PHILEX MINING CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES Court ofTax Appeals QUEZON CITY Third Division PHILEX MINING CTA CASE NO. 8600 CORPORATION, Members: BAUTISTA, Chairperson Petitioner, FABON-VICTORINO, and -versus- RINGPIS-LIBAN, JL COMMISSIONER OF INTERNAL Promulgated: REVENUE, MAY 1 4 20l5 Respondent. x------------------------------------------------------------------------------------------------------------x DECISION BAUTISTA,[.: The Petition for Review, filed pursuant to Section 7(a)(2) of Republic Act ("RA") No. 1125, as amended by RA No. 9282 and RA No. 9503, seeks for the refund of the amount of Php40,201,665.70, representing excess unutilized input taxes for the 4th Quarter of 2010.1 THE PARTIES2 Petitioner Philex Mining Corporation is a domestic corporation organized under Philippine laws with principal office at 27 Brixton St., Pasig City. It is engaged in the mining business, including the exploration and operation of mine properties and the commercial (v production and marketing of mine products. It is a Value Added Tax ("VAT")-registered with VAT Registration Certificate No. 35-6-00073 1 Records, pp. 6-19, with Annexes. 2 Id., Summary of Facts Admitted, pp. 153-154.

Decision CTA Case No. 8600 Page 2 of18 effective October 29, 1997, and under Bureau of Internal Revenue ("BIR") Form No. 2303 as of January 31, 1997. It likewise had its Application for Zero-Rate approved effective April 12, 1998, pursuant to Sec.4.100-3 of Revenue Regulations No. 7-95. Respondent Commissioner of Internal Revenue is the government official charged with the administration and enforcement of National Internal Revenue Laws, including the granting of refund or tax credit of taxes erroneously or illegally collected, and other refundable or creditable taxes under the Tax Code, with address at BIR National Office, Diliman, Quezon City. FACTS OF THE CASE On January 24, 2011,3 petitioner filed with the Bureau of Internal Revenue ("BIR") its VAT Return for the 4th Quarter of 2010. On November 7, 2012,4 petitioner filed an Amended VAT Return which reflected the following a total zero-rated sales of Php5,191,480,758.61, importation of good of Php133,995,016.68 with input tax of Php16,079,402.00, and purchases of services of Php201,018,864.17 with input tax of Php24,122,263.70. On August 28, 2012, petitioner, pursuant to Section 4.112-1 of Revenue Regulations No. 16-2005, filed its administrative claim for refund or tax credit in the total amount of Php40,201,665.70, representing unutilized excess input VAT for the said quarter of 2010, with the One Stop Shop ("OSS") Center of the Department of Finance. Due to the inaction of the OSS, petitioner filed this instant Petition for Review on January 9, 2013.5 On March 7, 2013, respondent filed her Answer,6 interposing the following Special and Affirmative Defenses: j 3 Id., paragraph 4, p. 154. 4 Id. s Id., paragraph 5, p. 154. 6 Id., pp. 26-28.

Decision CTA Case No. 8600 Page 3 of18 "4. Petitioner's claim for tax refund is subject to administrative investigation and/ or examination by the respondent; 5. Taxes paid and collected are presumed to have been paid in accordance with law and regulations, hence, not refundable; 6. Moreover, in order to validly claim for tax refund, it is imperative for petitioner to prove its compliance with the following, viz: A. The registration requirements of a Value-Added taxpayer under the pertinent provision of the National Internal Revenue Code (NIRC) of 1997, as amended and its implementing revenue regulations; B. The invoicing and accounting requirements for VAT-registered persons, as well as the filing and payment of VAT pursuant to the provisions of Section 113 and 114 of the National Internal Revenue Code (NIRC) of 1997, as amended. Failure to comply with the invoicing requirements on the documents supporting the sale of goods and services will result in the disallowance of the claim for input tax of the taxpayer claimant (Revenue Memorandum Circular No. 42-2003). C. The submission of complete documents in support of the administrative claim for tax refund pursuant to Section 112(C) of the National Internal Revenue Code (NIRC) of 1997, as amended, otherwise, there would be no sufficient compliance with regard to the filing of administrative claim for tax refund which is a condition sine qua non prior to the filing of such claim; D. That the input taxes of Php40,201,665.70 allegedly representing excess and unutilized input taxes for the 4th Quarter of 2010, were: 1. Paid by petitioner; 2. Attributable to its zero-rated or effectively zero-rated sales; and

Decision CTA Case No. 8600 Page4 o�18 3. Such input taxes paid should not have been applied against any output tax. E. The petitioner's claim for tax refund allegedly representing excess and unutilized input taxes for the 4th Quarter of 2010 in the amount of Php40,201,665.70 was filed within two (2) years after the close of the taxable quarter when the sales were made in accordance with Section 112(A) of the National Internal Revenue Code (NIRC) of 1997, as amended; 7. Accordingly, the claimants of those refunds bear the burden of proving the factual basis of their claims and of showing, by words too plain to be mistaken, that the legislature intended to exempt them; 8. And finally, basic is the rule that tax refunds are in the nature of tax exemptions and are to be construed strictissimi juris against the entity claiming the same. Moreover, statutes in derogation of sovereignty such as those containing exemption from taxation should be strictly construed in favor of the State. In this regard, taxation is the rule and exemption is the exception. The law does not look with favor on tax exemptions and that he who would seek to be thus privileged must justify it by words too plain to be mistaken and too categorical to be misinterpreted." Pre-trial ensued. The parties filed their "Stipulation of Facts and Issues"on August 12, 2013.7 Petitioner presented Mrs. Eileeen C. Rodriguez and Mr. Albert G. Alba as witnesses, and documentary evidence marked as Exhibits "A" to "P-1."8 On the other hand, respondent presented as witness Ms. Cleofe T. Tasarra,9 and documentary evidence marked as Exhibits "R-1" and "R-1- ~ a."10 ( 7 Records, pp. 153-158. s Id., pp. 154-157. 9 Id., p.158. 1o Id., p. 549.

Decision CTA Case No. 8600 PageS o�18 On May 21, 2014,11 the Court resolved to submit the case for decision, taking into consideration the memorandum of petitioner filed on May15, 2014 and respondent's memorandum filed on April21, 2014. Hence, this Decision. ISSUES As stipulated upon by the parties, the sole issue for the Court's consideration is:12 WHETHER OR NOT PETITIONER IS ENTITLED TO THE REFUND OR TAX CREDIT OF THE ALLEGED EXCESS AND UNUTILIZED INPUT TAXES IN THE TOTAL AMOUNT OF PHP40,201,665.70 FOR THE 4TH QUARTER OF 2010 DUE TO PETITIONER BEING AN EXPORTER OF MINERAL PRODUCTS. RULING OF THE COURT Section 112(A) of the National Internal Revenue Code of 1997, as amended ("NIRC") laid down the manner in which the refund or credit of input tax may be made, to wit: "SEC.112. Refunds or Tax Credits ofInput Tax. - (A) Zero-rated or Effectively Zero-rated Sales. - Any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales under Section 106(A)(2)(a)(1), (2) and (b) and Section 108(B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules .J 11Records, p. 568. 12 Id., at p. 154.

Decision CTA Case No. 8600 Page 6 o�18 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 directly 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 are zero-rated under Section 108(B)(6), the input taxes shall be allocated ratably between his zero-rated and non-zero-rated sales." Based on the above-quoted provision, a taxpayer engaged in zero- rated or effectively zero-rated sales is entitled to a refund or tax credit of unutilized input VAT attributable to such zero-rated or effectively zero-rated sales upon compliance with the following requisites: 1.that there must be zero-rated or effectively zero-rated sales; 2.that input taxes were incurred or paid; 3.that such input taxes were attributable to zero-rated or effectively zero-rated sales; 4.that the input taxes were not applied against any output VAT liability; and 5.that the claim for refund was filed within the two-year prescriptive period. The Court shall first resolve the fifth requisite as it pertains to the timeliness of the filing of the Petition for Review. In resolving the fifth requisite, in addition to the requirement that the claim must be filed within two-years, petitioner must likewise comply with Section 112(C) of the NIRC which provides: r "SEC. 112. Refunds or Tax Credits ofInput Tax. - I

Decision CTA Case No. 8600 Page 7 o�18 (C) Period within which Refund or Tax Credit of Input Taxes shall be Made. - In proper cases, the Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in accordance with Subsection (A) hereof. In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty (120) day period, appeal the decision or the unacted claim with the Court of Tax Appeals." In the consolidated cases of Commissioner of Internal Revenue vs. San Roque Power Corporation, Taganito Mining Corporation vs. Commissioner of Internal Revenue, Philex Mining Corporation vs. Commissioner of Internal Revenue,13 the Supreme Court has stressed that the 120+30 day period provided in the aforequoted Section 112 (C) of the NIRC is mandatory and jurisdictional but provided exceptions thereto, to quote: "xxx The application of the 120+day periods was first raised in Aichi, which adopted the verba legis rule in holding that the 120+30 day periods are mandatory and jurisdictional. The language of Section 112(C) states that 'the Commissioner shall grant a refund or issue the tax credit within one hundred twenty (120) days from the date of submission of complete documents,' the law clearly gives the Commissioner 120 days within which to decide the taxpayer's claim. Resort to the courts prior to the expiration of the 120-day period is a patent violation of the doctrine of exhaustion of administrative remedies, a ground for dismissing the judicial suit due to prematurity. Philippine jurisprudence is awash with cases affirming and reiterating the doctrine of exhaustion of 13 G.R.Nos.187485, 196113, 197156, February 12,2013, 690 SCRA 336.

Decision CTA Case No. 8600 Page 8 o�18 administrative remedies. Such doctrine is basic and elementary. When Section 112(C) states that 'the taxpayer affected may, within thirty (30) days from receipt of the decision denying the claim or after the expiration of the one hundred twenty-day period, appeal the decision or the unacted claim with the Court of Tax Appeals,' the law does not make the 120+30 day periods optional just because the law uses the word 'may.' The word 'may' simply means that the taxpayer may or may not appeal the decision of the Commissioner within 30 days from receipt of the decision, or within 30 days from the expiration of the 120-day period. Certainly, by no stretch of the imagination can the word 'may' be construed as making the 120+30 day periods optional, allowing the taxpayer to file a judicial claim one day after filing the administrative claim with the Commissioner. XXX XXX XXX To repeat, a claim for tax refund or credit, like a claim for tax exemption, is construed strictly against the taxpayer. One of the conditions for a judicial claim of refund or credit under the VAT System is compliance with the 120+30 day mandatory and jurisdictional periods. Thus, strict compliance with the 120+30 day periods is necessary for such a claim to prosper, whether before, during, or after the effectivity of the Atlas doctrine, except for the period from the issuance of BIR Ruling No. DA-489-03 on 10 December 2003 to 6 October 2010 when the Aichi doctrine was adopted, which again reinstated the 120+30 day periods as mandatory and jurisdictional. XXX XXX XXX There is no dispute that the 120-day period is mandatory and jurisdictional, and that the CTA does not acquire jurisdiction over a judicial claim that is filed before the expiration of the 120-day

Decision CTA Case No. 8600 Page9 of18 period. There are, however, two exceptions to this rule. The first exception is if the Commissioner, through a specific ruling, misleads a particular taxpayer to prematurely file a judicial claim with the CTA. Such specific ruling is applicable only to such particular taxpayer. The second exception is where the Commissioner, through a general interpretative rule issued under Section 4 of the Tax Code, misleads all taxpayers into filing prematurely judicial claims with the CTA. In these cases, the Commissioner cannot be allowed to later on question the CTA's assumption of jurisdiction over such claim since equitable estoppel has set in as expressly authorized under Section 246 of the Tax Code. XXX XXX XXX BIR Ruling No. DA-489-03 is a general interpretative rule because it was a response to a query made, not by a particular taxpayer, but by a government agency tasked with processing tax refunds and credits, that is, the One Stop Shop Inter-Agency Tax Credit and Drawback Center of the Department of Finance. This government agency is also the addressee, or the entity responded to, in BIR Ruling No. DA-489-03. Thus, while this government agency mentions in its query to the Commissioner the administrative claim of Lazi Bay Resources Development, Inc., the agency was in fact asking the Commissioner what to do in cases like the tax claim of Lazi Bay Resources Development, Inc., where the taxpayer did not wait for the lapse of the 120-day period. Clearly, BIR Ruling No. DA-489-03 is a general interpretative rule. Thus, all taxpayers can rely on BIR Ruling No. DA-489-03 from the time of its issuance on 10 December 2003 up to its reversal by this Court in Aichi on 6 October 2010, where this r / Court held that the 120+30 day periods are mandatory and jurisdictional." (Underscoring supplied). (

Decision CTA Case No. 8600 Page 10 of18 Applying the foregoing in the present case, the pertinent periods are as follows: Period Filing date of Last day of the Last day of the Filing date administrative 120-day period 30-day period to of Petition claim under Section 112 judicially appeal for Review (C) from date of said inaction filing of before the Court administrative of Tax Appeals claim in case of inaction 4th Quarter August28, December 26, January 25, January 9, 2010 2012 2012 2013 2013 Evidently, petitioner timely filed its administrative and judicial claim. Anent the first and second requisites, petitioner duly filed its amended fourth quarterly VAT Return14 with the Bureau of Internal Revenue declaring, among others, the following: Zero Rated Sales/Receipts Sales/Purchases VAT Less: 5,191,480,758.61 - Input Tax Carried Over from Previous Period 283,528,153.68 133,995,016.68 16,079,402.00 Domestic Purchase of Services 201,018,864.17 24,122,263.70 Services Rendered by Non-residents 323,729,819.38 (43,268,934.50) Total Available Input Tax 280,460,884.88 (280,460,884.88) Less: VAT Refund/TCC claimed Total Available Input Tax Net VAT Payable (Overpayment) Petitioner also submitted a Certification1s from the Board of Investments of the Philippines (BOI) which certified that Philex Minin~ 14 Records, Exhibit "N-l,"p. 493.

Decision CTA Case No. 8600 Page 11 of18 Corporation exported 100% of its total sales volume/value for the calendar year covering January 1, 2010 to December 31,2010. In the Report16 of Mr. Albert G. Alba, the Commissioned Independent Certified Public Accountant ("ICPA"), he noted that petitioner's zero-rated sales for the fourth quarter of 2010 amounts to $119,497,766.00. Provisional Invoice No. Exhibit Final Invoice No. Exhibit Amount Current Quarter's Shipments Recorded in the General Ledger (in US$) 2601 F-1-b 2608 F-1-c 29,310,188.00 2602 F-2-b 2609 F-2-c 28,078,975.00 2604 F-3-b 2610 F-3-c 29,156,922.00 2605 F-4-b 2612 F-4-c 28,616,176.00 subtotal 115,162,261.00 Catch-up Ad.iustments to Prior Quarter's Shipments 2589 F-5-b 2599 F-5-c 79,949.00 2591 F-6-b 2598 F-6-c 309,891.00 2594 F-7-b 2600 F-7-c 324,927.00 2596 F-8-b 2603 F-8-c 1,411,455.00 2597 F-9-b 2606 F-9-c 2,209,283.00 subtotal 4,335,505.00 TOTAL 119,497,766.00 Since petitioner claims that all of its sales for the said quarter pertain to export sales, it is necessary that the following conditions17 15 Exhibit "0." 1~ 16 Exhibit "E." 17 Philex Mining Corporation vs. Commissioner of Internal Revenue, CTA Case No. 8553, March 15, 2015.

Decision CTA Case No. 8600 Page 12 of18 shall be present in order that such alleged sales shall be considered as zero-rated sales pursuant to Section 106 (A)(2)(a)(1) of the NIRC, to wit: 1. there was sale and actual shipment of goods from the Philippines to a foreign country; 2. the sale was made by a VAT registered person; 3. the sale was paid for in acceptable foreign currency or its equivalent in goods or services; and 4. the payment was accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas. In addition to the abovementioned requirements, it is necessary that the respective VAT invoices and VAT official receipts comply with the invoicing requirements provided in Section 113 of the NIRC and such invoices and receipts must have been duly registered with the BIR as prescribed under Section 237 in relation to Section 238 of the NIRC. Moreover, pursuant to the foregoing provisions of Section 106(A)(2)(a)(1) of the NIRC, in relation to Sections 113(A)(1), (B)(1) and (2)(c) of the NIRC and Sections 4.113-1(A)(1), B(1) and (2)(c) of RR No. 16-05, any VAT registered person claiming VAT zero-rated on its direct export sales must present at least three (3) types of documents, to wit: 1. the sales invoice as proof of sale of goods; 2. the export declaration and bill of lading or airway bill as proof of actual shipment of goods from the Philippines to a foreign country; and 3. bank credit advice, certificate of bank remittance or any other document proving payment for the goods in acceptable foreign currency or its equivalent in goods and services. Thus, only export sales supported by these documents shall qualify for VAT zero-rating under Section 106(A)(2)(a)( 1) of the NIRC/

Decision CTA Case No. 8600 Page 13 o�18 After careful examination of the documents presented by the petitioner, the alleged zero rated sales with their respective supporting documents may be summarized in a table below: Provisional Date Final Date Amount Invoice Invoice Recorded in No. Exhibit Exhibit the General Inward Exhibit Difference No. Ledger (in Remittance US$) Current Quarter's Shipments 2601 04- F-1-b 2608 01- F-1-c 29,310,188.00 23,186,882.00 G-1 li 1 ?'J,'J,Oii 00 2602 Nov- F-2-b 2609 Feb- F-2-c ?R n7R Q7'i no 2604 F-3-b 2610 11 F-3-c 29,156,922.00 2'\.?'>'> o;,;., no G-2 4.1\2'>,.412.00 2605 10 F-4-b 2612 15- F-4-c 28,616,176.00 22- Feb- 23,059,687.00 G-3 6,097,235.00 Nov- 11 10 02- - 2R.n1 n.176.00 Mar- 06- 11 Dec-10 01- Apr- 31- 11 Dec-10 subtotal 11" 11i? ?li1.00 69.502.132.00 45.660.129.00 Catch-up Adjustments to Prior l,luaner�s Shipm<>nt� 06- 07- Oct- 2589 Jun-10 F-5-b 2599 10 F-5-c _2'2,949.00 _;}00,564.00 G-5 - 04- 05-Jul- Oct- 2591 10 F-6-b 2598 10 F-6-c 309,891.00 3,396,528.00 G-8 - 03- 04- Aug- Nov- 2594 10 F-7-b 2600 10 F-7-c 324,927.00 4.584.6::\1.00 G-4 - 01- 09- Dec- 2596 Sep-10 F-8-b 2603 10 F-8-c 1,411,455.00 5,494,114.00 G-6 - 04- 28- Jan- 2597 Sep-10 F-9-b 2606 11 F-9-c ? ?OQ ?R'J, 00 21.8::\::\.242.00 G-7 - subtotal 4 '>,'>,<:; <:;O<:;OO 37,409,079.00 - TOTAL 119,497,766.00 10iiQ11 ?11 no Out of the $119,497,766.00 declared zero-rated sales, $45,660,129.00, pertaining to current quarter's shipment should be disallowed. Final Invoice Nos. 2608, 2609, 2610, and 2612 should be disallowed because they were not dated within the period of the subject claim and no actual remittance from the buyer was yet made for Final Invoice No. 2610. Consequently, the allocation of the correct Zero-Rated ~ Sales in Peso Value shall be computed as follows: / Computation of Allocation of Zero-rated Sales in Peso Total Zero-Rated Sales in US$ 119,497,766.00 100.00%

Decision 45,660,129.00 38.21% CTA Case No. 8600 73,837,637.00 61.79% Page14 of18 Less: Disallowed Zero-Rated Sales Valid Zero-rated Sales in US$ Disallowed Zero-Rated Sales in 1,983,666,214.64 38.21% Peso 3,207,814,543.97 61.79% Valid Zero-Rated Sales in Peso 5,191,480,758.61 100.00% Zero-Rated Sales per VAT Return Since only 61.79% out of the declared Zero-Rated Sales for the quarter was found to be valid, only the proportionate share of input taxes allocated to zero-rated or effectively zero-rated sales can be claimed for refund or issuance of a tax credit certificate pursuant to Section 4.112-1 of RR 16-2005. Anent the third requisite that the input taxes paid for the period can be attributable to the said zero-rated transactions, Section 4.110-8 of RR 16-2005 provides the required supporting documents that must be presented in order to substantiate the alleged input tax credits for the period of claim, to wit: "SEC. 4.110-8. Substantiation of Input Tax Credits. - (a) Input taxes for the importation of goods or the domestic purchase of goods, properties or services is made in the course of trade or business, whether such input taxes shall be credited against zero-rated sale, non-zero-rated sales, or subjected to the 5% Final Withholding VAT, must be substantiated and supported by the following documents, and must be reported in the information returns required to be submitted to the Bureau: (1) For the importation of goods - import entry or other equivalent document showing actual payment of VAT on the imported goods. (2) For the domestic purchase of goods and properties - invoice showing the information required under Sees. 113 and 237 of the Tax Code. (3) For the purchase of real property - public instrument i.e., deed of absolute sale, deed of ) conditional sale, contract/agreement to sell, etc., . together with VAT invoice issued by the seller. .

Decision For the purchase o(services- o;[ficial receipt showing CTA Case No. 8600 the information required under Sees. 113 and 237 of Page 15 of 18 the Tax Code." (4) After careful examination of all documents submitted before this Court, only the following items were able to comply with the invoicing requirements provided in Section 113 of the NIRC, to wit: a) Importation of Goods Bank or BOC Official Receipt IEIRD Statement of Settlement of Duties and Taxes Input VAT Date No. Exhibit Date No. Exhibit Date Ref. No. Exhibit 1,337,826.00 20-0ct-10 305732 H-1 20-0ct-10 111707967 H-1-a J-1 2,561,417.00 J-2 10-Dec-10 307893 H-2 09-Dec-10 112722653 H-2-a 7,073.00 1,646,964.00 24-Dec-10 181343501-1 I-1 1,660,057.00 Php 7,213,337.00 04-Nov-10 C118 09-Nov-10 C2116 TOTAL INPUT VAT ON IMPORTATIONS b) Domestic Purchases of Services OR Date OR No. Supplier's Name TIN OR Amount Input VAT Exhibit No. 1-0ct-10 1543 Bradley Drilling Inc. 246-474-387 20,856,921.58 2,502,830.59 L-1 000-349-114 30,592.58 3,277.78 L-3 6-0ct-10 41211 Orient Freight International 000-323-228 27,015.42 2,894.52 L-8 10-0ct-10 International Container 000-300-956-001 6,262.50 670.97 L-9 16-0ct-10 3105465 Terminal Services, Inc. 8,348.85 873.90 L-11 TSN1048 000-305-554 1,157.54 123.00 L-12 TOYOTA North EDSA 000-323-228 4,211.59 451.24 L-13 537 246-47 4-387 L-14 246-474-387 23,987,758.13 2,773,921.43 L-15 19-0ct-10 113942 DHL 000-305-304 32,370,827.33 3,884,499.28 L-16 20-0ct-10 670950 People's Air Cargo and 000-323-288 L-18 20-0ct-10 3154339 Warehousitlg Co., Inc. 000-323-288 578.90 61.52 L-19 International Container 000-323-288 21,057.95 2,256.20 L-21 Terminal Services, Inc. 000-323-288 29,481.13 3,158.68 L-22 246-474-387 18,691.90 2,002.70 L-25 22-0ct-10 1545 Bradley Drilling Inc. 000-323-228 2,156.20 L-27 000-323-228 53,242,490.08 231.02 L-28 26-0ct-10 1546 Bradley Drilling Inc. 32,445.36 6,389,098.81 12,443.35 26-0ct-10 926571 Philippine Skylanders, Inc. 3,476.26 I 3166563 International Container 1,440.36 27-0ct-10 3166562 Terminal Services, Inc. 3177318 International Container 27-0ct-10 3162142 Terminal Services, Inc. International Container 4-Nov-10 1547 Terminal Services, Inc. 3196131 International Container 8-Nov-10 3196132 Terminal Services, Inc. 10-Nov- Bradley Drilling Inc. 10 International Container 12-Nov- Terminal Services, Inc. International Container 10 Terminal Services, Inc. 12-Nov- 10

Decision CTA Case No. 8600 Page 16 of18 23-Nov- 5059282 Sycip Salazar Hernandez & 000-502-555 2,432,036.32 260,575.32 L-31 10 3198440 Gatmaitan 000-323-228 3198439 International Container 000-323-228 21,057.95 2,256.20 L-34 23-Nov- 3198442 Terminal Services, Inc. 000-323-228 10 International Container 000-220-239 29,481.13 3,158.68 L-35 Tern1inal Services, Inc. 246-474-387 23-Nov- International Container 246-474-387 1,617.18 173.28 L-36 10 Terminal Services, Inc. 246-474-387 23-Nov- 20737089 HONDA Cars Makati Inc. 69,894.88 7,624.90 L-37 10 24-Nov- 10 1-Dec-10 1550 Bradley Drilling Inc. 5,265,937.07 575,774.21 L-38 6-Dec-10 1548 Bradley Drilling Inc. 40,882,657.10 3,518,069.20 L-39 22-Dec-10 1549 Bradley Drilling Inc. 29,625,985.92 3,555,118.31 L-42 TOTAL DOMESTIC PURCHASES OF SERVICES Php 23,494,018.35 Thus, the total input tax credits for the quarter amount to Php30,707,355.35. However, this input tax cannot be claimed in full by the petitioner since only 61.79% out of the actual zero-rated sales declared per VAT return were found to be valid. Thus, such input tax credits shall be allocated accordingly: Allocation of Input VAT Php30,707,355.35 61.7900% Total Substantiated Input VAT Multiplied by: Percentage of Valid Zero-rated Sales Php18,974,066.49 Substantiated Input VAT attributable to Valid Zero-Rated Sales Anent the fourth requisite, as found on records,1s the input taxes were not applied against any output VAT liability for the fourth quarter of 2010 and the alleged input tax credit of such quarter in the amount of Php40,201,665.70 was subsequently declared as an item under VAT Refund/TCC Claimed per BIR Form No. 2550-Q of the Second Quarter of 2012. Thus, petitioner complied with the fourth requisite. Although petitioner has satisfactorily complied with the requirements set forth in the NIRC in its claim for refund of unutilized input VAT arising from Zero Rated Transactions for the 4th quarter of 2010, only the amount of Php18,974,066.49 was properly substantiated. Therefore, petitioner is entitled only to the amount of Php18,974,066.49 as claim for refund arising from its unutilized inputil VAT from Zero Rated Transactions for the 4th quarter of 2010, as properly substantiated amount. 18 Records, Exhibits "N-1" to "N-7,"pp.493-506.

Decision CTA Case No. 8600 Page 17 of18 WHEREFORE, premises considered, the instant Petition for Review is hereby PARTIALLY GRANTED. Accordingly, respondent is hereby ORDERED TO REFUND or TO ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner in the reduced amount of Php18,974,066.49 representing unutilized input VAT from zero-rated transactions for the 4th quarter of 2010. SO ORDERED. WE CONCUR: @,_,. ~ ~., ~ MA. BELEN M. RINGPIS-LIBAN Associate Justice 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's Division. LOVELL R. BiiSTA Associate Justice Chairperson CERTIFICATION Pursuant to Section 13 of Article VIII of the Constitution, and the Division Chairperson's Attestation , I certify that the conclusions in the

Decision CTA Case No. 8600 Page 18 of18 above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.