1n the amount of Php33,689,852.71 shall then be utilized against the said remaining output VAT liability of Petitioner in the amount of Php6,148,951.46. Correspondingly, only the remaining input VAT ofPhp27 ,540,901.25 represents Petitioner's unapplied/excess input VAT attributable to its valid zero-rated sales, as determined below: Substantiated Total Input VAT Allocated to Zero-Rated Sales Php33,689 ,852. 71 Less: Output VAT still due 6,148,951.46 Excess input VAT attributable to valid zero-rated sales Php 27,540,901.25 Needless to state, the said amount of Php27 ,540,901.25 is included in the amounts of the subject refund claim, i.e., the amounts of Php14,516,165.27 and Php18,968,294.79 for the first and second quarters of TY 2015, respectively. Although the said amounts of input VAT claims were initially carried-over by Petitioner in its succeeding Quarterly VAT Returns,80 the same remained unutili:?.ed until the same was deducted as 'VAT Refund/TCC Claimed" in its Monthly VAT Declarations for the months of October 201581 and February 2016,82 respectively. In fine, Petitioner 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. Correspondingly, Petitioner is entided to refund or issuance of tax credit certificate in the amount ofPhp27,540,901.25. WHEREFORE, in light of the foregoing considerations, the instant consolidated Petitions for Review is PARTIALLY GRANTED. Accordingly, r Respondent is ORDERED TO REFUND OR ISSUE A TAX CREDIT 80 Id., Exhibits "P-14", "P-17'', "P-20", and "P-23", pp. 3726 to 3727, 3732 to 3733, 3738 to 3739, and 3744 to 3745, respectively. 81 !d., Line 200 of Exhibit "P-28", p. 3755. 82 !d., Line 200 of Exhibit "P-29", p. 3757.

DECISION CTA CASE NOS. 9350 & 9430 CERTIFICATE in favor of Petitioner in the amount of Php27,540,901.25, representing the latter's unutilized input Vi\T attributable to Petitioner's zero- rated sales for the first and second quarters of TY 2015. SO ORDERED. ()Y(. ).A_ 4----- MA. BELEN M. RINGPIS-LIBAN Associate Justice WE CONCUR: ERL~P.UY Associate Justice MARIA ATTESTATION I attest 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. ERL~P.UY Associate Justice Chairperson

DECISION CTA CASE NOS. 9350 & 9430 CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, and the Division Chairperson's Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the cases were assigned to the writer of the opinion of the Court. PreJiding Justzi�e