I-REMIT, INC. v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY Pirst C])ivision I-REMIT, INC., CTA Case No. 9733 Petitioner, Members: -versus- DEL ROSARIO, P.J ., Chairperson FABON-VICTORINO , and MANAHAN, JJ. COMMISSIONER OF INTERNAL Promulgated: REVENUE, Respondent. IJUL~t~jt' 1.'l[/t.~- )(- - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - )( DECISION MANAHAN, J.: This Petition for Review pertains to the claim for taJC refund / credit of petitioner's alleged unutilized input (value- added taJC) VAT from Janu ary 1 to December 31, 2015, amounting to P10,582,022.34. 1 THE PARTIES Petitioner I-Remit, Inc. is a remittance corporation duly organized and eJCisting under and by virtue of the laws of the Republic of the Philippines, with principal office at 26th Floor Discovery Centre, 25 ADB Avenue, Ortigas Center, Pasig City 1 6 0 5 .2 Respondent Commissioner of Internal Revenue is herein impleaded in his official capacity, having b een duly appointed and empowered to perform the duties of his office, including, among others, the duty to act on and approve claims for 1 Docket, CTA Case No. 9733, Vol. 1, Summary of t he Case, Pre-Trial Order dated May 23, 2018, p. 173. 2 /d., Vol. 1, Par. 1, The Parties, Petition for Review, p. 11, vis-a-vis Par. 1, Answer, Docket, Vol. 1, p. 64; Docket, Vol. 1, Part II(A)(1), Pre-Trial Order dated May 23, 2018, p. 173; Docket, Vol. 1, Exhibit "P-2", p. 104. o.--

DECISION CTA Case No. 9733 refund as provided by law. 3 He is the head of the Bureau of Internal Revenue (BIR), the government agency tasked to, among others, assess and collect all national internal revenue taxes with the power to decide disputed assessments, refunds of international revenue taxes, fees or other charges, penalties imposed in relation thereto or other matters arising under the Tax Code or other laws or portions thereof administered by the BIR. 4 THE FACTS On July 18, 2017, petitioner filed with the BIR its administrative claim for refund, embodied in the letter dated July 17, 20 17,5 accompanied by an Application for Tax Credits/ Refunds (BIR Form No. 1914),6 requesting for the refund of input VAT paid by petitioner from January 1 to December 31, 2015 in the total amount ofP10,582,022.34. However, the said administrative claim of petitioner was denied by Ms. Teresita M. Angeles, OIC-Assistant Commissioner for Large Taxpayers Service of the BIR, in her letter dated November 9, 2017, which was received by petitioner on November 16, 2017,7 pertinent portions of which read: "Based on our evaluation of the documents submitted, it merely substantiated the existence of the sales/revenue, receipt of foreign currency payments and inward remittance of the proceeds of the sale/revenue. Nothing in the documents presented would support that your clients were doing business outside the Philippines which is an essential condition under the above provisions of the NIRC. This specific condition for zero-rating was affirmed in the case of Commissioner of Internal Revenue vs. Accenture, Inc. under G.R. No. 190102 dated July 11,2012. In this regard, we regret to inform you that your Application for Tax Credit for the period January 1, 2015 to December 31, 2015 is hereby DENIED." 3 Docket, Vol. 1, Par. 2, The Parties, Petition for Review, p. 11, vis-a-vis Par. 1, Answer, Docket, Vol. 1, p. 64; Docket, Vol. 1, Part II(A)(2), Pre-Trial Order dated May 23, 2018, p. 173. � Id., Vol. 1, Part II(A)(3), Pre-trial Order dated May 23,2018, pp. 173 to 174. s Id., Vol. 1, Exhibit "P-5", pp. 107 to 109. 6 Id., Vol. 1, Exhibit "P-4", p. 106. 7 Id., Vol. 1, Exhibit "P-8", pp. 19 to 20; Exhibit "R-3", BIR Records, pp. 323 to 324. a....-

DECISION CTA Case No. 9733 Petitioner filed the instant Petition for Review on December 14, 2017.8 The case was initially raffled to the Third Division of this Court. On February 12, 2018, respondent filed his Answer,9 interposing the following special and affirmative defenses, to wit: "SPECIAL AND AFFIRMATIVE DEFENSES 4. Respondent reiterates and re-pleads the preceding paragraphs of this Answer as part of his Special and Affirmative Defenses. Petitioner is not entitled to refund of its alleged unutilized Input VAT 5. Petitioner is claiming for its excess input VAT from zero-rated revenues pursuant to Section 108 B (2) of the NIRC of 1997, as amended, which provides: 'Section. 108. Value-Added Tax on Sale of Services and Use or Lease of Properties.- (A) X X X (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) XXX (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);' 6. However, evaluation of the documents submitted by petitioner related to its zero-rated sales show that it merely substantiated the existence of the sales/revenue, receipt of foreign currency payments and inward remittance of the proceeds of the sale/revenue. Nothing in the documents would support petitioner's claim that its clients were doing business outside the Philippines which is an B Docket, Vol. 1, pp. 10 to 18. 9 Id., Vol. 1, pp. 64 to 69 . .,.,.....-

DECISION CTA Case No. 9733 essential requirement under the above-mentioned provision of the NIRC. Hence, petitioner 7. The requirements for zero-rating, including the essential condition that the recipient of service is doing business outside the Philippines must be clearly established to treat the transaction as zero-rated and to allow any excess input taxes attributable thereto as eligible for tax refund or TCC application. 8. Likewise, in the recent case of Deutsche Knowledge Services Pte Ltd vs. Commissioner of Internal Revenue, CTA Case Nos. 8623, 8656 and 8685 dated April 4, 2017, additional documents such as SEC Certificate of Non- Registration of Corporation/Partnership and Certificate/ Articles of Incorporation/ Association/ Registration for the sixty-nine (69) foreign affiliates/ customers are required to substantiate that the recipient of the service is engaged in business conducted outside the Philippines. 9. In this light, as petitioner failed to show proof that the recipients of its services are doing business outside the Philippines, which is a mandatory requirement in order to treat its transactions as zero-rated, it is unquestionably not entitled to any refund. It is incumbent upon petitioner to prove that it is entitled to the refund sought because a claim for refund is not ipso facto granted upon filing of the claim. 10. The power of taxation is an inherent attribute of sovereignty; the government chiefly relies on taxation to obtain the means to carry on its operations. Taxes are essential to its very existence; hence, the dictum that taxes are the lifeblood of the government. For this reason, the right of taxation cannot easily be surrendered. 11. Since taxes are what we pay for civilized society, or are the lifeblood of the nation, the law frowns against exemptions from taxation and statutes granting tax exemptions are thus construed strictissimi juris against the taxpayers and liberally in favor of the taxing authority. 12. Tax refunds partake of the nature of tax exemptions which are a derogation of the power of taxation of the State. Consequently, they are construed strictly against a taxpayer and liberally in favor of the State.-

DECISION CTA Case No. 9733 Page 5 of28 13. Thus, petitioner is charged with the heavy burden of proving that it has complied with and satisfied all the statutory and administrative requirements to be entitled to the tax refund. 14. Likewise, not only should petitioner establish that it is entitled to tax refund, it is also imperative that petitioner prove its compliance with the following: a. The registration requirement of a VAT taxpayer in compliance with Revenue Regulations No. 7- 2012 in relation to Section 236 (A), (B), (C) and (D) of the Tax Code; 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 Sections 113 and 114 of the Tax Code; c. Proof of compliance with the prescribed checklist of requirements to be submitted in cases involving a claim for VAT refund pursuant to Revenue Memorandum Order No. 53-1998 and Revenue Memorandum Circular No. 54-2014. Otherwise, there would be no sufficient compliance with the filing of an administrative application for tax 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. 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 Petition for Review; d. That the petitioner's alleged zero rated sales complied with the requirements set forth in Section 108 of the Tax Code; e. That the input taxes in the amount of Thirty Seven Million Three Hundred Ninety Three Thousand One Hundred Ninety Five Pesos (P37 ,393, 195.00) allegedly representing unutilized Input VAT were directly attributable to its zero rated sales and such have not been applied against any Output VAT and were not carried over to the succeeding taxable quarter or quarters;~

DECISION CTA Case No. 9733 f. That petitioner's administrative and judicial claims for tax refund was filed within the periods provided in Section 112 (A) and (C) of the Tax Code; g. That petitioner's local purchases and importation of goods and services were made in the course of its trade or business, properly supported by VAT invoices and/or official receipts under Sections 110 (A) (2) and 113 of the Tax Code; and h. The requirements as enumerated under Section 4-110-7 of Revenue Regulations No. 14-2005. 15. In the case at hand, for failure of petitioner to show that it has strictly complied with the conditions for the grant of the VAT refund/credit, petitioner is not entitled to claim for tax refund/credit. 16. Based on the foregoing, petitioner's claim for refund in the total amount of P10,582,022.34 has no bases in fact and in Jaw. Thus, the instant petition should be denied for lack of merit." The Pre-Trial Conference was set and held on May 8, 2018.10 In the meantime, Respondent's Pre-Trial Briefwas filed on April 30, 2018, 11 while petitioner's Pre-Trial Brief was submitted through private courier on May 4, 2018.12 On May 23, 2018, the Pre-Trial Order was issued, 13 thereby deeming the termination the Pre-Trial Conference. Thereafter, respondent filed the BIR Records for the instant case on May 25, 2018.14 The trial of the case proceeded. During trial, petitioner presented its documentary and testimonial evidence. It offered the testimony of its sole 10 Docket, Vol. 1, Notice of Pre-Trial Conference dated February 14, 2018, pp. 71 to 72; Docket, Vol. 1, Minutes of the hearing held on May 8, 2018, p. 169. II ld., Vol. 1, pp. 83 to 86. 12 Id., Vol. I, pp. 88 to 91. 13 Id., Vol. 1, pp. 173 to 177. 14 Id., Vol. 1, Compliance dated May 18,2019, pp. 178 to 180. ..........---

DECISION CTA Case No. 9733 witness, Ms. Analie M. Angeles, 15 former Vice President and Comptroller of petitioner. On September 18, 2018, petitioner filed its Formal Offer of Evidence. 16 Respondent filed his Comment (Re: Petitioner's Formal Offer of Evidence) on September 20, 2018.17 Thus, in the Resolution dated January 7, 2019, 18 the Court admitted petitioner's Exhibits. Meanwhile, in the Order dated September 20, 2018, 19 the instant case was transferred to this Court's First Division. For his part, respondent likewise presented his documentary and testimonial evidence. He offered the testimony of Ms. Catherine Obias,2� a Revenue Officer 1 of the BIR. Respondent filed his Formal Offer of Evidence through private courier on March 7, 2019. 21 Petitioner filed its Comment thereon on March 15, 2019.22 Thus, in the Resolution dated May 2, 2019,23 the Court admitted respondent's Exhibits, except for Exhibit "R-1-a", for being unmarked. On June 3, 20 19, petitioner filed a Manifestation, 24 through private courier, stating that it no longer intends to present its rebuttal evidence. Thus, in the Resolution dated June 4, 2019,25 the Court admitted petitioner's Manifestation; cancelled the supposed hearing for the presentation of petitioner's rebuttal evidence; and ordered both parties to submit their respective memoranda. 15 Docket, Vol. 1, Exhibit "P-111", pp. 209 to 219; Docket, Vol. 2, Minutes of the hearing held on, and Order dated, September 4, 2018, pp. 909 to 910. 16 Jd., Vol. 2, pp. 911 to 916. 17 Id., Vol. 2, pp. 917 to 920. 1s Jd., Vol. 2, pp. 926 to 927. 19 Id., Vol. 2, p. 921. 2o Id., Vol. 2, Exhibit "R-4", pp. 932 to 935; Docket, Vol. 2, Minutes of the hearing held on, and Order dated, March 5, 2019, pp. 949 to 950. " Id., Vol. 2, pp. 952 to 955. 22 Id., Vol. 2, pp. 957 to 958. 23 Id., Vol. 2, pp. 963 to 964. 24 Id., Vol. 2, pp. 965 to 967. 25 Id., Vol. 2, p. 971...........--

DECISION CTA Case No. 9733 Respondent filed his Memorandum on July 8, 2019,26 while petitioner failed to file its memorandum.27 The case was submitted for decision on July 29, 2019.28 ISSUES The sole issue for the Court's resolution is as follows, to wit: "Whether petitioner is entitled to refund of its unutilized Input VAT paid from January 1, 2015 to December 31, 2015 in the total amount of P10,582,022.34 consequential to its alleged zero- rated sales." 29 Petitioner's Arguments Petitioner argues that it has submitted all the required documents in support of its claim for tax refund, pursuant to Revenue Memorandum Circular (RMC) No. 54-2014; and that petitioner has fully complied with the provision of Section 108(B)(2) of the National Internal Revenue Code (NIRC) of 1997, as amended. Respondent's Arguments Respondent counter-argues that the petition must be dismissed for failure of petitioner to substantiate its administrative claim for refund; and that petitioner is not entitled to the claim for refund of alleged excess and unutilized input taxes. RULING OF THE COURT This Court shall determine first whether it has jurisdiction on the instant petition. Sections 7(a) and 11 of 26 Docket, Vol. 2, pp. 972 to 981. 27 Id., Vol. 2, Records Verification dated July 18, 2019 issued by the Judicial Records Division of this Court, p. 983. 2s Jd., Vol. 2, Resolution dated July 29, 2019, p. 985. 29 Id., Vol. 1, Issue, Pre-Trial Order dated May 23, 2018, p. 174. . , _ -

DECISION CTA Case No. 9733 Republic Act (RA) No. 112530, as amended by RA No. 928231 , provides as follows: "SEC. 7. Jurisdiction.- The CTA shall exercise: (a) Exclusive appellate jurisdiction to review by appeal, as herein provided: (1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relations thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue; XXX XXX XXX "SEC. 11. Who May Appeal; Mode of Appeal; Effect of Appeal. - Any party adversely affected by a decision, ruling or inaction of the Commissioner of Internal Revenue xxx may file an appeal with the CTA within thirty (30) days after the receipt of such decision or ruling or after the expiration of the period fixed by law_for actions as referred to in Section 7(a)(2) herein. Appeal shall be made by filing a petition for review under a procedure analogous to that provided for under Rule 42 of the 1997 Rules of Civil Procedure with the CTA within thirty (30) days from receipt of the decision or ruling or in the case of inaction as herein provided, from the expiration of the period fixed by law to act thereon. xxx." (Emphasis supplied) Based on the foregoing provisions, this Court has exclusive appellate jurisdiction, inter alia, to take cognizance of decisions involving claims for refund of any intemal revenue taxes and the concerned taxpayer or party adversely affected by said decision of respondent may file an appeal with this Court within thirty (30) days after the receipt of such decision. In the instant case, petitioner filed the instant Petition for Review on the letter of denial of its claim for input VAT refund dated November 9, 2017 issued by Ms. Teresita M. Angeles, 30 AN ACT CREATING THE COURT OF TAX APPEALS. 31 AN ACT EXPANDING THE JURISDICTION OF THE COURT OF TAX APPEALS (CTA), ELEVATING ITS RANK TO THE LEVEL OF A COLLEGIATE COURT WITH SPECIAL JURISDICTION AND ENLARGING ITS MEMBERSHIP, AMENDING FOR THE PURPOSE CERTAIN SECTIONS OR REPUBLIC ACT NO. 1125, AS AMENDED, OTHERWISE KNOWN AS THE LAW CREATING THE COURT OF TAX APPEALS, AND FOR OTHER PURPOSES. ~

DECISION CTA Case No. 9733 OIC-Assistant Commissioner for Large Taxpayers Service of the BIR which it received on November 16, 2017. Such is the final decision of the respondent on said claim for refund, hence, the instant case is within the jurisdiction of this Court. Requisites for the grant of refund under the law. Section 112 of the NIRC of 1997, as amended by Republic Act (RAJ No. 9337,32 provides as follows: "SEC. 112. Refunds or Tax Credits of Input Tax. - (A) Zero-Rated or Effectively Zero-Rated Sales. - Any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales under Section 106(A)(2)(a)(1), (2) and (b) and Section 108(8)(1) and (2), the acceptable foreign currency exchange proceeds 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 of properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales: XXX. XXX XXX XXX (C) Period within which Refund or Tax Credit of Input Taxes shall be Made.- In proper cases, the Commissioner shall grant a refund or issue a tax credit certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in accordance with Subsection (A) hereof. In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty 32 AN ACT AMENDING SECTIONS 27, 28, 34, 106, 107, 108, 109, 110, Ill, 112, 113, 114, 116, 117, 119, 121, 148, 151, 236, 237 AND 288 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES._.

DECISION CTA Case No. 9733 (30) days from the 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." Based on the foregoing provision, jurisprudence has laid down certain requisites which the taxpayer-applicant must comply with in order 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. that the claim is filed with the BIR within two years after the close of the taxable quarter when the sales were made;33 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 120 days from the submission of complete documents, the judicial claim has been filed with this Court, within 30 days from receipt of the decision or after the expiration of the said 120-day period;34 In relation to the taxpayer's output VAT: 3. the taxpayer is engaged in zero-rated or effectively zero-rated sales;35 4. for zero-rated sales under Section 106(A)(2)(a)(1), (2) and (b), and Section 108(B)(1) and (2), the 33 Intel Technology Philippines, Inc. us. Commissioner of Internal Revenue, G.R. No. 166732, April 27, 2007; San Roque Power Corporation us. Commissioner of Internal Revenue, G.R. No. 180345, November 25, 2009; and AT&T Communications Services Philippines, Inc. us. Commissioner of Internal Revenue, G.R. No. 182364, August 3, 2010. 34 Steag State Power, Inc. (Formerly State Power Development Corporation} us. Commissioner of Internal Revenue, G.R. No. 205282, January 14, 2019; Rohm Apollo Semiconductor Philippines us. Commissioner of Internal Revenue, G.R. No. 168950, January 14, 2015. 35 Intel Technology Philippines, Inc. us. Commissioner of Internal Revenue, supra; San Roque Power Corporation us. Commissioner of Internal Revenue, supra; and AT&T Communications Services Philippines, Inc. us. Commissioner of Internal Revenue, supra.--

DECISION CTA Case No. 9733 acceptable foreign currency exchange proceeds have been duly accounted for in accordance with BSP rules and regulations;36 With reference to the taxpayer's registration with the BIR: 5. the taxpayer is a VAT-registered person;37 As regards the taxpayer's input VAT being refunded: 6. the input taxes are not transitional input taxes;38 7. the input taxes are due or paid;39 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 directly and entirely attributable to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume;4o and 9. the input taxes have not been applied against output taxes during and in the succeeding quarters. 41 In cases filed before this Court, which are litigated de novo, party-litigants must prove every minute aspect of their case.42 Thus, it behooves petitioner to show compliance with each of the foregoing requisites. 36 Id. 37 Id. 38 Id. 39 Id. 40 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, supra; and San Roque Power Corporation vs. Commissioner ofInternal Revenue, supra. 41 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, supra; San Roque Power Corporation vs. Commissioner of Internal Revenue, supra; and AT&T Communications Services Philippines, Inc. vs. Commissioner of Internal Revenue, supra. 42 Edison (Bataan] Cogeneration Corporation vs. Commissioner of Internal Revenue, etseq., G.R. Nos. 201665 and 201668, August 30, 2017; Commissioner of Internal-

DECISION CTA Case No. 9733 Petitioner's administrative claim pertaining to the 1st and 2nd quarters of2015 has prescribed. The first requisite pertains to the filing of a claim for tax refund or tax credit 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 four (4) quarters of taxable year 2015, which closed on: (1) March 31, 2015 for the 1�t quarter thereof; (2) June 30, 2015 for the 2nd quarter; (3) September 30, 2015 for the 3rd quarter; and (4) December 31, 2015 for the 4th quarter. Counting two (2) years from the said dates, petitioner had until March 31, 2017, June 30, 2017, September 30, 2017, and December 31, 2017, respectively, within which to file its administrative claim for refund. Considering that petitioner's administrative claim for refund, covering the four (4) quarters of 2015, was filed with the BIR only on July 18, 2017,43 petitioner's right to claim for tax refund/credit of its alleged input VAT for the 1�t and 2nd quarters of 2015 has already prescribed. As a corollary, the refund claim pertaining to the 3rd and 4th quarters of 2015 was filed within the prescriptive period. Anent the prescribed portion of the instant refund claim, petitioner's sole witness, Ms. Angeles, testified, in effect, that petitioner attempted to file its administrative claim on March 24, 2017, but respondent refused to accept the same on the ground that it failed to submit complete documents as required in Annex "A", Section II ofRMC No. 54-2014.44 The Court, however, finds that even granting that the said testimony is true, the fact still remains that petitioner belatedly filed its administrative claim insofar as the 1st and Revenue us. Philippine National Bank, G.R. No. 180290, September 29, 2014; Commissioner of Internal Revenue us. United Salvage and Towage (Phils.), Inc., G.R. No. 197515, July 2, 2014; Dizon us. Court of Tax Appeals, et al., G.R. No. 140944, April 30, 2008; Atlas Consolidated Mining and Development Corporation us. Commissioner of Internal Revenue, G.R. No. 145526, March 16, 2007; and Commissioner of Internal Revenue us. Manila Mining Corporation, G.R. No. 153204, August 31, 2005. 43 Docket, Vol. 1, Exhibits "P-5" and "P-4", pp. 107 to 109, and 106, respectively. 44 Id., Vol. 1, Par. 4, Statement of Facts, Petition for Review, p. 11; Docket, Vol. 1, Par. 20, Exhibit "P-111", p. 212. ~

DECISION CTA Case No. 9733 2nd quarters of 2015 are concemed. After all, petitioner is indeed required to submit the complete documents in support of its refund application. To be clear, petitioner's compliance with the first requisite pertains only to the the 3rct and 4th quarters of 20 15. Correspondingly, this Court shall confine its further determination on whether petitioner complied with the other requisites only to these unprescribed periods. Petitioner's judicial claim was timely filed. The second requisite is to the effect that the judicial claim must have been filed within thirty (30) days from the receipt of respondent's decision or after the expiration of the 120-day period, as enunciated in Section 112(C) of the NIRC of 1997, as amended. Records reveal that the letter dated November 9, 2017, denying its administrative claim for tax refund/ credit, was received by petitioner on November 16, 2017.45 Counting thirty (30) days from November 16, 2017, petitioner had until December 16, 20 17, within which to file its judicial claim for refund. Since the instant Petition for Review was filed on December 14, 2017,46 petitioner's judicial claim was seasonably filed. Such being the case, petitioner fulfilled the above-stated second requisite. Petitioner failed to establish that it was engaged in zero- rated or effectively zero-rated sales during the 3rd and 4th quarters of2015. The third and fourth requisites require that the taxpayer is engaged in zero-rated or effectively zero-rated sales, and for zero-rated sales under Sections 106 (A)(2)(a)(1), (2) and (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 45 Docket, Vol. 1, Exhibit "P-8", pp. 19 to 20; Exhibit "R-3", BIR Records, pp. 323-324. 46 Id., Vol. 1, pp. 10 to 18.__..--

DECISION CTA Case No. 9733 been duly accounted for in accordance with the BSP rules and regulations. Section 108(B) of the NIRC of 1997, as amended, provides, in part, as follows: "SEC. 108. Value-added Tax on Sale of Services and Use or Lease of Properties. - XXX XXX XXX (B) Transactions Subject to Zero Percent (0%) Rate. - The following services performed in the Philippines by VAT- registered persons shall be subject to zero percent (0%) rate: (1) Processing, manufacturing or repacking of goods for other persons doing business outside the Philippines which goods are subsequently 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);" (Emphases supplied) 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),47 or simply, the services rendered should be other than ''processing, manufacturing or repacking goods ";48 2) The recipient of the services is a foreign corporation, and the said corporation is doing business outside the Philippines, or is a nonresident person not engaged in 47 Commissioner of Internal Revenue us. American Express International, Inc. (Philippine Branch), G.R. No. 152609, June 29, 2005. 48 Commissioner of Internal Reue nue us. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., G.R. No. 153205, January 22, 2007 . ........__

DECISION CTA Case No. 9733 business who is outside the Philippines when the services were performed;49 3) The service must be performed in the Philippinesso by a VAT-registered person; and 4) The payment for such services should be in acceptable foreign currency accounted for in accordance with BSP rules. 51 As for the first essential element, records reveal that based on the Certificate of Registration (MSB Registration No. 60-00106-0-00000) dated October 13, 2017, issued by the BSP, petitioner is authorized to operate as a "REMITTANCE and TRANSFER COMPANY (RTC) with a Type 'A' REMITTANCE AGENT (RA) with MONEY CHANGING (MC)/FOREIGN EXCHANGE DEALING (FXD) registration in the Philippines."52 Relative thereto, pursuant to the Memoranda of Agreement between petitioner and its clients, petitioner was required to perform "Distribution Fulfillment Services" or one that involves money remittance services to local beneficiaries in the Philippines for foreign-based customers.53 The services rendered by petitioner are certainly not in the same category as "processing, manufacturing or repacking ofgoods". Thus, petitioner satisfied the first essential element. Anent the second essential element, in order to be considered as a non-resident foreign corporation doing business outside the Philippines, each entity must be supported, at the very least, by both a Certification of Non- Registration of Corporation/Partnership issued by the Philippine Securities and Exchange Commission (SEC), and 49 Site! Philippines Corporation (Formerly Clientlogic Phils. Inc.) vs. Commissioner of Internal Revenue, G.R. No. 201326, February 8, 2017; Commissioner of Internal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., G.R. No. 153205, January 22, 2007; Accenture, Inc. vs. Commissioner of Internal Revenue, G.R. No. 190102, July 11,2012. �5 Commissioner of Internal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., supra; Commissioner of Internal Revenue vs. American Express International, Inc. (Philippine Branch}, G.R. No. 152609, June 29, 2005. 51 Commissioner of Internal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., supra; Commissioner of Internal Revenue vs. American Express International, Inc. (Philippine Branch), supra. 52 Docket, Vol. 1, Exhibit "P-2", p. 104. 53 Id., Vol. 1, Pars. 50 to 52, Exhibit "P-111", p. 2 1 6 . -

DECISION CTA Case No. 9733 proof of incorporation/registration in a foreign country (e.g., ArticlesI Certificate of Incorporation/Registration and/or Tax Residence Certificate). As a corollary, there must be no other indication which would disqualify said entity from- being classified as a non-resident foreign corporation. The Philippine SEC's Certification of Non-Registration of Corporation establishes that the recipient of the service has no registered business in the Philippines, and that it is not engaged in trade or business within the Philippines; while the certificateI articles of incorporation/association will prove that the said recipient of the service is indeed foreign. In this case, petitioner's witness, Ms. Angeles, testified that during the year 2015, petitioner rendered services to forty-seven (47) foreign corporations doing business outside the Philippines.54 However, the Court notes certain discrepancies in the names of the corporations stated in the supporting documents vis-a-vis the names of the entities as identified by petitioner's witness. Furthermore, not all corporations mentioned by petitioner's witness were duly supported with both SEC Certification of Non-Registration of Corporation/Partnership and proof of incorporation/registration in a foreign country. Thus, the Court did not consider the said corporations as non- resident foreign corporations doing business outside the Philippines, as shown in the table below: Articles of Association/ Certificate of SEC Registration/ Whether with Name of the Certificate Incorporation and/or Memorandum Entity as of other similar documents of Agreement Reason/ s for Identified by Ms. Angeles Non- Exhibit Document (MOAI or not Denial 55 1. AI Bader Registration No. Exchange P-64 56 P-1757 Commercial With MOA The registered name in the Commercial License License is "AI Bader Money Exchange"; while the same was identified by the witness as "AI Bader Exchange". 54 Docket, Vol. I, Par. 52, Exhibit "P-111", pp. 216 to 217. 55 Inconsistency in the name of the entity or no SEC Certificate of Non-Registration or Certificate of Registration/Incorporation and/or other similar documents. 56 Id., Vol. 1, p. 122. 57 Id., Vol. 1, pp. 223 to 239. ,.~�-�--

DECISION CTA Case No. 9733 2. AI Ahalia P-6558 P-1859 Commercial With MOA The registered name Money License Exchange in the Certificate of Non-Registration and Commercial License is "Alhalia Money Exchange Bureau"; while the same was identified by the witness as "AI Ahalia Money Exchange". 3. Alfa P:6660 P-1961:' CommercillJ. WithMOA Exchange P-6762 4. Alfalah License : c" ";" Exchange P-2o63 Commercial With MOA The registered name License With MOA in the Certificate of Non-Registration, Memorandum - Commercial License of - and Memorandum of Incorporation Incorporation is "Alfalah Exchange 5. AI Ghurair P-6864 P-2165 Commercial Company"; while the Exchange License same was identified by the witness as "Alfalah 6. Arab P-6966 P-2267 Registration Exchange". Exchange Co. Certificate Of The registered name With Limited in the Commercial Liability License is "AI Ghurair Company International Exchange"; while the 7. National P-7o68 P-2369 Registration same was identified by Finance & Certificate Of the witness "AI Exchange Co. With Limited Ghurair Exchange". Liability Company The registered name in the Certificate of Non-Registration and Registration Certificate Of With Limited Liability Company is "Arab 1 Exchange Co. W.L.L."; I while the same was identified by the witness as "Arab Exchange Co." The registered name in the Registration Certificate Of With Limited Liability Company is "National Finance & Exchange Co. W.L.L.," while the same was identified by the witness as 58 Docket, Vol. I, p. 123. 59 Id., Vol. 1, pp. 240 to 249. 6o Id., Vol. I, p. 124. 61 Id., Vol. 1, pp. 250 to 276. 62 Id., Vol. 1, p. 125. 63 Id., Vol. 1, pp. 277 to 324. 64 Id., Vol. I, p. 126. 65 Id., Vol. 1, pp. 325 to 343. 66 Id., Vol. 1, p. 127. 67 Id., Vol. 1, pp. 344 to 345. 68 Id., Vol. 1, p. 128. 69 Id., Vol. 1, pp. 346 to 347. .,...........--

DECISION CTA Case No. 9733 Page 19 of28 Exchange 10. Arab Link P-7373 Money Transfer Association/ Cc of Registration/ P-7474 Incorporation and/ or 14. Economic P-7780 License is "AI Fardan Exchange P-7882 !Exchange LLC"; while 15. A1 Fardan Exchange 16. Federal P-7984 Exchange 17. GCC P-8o85 P-3086 Exchange 10 Docket, Vol. 1, p. 129. 71 !d., Vol. I, pp. 348 to 373. 72Jd., Vol. 1,p. 130. 73 !d., Vol. I, p. 131. 74 !d., Vol. 1, p. 132. 1s Id., Vol. 1, pp. 374 to 401. 76 Id., Vol. 1, p. 133. 77 Id., Vol. 1, pp. 402 to 417. 78 !d., Vol. 1, p. 134. 79 Id., Vol. 1, pp. 418 to 440. 80 !d., Vol. 1, p. 135. 81 /d., Vol. I, pp. 441 to 455. 82 Id., Vol. 1, p. 136. 83 Id., Vol. 1, pp. 456 to 478. 84 !d., Vol. 1, p. 137. 85 Docket, Vol. 1, p. 138. 86 /d., Vol. 1, pp. 479 to 499. _....

DECISION CTA Case No. 9733 18. Haw! Al P-81 87 P-31 88 Limited With MOA Private Limited Khaleej Company Company and Exchange P"3~;o Memorandum Memorandum and <.; and Articles of Articles of Association 19. Lart . P-8289" Association . . WithMO""'A; is "GCC Exchange P - 8 3 91 - Private Limited"; Exchange Trading License while the same was identified by the Establishment Corl1Iljercial ;, .. � �; witness as "GCC License.;~ Exchange". 20. Orient - - The registered name Exchange Co. in the Certificate of Non-Registration is "Haw! AI Khaleei Exhange"; while the same was identified by the witness as "Haw! AI Khaleej Exchange". . ~,2 . '*��~.�r. �.. The registered name in the Certificate of Non-Registration is "Orient Exchange Co. LLC"; while the same was identified by the witness as "Orient Exchange Co." No Articles of Association/ Certificate of Registration/ Incorporation and/ or other similar documents 21. Premier P-8492 - - - The registered name International in the Certificate of Exchange Non-Registration is "Premier International Exchange Est."; while the same was identified by the witness as "Premier International Exchange". No Articles of Association/ Certificate of Registration/ Incorporation and/ or other similar documents 22.Sultan P-8s93 P-3394 �� Commercial"� WithMOA .A. Althabab Exchane:e Li8ense � .. : ., J . �. . "; ;, ����� ' 87 Id., Vol. 1, p. 139. 88 Id., Vol. 1, p. 500; Docket- Vol. 2, pp. 501 to 520. 89 Id., Vol. 1, p. 140. 90 Id., Vol. 2, pp. 521 to 534. 91 Id., Vol. 1, p. 141. 92 Id., Vol. 1, p. 142. 93 Docket, Vol. 1, p. 143. 94 Id., Vol. 2, pp. 535 to 553. ~

DECISION CTA Case No. 9733 23. Smart P-8695 Exchange 24. P-8796 Express P-8898 25. Intel Express Giorgia 26. P-8999 Exchange P-90101 27. Filipino Television P-91102 P-36103 P-92104 International Trade Agency DelaCruz 30. Small P-93106 World Financial Services Group !Articles of 95 Id., Vol. 1, p. 144. 96 Id., Vol. 1, p. 145 97 Id., Vol. 2, pp. 554 to 573. 98 Id., Vol. 1, p. 146. 99 Id., Vol. 1, p. 147. too Id., Vol. 2, pp. 574 to 596. to1 Id., Vol. 1, p. 148. to2Jd., Vol. l,p. 149. to3 Id., Vol. 2, pp. 597 to 616. 10� Id., Vol. 1, p. 150. tos Id., Vol. 2, pp. 617 to 623. to6 Id., Vol. 1, p. 151. 101 Id., Vol. 2, pp. 624 to 731.-----

DECISION CTA Case No. 9733 the witness as "Small World Financial Services Group". 31. P-94 108 - - - The registered name Joyalukkas in the Certificate of Exchange Non-Registration is "Joyalukkas Exchange Co. WLL"; while the same was identified by the witness as "Joyalukkas Exchange". No Articles of AssociationI Certificate of Registration/ Incorporation and/ or other similar documents 32. Al-Sadd P-95109 P-39110 Commercial - The registered name Exchange Registration in the Certificate of Data Non-Registration is "Al-Sadd Exchange Company"; the registered name in the Commercial Registration Data is "Aisad Money- exchange"; while the same was identified by the witness as "Al- Sadd Exchange". 33. Al-Jazeera P-96 111 P-40112 Memorandum - The registered name Exchange of Association in the Memorandum of Association is "Al- Jazeera Exchange Company"; while the same was identified by the witness as "Al- Jazeera Exchange". 34. Habib P-97 113 P-41 114 Commercial - The registered name Qatar Registration International Data in the Commercial Exchange Registration Data is "Habib Qatar AIDowaliya for Exchange"; the registered name in the Certificate of Non- Registration is "Habib Qatar International Exchange Ltd."; while the same was identified by the witness as Habib Qatar International Exchange". JOB Docket, Vol. 1, p. 152. 109 Id., Vol. 1, p. 153. no ld., Vol. 2, pp. 732 to 734. 111 Id., Vol. 1, p. 154. 112 Id., Vol. 2, pp. 735 to 760. 113 Id., Vol. 1, p. 155. 114 Id., Vol. 2, pp. 761 to 763. a.---

DECISION CTA Case No. 9733 Page 23 of28 35. Union P-98115 - - - The registered name Exchange in the Certificate of Company Non-Registration is "Union Exchange Company WLL"; while the same was identified by the witness as "Union Exchange Company". No Articles of Association/ Certificate of Registration/ Incorporation and/ or other similar documents 36. AI Dar For P-99116 P-42117 Articles of - '!'he registered name Exchange Association in the Articles of Works Association is "ALDAR Exchange Company"; while the same was identified by the witness as "AI Dar For Exchange Works". 37. !-Remit P-1oo118 P-43119 Certificate of - The registered name Global Incorporation in the Certificate of Remittance on Change of Incorporation on Ltd. Name Change of Name is "Iremit Global Remittance Limited"; while the same was identified by the witness as "1-Remit Global Remittance Ltd." 38. Lucky Star P-101120 P-44121 Memorandum - The registered name Management and Articles of in the Certificate of Association Non-Registration is "Lucky Star Management Ltd"; the registered name in the Articles of Association "Lucky Star Management Limited"; while the same was identified by the witness as "Lucky Star Management". 11s Docket, Vol. 1, p. 156. 116 Id., Vol. 1, p. 157. m Id., Vol. 2, pp. 764 to 795. 11s Id., Vol. 1, p. 158. 119 Id., Vol. 2, pp. 796 to 816. 12o Id., Vol. 1, p. 159. 121 Id., Vol. 2, pp. 817 to 826.__.

DECISION CTA Case No. 9733 39. Hwa Kung P-102 122 P-45123 Articles of - The registered name Hong and Incorporation Company in the Certificate of Non-Registration is "Hwa Kung Hong and Company Limited"; the registered name in the Articles of Incorporation is "Hwa Kung Hong & Co., Ltd."; while the same was identified by the witness as "Hwa Kung Hong and Company". 40. !remit P-103124 - - - The registered name Global in the Certificate of Remittance Non-Registration is Italy !remit Global Remittance Limited (Italy), while the same was identified by the witness as !remit Global Remittance Italy No Articles of Association/ Certificate of Registration/ Incorporation and/ or other similar documents 41. Laxmidas P-104 125 - - - The registered name Tharia Ved in the Certificate of Exchange Non-Registration is "Laxmidas Tharia Ved Exchange Co LLC"; while the same was identified by the witness as "Laxmidas Tharia Ved Exchange". No Articles of Association/ Certificate of Registration/ Incorporation and/ or other similar documents 42. Worlwide P-105126 - - - No Articles of Exchange Pty. Association/ Certificate Ltd. of Registration/ Incorporation and/ or other similar documents 43. P-106127 P-46128 Certificate of - The registered name International Incorporation Remittance in the Certificate of (Canada) Non-Registration is "International 122 Docket. Vol. 1, p. 160. 123 Id., Vol. 2, pp. 827 to 837. 124Jd., Vol. 1,p. 161. 12s Jd., Vol. I, p. 162. 126 Id., Vol. 1, p. 163. 121 Jd., Vol. 1, p. 164. 12s Id., Vol. 2, pp. 838 to 850. - - - -

DECISION CTA Case No. 9733 Remittance (Canada) Ltd."; while the same was identified by the witness as "International Remittance (Canada)" 44. I- P-107129 P-47130 Memorandum - The registered name Remittance and Articles of Singapore Pte. in the Memorandum Ltd. Association and Articles of Association is "lremit Singapore Pte Ltd"; while the same was identified by the witness as "International Remittance (Canada)". 45. KK I-Remit P-108131 P-48132 No English - The registered name Japan translation of the attached in the Authentication document. is "1-Remit Japan"; while the same was identified by the witness as "KK I- Remit Japan". 46. GCC P-109 133 P-49134 Certificate of With MOA No English translation Exchange UK Incorporation - of the attached on Change of document. Name The registered name in the Certificate of Non-Registration is "GCC Exchange UK Ltd."; the registered name in the Certificate of Incorporation on Change of Name is "GCC Exchange UK Limited"; while the same was identified by the witness as "GCC Exchange UK". 47. Luck P-110135 - - Travel Ltd. As a result, the Court finds that out of petitioner's 47 foreign clients, only the following twelve (12) entities shall be considered as non-resident foreign corporations doing business outside the Philippines: 129 Docket, Vol. 1, p. 165. 130 Id., Vol. 2, pp. 851 to 879. 131 Id., Vol. 1, p. 166. 132 Id., Vol. 2, pp. 880 to 890. 133 !d., Vol. 1, p. 167. 134 Id., Vol. 2, pp. 903 to 905. 135 Id., Vol. 1, p. 168. c:a,..--

DECISION CTA Case No. 9733 Articles of SEC Association/Certificate of Certificate Registration/Incorporation of Name of the Entity Non- and/or other similar 1. Alfa Exchange Registratio documents n Exhibit Document/s "P-66" No. "P-19" Commercial License 2. Al Nee! Exchange "P-71" "P-24" Commercial License 3. Day Exchange LLC "P-74" "P-25" Commercial License 4. Delma Exchange "P-75" "P-26" Commercial License 5. Deniba International "P-76" "P-27" Commercial Exchange License 6. Economic Exchange Centre "P-77" "P-28" Commercial "P-32" License 7. Lari Exchange "P-82" Commercial Establishment License 8. Sultan Althabab Exchange "P-85" "P-33" Commercial . License ' I 9. Gulf Express Exchange "P-87" "P-34" Commercial License 10. Universal Exchange "P-89" "P-35" Commercial Center License i ' 11. Leela Megh Exchange "P-91" "P-36" Commercial LLC License 12. International Trade "P-92" "P-37" Certificate of Agency Dela Cruz Membership of the Chamber of Commerce of the District of Bonn/Rhine-Sieg Petitioner complied with the above-stated second essential element with respect to the foregoing enumerated twelve (12) foreign entities. As for the third essential element, i.e., that the subject services were performed in the Philippines, except for the International Trade Agency Dela Cruz, petitioner was able to show its compliance with the said essential element with reference to the said enumerated foreign entities. This is so because petitioner has shown that it has individually entered into a Memorandum of Agreement with the remaining eleven...__

DECISION CTA Case No. 9733 (11) foreign entities,l36 wherein petitioner obligated itself to perform "Distribution Fulfillment Services" or one that involves money remittance services to local beneficiaries in the Philippines for foreign based customers. In any event, the fourth essential element was not complied with because petitioner did not submit any proof that the services rendered to foreign clients were paid for "in acceptable foreign currency ... and accounted for in accordance with the rules and regulations of the BSP". 137 Such being the case, petitioner failed to fulfill the fourth requisite for the successful prosecution of the instant refund claim. Needless to state, it is only when the sales of a VAT- registered person are zero-rated or effectively zero-rated that he/she/it may have the option of applying for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales.l3B Considering petitioner's failure to establish its zero-rated or effectively zero-rated sales for the subject periods, the instant Petition for Review must already be denied. Consequently, it becomes unnecessary to look into petitioner's compliance with the other remaining requisites. Finally, it must be emphasized that actions for tax refund or credit, as in the instant case, are in the nature of a claim for exemption and the law is not only construed in strictissimi juris against the taxpayer, but also the pieces of evidence presented entitling a taxpayer to an exemption are strictissimi scrutinized and duly proven. 139 Thus, the burden is on the 136 Docket, Vol. 1, Exhibit "P-19", Docket- Vol. 1, pp. 251 to 263; Exhibit "P-24", pp. 349 to 362; Docket, Vol. 1, Exhibit "P-25", pp. 375 to 387; Docket, Vol. 1, Exhibit "P- 26", pp. 403 to 413; Docket, Vol. 1, Exhibit "P-27", pp. 419 to 431; Docket, Vol. 1, Exhibit "P-28", pp. 442 to 451; Docket, Vol. 2, Exhibit "P-32", pp. 522 to 529; Docket, Vol. 2, Exhibit "P-33", pp. 536 to 547; Docket, Vol. 2, Exhibit "P-34", pp. 555 to 566; Docket, Vol. 2, Exhibit "P-35", pp. 575 to 584; and, Docket, Vol. 2, Exhibit "P-36", pp. 598 to 608. 137 Refer to Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No. 166732, April 27, 2007. 138 Coca-Cola Bottlers Philippines, Inc. vs Commissioner of Internal Revenue, G.R. No. 222428, July 19, 2018. 139 Atlas Consolidated Mining and Development Corporation vs. Commissioner of Internal Revenue, G.R. No. 159490, February 18, 2008. """'---

DECISION CTA Case No. 9733 taxpayer to show that he/she/it has strictly complied with the conditions for the grant of the tax refund or credit. 140 WHEREFORE, in light of the foregoing considerations, the instant Petition for Review is DENIED for lack of merit. SO ORDERED. ~~�;: ~....,.oec.~A4"'-�- - CATHERINE T. MANAHAN Associate Justice WE CONCUR: Presiding Justice CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. Presiding Justice 140 Commissioner of Internal Revenue vs. San Roque Power Corporation, G.R. Nos. 187485, 196113, and 197156, February 12, 2013.