MARUBENI PHILIPPINE CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION ************* MARUBENI PHILIPPINES C.T.A. CASE NO. 7223 CORPORATION, Members: Petitioner, -versus- ACOSTA, Chairperson BAUTISTA, and CASANOVA, JJ. COMMISSIONER OF INTERNAL Promulgated: . REVENUE, OEC1 5 2009 /J : ~~pi'Y\ ~ Respondent. x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -~- : - ~- ~ -x DECISION CASANOVA, J.: This case is a claim for refund or issuance of a tax credit certificate in the amount of P11,139,650.19 allegedly representing petitioner's unutilized excess input value-added tax (VAT) on purchases of capital goods and domestic purchases of goods and services directly attributable and/or allocable to its zero-rated sales for the four quarters of taxable year 2003. Petitioner is a domestic corporation organized and existing under the laws of the Republic of t he Ph ilippines, with principal office located at the gth Floor, L.V. Locsin Buildi ng, Ayala Avenue corner Makati Avenue, Makati City. It is primarily engaged in the business of buying, selling, distributing,

DECISION goods, commodities, wares and merchandise of every kind and description, and to enter into all kinds of contracts for the export, import, purchase, acquisition, sale at wholesale and other disposition for its own account as the principal or in representative capacity as manufacturer's representative, merchandise broker, indentor, commission merchant, factors or agents, upon consignment of all kinds of goods, wares, merchandise or products whether natural or artificial. As such, it is registered with the Bureau of Internal Revenue (BIR) as a VAT taxpayer in accordance with Section 236 of the National Internal Revenue Code of 1997 (the "Tax Code''), with Taxpayer Identification No. 004-519-222-000 and BIR Certificate of Registration bearing RDO Control No. 8RC0000015925. 1 Respondent is the duly appointed Commissioner of Internal Revenue empowered to perform the duties of said office including, among others, the power to decide, approve and grant refunds or tax credits of erroneously or excessively paid taxes. 2 For the period beginning the first quarter to the fourth quarter of 2003, petitioner filed with the BIR, its original Quarterly VAT Returns (BIR Form No. 2550Q), and amended Quarterly VAT Returns within the period provided under the Tax Code, as follows\~:z... 1 Pars. 1.1, 1.3 and 1.4, Admitted Facts, JSFI, Division Docket, pp. 83-84

Ut:U!::>lUN Period Original Return Exhibit Amended Return Exhibit 1st Quarter April 23 2003 October 17 2003 (1st ) B I B-1 c 2nd Quarter July 25 2003 April 14 2005 (2nd) E I E-1 October 10 2005 (3'd) D 3rd Quarter October 27 2003 October 17 2003 (1st) 4th Quarter January 26 2004 HI H-1 April 14 2005 (2nd) u October 10 2005 (3 'd) J I J-1 F April14 2005(1st) October 10 2005 (2nd) G I G-1 April14 2005(1st) v October 10 2005 (2nd) I I I-1 w K I K-1 X In its amended Quarterly VAT Returns for the four quarters of 2003, petitioner reflected VAT zero-rated sales in the amount of P166,957,052.16, taxable sales in the amount of P13,419,573.81 with the corresponding output VAT of P1,341,957.39 and excess input VAT of P11,167,802.09, broken down as follows: Period Zero-Rated Sales Taxable Sales Output VAT Input VAT Excess Input 1st Quarter p 30,757,850.52 p 11,251,123.63 p 1,125,112.36 p 2 749 892.90 VAT 2nd Quarter 3rd Quarter 30,135,727 .65 531,105.42 53,110 .55 2 487 476.72 p 1 624 780.54 4th Quarter 37,609,307.49 477,469 .09 47,746 .91 3 073 509.10 2 434 366.17 68,454,166.50 1,159 ,875 .67 115,987.57 4 198 880.76 3 025 762.19 Total 4 082 893.19 P166,957,052.16 P13,419,573.81 P1,341,957.39 P12,509,759.48 P11,167,802.09 On April 20, 2005, petitioner filed a letter with the BIR requesting for the refund or issuance of a tax credit certificate in the amount of P11,139,650.19 out of the total excess input VAT of P11,167,802.09 reported in its VAT return for the four quarters of 20034� The claimed amount of P11,139,650.19 allegedly represents unutilized excess input VAT attributable t9l-

DECISION to petitioner's zero-rated sales and capital goods purchased for the four quarters of 2003. Due to respondent's inaction on its claim, petitioner filed the instant Petition for Review before this Court on April 21, 2005. Respondent, in his Answer to the Petition for Review, interposed the following Special and Affirmative Defenses: 4. Petitioner's alleged claim for issuance of tax credit certificate is still subject to administrative routinary investigation/examination by the respondent's Bureau; 5. Taxes paid and collected are presumed to have been made in accordance with law, hence, not refundable; 6. Petitioner's claim for refund or issuance of tax credit certificate in the amount of P11,139,650.19, as alleged unutilized input VAT paid on its domestic purchases of goods and services for the period January 1, 2003 to December 31, 2003 were not fully substantiated/documented; 7. In an action for refund/credit, the burden of proof is on the petitioner to establish its right to refund and failure to adduce sufficient proof is fatal to the claim for tax refund/credit; 8. Petitioner's sales of goods and services to various alleged clients do not qualify as zero-rate VAT; 9. It is incumbent upon the latter to show that it has complied with the provisions under Section 204 (c) in relation to Section 229 of the Tax Code, otherwise, its failure to prove the same is fatal to its claim for refund; 10. Claims for refund are construed strictly against the claimant for the same partake the nature of exemption from taxation ( Commissioner of Internal Revenue vs. Ledesma, 31 SCRA 95} and as such, they are looked upon with disfavor (Western Minolco Corp. vs. Commissioner of I nternal Revenue, 124 SCRA 1211).f!P... 1406

DECISION To buttress its claim, petitioner presented documentary and testimonial evidence. Respondent, on the other hand, was declared to have waived his right to present evidence. 5 With the admission of petitioner's Memorandum, sans respondent's Memorandum, the case was submitted for decision on December 24, 2008 . The issues6 posed for this Court's resolution are as follows: 1. Whether or not petitioner generated zero-rated sales for the period beginning the 1st quarter to the 4th quarter of 2003 in the total amount of P139,257,052.16. 2. Whether or not petitioner's zero-rated sales of goods to non-resident entities for the period beginning the 1st quarter to the 4th quarter of 2003 were paid for in acceptable foreign currency inwardly remitted and duly accounted for in accordance with the regulations of the Bangko Sentral ng Pilipinas. 3. Whether or not petitioner generated zero-rated sales of goods to entities that are registered with the Philippine Economic Zone Authority CPEZA'') for the period beginning the 1st quarter to the 4th quarter of 2003. 4. Whether or not the amount of P11,139,650.19 representing unutilized/excess input VAT paid by petitioner for the period beginning the 1st quarter to the 4th quarter of 2003 is attributable to its zero-rated sales and purchases of capital goods. 5. Whether or not the amount of Pll, 139,650.19 representing unutilized/excess input VAT paid by petitioner for the period beginning the 1st quarter to the 4th quarter of 2003 which is attributable to its zero-rated sales and purchases of capital goods was not utilized or applied against its output VAT liabilities for the subsequent taxable quarters. 6. Whether or not petitioner's claim for refund of alleged unutilized input VAT for the 1st quarter to the 4th quarter of 2003 is substantiated by documentary evidence.~

UtUSlON 7. Whether or not petitioner is entitled to the refund or issuance of a tax credit certificate in the amount of P11,139,650.19 representing unutilized/excess input VAT paid by petitioner for the period beginning the 15t quarter to the 4th quarter of 2003. All of the above issues may be simplified into: Whether or not petitioner is entitled to the refund or issuance of a tax credit certificate in the amount of P11,139,650.19 representing unutilized/excess input VAT beginning the first quarter to the fourth quarter of taxable year 2003 . Petitioner anchors its claim on Section 110 in relation to Sections 112(A) and (8) of the Tax Code, which are all quoted below for easy reference: "SEC. 110. Tax Credits. - (8) Excess Output or Input Tax.-If at the end of any taxable quarter the output tax exceeds the input tax, the excess shall be paid by the VAT-registered person. If the input tax exceeds the output tax, the excess shall be carried over to the succeeding quarter or quarters. Any input tax attributable to the purchases of capital goods or to zero-rated sales by a VAT-registered person may at his option be refunded or credited against other internal revenue taxes, subject to the provisions of Section 112. "SEC. 112. Refunds or Tax Credits ofInput Tax.- 4 , " 1"1 "(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 and regulations of the Bangko Sentral

Ut:U::,lUI'I 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 attributable to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales. "(B) Capital Goods. -A VAT-registered person may apply for the issuance of a tax credit certificate or refund of input taxes paid on capital goods imported or locally purchased to the extent that such input taxes have not been applied against output taxes. The application may be made only within two (2) years after the close of the taxable quarter when the importation or purchase was made. The subject claim of P11,139,650.19 allegedly consists of input VAT attributable to zero-rated sales and input VAT attributable to capital goods purchased. We shall rule first on petitioner's claimed input VAT attributable to zero-rated sales. Section 112(A) of the Tax Code, as aforequoted, allows the refund or tax credit of unutilized excess input VAT attributable to zero-rated or effectively zero-rated sales subject to the taxpayer's compliance with the following requisites: 1. there must be zero-rated or effectively zero-rated sales; 2. that input taxes were incurred or paid; 3. that such input taxes are attributai!J=! to.' zero-rated or effectively zero-rated sales; � "i; � 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

( Ut:U::>lUN Anent the first requisite, the Court-commissioned Independent CPA, Mr. Ernesto T. Diaz of R.S. Bernaldo & Associates, noted that the amount of P166,957,052.16 treated by petitioner as zero-rated sales comprised of the following: 7 Nature of Sales Amount Export Sales to Marubeni Tokyo - zero-rated P101,939 439.49 Zero-rated sales/commissions p 757 314.54 a. Residents - PEZA entities 1,768 224.40 Sale of goods p 2,525 538.94 Collected Commissions Subtotal b. Non-residents p 23 016 805.76 Sale of goods 39 475 267.97 Collected Commissions p 62 492 073.73 Subtotal Total P166,957,052.16 The ICPA stated that petitioner's export sales to Marubeni Corporation- Tokyo amounting to P101,939,439.49 arose from petitioner's sale of rubber protectors to its parent company, Marubeni-Tokyo, a non-resident foreign corporation. Petitioner maintains that since these export sales were paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas, the same are subject to zero percent (0%) VAT pursuant to Section 106(A)(2)(a)(l) of the Tax Code, which states: SEC.106. Value-Added Tax on Sale of Goods or Properties.- "(A) Rate and Base of Tax.- x x x XXX XXX XXX~

Ut:Ll::>lUI'J "(2) The following sales by VAT-registered persons shall be subject to zero percent (0%) rate: "(a) Export Sales. - The term 'export sales' means: "(1) The sale and actual shipment of goods from the Philippines to a foreign country, irrespective of any shipping arrangement that may be agreed upon which may influence or determine the transfer of ownership of the goods so exported and paid for in acceptable foreign currency or its equivalent in goods or services, and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP)." Based on the foregoing provisions of Section 106(A)(2)(a)(1) of the Tax Code, in relation to Section 113(A) of the same Code and Section 4.108-1 of Revenue Regulations No. 7-95, any person claiming VAT zero-rated direct export sales must present at least three (3) types of documents, to wit: a) the sales invoice as proof of sale of goods; b) 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 c) 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. In other words, only export sales supported by these documents shall qualify for VAT zero-rating under Section 106(A)(2)(a)(l) of the Tax Code. Further, the sales invoices supporting the export sales must be registered with the BIR and contain all the required information under the law and regulations, such as the imprinted word "zero-rated" and the taxpayer's TIN-VAT number:.t:iJ- 1411

Ut:Ll::,lUN While petitioner satisfactorily met the first requirement as it presented sales invoices8 duly stamped with the phrase "zero-rated sales", however, petitioner failed to comply with the equally significant second and third requisites. Without the bills of lading or airway bills, the export declarations9 submitted by petitioner are insufficient to prove that there was actual shipment of petitioner's goods from the Philippines to Tokyo, Japan. Regarding the third requisite, the ICPA noted in its Final Report dated February 19, 2007 10 that the foreign currency proceeds of petitioner's export sales to Marubeni Tokyo for the year 2003 were partially offset against the petitioner's payables to Marubeni Tokyo through the Mutual Account Ledger and partially inwardly remitted and accounted for in accordance with the rules and regulations of the SSP. In support thereof, petitioner submitted bank credit advices, bank statements and mutual account ledgers for the same period. 11 However, the Court finds the preceeding documents insufficient. In Revenue Memorandum Circular (RMC) No. 42-2003 dated July 15, 2003 entitled "Clarifying Certain Issues Raised Relative to the Processing of Claims for Value-Added Tax (VAT Credit/Refund, Including Those Filed with the Tax and Revenue Group, One-Stop Shop Inter-Agency Tax Credit an~ 8 Included in Exhibits "JJJ-l" to "JJJ-20", "KKK- I" to "KKK-24", "LLL-1" to "LLL-26"& "MM M- 1 .4 1 'J 1" to "MMM-28" 9 Included in Exhibits "JJJ-1" to "JJJ-20", "KKK-I" to "KKK-24", "LLL- 1" to "LLL-26"& "MMM- 1" to "MMM-28"

DECISION Duty Drawback Center, Department of Finance (OSS) by Direct Exporters, the documents required in an offsetting arrangement were enumerated, thus: Q-8: With the full liberalization of the BSP rules on foreign exchange and trade transactions (CB Circular No. 1389 dated April 13, 1993 enunciated in RMC No. 57-97), the BIR requirement for full documentation of proofs of inward remittances of export proceeds should no longer be enforced. Accordingly, what should be the acceptable documentary requirements in the processing of claims for TCC/refund, specifically on offsetting arrangements? A-8: In the case of offsetting arrangements, the following documents should be required: a. Import documents which created liability accounts in favor of the foreign parent or affiliated company; b. Other contracts with the foreign or affiliated company that brought about the liabilities which were offset against receivables from export sales; c. Evidence of proceeds of loans, in case the claimant has received loans or advances from the foreign company; d. Documents or correspondence regarding offsetting arrangements; e. Confirmation of the offsetting arrangements by the heads of the business organizations involved; f. Documents to prove actual export of goods; g. Documents to prove that the sales are zero-rated sales. Petitioner should have submitted documents establishing the existence of its foreign currency payables to Marubeni Tokyo such as those specified under letters "a" to "c" of RMC No. 42-2003, namely: a) import documents which created liability accounts in favor of the foreign parent or affiliated company; b) other contracts with the foreign or affiliated company that brought about the liabilities which were offset against receivables from export

received loans or advances from the foreign company. Likewise, petitioner should have submitted documents or correspondence regarding the offsetting arrangements and confirmation of the offsetting arrangements by the heads of both petitioner and Marubeni Tokyo. Without clear and convincing proof showing how much of petitioner's export sales were offset against its payables to Marubeni Tokyo and how much thereof were �inwardly remitted and accounted for in accordance with the BSP rules and regulations, petitioner's reported export sales of P101,939,439.49 shall be denied VAT zero rating. Likewise, petitioner's sales of goods to non-resident entities in the amount of P23,016,805.76 shall be denied VAT zero-rating as no evidence was adduced by petitioner to prove that the same can be classified as zero- rated sales. As to the VAT zero-rating of its collected commissions from non- residents in the amount of P39,475,267.97, petitioner relies on Section 108(8)(2) of the Tax Code, which provides as follows: "SEC. 108. Value-added Tax on Sale of Services 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 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

DECISION "(2) Services other than those mentioned in the preceding paragraph, 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);(emphasis supplied) To substantiate the commissions it earned and collected from non- residents, petitioner submitted invoices, 12 credit remittances, bank statements and related document vouchers 13 . However, these sales of services were not duly supported by VAT official receipts in violation of Section 113(A) in relation to Section 108(C) of the Tax Code. Further, no evidence was presented to prove the fact that the non-resident clients to whom petitioner renders services are clients doing business outside the Philippines. In the case of Commissioner ofInternal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc.,14 the Supreme Court held that another essential condition for qualification to VAT zero-rating under Section 108(8)(2) [then Section 102(b)(2)] is that the recipient of such services is doing business outside the Philippines. We quote hereunder the pertinent portion of the said decision: "The Tax Code not only requires that the services be other than "processing, manufacturing or repacking of goods" and that payment for such services be in acceptable foreign currency accounted for in accordance with BSP rules. Another essential condition for qualification to zero-rating under Section 102(b)(2) is that the recipient of such services is doing business outside the Philippines. While this requirement is not expressly stated in the second paragraph of Section 102 (b), this is clearly provided in the first paragraph of Section 102(b) where the listed services must be "for other persons doin~ 12 Exhibits "SSS-1 " to "SSS-42 1" 13 Exhibits "TTT-1 " to "TTT-319"

Ut:Ll::,lUN business outside the Philippines". The phrase "for other persons doing business outside the Philippines" not only refers to the services enumerated in the first paragraph of Section 102(b), but also pertains to the general term "services" appearing in the second paragraph of Section 102(b). In short, services other than processing, manufacturing, or repacking of goods must likewise be performed for persons doing business outside the Philippines. This can only be the logical interpretation of Section 102(b)(2). If the provider and recipient of the "other services" are both doing business in the Philippines, the payment of the foreign currency is irrelevant. Otherwise, those subject to the regular VAT under Section 102(a) can avoid the VAT by simply stipulating payment in foreign currency inwardly remitted by the recipient of services. To interpret Section 102(b)(2) to apply to a payer-recipient of services doing business in the Philippines is to make the payment of the regular VAT under Section 102(a) dependent on the generosity of the taxpayer. The provider of services can choose to pay the regular VAT or avoid it by stipulating payment in foreign currency inwardly remitted by the payer-recipient. Such interpretation removes Sectfon 102(a) as a tax measure in the Tax Code, an interpretation this Court cannot sanction. A tax is a mandatory exaction, not a voluntary contribution." In the present case, the documents submitted by the petitioner merely established the existence of its sales of services. Petitioner failed to substantiate the receipt of the foreign currency proceeds thereof with proper VAT official receipts and that its clients are non-resident foreign entities doing business outside the Philippines. Considering so, petitioner's reported collected commissions from non-~sidents in the amount of P39,475,267.97 cannot qualify for VAT zero-rating. With respect to petitioner's reported sales of goods and commissions collected from residents - PEZA entities in the respective amounts o.W..

LJt:LlSlUN P757,314.54 and P1,768,224.40 totalling to P2,525,538.94, Section 106(A)(2)(a)(S) of the Tax Code, states: SEC. 106. Value-added Tax on Sale of Goods or Properlies. - (A) XXX XXX XXX (1) XXX XXX XXX (2) The following sales by VAT-registered persons shall be subject to zero percent (0%) rate: "(a) Export Sales.- The term 'export sales means: XXX XXX XXX "(5) Those considered export sales under Executive Order No. 226, otherwise known as the Omnibus Investment Code of 1987, and other special laws. Sales by a VAT taxpayer from the Customs Territory to a PEZA entity are considered export sales under Executive Order (E.O.) No. 226, otherwise known as the Omnibus Investments Code of 1987, the relevant portions of which read as follows: "ARTICLE 23. "Export Sales" shall mean the Philippine port F.O.B. value, determined from invoices, bills of lading, inward letters of c;:redit, landing certificates, and other commercial documents, of export products exported directly by a registered export producer or the net selling price of export product sold by a registered export producer to another export producer, or to an export trader that subsequently exports the same: Provided, That sales of export products to another producer or to an export trader shall only be deemed export sales when actually exported by the latter, as evidenced by landing certificates of similar commercial documents: Provided, further, That without actual exportation the following shall be considered "constructively exported" for purposes of this provision: (1) sales to bonded manufacturing warehouses of - .. .. _ _ .-L _ ._ : ___ L _ -1 �- __ �- _ . r __ '

UCI....!.:>lVI'I "ARTICLE 77. Tax Treatment of Merchandise in the Zone. - (1) Except as otherwise provided in this Code, foreign and domestic merchandise, raw materials, supplies, articles, equipment, machineries, spare parts and wares of every description, except those prohibited by law, brought into the zone to be sold, stored, broken up, repacked, assembled, installed, sorted, cleaned, graded, or otherwise processed, manipulated, manufactured, mixed with foreign or domestic merchandise whether directly or indirectly related in such activity, shall not be subject to customs and internal revenue laws and regulations nor to local tax ordinances, the provisions of law to the contrary notwithstanding. (2) Merchandise purchased by a registered zone enterprise from the customs territory and subsequently brought into the zone, shall be considered as export sales and the exported thereof shall be entitled to the benefits allowed by law for such transaction. (emphasis supplied) Clearly, from the foregoing provisions of Section 106(A)(2)(a)(S) in relation to Articles 23 and 77(2) of the Omnibus Investments Code, indirect exports made by a VAT taxpayer to a PEZA registered entity are legally entitled to the zero percent (0%) VAT. Likewise, the sale of services by a VAT taxpayer to a PEZA registered entity is effectively subject to zero percent (0%) VAT under Section 108(8)(3) of the Tax Code, which states: "SEC. 108. Value-Added Tax on Sale of Services 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; p... 1~ 1R

UCI...l;:>lVI'l "(3) Services rendered to persons or entities whose ex emption under special laws or international agreements to which the Philippines is a signatory effectively subjects t he supply of such services to zero percent ( OOfo ) rate; (emphasis supplied) The VAT zero-rating of sales of goods or services made by a VAT taxpayer to a PEZA entity was further clarified in Revenue Memorandum Circular (RMC) No. 74-99, the pertinent provisions of which read as follows: "SECTION 3. Tax Treatment of Sales Made By A VAT Registered Supplier from the Customs Territory, To A PEZA Reg istered Enterpr ise.- XXX XXX XXX 3. In the final analysis, any sale of goods, property or services made by a VAT registered supplier from the Customs Territory to any registered enterprise operating in the ecozone, regardless of the class or type of the latter's PEZA registration, is actually qualified and thus legally entitled to the zero percent (0%) VAT. Accordingly, all sales of goods or property to such enterprise made by a VAT registered supplier from the Customs Territory shall be treated subject to 0�/o VAT, pursuant to Sec. 106(A)(2)(a)(S) , NIRC , in relation to Art. 77(2) of the Omnibus Investments Code, while all sales of services to the said enterprises, made by VAT registered supplies from the Customs Territory, shall be treated effectively subject to 0�/o VAT, pursuant to Section 108(8)(3), NIRC, in relation t o the provisions of R.A. 7916 and t he " Cross Border Doctrine" of the VAT system . "This Circular shall serve as a sufficient basis to entitle such supplier of goods, property or services to the benefit of the zero percent (0%) VAT for sales made to the aforementioned ECOZONE enterprises and shall serve as sufficient compliance to the requirement for prior approval of zero-rating imposed by Revenue Regulation No. 7-95 effective as of the date of issuance of this Circular. (emphasis supplied)~ 1 A1o

DECISION Petitioner's sales of goods to PEZA-registered entities in the amount of P757,314.54 which is duly covered by VAT invoices15 and PEZA Certifications16 qualifies for VAT zero-rating. The same holds true with petitioner's commission income in the amount of P1,768,224.40. However, upon scrutiny of the Summary of Zero-Rated Sales and Commissions other than Export Sales17 and petitioner's supporting documents, the Court finds that the amount of P687,626.9218 representing commission income not supported by official receipts and the amount of P10,806.6619 representing discrepancy in petitioner's commission income as reflected on the official receipts and sales invoices issued by petitioner to PEZA entities vis-a-vis the amounts indicated in petitioner's schedule of commission income shall be denied VAT zero- rating. Thus, petitioner's total substantiated zero-rated sales amounts only to P1,827,105.36, as computed below: Declared zero-rated sales P166,957 052.16 Less: Disallowed zero-rated sales: P101,939,439.49 Export Sales to Marubeni Tokyo Zero-Rated Sales to PEZA entities p 687 626.92 Commissions not supported by Official Receipts Discrepancies in commission income as 10 806.66 p 698,433.58 reflected in the ORs/sales invoices vis-a-vis the p 23 016 805.76 commission income shown per petitioner's 39,475 267.97 schedule Zero-Rated Sales to Non-residents Sales of goods Collected Commissions 15 Exhibits "PPP-1 " to "PPP-38", "QQQ-1 " to "QQQ-42" & "RRR-1 " to " RRR-40" 1..1')() 16 Exhibits "UUU-24" to "UUU-29" 17

LJCU::.lUI'J p 62,492,073.73 165,129,946.80 p 1 827,105.36 We proceed to the determ ination of the amount of unutilized input VAT attributable thereto. Petitioner's total input VAT based on its amended Quarterly VAT Returns filed for the taxable year 2003 amounted to P12,509,759.4920, which upon deduction therefrom the amount of P28,153.07 representing petitioner's input VAT attributable to domestic sales, there still remained input VAT credits in the amount of P12,481,606.42. Based on the Final Report of the Independent CPA21, petitioner's input VAT credits in the amount of P12,481,606.42 comprised of the following: Input VAT Pertaining to Input VAT 1. Purchases of goods that were p 10 045 631.80 a. subsequently exported 64 022.25 b. sold to zero-rated ent.ities (PEZA entities) 2. Purchases of ordinary expenses (common) 2 301 998.98 3. Purchases of capital goods 69,954.55 Total P12 481 607.58 Less: Output VAT Total input VAT claimed for refund in the 1 341,957.38 petition P11 139 650.20 Considering that petitioner failed to prove that it had zero rated export sales and zero-rated sales/commissions to non-residents for the four quarters of 2003, petitioner's claimed input taxes which are directly attributable.e:L 20

UtUSlUN thereto in the amount of P10,045,631.8022, though substantiated with VAT invoices and official receipts, cannot be granted. Based on his review and validation of petitioner's P12,509,760.65 input VAT claim, the Court-commissioned ICPA found P660,250.1423 as exceptions of which P14,309.42 pertains to petitioner's zero-rated sales of goods to PEZA entities while the remaining amount of P645,940.72 refers to input VAT incurred by petitioner on common ordinary expenses, detailed as follows24 : Input VAT Attributable to Total Input VAT Nature of Exception Sales to Ordinary PEZA Expenses a. Purchases not supported by document p 497,836.02 p 511,309.00 vouchers, suppliers' official receipts p 13,472.98 and/or sales invoices b. Purchases of services not supported by - 33,937 .21 33,937.21 19,871.59 20,708.03 suppliers' official receipts 14,981. 20 14,981.20 c. Purchases of goods not supported by 836 .44 suppliers' sales invoices d. Purchases supported by photocopy of - official receipts or invoices only e. Purchases of services recorded .in 2003 but the supporting official receipts were - 8,593.77 8,593 .77 dated 2004 f. Overstatement in the recorded and - 53,3 29. 72 53,329.72 claimed input VAT 9,209 .82 9,209.82 7,94 1.44 7,941.44 g. Suppliers official receipts/official - reteipts not in the name of Marubeni h. Suppliers' TIN not indicated in their - official receipts and/or sales invoices i. Suppliers' BIR permit to print not indicated in their official receipts and/or - 239.95 239.95 sales invoices Total p 14,309.42 p 645,940.72 p 660,250.14 The claimed input VAT directly attributable to zero-rated sales of goods to PEZA entities amounting to P64,022.25 should be reduced by P14,309.42. ~ 22 Exhibits "BBB- 1" to "BBB-1 686", "CCC- I" to "CCC- 1565", "OD D-I " to "DDD- 1868" & "EEE- 1"

Ut:Ll::.lUN Thus, only the remaining amount of P49,7 12 .83 represents petitioner's valid input VAT directly attributable to zero-rated sales of goods to PEZA entities. We now delve on the input VAT incurred by petitioner on common ordinary expenses amounting to P2,301,998.98. Upon verification thereof, the Court finds that aside from the disallowances of P645,940. 72 recommended by the !CPA, the claimed amount of P175,656.46 should likewise be disallowed for failure to meet the substantiation requirements under Sections llO(A) and 113(A) of the Tax Code, as implemented by Sections 4.104-1, 4.104-5 & 4.108-1 of Revenue Regulations No.7-95: FINDINGS25 D I S A LLOWANCES Input VAT on purchase of services not supported by official receipts p 127 773:78 Input VAT on purchase of goods not supported by invoice Input VAT on rental payments supported by OR dated 581.90 outside the year covered by the claim Input VAT on purchase of goods/services supported by 44 334.54 VAT invoice/ORs issued not in the petitioner's name/payor is not indicated 2,936.26 Input VAT on purchase of goods without supporting 29.98 documents p 175 656.46 Total Only that portion of the P1,480,401.80 (P2,301,998 .98 less P645,940.72 less P175,656.46) valid input VAT on common ordinary expenses which is allocable to petitioner's substantiated zero-rated sales will be considered for refund. The rate to be applied is based on the total amount of sales and is computed as follows: Zero-Rated Sales p 1 827 105.36 P166,957,052.16 Substantiated Zero-Rated Sales 165 129 946.80 13 419,573.81 Unsubstantiated Zero-Rated Sales P180,376, 625 .97 Taxable Sales Total Sales

ut:u:,lUI'l Substantiated Zero-Rated Sales p 1,827,105.36 Divided by Total Sales ..;. P180,376,625.97 Rate of Substantiated Zero-Rated Sales 1.012939% Therefore, only the input VAT of P14,995.57 from ordinary expenses can be attributed to petitioner's substantiated zero-rated sales, as computed below: Input VAT Claim on common ordinary expenses p 2,301,998.98 Less: Disallowances 645 940.72 Per Independent CPA 175 656.46 Per this Court's verification p 1,480,401.80 Validly supported in_put VAT 1.012939% Multiplied by rate of substantiated zero-rated sa les Valid Input VAT on common ordinary expenses � p 14,995.57 attributable to substantiated zero-rated sales What is now left to be determined is whether or not petitioner is entitled to the amount of P69,954.55 representing unutilized excess input VAT on purchases of capital goods. Section 112(8) of the Tax Code, quoted earlier, allows the refund/tax credit of unutilized input VAT paid on capital goods purchased. Relative to the said provision is Section 4.106-1 of Revenue Regulations No. 7-95 which defines "capital goods or properties" as follows: "Capital goods or properties' refer to goods or properties with estimated useful life greater than one year and which are treated as depreciable assets under Section 29(f), used directly or indirectly in the production or sale of taxable goods or services." Thus, in order that the items purchased can be classified as capital goods or properties, petitioner must show that: (1) the goods or properties have economic useful life of more than one year; (2) such qoods or orooerties _

DECISION are treated as depreciable assets under Section 29(f) [now 34F of the NIRC of 1997]; and (3) they are used directly or indirectly in the production or sale of taxable goods or ser\tices. Evidence forwarded to this Court, such as VAT sales invoices/official receipts26, Journal Vouchers or Transfer Posting Lists27, Schedule of Furniture and Fixtures28/Depreciation Lapsing Schedule for Furniture and Fixtures29, Schedule of Machinery and Equipment30/Depreciation Lapsing Schedule for Machinery and Equipment31 and Audited Financial Statements32, proved that the claimed input VAT of P69,954.55 relates to petitioner's purchases of laptops and Microsoft license which (1) have estimated useful life of more than one year; (2) used indirectly in its business, and (3) were capitalized and subjected to depreciation. Therefore, the amount of P69,954.55 represents petitioner's valid input tax claim on capital goods purchased for the year 2003. To recapitulate, only the substantiated input VAT claim of P134,662.95 which is attributable to petitioner's substantiated zero-rated sales and capital goods purchased for taxable year 2003 is refundable, as computed below: Input VAT claim pertaining to Amount of Input 1. Purchases of qoods that were VAT a. subsequently exported p - b. sold to zero-rated entities (PEZA) 2. Purchases of ord inary expenses(common) 49 712.83 14 995.57 26 Exhibits "UU-1", "UU-2", "VV- 1", "VV-2", "WW- 1", "WW-2", "XX-1" & "XX-2" 27 Exhibi ts "UU" "VV" "WW" & "XX" 28 Exhibit " RR-4;', Inde;endent CPA Report, Annex 8.1, pages 41-43 29 Exhibi ts "YY", "YY- 1", "YY-2" & "YY-3" 3

DECISION 3. Purchases of capita l goods 69,954.55 Valid Input VAT attributable to capital goods purchased 134,662.95 and substantiated zero-rated sales p Inasmuch as petitioner's input tax credits directly attributable to its domestic sales in the amount of P28,153.07 and input tax credits directly attributable to its declared zero-rated export sales in the amount of P10,045,631.80 are sufficient to cover its output VAT liability of P1,341,957.38, no amount of the substantiated input VAT claim of P134,662.95 shall be applied against any output VAT. As to whether or not the subject claim was carried-over/applied in the succeeding quarters, petitioner's Quarterly VAT Return for the first quarter of 2004 reflected the amount of P17,583,463.92 as "Input T~x Carried Over from Previous Quarter"33, however, the same pertains to the excess input tax for the fourth quarter of 2002 in the amount of P17,555,310.89 plus the input VAT from taxable domestic sales of P28,153.07 which was deducted from the subject claim. Moreover, it was established that said input VAT was not carried-over in the succeeding quarter(s) as shown in petitioner's amended Quarterly VAT Returns for the four taxable quarters of 200434 and 200535 and the Original Quarterly VAT Returns for the First36 and Second37 Quarters of 2006. Finally, as to the timeliness of the filing of the instant claim, it has been held that the two-year prescriptive period for the filing of VAT refund claims i h 33 Exhibit "Y" 34 Exhibits "Y', "Z", "AA" & "BB" 35

DECISION reckoned from the date of filing of the corresponding Quarterly VAT Returns. 38 The earliest quarter covered by the instant Petition is the first quarter of 2003 for which petitioner originally filed its Quarterly VAT Return on April 23, 200339. Counting from this date, both the administrative claim filed on April 20, 200540 and the Petition for Review filed on April 21, 2005 fa ll within the two-prescriptive period . WHEREFORE, the instant PETITION FOR REVIEW is PARTIAllY GRANTED. Accordingly, respondent Commissioner of Internal Revenue is hereby ORDERED to REFUND or in the alternative, ISSUE a TAX CREDIT CERTIFICATE in the amount of ONE HUNDRED THIRTY FOUR THOUSAND SIX HUNDRED SIXTY TWO AND 95/100 PESOS (P134, 662.95) in favor of petitioner, representing unutilized excess input taxes attributable to zero-rated sales for the four taxable quarters of 2003. SO ORDERED . CAESAR A. CASANOVA Associate Justice WE CONCUR: .: <(_~~ ~ D~ (with Dissenting Opinion) ERNESTO . ACOSTA 38 Atlas Cons idated Mining and Development Corporation vs. Commissioner of Internal Revenue,

DECISION 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. ~~.c~ ERNESTO D. ACOSTA Presiding Justice Chairman, First Division

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION MARUBENI PHILIPPINES CTA CASE NO. 7 2 23 CORPORATION, Members: Petitione~ ACOSTA, Chairperson IV versus IV BAUTISTA, and, CASANOVA, JJ. COMMISSIONER OF INTERNAL REVENUE, Respondent X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ----X DISSENTING OPINION With all due respect to the majority, I dissent from their opinion. I vote to dismiss the petition for review for the reason that it was prematurely filed before the Court in accordance with Section 112(A) in relation to Section 112(0) of the 1997 National Internal Revenue Code (NIRC) . In the majority's opinion, the Court, granted the petition for review which seeks the refund or issuance of a tax credit certificate in the amount of Pll, 139,650.19, allegedly representing petitioner's unutilized excess input value added tax (VAT) on purchases of capital goods and domestic purchases of goods and services directly attributable and/or allocable to its zero-rated sales for the four quarters of taxable year 2003, but only in the amount of P134,662.95. The Court did not take into consideration the date of filing of IV<-

L/J......,I.....,!L...I VI J.l VU L/1 J.l VJ.L/ J V CTA Case No. 7223 Page2 of3 petitioner's administrative claim for refund which is April 20, 2005, as well as, its date of filing before this Court, which is April 21, 2005. Sections 112(A) and (D) of the 1997 NIRC provide the basis and procedure for refunds or tax credits of input tax attributable to zero-rated sales, to wit: Section 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 (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 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 (D) 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 compete documents in support of the application filed in accordance with Subsections (A) and (B) 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 day-period, appeal the decision or the unacted claim with the Court of Tax Appeals . (Emphasis Ours). Applying the foregoing to the case at bar, petitioner, after filing its administrative claim on April 20, 2005, has to await one hundred twenty (120)

CTA Case No. 7223 Page3 of3 days for the respondent to act on it before filing its judicial claim for refund or tax credit before this Court, since only then is petitioner allowed within thirty (30) days to file its judicial claim. Apparently in this case, the petitioner swiftly filed its judicial claim the next. day after submitting its administrative claim or on April 21, 2005. Said filing is a violation of the doctrine of exhaustion of administrative remedies. It is already well settled that non-exhaustion of administrative remedies is not jurisdictional. It only renders the action premature, i.e., the claimed cause of action is not ripe for judicial determination and for that reason a party has no cause of action to ventilate in court. 1 The premature invocation of court's intervention is fatal to one's cause of action. Accordingly, absent any finding of waiver or estoppe~ the case is susceptible of dismissal for lack of cause of action. 2 I vote to deny the petitioner's claim for refund on the basis of petitioner's violation of the doctrine of exhaustion of administrative remedies by failing to properly apply Section 112(A) in relation to Section 112(0) of the 1997 NIRC. ~v. O~- ERNEsTo D. ACOSTA Presiding Justice 1 Carafe vs. Abarintos, GR No. 120704, March 3, 2009. 2 Paat vs. Court ofAppeals, G.R. No. 111107, January 10, 1997; 266 SCRA 167, pp. 175-177.

MARUBENI PHILIPPINES CORPORATION Annex A vs. COMMISSIONER OF INTERNAL REVENUE CTA CASE NO. 7223 Input Vat ADDITIONAL INPUT VAT DISALLOWANCES 203 .30 PER THE COURT'S VERIFICATION 54 .30 230.21 1.) Input VAT on purchase of services not supported by official receipts 230 .21 24 .20 Month Exhibit No. Supplier 209.88 April BBB-357 to BBB-362 Globe Telecom 65 .23 April BBB-363 to BBB-369 Globe Telecom 443.47 174 .26 April BBB-370 to BBB-378 Globe Telecom 207.06 April BBB-370 to BBB-378 Globe Telecom April BBB-379 to BBB-384 Globe Telecom 3,200 .00 April BBB-385 to BBB-390 Globe Telecom 186.50 April BBB-391 to BBB-397 Globe Telecom 326 .74 April BBB-12 to BBB-18 PLOT 172.79 April BBB-19 to BBB-23 PLOT 170 .98 April BBB-24 to BBB-30 PLOT 228.13 April BBB-31 to BBB-35 PLOT 162 .15 April BBB-36 to BBB-40 PLOT 162 .15 April BBB-41 to BBB-45 PLOT April BBB-46 to BBB-50 PLOT 3,584 .37 April BBB-51 to BBB-57 PLOT 146 .39 April BBB-51 to BBB-57 PLOT 310 .36 April BBB-58 to BBB-63 PLOT 404 .12 April BBB-58 to BBB-63 PLOT 255 .36 April BBB-64 to BBB-86 PLOT 208 .82 April BBB-87 to BBB-91 PLOT 204 .68 April BBB92- to BBB-98 PLOT 136.41 April BBB-99 to BBB-106 PLOT 235.12 April BBB-107 to BBB-114 PLOT 160.14 April BBB-115 to BBB-122 PLOT 234.93 April BBB-123 to BBB-129 PLOT 132.41 April BBB-123 to BBB-129 PLOT 169.19 April BBB-130 to BBB-143 PLOT 50 .91 April BBB-130 to BBB-143 PLOT 287 .00 April BBB-130 to BBB-143 PLOT 137.19 April BBB-153 to BBB-158 Smart Communications Inc. 55 .93 April BBB-159 to BBB-167 Smart Communications Inc. 308.94 April BBB-159 to BBB-167 Smart Communications Inc. 72 .78 April BBB-168 to BBB-170 Sugi Management Corp 127 .77 May BBB-634 to BBB-640 Globe Telecom 72.60 May BBB-641 to BBB-647 Globe Telecom 231 .82 May BBB-648 to BBB-668 Globe Telecom 324.44 May BBB-648 to BBB-668 Globe Telecom 83 .85 May BBB-669 to BBB-675 Globe Telecom 205 .33 May BBB-676 to BBB-681 Globe Telecom 90 .22 May BBB-682 to BBB-689 Globe Telecom 45 .28 May BBB-690 to BBB-697 Globe Telecom 253 .59 May BBB-690 to BBB-697 Globe Telecom 166.55 May BBB-698 to BBB-706 Globe Telecom May BBB-707 to BBB-715 Globe Telecom 14~2 May BBB-716 to BBB-722 Globe Telecom May BBB-723 to BBB-729 Globe Telecom May BBB-826 to BBB-830 PLOT

MARUBENI PHILIPPINES CORPORATION Annex A vs. COMMISSIONER OF INTERNAL REVENUE CTA CASE NO. 7223 Input Vat ADDITIONAL INPUT VAT DISALLOWANCES 83 .36 PER THE COURT'S VERIFICATION 435 .6 9 1.) Input VAT on purchase of services not supported by official receipts 263.29 3,200.00 Month Exhibit No. Supplier 153.34 May BBB-831 to BBB-836 PLOT 166 .26 May BBB-837 to BBB-843 PLOT 171 .14 May BBB-844 to BBB-849 PLOT 189 .77 May BBB-850 to BBB-855 PLOT 157 .95 May BBB-856 to BBB-864 PLOT 137 .23 May BBB-865 to BBB-869 PLOT 294 .86 May BBB-870 to BBB-877 PLOT 394 .75 May BBB-878 to BBB-884 PLOT 179 .99 May BBB-885 to BBB-89 3 PLOT 229.47 May BBB-894 to BBB-899 PLOT 379 .89 May BBB-900 to BBB-904 PLOT 135.39 May BBB-905 to BBB-9 10 PLOT 144 .90 May BBB-9 11 to BBB-915 PLOT 326 .74 May BBB-916 to BBB-920 PLOT 3,200 .00 May BBB-921 to BBB-927 PLOT 183.61 May BBB-928 to BBB-931 PLOT 315 .01 May BBB-932 to BBB-936 PLOT 239.88 May BBB-935 to BBB-941 PLOT 189.06 May BBB-942 to BBB-946 PLOT 254 .58 May BBB-947 to BBB-95 1 PLOT 187.42 May BBB-952 to BBB-958 PLOT 736 .90 May BBB-959 to BBB-963 PLOT May BBB-964 to BBB-972 PLOT 96 .95 May BBB-964 to BBB-972 PLOT 2,834 .15 May BBB-964 to BBB-972 PLOT May BBB-1036 to BBB-1039 Skycable Central CATV, Inc. 35 .32 June BBB-1167 to BBB- 1184 C.P.K. 167.51 June BBB-1198 to BBB-1202 Fuji Xerox Philippines 230 .58 June BBB-1234 to BBB-1240 Globe Telecom June BBB-1241 to BBB-1254 Globe Telecom 74 .51 June BBB-1241 to BBB-1254 Globe Telecom 12.10 June BBB-1241 to BBB-1254 Globe Telecom 83 .74 June BBB-1255 to BBB-1260 Globe Telecom 221 .37 June BBB-1261 to BBB-1267 Globe Telecom 127.26 June BBB-1268 to BBB-1274 Globe Telecom 72.60 June BBB-1275 to BBB-1281 Globe Telecom 284 .00 June BBB-1282 to BBB-1287 Globe Telecom 1,573 .04 June BBB-1288 to BBB-1294 Globe Telecom 127.27 June BBB-1295 to BBB-1302 Globe Telecom 66 .92 June BBB-1167 to BBB-1184 Makati Shangri-la Manila 331 .96 June BBB-1385 to BBB-1389 PLOT 3,578 .55 June BBB-1390 to BBB-1394 PLOT 198 .93 June BBB-1395 to BBB-1417 PLOT 168.85 June BBB-1418 to BBB-1423 PLOT 137 .81 June BBB-1424 to BBB-1428 PLOT 66.27 June BBB-1429 to BBB-1433 PLOT 183 .98 June BBB-1434 to BBB-1439 PLOT June BBB-1440 to BBB-1444 PLOT 1L111

MARUBENI PHILIPPINES CORPORATION Annex A vs. COMMISSIONER OF INTERNAL REVENUE CTA CASE NO. 7223 Input Vat ADDITIONAL INPUT VAT DISALLOWANCES 199 .73 PER THE COURT'S VERIFICATION 349 .64 361 .20 1.) Input VAT on purchase of services not supported by official receipts 199.08 219 .70 Month Exhibit No. Supplier 499 .12 June BBB-1445 to BBB-1449 PLOT 472.97 June BBB-1450 to BBB-1454 PLOT 176 .57 June BBB-1455 to 888-1460 PLOT June 888-1 461 to BBB-1465 PLOT 3,492 .51 June 888-1466 to 888- 1470 PLOT 3,200 .00 June 888-1471 to 888-1479 PLOT June 888-1480 to 888-1485 PLOT 326 .74 June 888-1486 to 888-1490 PLOT 158 .57 June 888-1491 to 888-1513 PLOT 222 .73 June 888-1523 to 888-1527 PLOT 152.68 June BBB-1528 to 888-1532 PLOT 251 .76 June 888-1533 to 888-1536 PLOT 144 .81 June BBB-1537 to 888-1541 PLOT June 888-1542 to 888-1548 PLOT 20 .50 June 888-1542 to 888- 1548 PLOT 350 .16 June 888-1549 to BBB-1556 PLOT June BBB-1609 to 888-1614 Smart Communications Inc. 60 .00 June 888-1615 to 888-1626 Smart Communications Inc. 121.00 June 888-1167to 888-1184 The Peninsula Manila July CCC-150 to CCC-154 Globe Telecom 72 .66 July CCC-155 to CCC-159 Globe Telecom 306 .84 July CCC-160 to CCC-164 Globe Telecom July CCC-165 to CCC-168 Globe Telecom 12.10 July CCC-169 to CCC-173 Globe Telecom 263 .98 July CCC-174 to CCC-180 Globe Telecom 622 .57 July CCC-181 to CCC-185 Globe Telecom 535.36 July CCC-186 to CCC-190 Globe Telecom July CCC-191 to CCC-195 Globe Telecom 44 .66 July CCC-196 to CCC-201 Globe Telecom 175.27 July CCC-202 to CCC-206 Globe Telecom 175 .97 July CCC-2 07 to CCC-211 Globe Telecom 236 .58 July CCC-212 to CCC-216 Globe Telecom July CCC-21 7 to CCC-220 Globe Telecom 69 .78 July CCC-221 to CCC-229 Globe Telecom 84 .57 July CCC-230 to CCC-233 Globe Telecom 12.10 July CCC-234 to CCC-261 Globe Telecom 1,222 .18 July CCC-262 to CCC-265 Globe Telecom 145.16 July CCC-266 to CCC-269 Globe Telecom 546 .15 July CCC-412 to CCC-416 PLOT 72 .60 July CCC-417 to CCC-422 PLOT 234 .57 July CCC-423 to CCC-426 PLOT 359 .07 July CCC-425 to CCC-430 PLOT 606 .50 July CCC-431 to CCC-434 PLOT 190.64 July CCC-435 to CCC-440 PLOT 148.42 July CCC-441 to CCC-444 PLOT 162.03 July CCC-445 to CCC-448 PLOT 3,200 .00 July CCC-449 to CCC-452 PLOT 142.42 July CCC-453 to CCC-457 PLOT 326 .74 218 .55 329.48

MARUBENI PHILIPPINES CORPORATION Annex A vs . COMMISSIONER OF INTERNAL REVENUE CTA CASE NO. 7223 Input Vat ADDITIONAL INPUT VAT DISALLOWANCES 64 .97 PER THE COURT'S VERIFICATION 247 .09 1.) Input VAT on purchase of services not supported by official receipts 256 .69 233.44 Month Exhibit No. Supplier 326.12 July CCC-458 to CCC-462 PLOT 211.79 July CCC-463 to CCC-468 PLOT 197 .54 July CCC-469 to CCC-473 PLOT 113 .73 July CCC-474 to CCC-477 PLOT 143 .64 July CCC-504 to CCC-510 Smart Communication & Post August CCC-625 to CCC-629 Globe Telecom 30 .25 August CCC-630 to CCC-634 Globe Telecom 197 .26 August CCC-635 to CCC-639 Globe Telecom 1,288.24 August CCC-640 to CCC-644 Globe Telecom 128 .23 August CCC-645 to CCC-649 Globe Telecom 331 .91 August CCC-650 to CCC-659 Globe Telecom 180.82 August CCC-650 to CCC-659 Globe Telecom 121 .00 August CCC-650 to CCC-659 Globe Telecom 238.84 August CCC-650 to CCC-659 Globe Telecom August CCC-650 to CCC-659 Globe Telecom 72.60 August CCC-660 to CCC-665 Globe Telecom 121.00 August CCC-666 to CCC-670 Globe Telecom August CCC-671 to CCC-675 Globe Telecom 12.10 August CCC-676 to CCC-680 Globe Telecom 52 .88 August CCC-681 to CCC-685 Globe Telecom 107 .11 August CCC-686 to CCC-690 Globe Telecom 104 .06 August CCC-691 to CCC-695 Globe Telecom 62 .78 August CCC-696 to CCC-700 Globe Telecom 373 .18 August CCC-706 to CCC-710 Globe Telecom 244.12 August CCC-711 to CCC-716 Grappa's 287 .01 August CCC-797 to CCC-800 PLOT 349 .12 August CCC-801 to CCC-804 PLOT 299 .95 August CCC-803 to CCC-808 PLOT 186 .63 August CCC-809 to CCC-812 PLOT 117.22 August CCC-813 to CCC-817 PLOT 117 .22 August CCC-818 to CCC-822 PLOT 117.22 August CCC-818 to CCC-822 PLOT 222 .51 August CCC-818 to CCC-822 PLOT 437 .05 August CCC-823 to CCC-826 PLOT 239 .14 August CCC-827 to CCC-830 PLOT 151 .75 August CCC-831 to CCC-834 PLOT 166 .86 August CCC-835 to CCC-838 PLOT 289 .38 August CCC-839 to CCC-842 PLOT 294 .19 August CCC-843 to CCC-848 PLOT 644 .96 August CCC-849 to CCC-852 PLOT 132.73 August CCC-853 to CCC-861 PLOT 3,200 .00 August CCC-862 to CCC-865 PLOT 182.96 August CCC-866 to CCC-870 PLOT 143 .11 August CCC-871 to CCC-875 PLOT 3,564.44 August CCC-871 to CCC-875 PLOT 3,492 .51 August CCC-876 to CCC-898 PLOT 326 .74 August CCC-899 to CCC-922 PLOT August CCC-923 to CCC-927 PLOT Page 4 of 8 .

MARUBENI PHILIPPINES CORPORATION Annex A vs. COMMISSIONER OF INTERNAL REVENUE CTA CASE NO. 7223 Input Vat ADDITIONAL INPUT VAT DISALLOWANCES 165.57 PER THE COURT'S VERIFICATION 776.71 380 .57 1.) Input VAT on purchase of services not supported by official receipts 218 .18 112.56 Month Exhibit No. Supplier 300 .16 August CCC-928 to CCC-931 PLOT 12.10 August CCC-1 033 to CCC-1 037 Smart Communications Inc. 171 .84 August CCC-1 038 to CCC-1 044 Smart Communications Inc. 207 .95 August CCC-1 045 to CCC-1 047 Smart Communications Inc. 203 .09 September CCC-1125 to CCC-1128 Bravo Grande Corp Grappa's Restorante 155 .85 September CCC-1247 to CCC-1251 Globe Telecom 155.85 September CCC-1252 to CCC-1256 Globe Telecom 155.85 September CCC-1262 to CCC-1266 Globe Telecom 230 .56 September CCC-1373 to CCC-1375 PLOT 308 .08 September CCC-1376 to CCC-1380 PLOT 272 .32 September CCC-1381 to CCC-1383 PLOT 140 .39 September CCC-1381 to CCC-1383 PLOT 309 .39 September CCC-1381 to CCC-1383 PLOT 66 .39 September CCC-1384 to CCC-1386 PLOT 143 .11 September CCC-1387 to CCC-1389 PLOT 320.75 September CCC-1390 to CCC-1393 PLOT September CCC-1394 to CCC-1397 PLOT 3,590 .19 September CCC-1394 to CCC-1397 PLOT 326 .74 September CCC-1398 to CCC-1402 PLOT 166 .83 September CCC-1403 to CCC-1407 PLOT September CCC-1408 to CCC-1411 PLOT 1,397.60 September CCC-1412 to CCC-1433 PLOT 392.70 September CCC-1434 to CCC-1437 PLOT 130 .82 September CCC-1438 to CCC-1440 PLOT 44.18 September CCC-1446 to CCC-1452 Philippine Fuji Xerox Corporation 173.58 September CCC-1497 to CCC-1501 Smart Communications Inc. 287 .39 September CCC-1502 to CCC-1508 Smart Communications Inc. 191 .12 September CCC-1502 to CCC-1508 Smart Communications Inc. 47 .61 September CCC-1502 to CCC-1508 Smart Communications Inc. 135.08 October 000-357 to 000-361 PLOT 165.11 October 000-362 to 000-366 PLOT 163.81 October 000-367 to 000-371 PLOT 528.49 October 000-372 to 000-376 PLOT 253 .12 October 000-377 to 000-382 PLOT 146.30 October 000-383 to 000-386 PLOT 293.77 October 000-387 to 000-393 PLOT 299.72 October 000-394 to 000-397 PLOT 334 .18 October 000-398 to 000-401 PLOT 142.33 October 000-402 to 000-405 PLOT 147.45 October OP0-406 to 000-409 PLOT 169.07 October 000-41 0 to 000-414 PLOT October 000-415 to 000-418 PLOT 3,200.00 October 000-419 to 000-423 PLOT 169.22 October 000-424 to 000-428 PLOT 178.20 October 000-429 to 000-433 PLOT 234 .80 October 000-434 to 000-437 PLOT October 000-438 to 000-442 PLOT ~ October 000-443 to 000-446 PLOT 1.4"JC

MARUBENI PHILIPPINES CORPORATION Annex A vs. COMMISSIONER OF INTERNAL REVENUE CTA CASE NO. 7223 Input Vat ADDITIONAL INPUT VAT DISALLOWANCES 142.33 PER THE COURT'S VERIFICATION 3,638 .70 1.) Input VAT on purchase of services not supported by official receipts 326 .74 213 .02 Month Exhibit No. Supplier 143.11 October DDD-447 to DDD-450 PLOT 143.11 October DDD-451 to DDD-475 PLOT 143 .11 October DDD-476 to DDD-479 PLOT 226.46 October DDD-480 to DDD-484 PLOT 185.89 October DDD-485 to DDD-489 PLOT 246 .64 October DDD-485 to DDD-489 PLOT 725 .87 October DDD-485 to DDD-489 PLOT October DDD-490 to DDD-493 PLOT 3,200 .00 October DDD-494 to DDD-497 PLOT 136 .64 October DDD-498 to DDD-502 PLOT 263 .64 October DDD-503 to DDD-51 0 PLOT 385 .04 October DDD-511 to DDD-516 PLOT 230.40 October DDD-517 to DDD-521 PLOT 247 .71 October DDD-581 to DDD-583 Smart Communications Inc. 148 .36 October DDD-584 to DDD-590 Smart Communications Inc. 528.29 November DDD-979 to DDD-985 PLOT 280 .14 November DDD-979 to DDD-985 PLOT 202 .51 November DDD-979 to DDD-985 PLOT 262.02 November DDD-986 to DDD-990 PLOT 325 .19 November DDD-991 to DDD-995 PLOT 252 .18 November DDD-986 to DDD- 1000 PLOT 375 .81 November DDD-1001 to DDD-1005 PLOT 146.09 November DDD-1006 to DDD-1009 PLOT 231.28 November DDD-1010 to DDD-1013 PLOT 326.74 November DDD-1014 to DDD-1018 PLOT 138 .59 November DDD-1019 to DDD-1022 PLOT 174 .87 November DDD-1023 to DDD-1026 PLOT 150.42 November DDD-1027 to DDD-1030 PLOT November DDD-1031 to DDD-1034 PLOT 3 ,638 .77 November DDD-1034 to DDD-1040 PLOT 169.23 November DDD-1041 to DDD-1045 PLOT November DDD-1046 to DDD-1068 PLOT 3,200 .00 November DDD-1 069 to DDD-1072 PLOT 80.40 November DDD-1 073 to DDD-1 078 PLOT November DDD-1 079 to DDD-1 082 PLOT 110.57 November DDD-1083 to DDD-1087 PLOT 110.58 November DDD-1 083 to DDD-1 087 PLOT 110.58 November DDD-1083 to DDD-1 087 PLOT 584 .79 November DDD-1088 to DDD-1 094 PLOT 231 .93 November DDD-1 095 to DDD-1098 PLOT 278 .69 November DDD-1 099 to DDD-11 02 PLOT 435 .62 November DDD-1170 to DDD-1176 Smart Communications Inc. 121 .00 De cembe r DDD-1389 to DDD-1392 Globe Telecom 199.08 December DDD-1393 to DDD-1396 Globe Telecom December DDD-1397 to DDD-1400 Globe Telecom 72 .60 December DDD-1636 to DDD-1639 PLOT 138.07 December DDD-1640 to DDD-1644 PLOT 223 .35, December DDD-1645 to DDD-1651 PLOT 3,200.00 Page 6 of 8 .. ,., ...

MARUBENI PHILIPPINES CORPORATION Annex A vs. COMMISSIONER OF INTERNAL REVENUE CTA CASE NO. 7223 Input Vat ADDITIONAL INPUT VAT DISALLOWANCES 168.59 PER THE COURT'S VERIFICATION 145 .57 326 .74 1.) Input VAT on purchase of services not supported by offi cial receipts 4 12 .66 464 .66 Month Exhibit No. Supplier Decem ber 000-1652 to 000-1656 PLOT 1, 000.00 December 000-1657 to DDD-166 1 PLOT 127,773 .78 De cemb e r DDD-1662 to DDD-1666 . PLOT December 000-1667 to DDD-1672 PLOT Input Vat December 00 0-1803 to 000-1808 Smart Communications Inc. 352 .18 De c em be r 000-1848 to 000-1849 USA & Co . 33.41 Total 7 .4 6 18 08 2.) Input VAT on purchase of goods not supported by invoic e 4.37 78 .61 Month Exhibit No. Supplier 30.52 April BBB-207 to BBB-209 The Landmark Corporation 19.09 May BBB-1056 to BBB-1058 SM Fairview 38 .18 Jun e BBB-1365 to BBB-1372 Landmark 581.90 June BBB-1365 to BB B-1372 Landmark June BBB-1365 to BB B-1372 National Bookstore June BBB-1373 to BBB-1375 National Bookstore November 000-947 to 000-950 Nationa l Bookstore November 000-95 1 to 000-954 National Bookstore Novem ber 00 0-941 to 000-946 National Bookstore Total 3.) Input VAT on rental payments supported by OR dated outside the year covered by the claim Mo nth Exhibit No. Supplier Input Vat Ap ril EE E- 1 Johnson Capital Holdings Corporation 7,389 .09 May EEE - 1 Johnson Capital Holdings Corporation 7,389 .09 June E EE - 1 Johnson Capital Holdings Corporation 7,389 .09 July EE E-1 Johnson Capital Holdings Corporation 7,389.09 Augu st EEE- 1 Johnson Capital Holdings Corporation 7,389 .09 September EEE-1 Johnson Capital Holdings Corporati on 7,389. 09 Total 44,334.54 4.) Input VAT on purchase of goods/s ervices supported by VAT invoice/DRs issued not in the Petitic Payor is not indicated Month Exhibit No. Supplier Input Vat April BBB-432 to BBB-450 Man ila Golf & Country Club, Inc. 266.30 May BBB-764 to BBB-794 Manila Golf & Country Club, Inc. 401 .18 May BBB-1066 to BBB- 1068 The Tea Republic 20.70 June BBB- 1101 to BBB-1103 American Ch ilis & Bar Restaurant 94 .22 June BBB-1 357 to BBB-1359 Manila Mandari n Hotel , Inc. 303.13 June BBB-1645 to BBB-1647 Tach ibana In 27 0 .0 0 June BBB-1666 to BBB-1668 Tia n-tian Hot Pot & Restau rant Co . 353 .00 Page 7 of 8 . 1438

MARUBENI PHILIPPINES CORPORATION Annex A vs . COMMISSIONER OF INTERNAL REVENUE CTA CASE NO. 7223 Input Vat ADDITIONAL INPUT VAT DISALLOWANC ES 7 .10 PER THE COURT'S VERIFICATION 7 .00 1.) Input VAT on purc hase of services not supported by offi cial receipts 19.59 50.20 Month Exhibit No. Suppli er 4 0.0 0 Ju ly CCC-1 to CCC-31 3R Imaging 253 .39 Ju ly CCC-1 to CCC-31 3R Imaging 181.82 July CCC-349 to CCC-362 Manila Golf & Country Club, Inc. 124 .92 Aug ust CCC-545 to CCC-548 3R Imaging 301 .16 132 .50 Aug ust CCC-750 to CCC-752 Kameraworld Inc. 41 .59 Augu st CCC-753 to CCC-756 Kaya Restaurant 68.46 Septe mber CCC-1534 to CCC-1537 Tsukiji Restaurant 2,936 .26 Octob er DDD-642 to DDD-644 The Peninsu la Manila October DDD-645 to DDD-648 Tian-tian Hot Pot & Restaurant Co . Input Vat November DDD-964 to DDD-967 Pancake Connection, Inc�. 29 .98 November DDD-1128 to DDD- 1131 Red Ribbon Bakeshop 29 .98 De cembe r DDD-1491 to DDD-1494 La Dulcinea Restaurant, Inc. Total '<~ 5.) Input VAT on purchase of goods without supporting do cum ents Month Exhibit No. Supplier August Total Homeworld 1439