PROCTER & GAMBLE INTERNATIONAL OPERATIONS SA ROHQ v. COMMISSIONER OF INTERNAL REVENUE (CONSOLIDATED WITH CTA CASE NO. 9526)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS Quezon City Third Division PROCT ER & GAMBLE CTA CASE N OS. 9485 & 9526 INTERNATIONAL OPERATIONS SA-ROHQ, Members: Petitio ne r, UY, Chairperson RINGPIS-LIBAN, and -versus- MODESTO-SAN PE DRO,JJ. COMMISSIONE R OF INTE RNAL REVEN UE, Re s p o nd e nt. Pr'JomAuNlg0ate3d:2022-- x--------------------------------------------------------------J-~L~-fiP-:~-~--------x DECISION RIN GPIS-LIBAN, ].: The Case These consolidated cases involve Petitions for Review f.tled by Procter & Gamble International Operations SA-ROHQ against Respondent Commissio ner of Internal Revenue, praying for the refund or issuance of a tax credi.t certificate to Petitioner in the amounts of Php23,841,096.68 for CfA Case No. 9485 and Php23,123,319.83 for CTA Case No. 9526, allegedly representing its excess and unutilized input value-added tax ("VAT") on the purchases o f goods, services and importations, attributable to zero-rated sales for the period covering July 01,2014 to September 30,2014 and the 2"<.1 quarter of fiscal year ("FY") 2015 covering October 01, 2014 to December 30, 2014, respectively.1 / Docket (CTA Case No. 9485) - Vol. 4, Pre-Trial Order dated September 14, 2017, Summary of t he Case, p. 1684.

DECISION erA CASE NOS. 9485 & 9526 The Parties Petitioner is a Regional Operating Headquarters ("ROHQ") licensed by the Securities and Exchange Commission ("SEC") to transact business in the Philippines under SEC Registration No. FS201104304 dated March 24, 201 t.2 It is also registered with the Bureau of Internal Revenue ("BIR") as a VAT taxpayer under Tax Identification Number ("TIN") 406-931-778-000, with office address at 11/F Net Park, 5'h Avenue, Crescent Park West, Bonifacio Global City, Taguig City.3 On the other hand, Respondent is the duly appointed Commissioner of Internal Revenue vested under the appropriate laws with the authority to carry out the functions, duties, and responsibilities of his office including, inter alia, the duty to act upon and approve claims for refund or tax credit pursuant to the provisions of the National Internal Revenue Code ("NIRC") of 1997, as amended, and other tax laws, rules and regulations.4 The Facts On June 01,2016, Petitioner filed with the BIR the letter dated May 17, 2016 and an Application for Tax Credits I Refunds (BIR Form No. 1914), for the refund or tax credit of input tax, covering the quarter from July 01, 2014 to September 30, 2014, in the amount of Php23,841,096.68, pursuant to Section 112(A) of the NIRC of 1997, as amended.5 The claim was denied by the BIR, through Ms. Teresita M. Angeles, OIC-Assistant Commissioner, Large Taxpayers Service of the BIR, in the letter dated January 26, 2017,6 for failure to submit requirements within one hundred twenty (120) days, pursuant to Revenue Memorandum Circular (RMC) No. 54-2014. In the meantime, on August 30, 2016, Petitioner likewise filed with the BIR the letter dated August 25, 2016 and an ApplicationforTax Credits I Refunds (BIR Form No. 1914), for the refund or tax credit of input tax, covering the quarter from October 01, 2014 to December 31, 2014, in the amount of Php23,841,096.68, pursuant to Section 112(A) of the NIRC of 1997, as amended.7 The claim was likewise denied by the BIR, through OIC-Assistant ,/V 2 Docket (erA Case No. 9485)- Vol. 5, Exhibit "P-1", pp. 2178 to 2189. 3 Docket (erA Case No. 9485)- Vol. 5, Exhibit "P-2", p. 2217. 4 Docket (erA Case No. 9485) - Vol. 4, Joint Stipulation of Facts and Issues (JSFI), Stipulated Facts, Par. 1, p. 1673. Docket (erA Case No. 9485)- Vol. 9, Exhibits "P-9" and "P-9.1", pp. 4348 to 4351. 5 6 Docket (erA Case No. 9485)- Vol. 9, Exhibit "P-11", p. 4357. 7 Docket (erA Case No. 9485) -Vol. 9, Exhibits "P-10" and "P-10.1", pp. 4352 to 4356.

DEGSJON CTA CASE NOS. 9485 & 9526 Commissioner Teresita M. Angeles, in an undated letter,8 for failure to submit complete documents and for lack of factual basis. CTA Case No. 9485 On October 20, 2016, Petitioner flied a Petition for Review,9 praying for the refund, or issuance of a tax credit certificate in the amount, of Php23,841 ,096.68, allegedly representing its excess and unutilized input VAT on the purchases of goods and services, and importations, attributable to zero- rated sales for the period covering July 01, 2014 to September 30, 2014 ("the 1" quarter ofFY 2015"). The case was docketed as CTA Case No. 9485 and was initially raffled with the Third Division of this Court. Respondent flied his Answer on February 20, 2017,10 interposing, inter alia, the following special and affirmative defenses, to wit: (1) taxpayer is charged with the heavy burden of providing that he has complied with and satisfied a! the statutory and administrative requirements to be entitled to the tax refund; (2) the amount of Php23,841,096.68 being claimed for refund by Petitioner was not properly documented; hence, the instant claim for refund or credit must fail; (3) the instant petition is prematurely ftled; and (4) nowhere is it indicated in the claim for refund and in this petition that Petitioner has submitted its "complete" documents in support of the claim for refund. Respondent transmitted to this Court the BIR Records for the case on March 24, 2018. 11 The Pre-Trial Conference was initially scheduled on May 09, 2017,12 but was later cancelled, and was reset to July 25, 2017, in the Resolution dated May OS, 2017Y On May 04, 2017, Petitioner flied an Omnibus Motion, praying for: (1) the consolidation of CTA Case No. 9485, with CTA Case No. 9526, and (2) deferment of the Pre-Trial Conference./ 8 Docket (CfA Case No. 9485)- Vol. 9, Exhibit "P-12", p. 4358. 9 Docket (CfA'Case No. 9485)- Vol. 1, pp. 10 to 23 10 Docket (CfA Case No. 9485)- Vol. 1, pp. 105 to 115. 11 Docket (CfA Case No. 9485) -Vol. 1, Respondent's Compliance dated March 17, 2017, pp. 123 to 124. Docket (CfA Case No. 9485) - Vol. 1, Notice of Pre-trial Conference dated February 22, 12 2017, pp. 117 to 118. 13 Docket (CfA Case No. 9485)- Vol. 1, pp. 151 to 152. 14 Docket (CfA Case No. 9485)- Vol. 1, pp. 133 to 137.

DECISION erA CASE NOS. 9485 & 9526 Petitioner's Pre-Trial Briefwas ftled on May 05, 2017.15 In the Resolution dated May 10, 2017, 16 the Court considered Petitioner's Motion to Defer Pre-Trial Conference moot in view of the Resolution dated May 05, 2017, and ordered Respondent to comment on Petitioner's Motion to Consolidate. In compliance thereto, Respondent ftled, on May 23, 2017, a Manifostation submitting the resolution of Petitioner's Motion to Consolidate to the sound discretion of the CourtY CTA Case No. 9526 On the other hand, in January 20, 2017, Petitioner ftled another Petition for Review,18 praying for the refund, or issuance of a tax credit certificate in the amount, of Php23,123,319.83, allegedly representing its excess and unutilized input tax on the purchases of goods and services, and importations, attributable to zero-rated sales for the 2nd quarter of FY 2015, covering October 01, 2014 to December 30, 2014. The case was docketed as CTA Case No. 9526, and was initially raffled with the First Division of this Court. Respondent ftled his Answer on February 27, 2017, 19 interposing, inter alia, the following special and affirmative defenses, to wit: (1) Petitioner's alleged claim for refund is subject to administrative routinary investigation/examination by the BIR; (2) the amount being refunded was not properly documented; (3) Petitioner merely substantiated that it had rendered services to foreign entities outside the Philippines, but did not present evidence that these foreign entities are not doing business in the Philippines; (4) Petitioner's failure to comply with the duly mandated legal requirements in such claims for refund/tax credit warranted the denial by inaction of the administrative claim; (5) Petitioner has the burden of proving that the right to such tax refund indubitably exists and well-founded doubt is fatal to the claim; and (6) without a validly and duly ftled administrative claim for refund, the Court is without jurisdiction to entertain the Petition for Review. The Pre-Trial Conference was initially set on June 01, 2017. 20 Prior thereto, Respondent's Pre-Trial Briefwas ftled on March 08, 2017.21 ~ 15 Docket (erA Case No. 9485)- Vol. 1, pp. 138 to 149. 16 Docket (erA Case No. 9485) -Vol. 1, p. 154 17 Docket (erA Case No. 9485)- Vol. 1, pp. 158 to 159. 18 Docket (erA Case No. 9526), pp. 10 to 26. 19 Docket (erA Case No. 9526), pp. 104 to 112. 20 Docket (erA Case No. 9526), Notice of Pre-Trial Conference dated March 02, 2017, pp. 119 to 120. 21 Docket (erA Case No. 9526), pp. 125 to 128. c

DECISION CTA CASE NOS. 9485 & 9526 On May 04, 2017, Petitioner filed a Motion to Consolidate, praying for the consolidation of this case with CTA Case No. 9485.22 The BIR Records for the case were transmitted to the Court on May OS, 2017. 23 In the Resolution dated May 22, 2017,24 the First Division of this Court granted Petitioner's Motion to Consolidate, and ordered the consolidation of CTA Case No. 9526, with CTA Case No. 9485, subject to the conformity of the Third Division of this Court. Consolidation ofCase Nos. 9485 and 9526 In the Resolution dated May 31, 2017,25 the Third Division of this Court stated that it has no objection to the First Division's Resolution dated May 22, 2017, and thus, ordered the consolidation of CTA Case No. 9526 with CTA Case No. 9485. In the same Resolution, the Court decreed that the Pre-Trial Conference previously scheduled on July 25, 2017 shall proceed as scheduled. Thus, the Pre-Trial Conference was held on July 25, 2017. 26 Prior thereto, Respondent filed his Consolidated Pre-Trial Briefon July 17, 2017,27 while Petitioner's Pre-Trial Briefwas received by the Court on July 21, 2017.28 On August 29, 2017, the parties submitted their Joint Stipulation of Facts and Issues. 29 Subsequendy, the Pre-Trial Order dated September 14, 2017 was issued,30 deeming the termination of the Pre-Trial Conference. As trial ensued, Petitioner presented its testimonial and documentary evidence. It offered the testimonies of the following individuals, namely: (1) ~ 22 Docket (CTA Case No. 9526), pp. 152 to 155. 23 Docket (CTA Case No. 9526), pp. 158 to 159. 24 Docket (CTA Case No. 9526), pp. 163 to 164; Docket (CTA Case No. 9485)- Vol. 1, pp. 158 to 159. 25 Docket (CTA Case No. 9485) - Vol. 1, pp. 162 to 163; Notice of Pre-Trial Conference dated June OS, 2017, pp. 164 to 165; Minutes of the hearing held on, and Order dated July 25, 2017, pp. 1658 and 1660 to 1661, respectively. 26 Docket (CTA Case No. 9485) - Vol. 4, Minutes of the hearing held on, and Order dated, July 25, 2017, pp. 1658 to 1661. 27 Docket (CTA Case No. 9485)- Vol. 1, pp. 174 to 176. 28 Docket (CTA Case No. 9485)- Vol. 4, pp. 1644 to 1656. 29 Docket (CTA Case No. 9485)- Vol. 3, pp. 1673 to 1682. 30 Docket (CTA Case No. 9485)- Vol. 4, pp. 1684 to 1689. (!

DECISION CTA CASE NOS. 9485 & 9S26 Mr. Carlos Ben C. Ignacio, 31 Petitioner's Procure to Pay Global Service Manager and former Comptroller and Compliance Manager; and (2) Mr. Jay A. Ballesteros, 32 the Court-commissioned Independent Certified Public Accountant ("ICPA").33 The ICPA Report was submitted to the Court on March 09, 2018.34 Petitioner filed its Formal Offer of Evidence (FOE) on May 22, 2018. 35 Subsequendy, Respondent ftled his Comment Re: Petitioner's Formal Offer of Evidence on May 31, 2018.36 In the Resolution dated November 15, 2018,37 the Court admitted the offered exhibits of Petitioner, except for the following: 1) Exhibits "P-4.14", "P-4.35", "P-5.7", "P-5.8", "P-5.9", ''P- 5.20", "P-5.23", "P-5.31", "P-5.32", "P-5.33", "P-5.51", "P-5.60", "P-5.61", "P-5.62", "P-5.67", "P-6.3", "P-6.10", "P-6.18", "P-6.24", "P-6.25", "P-6.26", "P-6.27", "P-6.28", "P-6.32", "P-6.34", "P-6.36", "P-7.8", "P-7.10", "P-7.22", "P-20", "P-20.1", "P-20.2", "P-20.3", "P-20.4", "P-20.5", "P-20.6", "P-20.7", "P-20.8", "P-20.9", "P-20.10", "P- 20.11", "P-20.12", "P-20.13", "P-20.14", "P-20.15", "P- 21.1", "P-21.2", "P-21.3", "P-21.4", "P-21.5", "P-21.6", "P-21.7", "P-21.8", "P-21.9", "P-21.10", "P-21.11", "P- 21.12", "P-21.13", "P-21.16", "P-21.17", "P-21.18", "P- 21.19", "P-21.20", "P-21.21", "P-21.25", "P-21.27", "P- 21.28", "P-21.29", "P-21.30", "P-21.31", "P-21.33", for failure to correspond with the documents actually marked; 2) Exhibits "P-21 ", "P-21.1 5", ''P-21.23", and ''P-21.24", for not being found in the records; /V 31 Docket (CTA Case No. 9485) - Vol. 4, Exhibit "P-31", pp. 1744 to 1772; Minutes of the hearing held on, and Order dated, January 23, 2018, pp. 1862, and 1864 to 1865, respectively. 32 Docket (CTA Case No. 9485) -Vol. 5, Exhibit "P-23", pp. 1987 to 2018; Minutes of the hearing held on and Order dated, April 17, 2018, pp. 2019 to 2021. 33 Docket (CTA Case No. 9485) - Vol. 4, Oath of Commission dated January 23, 2018, p. 1863; Minutes of the hearing held on, and Order dated, January 23, 2018, pp. 1862, and 1864 to 1865, respectively. 34 Docket (CTA Case No. 9485)- Vol. 5, Exhibit "P-22", pp. 2075 to 2175. 35 Docket (CTA Case No. 9485) -Vol. 5, pp. 2027 to 2072. 36 Docket (CTA Case No. 9485)- Vol. 9, pp. 4368 to 4370. 37 Docket (CTA Case No. 9485)- Vol. 9, pp. 4376 to 4384. c

DECISION CTA CASE NOS. 9485 & 9526 3) Exhibits "P-21.14", "P-21.22", "P-21.26", and "P-21.34", for failure to correspond with the documents actually marked and to submit the originals for comparison; and 4) Exhibit "P-21.32", for being unreadable or not properly scanned/blurred. Petitioner then filed an Omnibus Motion (i) Motion for Reconsideration (Re: Resolution dated November 15, 20 18); (ii) Motion to Set Commissioner's Hearing; and (iii) Motion for Leave of Court to Recall Witness on December 03, 2018.38 Respondent did not flle his comment to the said Omnibus Motion. 39 In the Resolution dated March 15, 2019, 40 the Court granted Petitioner's Motion to Set Commissioner's Hearings and Motion for Leave of Court to Recall Witness, while the Motion for Reconsideration was held in abeyance. Petitioner then recalled, and presented the testimonies of, Mr. Carlos Ben C. Ignacio,41 and Mr. Jay A. BallesterosY Subsequently, Petitioner flied a Motion for Clarification on August 13, 2019,43 seeking clarification on the whether or not the Court has admitted or denied Exhibits "P-6.25" and "P-6.26". In Resolution dated August 29, 2019,44 the Court granted the said Motion for Clanjication, and admitted the said exhibits. In the meantime, Petitioner filed its Supplemental Formal Offer of Evidence on August 23, 2019. 45 Respondent, however, did not flle his comment thereon. 46 In the Resolution dated October 15, 2019,47 the Court admitted certain exhibits of Petitioner, and still denied the following: 1) Exhibits "P-6.10", "P-6.34", "P-6.38", "P-6.46", "P-20.4", "P-20.5", "P-20.6", "P-20.11", "P-20.12", "P-21.6", for failure to correspond with the documents actually marked; _/V' 38 Docket (CTA Case No. 9485) -Vol. 9, pp. 4388 to 4409. 39 Docket (CTA Case No. 9485) - Vol. 9, Records Verification Report dated January 08, 2019, p. 4424. 40 Docket (CTA Case No. 9485) -Vol. 9, pp. 4428 to 4430. 41 Docket (CTA Case No. 9485) - Vol. 9, Exhibit "P-32", pp. 4468 to 4479; Docket (CTA Case No. 9485) - Vol. 10, Minutes of the hearing held on, and Order dated, August 13, 2019, pp. 5094 to 5096. Docket (CTA Case No. 9485) - Vol. 9, Exhibit "P-33", pp. 4450 to 4464; Docket (CTA 42 Case No. 9485) - Vol. 10, Minutes of the hearing held on, and Order dated, August 13, 2019, pp. 5094 to 5096. 43 Docket (CTA Case No. 9485) -Vol. 10, pp. 5073 to 5075. 44 Docket (CTA Case No. 9485)- Vol. 11, pp. 5714 to 5715. 45 Docket (CTA Case No. 9485)- Vol. 10, pp. 5097 to 5117. 46 Docket (CTA Case No. 9485) - Vol. 12, Records Verification Report dated September 11, 2019 issued by the Judicial Records Division of this Court, p. 5716. 47 Docket (CTA Case No. 9485)- Vol. 11, pp. 5723 to 5726. r

DECISION CTA CASE NOS. 9485 & 9526 2) Exhibits "P-6.10-1 ", "P-21.14", "P-21.22", "P-21.26", "P- 21.34", for failure to present the originals for comparison; 3) Exhibits "P-21.15", "P-21.23", and "P-21.24", for not being found in the records; 4) Exhibit "P-21.32", for being unreadable or not properly scanned or blurred; and 5) Exhibits "P-6.42", "P-6.43", "P-6.49", "P-6.50", and "P- 6.51", for failure to correspond with the documents actually marked and failure to present the originals for comparison (not original and no marking stating if Faithful Reproduction of the Original/Provision Marking). On November OS, 2019, Petitioner flied a Motion for Reconsideration (Re: Resolution dated October 15, 2019). 48 Respondent did not file his comment thereon. 49 In the Resolution dated February 21, 2020, 50 the Court granted Petitioner's Motion for Reconsideration, and admitted Exhibits "P-20.4", "P-20.5", "P-20.6", "P-20.11", "P-20.12", "P-21.6", "P-21.15", "P-21.23", and "P-21.24". For his part, Respondent likewise presented his testimonial and documentary evidence. Respondent offered the testimonies of (1) Revenue Officer Rosario A. Arriola,51 and (2) OIC- Assistant ChiefWilfredo Reyes.52 Respondent's Formal Offir ofEvidence was posted on September 28, 2020.53 Petitioner then filed its Comment (Re: Respondent's Formal Offir of Evidence dated September 23, 2020) on October 26, 2020.54 In Resolution dated November 11,2020,55 the Court admitted Respondent's exhibits. . /Y" 48 Docket (CTA Case No. 9485)- Vol. 11, pp. 5731 to 5742. 49 Docket (CTA Case No. 9485) - Vol. 12, Records Verification Report dated January 28, 2020 issued by the Judicial Records Division of this Court, p. 5747. 50 Docket (CTA Case No. 9485) -Vol. 12, pp. 5753 to 5755. 51 Docket (CTA Case No. 9485) -Vol. 1, Exhibit "R-4", pp. 169 to 173; Docket (CTA Case No. 9485) - Vol. 9, Minutes of the hearing held on, and Order dated, November 15, 2018, pp. 4385 to 4387. 52 Docket (CTA Case No. 9485) - Vol. 12, Exhibit "R-9", pp. 5761 to 5764; Docket (CTA Case No. 9485) - Vol. 12, Minutes of the hearing held on, and Order dated, September 15, 2020, pp. 5766 to 5768. 53 Docket (CTA Case No. 9485)- Vol. 12, pp. 5769 to 5772. 54 Docket (CTA Case No. 9485)- Vol. 12, pp. 5776 to 5781. 55 Docket (CTA Case No. 9485)- Vol. 12, pp. 5786 to 5787. (

DECISION CTA CASE NOS. 9485 & 9526 On December 28, 2020, Respondent filed his Memorandum; 56 and on January 22, 2021, Petitioner's Memorandum was flledY These consolidated cases were considered submitted for decision on January 28, 2021.58 The Issue The sole issue to be resolved in these consolidated cases is whether or not Petitioner is entitled to its claim for refund of or issuance of tax credit certificate for excess or unutilized input VAT in the aggregate amount of Php46,964,416.51 for the 1" and 2nd quarters of FY2015."59 Petitioner's arguments: Petitioner argues that tt ts a VAT-registered entity; that its sales of services to its customers outside the Philippines are zero-rated sales; that Petitioner paid or incurred input VAT which are properly substantiated in accordance with the law and regulations; that the input VAT paid or incurred by Petitioner are attributable to zero-rated sales or effectively zero-rated sales; that the input VAT have not been applied against output taxes during and in the succeeding periods; and that Petitioner's claim for refund was filed within the mandatory period provided under the law. Respondent's counter-arguments: Respondent contends that Petitioner's alleged claim for refund is subject to administrative routinary investigation/examination by the BIR; that there is no record of Petitioner ever submitting complete documents to substantiate its administrative claim for refund; that Petitioner's administrative claim for refund is denied for failure to submit complete documents and for lack of factual basis; that Petitioner merely substantiated that it had rendered services to foreign entities doing business outside the Philippines, but did not present evidence that these foreign entities are not doing business therein; that without a validly and duly filed administrative claim for refund, the Court is without jurisdiction to entertain the Petition for Review; and that claims for refund are construed strictly against the claimant for the same partake the nature of exemption from taxation/ 56 Docket (CTA Case No. 9485) -Vol. 12, pp. 5788 to 5796. 57 Docket (CTA Case No. 9485) -Vol. 12, pp. 5799 to 5833. 58 Docket (CTA Case No. 9485) -Vol. 12, Resolution dated January 28, 2021, p. 5835. 59 Docket (CTA Case No. 9485)- Vol. 4, JSFI, Stipulated Issue, pp. 1673 to 1674. 0

DECISION CTA CASE NOS. 9485 & 9526 Discussion/Ruling The consolidated Petitions for Review must be denied. Before this Court detennines the propriety of the subject claims on the basis of substantive law, it shall first resolve the issue of jurisdiction being raised by Respondent. According to the latter, Petitioner's failure to submit documents supporting its claim for refund makes its administrative claim for refund proforma. Relative thereto, Respondent argues that this pro-forma administrative claim should not be taken as proper compliance with the requirements of the law; and that without a validly and duly flied administrative claim for refund, the Court is without jurisdiction to entertain the Petition for Review. We disagree with Respondent. Part II of RMC No. 54-2014, the BIR issuance under which the subject administrative claims were filed, reads as follows: "II. Filing and Processing of Administrative Claims - The application for VAT refund/tax credit must be accompanied by complete supporting documents as enumerated in Annex 'A' hereof. In addition, the taxpayer shall attach a statement under oath attesting the completeness of the submitted documents (Annex 'B'). The affidavit shall further state that the said documents are the only documents which the taxpayer will present to support the claim. If the taxpayer is a juridical person, there should be a sworn statement that the officer signing the affidavit (i.e., at the very least, the Chief Financial Officer) has been authorized by the Board of Directors of the company. Upon submission of the administrative claim and its supporting documents, the claim shall be processed and no other documents shall be accepted/required from the taxpayer in the course of evaluation. A decision shall be rendered by the Commissioner based only on the documents submitted by the taxpayer. The application for tax refund/tax credit shall be denied where the taxpayer/claimant failed to submit the ~

DECISION CTA CASE NOS. 948S & 9526 complete supporting documents. For this purpose, the concerned processing/investigating office shall prepare and issue the corresponding Denial Letter to the taxpayer/ claimant."60 On the basis of the foregoing, there is no indication that a taxpayer- applicant's failure to submit complete supporting documents should result to the treatment of the administrative claim as proforma. It is merely a ground for the BIR to deny the same administrative claim. Moreover, this Court sees no legal or jurisprudential basis to treat an administrative claim with incomplete supporting documents as proforma, so as to oust this Court of jurisdiction. Considering the unfounded contention of Respondent and since there is no indication that this Court is without jurisdiction over the present consolidated cases, this Court shall assume jurisdiction. Requisites for the grant of the refund or issuance of a tax credit certificate under the law. Section 112 of the NIRC of 1997, as amended by Republic Act No. 9337,61 provides: "SEC. 112. Refunds or Tax Credits riflnput Tax.- (A) Zero-Rated or Effective!J 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 Provided, further, That where the Bangko Sentral ng Pilipinas (BSP): ~ 60 Emphasis and underscoring supplied. 108, 109, 110, 111, 112, 113, 114, 116, 61 An Act Amending Sections 27, 28, 34, 106, 107, the National Internal Revenue Code of 117, 119, 121, 148, 151, 236, 237 And 288 of 1997, as Amended, and for Other Purposes. 0

DECISION CTA CASE NOS. 9485 & 9526 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 ofInput 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 f!led in accordance with Subsection (A) hereof. In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty 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 the taxpayer-applicant to requisites which must be complied with by Said requisites are classified successfully obtain a credit/refund of input VAT. into certain categories, to wit: Timeliness ofthefiiing qfthe administrative andjudiciai claims: 1. the claim is f!led with the BIR within two years after the close of the taxable quarter when the sales were made;62 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, the judicial claim has been filed with this Court, within 30 days from receipt of the 120-day period;63 decision or after the expiration of the said ,y" 62 Intel Technology Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 166732, April 27, 2007; San Roque Power Corporation v. Commissioner of Internal Revenue, G.R. No. 18034S, November 25, 2009; and AT&T Communications Services Philippines, Inc. v. 63 Commissioner ooPffoInwInteetrer,nrnaaIlnlRcR.eveev(neFunoeur,me,Ge.GrRly..RN. SoN.tao1t.e82203P56o24w8, 2eA,rugJauDnsetuva0er3lyo, p21m041e, 0n2.t01C9;orRpoorhamtioAn)pollvo. Steag State Commissioner

DECISION CTA CASE NOS. 948S & 9526 With r~&rence to the taxpqyer's registration with the BIR- 3. the taxpayer is a VAT-registered person;64 In relation to the taxpqJer's output VAT.� 4. the taxpayer is engaged in zero-rated or effectively zero-rated 5. sfaolresz�'e65ro-rated sales under Sections 106(A)(2)(a)(1), (2) and (b); and 108(B)(1) and (2), the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with BSP rules and regulations;66 and As regards the taxpqyer's input VAT being r~funded� 6. the input taxes are not transitional input taxes;67 7. the input taxes are due or paid;68 8. the input taxes claimed are attributable to zero-rated or effectively zero-rated sales. However, where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes cannot be direcdy and entirely attributable to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume;69 and 9. the input taxes have not been applied against output taxes during and in the succeeding quarters.70 It must be emphasized that in cases filed before this Court, which are aspect of their case.71 litigated de novo, party-litigants must prove every minute ;"V' Semiconductor Philippines v. Commissioner of Internal Revenue, G.R. No. 168950, 64 January 14, 2015. v. Commissioner of Internal Revenue, G.R. No. 166732, Intel Technology Philippines, Inc. Corporation v. Commissioner of Internal Revenue, G.R. April 27, 2007; San Roque Power and AT&T Communications Services Philippines, Inc. v. No. 180345, November 25, 2009; Commissioner of Internal Revenue, G.R. No. 182364, August 03, 2010. 65 !d. 66 !d. 67 !d. 68 Id Technology Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 166732, 69 27, 2007; San Roque Power Corporation v. Commissioner of Internal Revenue, G.R. Intel April 70 No. 180345, November 25, 2009. v. Commissioner of Internal Revenue, G.R. No. 166732, Corporation v. Commissioner of Internal Revenue, G.R. Intel Technology Philippines, Inc. and AT&T Communications Services Philippines, Inc. v. April 27, 2007; San Roque Power No. 180345, November 25, 2009; CNIECP2n0doohoti1esminsl.i4rospmn;onp2aliiis0nDld(se1BaiRizo6taoeen6tNndvae5eaarMnvtnoia.uo)infnenCdiICannvolgot.ue2gBraU0retnna1nndano6ietkl6ferD,aR8dTte,eiGaovSvxn.eAeaRlnulo.AvCugpapeuoNmgp,sreoepetG.aona.l3rRtsna10,.Cdt8,iNoo0eTnr2o2tpo.90owav011rl.a,.a78,gt;2CiSeoG3oCen6.m(Rp4oPv.tm,mhe. AmiNimClssuosbo.isg).iemo,surni1Ismoen4tn2irc0s0e9.s93or,,i4,ofG4on22I.,e0fn0Rr11tA.Ie40onpNr;tfnreoiIlaC.rnln3to1ea0Rm9rl,en7mva5R2ei1ls0en5sR0vui,e8oeen;Jnv,uueeAelGnrytul.aRoe2vs..,,f 71

DECISION CfA CASE NOS. 9485 & 9526 Thus, it behooves Petitioner to show compliance with each of the above- enumerated requisites. Petitioner timely filed its administrative and judicial claims. The first requisite pertains to the filing of the refund for tax credit or refund of input VAT before the BIR, within two (2) years from the close of the quarter when the sales were made. The present claims cover the 1" and 2"d quarters of FY 2015. Counting two (2) years from the respective close of the said quarters, the following table indicates the pertinent last days for the filing of an administrative claim for the said two (2) quarters, to wit: Quarter Close of the Quarter Last day to File Date of Filing (FY 2015) September 30, 2014 Administrative Administrative December 31, 2014 1" Quarter Claim Claim Guly 1, 2014 to September 30, September 30, 2016 June 01, 201672 2014) December 31, 2016 August 30, 201673 2"d Quarter (October 1, 2014 to December 31, 2014) On the basis thereof, it is apparent that Petitioner's administrative claims were timely flied. The second requisite is to the effect that the judicial claim must have been flied within thirty (30) days from the receipt of Respondent's decision or after the expiration of the 120-day period under Section 112(C) of the NIRC of 1997, as amended. In Silicon Philippines, Inc. (Former!J Intel Philippines Manufacturing, Inc.) v. Commissioner ofInternal Revenue/4 the Supreme Court held:/ G.R. No. 145526, March 16, 2007; and Commissioner of Internal Revenue v. Manila Mining Corporation, G.R. No. 153204, August 31, 2005. Docket (CfA Case No. 9485)- Vol. 9, Exhibits "P-9" and "P-9.1", pp. 4348 to 4351. 72 73 Docket (CfA Case No. 9485)- Vol. 9, Exhibits "P-10" and "P-10.1", pp. 4352 to 4356. 74 G.R. No. 182737, March 02, 2016.

DECISION CTA CASE NOS. 9485 & 9526 "Whether Respondent rules in favor of or against the taxpayer - or does not act at all on the administrative claim- within the period of 120 days from, the submission of complete documents, the taxpayer may resort to a judicial claim before the CTA. The judicial claim shall be filed within a period of 30 days after the receipt of Respondent's decision or ruling or after the expiration of the 120-day period, whichever is sooner. Aside from a specific exception to the mandatory and jurisdictional nature of the periods provided by law, any claim filed in a period less than or beyond the 120+30 days provided by the NIRC is outside the jurisdiction of the CTA."75 Based on the foregoing doctrinal pronouncements, the 30-day period provided by law should be reckoned after the receipt of Respondent's decision/ruling or after the expiration of the 120-day period, whichever is sooner. In addition, it is clear that any judicial claim filed in a period less than or beyond the said 120+30-day period is outside the jurisdiction of this Court. In this case, as already established, Petitioner's administrative claims were ftled on June 01, 2016 (1" claim) and August 30, 2016 (2"d claim), respectively. Respondent or the BIR then had one hundred twenty (120) days from the said dates to act on the said claims. For the 1" claim, the one hundred twenty (120) days ended on September 29, 2016; while for the 2"d claim, the one hundred twenty (120) days ended on December 28,2016. However, with regard to the 1" claim, it was only on January 26, 2017 that the BIR issued the letter denying the said claim.76 Thus, it is clear that the BIR's denial is beyond the 120-day period, and that there was inaction. The same is true as regards the 2"d claim. While the BIR issued a denial letter, the same is undated77 Hence, there is no way of knowing whether the same was made within the corresponding 120-day period. Accordingly, it is deduced that there was also inaction:..-,./ 75 Emphasis and underscoring supplied. 76 Docket (CTA Case No. 9485)- Vol. 9, Exhibit "P-11", p. 4357. 77 Docket (CTA Case No. 9485)- Vol. 9, Exhibit "P-12", p. 4358. (

DECISION CTA CASE NOS. 9485 & 9526 Correspondingly, for the present consolidated cases, the 30-day period to appeal before this Court should be reckoned from the expiration of the 120- day period. Such being the case, for the 1" claim, Petitioner had until October 29, 2016, and for the 2"d claim, Petitioner had until January 27, 2017, within which to flie the judicial claims, respectively. Considering that for the 1" claim, the Petition for Review was flied on October 20, 2016 (CTA Case No. 9485)/8 and that for the 2"d claim, the Petition for Review was flied on January 20, 2017 (CTA Case No. 9526),79 both appeals were timely made. Such being the case, Petitioner fulfilled both the above-stated first and second requisites. The court has jurisdiction over the two (2) claims on the basis of Respondent's inaction. Petitioner is a VAT-registered person. Petitioner complied with the third requisite, considering that it is a VAT- registered person, under TIN 406-931-778-000, as evidenced by BIR Certificate with OCN 8RC0000448065 issued on February 22, 2016.80 However, Petitioner failed to establish that it was engaged in zero- rated sales or effectively zero-rated sales during the subject quarters. The fourth requisite require that the taxpayer is engaged in zero-rated or effectively zero-rated sales. Petitioner anchors its claim for refund or issuance of tax credit certificate representing its excess and unutilized input VAT on Section 108(B)(2) of the NIRC of 1997, as amended, which provides: "SEC. 108. Value-added Tax on Sale ofServices and Use or Lease ofProperties. - XXX XXX 78 Docket (CTA case No. 9485)- Vol. 1, pp. 10 to 23 79 Docket (CTA case No. 9526), pp. 10 to 26. 80 Docket {CTA case No. 9485)- Vol. 5, Exhibit "P-2", p. 2217.

DECISION CTA CASE NOS. 948S & 9526 (B) Transactions Subject to Zero Percent (0%) Rate. - The following services performed in the Philippines by VAT- registered persons shall be subject to zero percent (0%) rate: (1) Processing, manufacturing or repacking of goods for other persons doing business outside the Philippines which goods are subsequendy exported, where the services are paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP); (2) Services other than those mentioned in the preceding paragraph rendered to a person engaged in business conducted outside the Philippines or to a nonresident person not engaged in business who is outside the Philippines when the services are performed, the consideration for which is paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);"81 must Based on the foregoing provision, however, certain essential elements zero be present for a sale or supply of services to be subject to the VAT rate of percent (0%) under Section 1OS(B) (2) of the NIRC of 1997, as amended, to wit: 1) 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 business who is outside the Philippines when the services were performed;82 2) The services fall under any of the categories under Section 108(B)(2), 83 or simply, the services rendered should be repackinggoodl';84 other than ''processing, manufacturing or / 81 SEBR22imuete,rvpmle2hnPe0auhi0sseii7lts,iep; srpGAuian.pcRnecpd.selienWNCdtuoo.a.rrienp,2oS0rIan1ctca3io.n2nd6vi,.n(FaCFvoeoirabmmnrumeaCrilsryoysnCiot8rlnia,eecnr2tto0loor1fg7MiIc;nintPCedharoninlmsaa.mloI,inRscIsen.ivo)cen.vn,e.urGeC.,oRofmG. .INmRno.tise. sNr1inoo5a.n3le21rR09o50e,f1veI0Jnna2tun,eeurJnauarvlyy.l 82 83 11, 2012. of Internal Revenue v. American Express International, Inc. (Philippine Commissioner Branch), G.R. No. 152609, June 29, 2005. 84 Commissioner of Internal Revenue v. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., G.R. No. 153205, January 22, 2007. - - f - .....

DECISION CTA CASE NOS. 9485 & 9526 3) The services must be performed in the Philippines85 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. 86 rmiCPIiePCIaennnnsfhhosouctdtcfrieiaiiuosleolpdrrbiitrrenomrppeltppadrbin,ppAaseoloetiifhtdrnnfirnoRoeaofaseetreosnetrutsshiven/rip;,poeeoePittugnhpninawnguanrao/tr/epennrh.htRtrnecodeiteelgteecvserhTsgsfdioes.issethir,hrshittssipDthrepatartoyaoreetetfatersucoitsatattiolhiisifspihtastocndeeipstiehonnteureivendnstseiereinaaostdaKrdienclypndononuadrooeffitlomwib/neitlrovnetyflagseehomegrtsdenertsbgne,eettTeutsshginsbhtgssaaeethyeeSihn,xgrnanesvaebreitativvdnRciscioPiaedtcoseetlhheoushidsbeeionhrinlouelddiateaPtpcesersesmttaunyipnerrCdi.micaneedenctedno(roLeetoetetrhi.n.ntfgCeriebdt.ecsc,seoIeaSi,giPrsnrtpi8iEAtit7hnsoiciefCtefnirobnieattltnc,nhihurcidotpaceitsseyft,spldiieNoednaiiw)rsnSonfeenb.e/neisruCudqstCe-sspehsRue,doT:ireiernmeewrthgpaeemaimiseisfsdscrteiitesohhscrrafsbaoivaiionetyoCtinfinrcenonmoeonettttihurnhhooteoiiyroe-esrsfftff "For purposes of zero-rating under Section 108(B)(2) of the Tax Code, the claimant must establish the two components of a vi=~:: that their client was established client's NRFC 88 status, (1) the Philippines or, simply, is not a under t he laws f a cou ntry not o not engaged in trade or domestic corporation; and (2) that it is there must be sufficient business in the Philippines. To be sure, proof of both of these components: showing not only that the clients are foreign corporations, but also are not doing business in the Philippines. XXX XXX XXX To recall, the CTA found that the SEC Certification of("V" 85 CvM.oinmAdmmaneisarsioci,oannInercE.x,opfGre.IsRns.teINnrnote.arl1n5aR3tei2ov0ne5an,lu,JeaInnvcu..aBr(yPuhr2mi2lip,epi2sin0tee0r7B;arnCadnocmhWm),aiisnGs.iRoSn.ceaNrnood.fin1Ian5vt2iea6rn0n9a,Cl oJRunentvreaecn2tuo9er, 86 2vCM.0oin0mAd5mm.aneisarisocia,onnInecEr .x,opfGre.IsRns.teINnrnote.arl1n5aR3tei2ov0ne5an,lu,JeaInnvcu..a(BrPyuhr2iml2ip,epi2sin0tee0r7B;arnCadnocmhWm),aiisnGs.iRoSn.ceaNrnood. fin1Ian5vt2iea6rn0n9a,Cl oJRunentvreaecn2tuo9er, 2005. 87 G.R. No. 234445, July 15, 2020. 88 Nonresident foreign corporation. 0

DECISION CTA CASE NOS. 9485 & 9526 Non-Registration of Company and Authenticated Articles of Association and/or Certificates of Registration/ Good Standing/Incorporation sufficiendy established the NRFC status of 11 of DKS's affiliates clients. The Court upholds these findings. The Court accords the CTA's factual findings with utmost respect, if not finality, because the Court recognizes that it has tax matters. Significandy, necessarily developed an expertise on Bane gave credence to the both the CTA Division and CTA En aforementioned documents as sufficient proof of NRFC status. The Court shall not disturb its findings without any showing of grave abuse of discretion considering that the members of the tax court are in the best position to analyze the documents presented by the parties. In any case, after a judicious review of the records, the Court still do not find any reason to deviate from the court a quo's SEC Certifications of findings. To the Court's mind, the affiliates are foreign Non-Registration show that these corporations. On the other hand, the articles of association/certificates of incorporation stating that these affiliates are registered to operate in their respective home outside the Philippines are prima facie evidence countries, clients are not engaged in trade or business in the that their Philippines."89 In this case, the following table is indicative whether Petitioner complied with the first essential element vis-a-vis the presentation of the said required documents pertinent to the alleged recipients of the services rendered by Petitioner, viz: Client's Name SEC Certificate I The Procter & Gamble Company Certification Articles of of Non- Incorporation/ Registration of Company Registration (Exhibit No.) (Exhibit "P-6" NoJ "P-5" 89 Emphasis supplied. Of

DEOSION CfA CASE NOS. 9485 & 9526 Client's Name SEC Certificate/ Certification Articles of Procter & Gamble South African Trading (Pty) Ltd Incorporation/ Procter & Gamble Magyarorszag Nagykereskedelmi Kkt of Non- Registration P & G South African Trading (Proprietary) Limited Registration (Exhibit No.) (formerly: Eveready (Proprietary) Limited to Eveready of Company South Africa (Proprietary) Limited to Gillette Group NONE South Africa (Proprietary) Limited) (Exhibit NONE Procter & Gamble Hygiene and Health Care Limited No.) (formerly: Richardson Hindustan Limited to Procter & "P-5.1" "P-6.36" Gamble India Limited) "P-5.10" "P-6.3" "P-6.4" P&G Max Factor Godo Kaisha "P-5.1-1" NONE NONE Procter & Gamble Levant S.A.L. "P-5.11 " I NONE NONE Procter & Gamble_{Mahtysial SDN BHD "P-5.11-1" NONE Industries Marocaines Modemes SA "P-5.12" NONE "P-5.13" "P-6.41" Industries Marocaines Modernes "P-5.14" NONE "P-5.15" NONE Procter & Gamble Maroc "P-5.15-1" NONE Procter & Gamble Distributing New Zealand Limited "P-5.16" NONE Procter & Gamble Pakistan (Private) Limited "P-5.17" NONE Procter and Gamble Polska Sp. z o.o. "P-5.18" "P-5.19" "P-6.5" /"P-6.44" P & G Distribution Morocco s.a.s "P-5.2" Modem Industries Com_pallY::"Dammam "P-5.20" "P-6.11" "P-5.21" "P-6.29" Modem Products Company "P-5.2-1" NONE "P-6.30" P&G Distribution Morocco "P-5.22" NONE Procter & Gamble (Singapore) PTE LTD (formerly: Richardson-Merrell PTE. LTD. To Richardson-Vicks "P-5.23" "P-6.31" "P-5.24" NONE PTE. LTD.) "P-5.25" Detergent Products Sarl (Detergent Products "P-5.25-1" "P-6.45" GmbH/Detergent Products LLC) "P-5.26" NONE Procter & Gamble Taiwan Limited "P-5.26-1" Procter & Gamble Manufacturing (Thailand) Ltd "P-5.27" Procter & Gamble Manufacturing_(Thailandl Limited Procter & Gamble Trading (Thailand) Ltd "P-5.27-1" Procter & Gamble Trading (Thailand) Limited (former "P-5.28" name: Richardson-Merrell (Thailand) Limited to Richardson-Vicks Limited) Procter & Gamble Tuketim Mallari Sanayi AS Procter & Gamble Tuketim Mallari Sanayi Anonim Sirketi Procter & Gamble Korea, Inc.

DECISION CfA CASE NOS. 9485 & 9526 Client's Name SEC Certificate/ Certification Articles of Procter & Gamble Korea Incorporation/ Procter and Gamble Operations Polska Sp. z o.o. of Non- Registration Gillette Pakistan Limited (formerly: Interpak Shaving Registration (Exhibit No.) Products Ltd.) of Company Procter & Gamble, spol s.r.o. "P-6.6" Procter & Gamble Home Products Private Limited (Exhibit NONE (formerly: Personal Care Products Private Limited to No.) Personal Care Products Limited to Procter and Gamble NONE Home Products Limited) ''P-5.28-1" NONE Procter and Gamble SA (Pty) ltd "P-5.29" Procter & Gamble Marketing Detergenti SA "P-5.3" /"P- Procter & Gamble SA Bulgaria EOOD 5.3-1, PT. Procter & Gamble Home Products Indonesia Procter & Gamble Europe SA Singapore Branch "P-5.30" Procter & Gamble Vietnam Co. Ltd. Procter & Gamble Vietnam Ltd. "P-5.31" "P-6.8" Procter & Gamble Marketing Latvia Ltd., SIA "P-5.32" NONE Procter & Gamble Australia, Pty Ltd "P-5.33" NONE Procter & Gamble Technical Centers Ltd "P-5.34" NONE Procter & Gamble Technical Centres Limited (formerly: "P-5.35" NONE Faxaudio Limited) "P-5.36" NONE Procter & Gamble Indochina Company Limited "P-5.37'' "P-6.14" Procter & Gamble Indochina "P-5.38" NONE Procter & Gamble d.o.o. za trgovinu "P-5.38-1" NONE Procter & Gamble Pet Care (Australia) Pty Ltd "P-5.39" NONE Procter & Gamble Gulf FZE "P-5.4" NONE P&G K.K. "P-5.40" NONE Procter & Gamble Korea S&D, Co. P&G Korea S&D Co. "P-5.40-1" "P-6.47" Procter & Gamble Korea, IE, Co. "P-5.41" NONE Procter & Gamble International Operations SA ''P-5.41-1, NONE Singapore Branch "P-5.42" NONE "P-5.43" NONE P&G Israel M.D.O. Ltd "P-5.44" "P-6.35" Wella India Hair Cosmetics Pvt Ltd "P-5.45" "P-6.15" Procter & Gamble Czech Republic s.r.o. "P-5.46" NONE "P-5.46-1" "P-6.16" "P-5.47" NONE "P-6.18" /"P-6.18- "P-5.48" 1" "P-5.49" I NONE "P-5.49-1" NONE "P-5.5" NONE "P-5.50"

DEGS!ON CTA CASE NOS. 9485 & 9526 Client's Name SEC Certificate/ Certification Articles of Procter & Gamble RSC Regi Incorporation/ Wella India Hair Cosmetics Private Limited (formerly: of Non- Registration Gillette India Private Limited to Gillette Group India Registration ~xhibit No.) Private Limited) of Company Procter & Gamble Distribution SRL NONE Gillette Diversified Operations Pvt Ltd (Exhibit Gillette Diversified Operations Private Limited No.) (formerly: Wilkinsons Sword India Private Limited) Gillette India Limited (formerly: Indian Shaving "P-5.51" Products Limited) "P-5.5-1" "P-6.1" Gillette Poland S.A. "P-5.52" "P-6.19" Procter and Gamble DS Polska Sp. z.o.o "P-5.53" NONE Gillette Poland International Sp. z.o.o. Procter & Gamble Japan K.K. "P-5.53-1" "P-6.26" Procter & Gamble Export Operations SARL, Taiwan "P-5.54" "P-6.24" Branch "P-5.55" NONE Procter & Gamble - Rakona s.r.o. "P-5.56" NONE Procter & Gamble Egypt Distribution "P-5.57" NONE Procter & Gamble Egypt Distribution Ltd. "P-5.58" "P-6.20" Procter & Gamble Egypt Supplies Procter & Gamble Egypt Supplies Ltd. "P-5.59" NONE Procter & Gamble Manufacturing SA "P-5.6" NONE Procter and Gamble Manufacturing SA (Proprietary) "P-5.60" NONE Limited (former name: Moonrock Trading 7 "P-5.60-1" NONE (Proprietary) Limited) "P-5.61" NONE P&G Innovation Godo Kaisha "P-5.61-1" NONE "P-5.62" NONE Cosmetic Suppliers Pty Ltd PPS Hairwear Australia Pty Ltd (formerly: Gresham "P-5.62.-1" "P-6.28" Direct Pty Ltd) "P-5.63" "P-6.22" P.T. Procter & Gamble Operations Indonesia "P-5.64" NONE Procter & Gamble Taiwan Sales Company Limited Procter and Gamble Manufacturing_SA.(P_ty)_ Ltd "P-5.65" "P-6.27" "P-5.66" "P-6.39" Procter & Gamble Egypt "P-5.67" "P-6.37" Procter & Gamble Egypt Ltd. "P-5.68" NONE Procter & Gamble Hong Kong Limited "P-5.7" NONE "P-5.7-1" NONE Hyginett Kft "P-5.8" "P-6.2" Interpak Shaving Products Ltd. "P-5.9" NONE NONE NONE

DECISION CTA CASE NOS. 9485 & 9526 Client's Name SEC Certificate/ Certification Articles of Procter & Gamble Australia Pty Limited (formerly: Vick Incorporation/ Products (Pty.) Limited to Richardson-Merrell Pty. of Non- Registration Limited to Richardson-Vicks Pty Limited) Registration (Exhibit No.)_ Procter & Gamble Holding (HK) Limited of Company Hyginett Magyar-Amerikai Higieniai Cikkeket Gyarto "P-6.40" (Exhibit Kft No.) NONE Richardson-Vicks SDN. Berhad (formerly: Richardson- Merrell SDN. Berhad) NONE NONE NONE Procter & Gamble Maroc SA "P-6.25" Procter & Gamble Distributing (New Zealand) Ltd NONE NONE Modern Industries Company NONE NONE NONE NONE Detergent Products AG NONE NONE Procter & Gamble Home Products Limited NONE NONE Procter & Gamble South Africa Pty Ltd NONE NONE Procter and Gamble SA (Proprietary) Limited (formerly: NONE Vick International (Proprietary) Limited to R-M NONE "P-6.32" Pharmaceuticals (Proprietary) Limited to Richardson- "P-6.9" Vicks (Poprietary) Limited to Permark International NONE (Proprietary) Limited) NONE NONE Procter & Gamble Marketing Romania SRL NONE NONE "P-6.13" Detergenti SRL Procter & Gamble Bulgaria EOOD NONE "P-6.12" Procter & Gamble Europe SA (Procter & Gamble NONE Europe AG /Procter & Gamble Europe Ltd) NONE SIA Procter & Gamble Marketing Latvia Ltd. NONE P & G Indochina/Procter and Gamble International NONE NONE S.A.R.L.- without English Translation NONE NONE Procter & Gamble Indochina Ltd NONE "P-6.17" Procter & Gamble Korea IE Yuhan Hoesa (Procter & NONE "P-6.48" Gamble Korea, IE, Co-l NONE Procter & Gamble Israel M.D.O. Ltd NONE Procter & Gamble Regionalis Szolgaltato Kft NONE NONE NONE Gillette India Ltd NONE "P-6.21" Procter & Gamble Export Operations SARL (Procter & Gamble Export Operations GmbH/Procter & Gamble NONE Export Operations LLC) Procter & Gamble Manufacturing South Africa Pty Ltd "P-6.23" Cosmetic Suppliers Pty Limited (formerly: Haidressing

DEOSION CTA CASE NOS. 9485 & 9526 Client's Name SEC Certificate/ Suppliers Pty. Limited) Certification Articles of Procter & Gamble Vietnam Ltd. - without English Incorporation/ Translations of Non- Registration Registration (Exhibit No.}_ of Company (Exhibit No.) NONE "P-6.33" On the basis of the foregoing, only the following clients of Petitioner shall be considered non-resident foreign corporations doing business outside the Philippines, insofar as Petitioner's compliance with the first essential element is concerned, to wit: SEC Certification Certificate/ of Non- Articles of Registration Incorporation/ Client's Name of Company_ Re_gi_stration The Procter & Gamble Company "P-5" "P-6" Detergent Products Sari (Detergent Products GmbH/Detergent Products LLC) "P-5.23" "P-6.11" Procter & Gamble Europe SA Singapore Branch "P-5.37" "P-6.14" P&G K.K. "P-5.45" "P-6.15" P&G Korea S&D Co. "P-5.46-1" "P-6.16" Procter & Gamble International Operations SA "P-6.18" /"P- Singapore Branch "P-5.48" 6.18-1" Procter & Gamble Distribution SRL "P-5.52" "P-6.19" Procter & Gamble Hong Kong Limited "P-5.8" "P-6.2" Procter & Gamble Japan K.K. "P-5.58" "P-6.20" P&G Innovation Godo Kaisha "P-5.63" "P-6.22" Procter & Gamble Taiwan Limited "P-5.24" "P-6.29" Procter & Gamble Manufacturing (Thailand) Limited "P-5.25-1" "P-6.30" Procter & Gamble Gulf FZE "P-5.44" "P-6.35" Procter & Gamble Taiwan Sales Company Limited "P-5.67" "P-6.37" P.T. Procter & Gamble Operations Indonesia "P-5.66" "P-6.39" P&G Max Factor Godo Kaisha "P-5.12" "P-6.4" Procter & Gamble Pakistan (Private) Limited "P-5.18" "P-6.41" Procter & Gamble Tuketim Mallari Sanayi Anonim Sirketi "P-5.27 -1" "P-6.45" "P-5.28-1" "P-6.6" Procter & Gamble Korea

DECISION erA CASE NOS. 9485 & 9526 Relative to the second essential element, of the foregoing clients considered as non-resident foreign corporations doing business outside the Philippines, only the following have Service Agreements with Petitioner, to wit: Client's Name Exhibits Procter & Gamble Europe SA Singapore Branch (Service P&GK.K. Agreements) Procter & Gamble International Operations SA Singapore Branch "P-4.34" Procter & Gamble Distribution SRL "P-4.41" Procter & Gamble Japan K.K. "P-4.44" P&G Innovation Godo Kaisha "P-4.48" Procter & Gamble Taiwan Limited "P-4.54" Procter & Gamble Manufacturing (Thailand) Limited "P-4.59" P.T. Procter & Gamble Operations Indonesia "P-4.21" P&G Max Factor Godo Kaisha "P-4.22" "P-4.62" "P-4.10" Notably, the said Service Agreements reveal that Petitioner must provide Financial Service & Solutions Services and Employee Services90 to the above- stated clients. Thus, since the said services are not in the same category as "processing, manufacturing or repacking ofgood!', only the same complies with the second essential element. However, for the purpose of the third essential element, there is no indication that the subject services were performed in the Philippines. In fact, in the said Service Agreements, it was provided that Petitioner shall render the services from all or any of its operational location, but it was not clearly indicated or deftned where any or all of its operational locations are. Moreover, it was also provided that Petitioner may enter into speciftc agreement with any third party and with any affiliated P&G company, with the purpose of sub- contracting the services or activities that Petitioner deems it appropriate or necessary to render the purported services. Consequently, such stipulations cast doubt that the services were actually performed in the Philippines. Such being the case, the third essential element was not complied with. Verily, at this juncture, Petitioner has already fell short in establishing that its sales or supply of services qualify for VAT zero-rating under Section 1OS(B) (2) of the NIRC of 1997, as amended. 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 ,/!./ 90 Chapter I, Par. 4.1 of Exhibits "P-4" series, Exhibit A to the Service Agreements.

DECISION CTA CASE NOS. 9485 & 9526 certificate or refund of creditable input tax due or paid attributable to such sales.91 Considering Petitioner's failure to establish its zero-rated or effectively zero-rated sales for the subject periods, the consolidated Petitionsfor Review must necessarily fail. Consequently, it becomes unnecessary to look into Petitioner's compliance with the fourth essential element 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, and even with the remaining requisites to successfully obtain a credit/refund of input VAT, pursuant to Section 112 of the same Code, as amended. It must be emphasized that actions for tax refund or credit, as in the present case, are in the nature of tax exemptions. As such, they are regarded as derogation of sovereign authority and to be construed strictissimijuris against the person or entity claiming the refund. 92 The pieces of evidence presented entitling a taxpayer to an exemption are also strictissimi scrutinized and must be duly proven.93 Hence, an applicant for a claim for tax refund or tax credit must not only prove entitlement to the claim but also compliance with all the documentary and evidentiary requirements. 94 Unfortunately for Petitioner, it has failed to prove such entitlement. WHEREFORE, in light of the foregoing considerations, the consolidated Petitionsfor Review are DENIED for lack of merit. SO ORDERED. ~-~ MA. BELEN M. RINGPIS-LIBAN Associate Justice WE CONCUR: 91 Coca-Cola Bottlers Philippines, Inc. v Commissioner of Internal Revenue, G.R. No. 222428, July 19, 2018. 92 Commissioner of Internal Revenue v. S.C. Johnson & Son, Inc., G.R. No. 127105, June 25, 1999. 93 Kepco Philippines Corporation v. Commissioner of Internal Revenue, G.R. No. 179961, January 31, 2011 citing Atlas Consolidated Mining and Development Corporation v. Commissioner of Internal Revenue, G.R. No. 159490, February 18, 2008. 94 Eastern Telecommunications Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 183531, March 25, 2015 citing J.R.A. Philippines, Inc. v. CIR, G.R. No. 171307, August 28, 2013.

DEGSION CTA CASE NOS. 9485 & 9526 ERL~P.UY Associate Justice ATTESTATION I attest that the conclusions in the above decision were reached in consultation before the cases were assigned to the writer of the opinion of the Court. ERL~P.UY Associate Justice Chairperson CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, and the Division Chairperson's Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the cases were assigned to the writer of the opinion of the Court. Presiding Justice