SAN ROQUE POWER CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION SAN ROQUE POWER C.T.A. CASE NO. 8007 CORPORATION, Members: Petitioner, - versus - ACOSTA, Chairperson UY, and FASON-VICTORINO, JJ. COMMISSIONER OF INTERNAL Promulgated: REVENUE, Respondent. DEC~~ . x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ---- -- ---x AMENDED DECISION Fabon- Victorino, J. : On May 7, 2012, the Court promulgated the assailed Decision denying the instant Petition for Review for insufficiency of evidence. The Court found the petitioner's evidence inadequate to sustain its claim that it is a generation company entitled to a refund or issuance of a tax credit certificate in the amount of Php26,645,244.93, representing its unutilized input value-added tax (VAT) from purchases of capital goods, other goods and services, as well as importation of goods for the j period January 2008 to March 2009. In particular, petitioner

Amended Decision CTA CASE NO. 8007 failed to present its Energy Regulatory Commission (ERC) Registration and Certificate of Compliance (COC), without which all of the reported zero-rated sales/receipts of Php8,671,202,381.65 cannot qualify for VAT zero-rating under Section 108(B)(7) of the National Internal Revenue Code (NIRC) of 1997, as amended by Republic Act (R.A.) No. 9337, in relation to Section 4.108-3 of Revenue Regulations No. 16-2005 and Section 4 of Rule 5 of the Implementing Rules and Regulations of R.A. No. 9136. With a strong belief that it is entitled to the relief sought, petitioner filed a Motion for Reconsideration (with Motion for Leave of Court to Admit Evidence;t on May 29, 2012, praying that: 1. This Honorable Court allow petitioner to present evidence on this Motion for Reconsideration or re-open the trial of this case for the reception of supplemental documentary and testimonial ev idence , more particularly, its COC, in support of the Petition for Review; and 2. This Honorable Court reconsider its Decision dated May 7, 2012 and , subsequently, issue an Order granting petitioner a refund in the amount of Twenty Six Million Six Hundred Forty Five Thousand Two Hundred Forty Four and 93/100 Pesos (Php26,645,244. 93). 1 Docket, pp . 489- 509 .

Amended Decision CTA CASE NO. 8007 Petitioner argues, among others, that its non-submission of the COC was due to an honest belief that its presentation is no longer necessary on account of the stipulation entered into by the parties in their Joint Stipulation of Facts and Issues as to petitioner's business and status as a power generation company. On May 31, 2012, respondent filed her Comment2 to which a Reply3 thereto was filed by petitioner on June 15, 2012. Petitioner's motion to reopen the case for presentation of additional documents was granted in the interest of substantial justice in the Resolution 4 dated July 13, 2012. On September 6, 2012, petitioner presented its Accountant, Ms. Lalaine A. Estayo, who identified the following exhibits: Exhibit Description "EEE" Supplemental Sworn Statement of Lalaine Estayo executed on August 6, 2012 "EEE-1" Signature of Lalaine Estayo "FFF" Certificate of Compliance (COC No . 04 - 06- GN1-0064) 2 Docket, pp . 520-525. 3 Docket, pp. 530-539 . 4 Docket, pp. 541-547 .

Amended Decision CTA CASE NO. 8007 "GGG" Certificate of Compliance (COC No . 09 - 08 - GNl -0064) In the same proceeding, petitioner orally offered the foregoing exhibits to establish that it is registered with the ERC and that it was issued with COC on June 16, 2004 and a renewed COC on August 17, 2009. All the additional exhibits of petitioner were admitted and the incident was deemed submitted in the Resolution dated September 19, 2012. After a careful examination of all the evidence presented, this Court hereby partially grants the instant Petition for Review. As stated in the Decision dated May 7, 2012, the main issue for the resolution of the Court is whether petitioner is entitled to the refund or issuance of tax credit certificate in the amount of Php26,645,244.93, representing its alleged unutilized input VAT attributable to effectively zero-rated sales for the period covering January 1, 2008 to March 31, 2009. /

Amended Decision CTA CASE NO. 8007 Section 112(A) of the National Internal Revenue Code (NIRC) of 1997, as amended, provides the basis for refunds or tax credits of input tax attributable to zero-rated or effectively zero-rated sales, to wit: SEC. 112. Refunds or Tax Credits of Input Tax- (A) Zero-rated or Effectively Zero- ./ rated Sales - Any VAT-registered person, whose sales are zero-rated or effectively zero-rated, may within two(2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales under Section 106(A)(2)(a)(1), (2) and (b) and Section 108(B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods or properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales: Provided, finally, That for a person making sales that are zero-rated under Section 108(B)(6), the input taxes shall be allocated ratably between his zero-rated and non-zero-rated sales.

Amended Decision CTA CASE NO. 8007 In the case of Silicon Philippines, Inc. vs. Commissioner of Internal Revenue, 5 the Supreme Court enumerated the requisites for refund/tax credit as follows: 1. The taxpayer must be VAT registered; 2. The taxpayer must be engaged in sales which are zero-rated or effectively zero-rated; 3. The claim must be filed within two years after the close of the taxable quarter when such sales were made; and 4. The creditable input tax due or paid must be attributable to such sales, except the transitional input tax, to the extent that such input tax has not been applied against the output tax. As stated by the Court in the assailed Decision of May 7, 2012, petitioner is a duly registered VAT taxpayer with Tax Identification No. (TIN) 005-017-501-000. The Court also found that both the administrative and judicial claims for refund were seasonably filed by petitioner. Most importantly, the additional pieces of evidence formally offered by petitioner and admitted by the Court, proved that it is engaged in sales which are zero-rated or effectively zero-rated. 5 G.R. No. 172378, January 17, 2011.

Amended Decision CTA CASE NO. 8007 Petitioner was able to established that it was authorized by the ERC to operate power generation facilities, utilizing hydro and diesel as fuel, as evidenced by the ERC Certificates of Compliance dated June 16, 20046 and August 17, 20097 with attached Terms and Conditions of the Certificates of Compliance. Likewise, it was established that it actually generated receipts from the sale of electricity to the National Power Corporation (NPC) for the subject period based on the official receipts8 and the related sales invoices9 and credit memo10 issued by petitioner to NPC, journal vouchers 11 and bank documents12 . Such receipts from sale of electricity generated through renewable source of energy, i.e., hydropower, qualify for VAT zero-rating under Section 108(B)(7) of the NIRC of 1997, as amended by R.A. No. 9337, in relation to Section 4.108-3 of Revenue Regulations No. 16-2005 and Section 4 of Rule 5 of the Implementing Rules and Regulations of R.A. No. 9136. For the subject period covering January 1, 2008 to March 31, 2009 (fourth quarter of FY 2008 to fourth quarter of FY 2009), the official receipts submitted by petitioner reflected zero- / 6 Exhibit "FFF". 7 Exhibit "GGG". 8 Exhibits " AAlb " to "AA49 b". 9 Exhibits "AAl " to "AA49". 10 Exhibit " AA32d ". 11 Exhibits " AA7a ", "AA9a ", "AA16a", " AA1 8a", " AA26a", " AA 30 a", " AA34a", " AA34al ", "AA37a", "AA40a", " AA46a " and " AA49a ". 12 Exhibits " AAlc" to "AA49c".

Amended Decision CTA CASE NO. 8007 rated receipts in the amount of only Php 8,143,908,947.05, detailed as follows: Exhibit Date US Dollar Japanese Yen Philippine Peso AA1b 02/27/08 30 247 906.40 AA2b 03/27/08 6 696 283.47 484 215 000.00 30 247 906.40 AA3b 04/25/08 7 120 410.14 484 215 000.00 30 247 906.40 AA4b 02/27/08 6 872 531.83 484 215 000 .00 AA5b 03/27/08 185 890 138.50 AA6b 04/25/08 6 421 893.44 484 215 000.00 183 759 592.50 AA7b 02/27/08 7 378 630.05 484 215 000.00 200 222 902.50 AA8b 03/27/08 7 998 686.65 484 215 000.00 274 139 148.98 AA9b 04/25/08 289 394 829.32 AA10b 05/28/08 6 981 845.05 484 215 000.00 285 904 196.66 AA11b 06/25/08 9 078 726.47 483 466 549.40 AA12b 07/25/08 9 978 726.17 30 247 906.40 AA13b 05/28/08 748 450.60 30 247 906.40 AA14b 06/25/08 8 302 112.63 484 215 000.00 30 247 906.40 AA15b 07/25/08 6 619 022.54 194 751 273.00 AA16b 05/28/08 6 624 606.73 484 215 000.00 201 966 076.50 AA17b 06/25/08 484 215 000.00 200 561 853.00 AA18b 07/27/08 484 215 000.00 270 091 994.30 AA19b 08/27/08 320 498 174.85 AA20b 08/27/08 356 397 481.06 AA21b 09/25/08 31 364 039.41 AA22b 10/28/08 AA23b 08/27/08 4 310 582.64 AA24b 09/25/08 31 364 039.41 AA25b 09/25/08 31 364 039.41 AA26b 10/24/08 198 915 522.00 AA27b 08/27/08 203 200 990.71 AA28b 09/25/08 AA29b 10/24/08 314 573.79 AA31b 11/26/08 211 844 062.50 AA32b 01/09/09 308 346 205.23 AA33b 01/09/09 413 999 005.76 AA34b 02/16/09 464 000 788.64 AA35b 11/26/08 AA36b 01/05/09 31 364 039.41 AA37b 02/05/09 34 267 857.14 AA38b 11/26/08 AA39b 01/06/09 5 199 989.86 AA40b 02/05/09 34 281 896.55 AA41b 03/10/09 243 414 880.50 AA42b 03/30/09 248 595 981.00 AA44b 03/13/09 252 808 651.50 AA45b 03/30/09 406 106 141.90 328 250 568.78 314 801 311.81 34 281 896.55 34 281 896.55 258 328 702.50 241 478 020.50

Amended Decision CTA CASE NO. 8007 AA47b 03/13/09 309 381 431.55 AA48b 03/30/09 322 976 731.88 Total 8 143,908 947.05 On the other hand, petitioner's Quarterly VAT Returns for the same period reflected a total amount of Php 8,671,202,381.65 VAT zero-rated receipts, broken down as follows: Exhibit Period Zero-rated Sales/Receipts F FY 2008 - 4th quarter 01/01/08 to p 1 520 972 956.70 03/31/08 H FY 2009 - 1st quarter 1 564 178 337.01 04/01/08 to J FY 2009 - 2nd quarter 06/30/08 1 779 022 199.41 L FY 2009 - 3rd quarter 07/01/08 to 1 388 093 952.36 09/30/08 N FY 2009 - 4th quarter 2 418 934 936.17 10/01/08 to P8,671 202,381.65 12/31/08 01/01/09 to 03/_31/09 Total Clearly, the amount of Php 8,671,202,381.65 zero-rated receipts declared per petitioner's Quarterly VAT Returns is higher by Php 527,293,434.60 when compared with the zero-rated receipts of Php 8,143,908,947.05 shown per petitioner's official/ receipts.

Amended Decision CTA CASE NO. 8007 In her report13 dated August 25, 2010, the Court- commissioned Independent CPA, Ms. Ma. Milagros F. Padernal, explained that the discrepancy of Php 527,293,434.60 pertains to petitioner's collections from sales made for the third quarter of FY 2008. However, considering that petitioner failed to substantiate the amount of Php 527,293,434.60 with VAT zero- rated official receipts, the same shall be denied VAT zero-rating. Thus, petitioner's total valid zero-rated receipts amounted only to Php 8,143,908,947.05, computed as follows: Zero-Rated Receipts per VAT Return p 8 671 202 381.65 Less: Unsubstantiated Zero-Rated Receipts 527 293 434.60 Valid Zero- Rated Receipts P8,143,908,947 .OS The Court will now determine the amount of unutilized excess input VAT attributable thereto. Petitioner's Quarterly VAT Returns for the subject period of claim reflected the following output and input tax transactions: Jan-Mar 2008 Apr-June 2008 July-Sept 2008 (Exhibit F) (Exhibit H) (Exhibit J) Vatable Sales/Receipts p 135 356 .25 p 226 760.00 Output Tax Due p 16 242 .75 p 27 211. 20 13 Ex hibit " CCC ", page 4, under Summary of Findings, Schedul e of Zero - Rated Sales and Collections, (Ex hibit AA), item no . 12

Amended Decision CTA CASE NO. 8007 Less: Allowable Input Tax Input Tax Carried Ove r from Previous p 28 982 124.60 p 31 242 846 .75 p 24 076 636.60 Quarter/Excess over 70% Output VAT 3 988 094.77 4 136 518.66 4 223 920.55 Input Tax Deferred on p 28,300, 557.15 Capit al Goods Exceeding P32 970,219.37 P35,379 365.41 P1Million from Previous 7 343.79 Quarter 39 033.22 43 630 . 15 218 755 .81 Total Input Tax from 459 412.62 439 184.52 1 442 495 .86 Previous Quarter 859 994.28 1 289 896.61 64 067.00 Current Transact ions 2 287 732 .01 Purchases of Capital 122 157.00 279 507.00 Goods not exceeding 37 095.24 P1Million 1J20 507.19 7 891 068.73 p 4 057/489.71 Purchase of Goods exceedinq P1Million 464 282.49 Domest ic Purchases of p 3 201 104.31 P10 407 569.50 Goods other than Capital Goods Importation of Goods Other than Capital Goods Domestic Purchases of Services Services rendered by non-residents Total Current Input Tax Total Available Input Tax p 36 171 323.68 p 45 786 934.91 p 32 358 046.86 Deduct ions from p 4 083 727 .94 p 4 043 947.23 p 4 146 970.53 p 28 274 318.92 Less: Input Tax 775 715.52 17 459 164.54 Input Tax on Purchases of Capital Goods exceeding 92 571.43 76 950.00 P1Million deferred for the p 31 259 089.50 p 24 103 849 .84 succeeding period VAT Refund/TCC Claimed Input Tax in excess of 70% cap to be carried to next period Others Tot al Allowable Input Tax Tax Payable (Overpayment) P31,242 846.75 P24 076,638.64 p 28 274 318.92 Oct- Dec 2008 Jan-Mar 2009 (Exh . L) (Exh. N) Total 784 446.58 Vatable Sales/Receipts p 10 714 .25 p 411 616.08 p Output Tax Due p 1 285.71 p 49 393.93 p 94 133 .59 Less: Allowable Input Tax Input Tax Carried Over p 28,982,124 .60 from Previous p 28 274 318.92 p 32 830 123 . 19 Quarter/Excess over 70% Output VAT

Amended Decision CTA CASE NO. 8007 Input Tax Deferred on 4 083 727.94 4 453 835 .34 3 988 094 .77 Capital Goods Exceeding p 32 970 219.37 PlMillion from Previous P32,358 046.86 P37 283,958.53 Quarter 287 622 .02 Total Input Tax from 778 931.50 197 614.86 2 277 786.49 Previous Quarter 381 502.04 6 607 489 .25 Current Transactions 1 380 725.10 1 634 377.40 547 194.00 Purchases of Capital Goods not exceeding 10 281.00 71 182.00 16 880 966.51 PlMillion 620 580.66 Purchase of Goods 2 638 056.80 2 343 601.78 exceeding PlMillion p 27 221,638.93 Domestic Purchases of 119 202 .93 Goods other than Capital p 4 927 197.33 p 4,628 278.08 Goods Importation of Goods Other than Cap ital Goods Domestic Purchases of Services Services rendered by non-residents Total Current Input Tax Total Available Input Tax p 37 285 244.19 p 41 912 236.61 p 60 191 858 .3 0 p 4 453 835.29 Less : Deductions from p 32 831 408.90 p 4 470 355.23 p 4 470 355.23 Input Tax 10 830 397.50 29 065 277 .56 Input Tax on Purchases of Capital Goods exceeding p 26 611 483.88 p 26 656 225.51 PlMillion deferred for the succeedinq period VAT Refund/TCC Claimed Input Tax in excess of 70% cap to be carried to next period others Total Allowable Input Tax Tax Payable (Overpayment) P32,830 123.19 P26 562,089.95 p 26 562 091.92 Of the above reported input taxes, petitioner is claiming refund of the following input taxes in the total amount of Php 26,645,244.93, net of petitioner's output tax liability of Php 94,133.59: 14 / 14 Docket, p. 8.

Amended Decision CTA CASE NO. 8007 Period Covered Total Input VAT Particulars Jan- Mar Apr - June July-Sept Oct- Dec Jan- Mar 2008 2008 2009 Input Taxes on 2008 2008 Capital Goods : 39 033.22 43 630 .15 7 343 .79 - 197 614.86 287 622 .02 Not Exceeding P1 Million 310 985 .72 351 785.64 358 948.42 408 824.15 364 982 .15 1 795 526 .08 Exceeding P1Million 1 720 507 .19 7 891 068 .73 2 287 732 .01 2 638 056 .80 2 343 601.78 16 880 966 .51 (Amortization) Input Taxes on 859 994.28 1 289 896 .61 1 442 495.86 1 380 725 .10 1 634 377.40 6 607 489 .25 Domestic Purchases: 122 157.00 279 507 .00 64 067 .00 10 281.00 71 182.00 547 194.00 Serv ice's Goods Other - 464 282.49 37 095 .24 119 202 .93 - 620 580 .66 than 27 211.20 1 285.71 94 133 .59 capital Goods 16 242 .75 - 49 393.93 Input Taxes on Importations of 3 036 434.66 10 292 959.42 4 197 682.32 4 555 804.27 4 562 364 .26 26 645 24 4.93 Goods Other Than Capital Goods Input Taxes on Services Rendered By Non- Residents Less: Output VAT TOTAL The Court-comm issioned ICPA summarized the results of her verifica t ion on petit ion er's clai med input VAT in the amount of Php 26,73 9,378 .08 before deduction of the output VAT of Php9 4,133.59, as fol lows :15 Exhibit Particulars Total Summary of Input Taxes on Capital Goods Not Exceeding P1 Million DO a.) Support ed by original VAT invoices in the Petitioner's name Dated in the current quarter p 264 329.16 Not dated withi n the taxable quarter but dated wi t hin the taxable year 23,292.86 I Second quarter of 2009 Total Input Taxes on CG not exceeding p 287,622.02 / Pl million 15 Exhibit "CCC".

Amended Decision CTA CASE NO. 8007 Summary of Input Taxes on Capital Goods Exceeding P1 Million EE Amortization During the Quarter p 1,860,008.92 Adjustment (Paragraph 38, Page 11 of 25) (64,482.98) Total Input Taxes on CG exceeding Pl P1,795,525.94 million Summary of Input Taxes on Domestic Purchases Purchases of Services FF a.) Supported by original VAT ORs in the Petitioner's name Dated in the current quarter p 15 209,231.04 Not dated within the taxable quarter but p 573 988.74 dated within the taxable year 386 904.58 367 308.74 First quarter of 2009 Second quarter of 2009 14 662.50 Third quarter of 2009 6,032.55 Not dated within the taxable year 1,641.43 Fourth quarter of 2007 Fourth quarter of 2008 106 217.73 First quarter of 2009 First quarter of 2010 Third quarter of 2010 36 832.82 1,493,589.09 p 16,702,820.13 GG b.) Supported by original VAT ORs in the acronym (SRPC) of Petitioner's name Dated in the current quarter p 343 347.83 Not dated within the taxable quarter but dated within the taxable year Second quarter of 2009 4,763.57 p 348,111.40 HH c.) Supported by original VAT ORs in the Petitioner's name with no BIR permit to print p 14,983.06 II d.) Supported by original VAT ORs in the Petitioner's name marked as "Not a Valid Source of Input p 51,245.89 Tax" JJ e.) Supported by original VAT ORs in the Petitioner's name but not in the Company's TIN p 168,278.87 KK f.) Supported by original VAT ORs not in the Petitioner's name Dated in the current quarter p 5 983.62 Not dated within the taxable quarter but dated within the taxable year Second quarter of 2009 1,200.00 p 7,183.62 LL g.) Supported by photocopies of VAT ORs in the I 1 614.03 Petitioner's name Dated in the current quarter p

Amended Decision CTA CASE NO. 8007 Not dated within the taxable quarter but 9 027.3 1 dated within the taxable year p 10,641.34 Fourth quarter of 2009 p (8,330.04) p 119,405.69 MM h.) Downward adjustment to input ta xes on 17,414,339.96 purchases of services NN i. ) Not supported by VAT ORs in the Petit ioner's name Total Purchases of Services Purchases of Goods Other Than Capital Goods 00 j .) Supported by original VAT invo ices in the Petitioner's name Dated in the current quarter p 4 304 4 28.72 Not dated within the taxable quarter but p 7 788.43 dated within the taxable year 188 485.07 Third quarter of 2008 First quarter of 2009 Second quarter of 2009 289 388.51 Third quarter of 2009 Fourth quarter of 2009 134 208.88 Not dated within the taxableyear Third quarter of 2008 9 654. 92 Fourth quarter of 2008 First quarter of 2009 8 271.58 220 746 .3 5 Fourth quarter of 2009 First quarter of 2010 1 331.57 557.14 Third quarter of 2010 268. 39 4 795.71 p e6s 496 .ss p 5 169,925.27 pp k .) Supported by original VAT invo ices in the acronym (SRPC) of Petitioner's name Dated in the current qua rte r p 631 ,943.37 Not dated within the taxable quarter but p 6 743.82 dated within the ta xable yea r 28 274.43 Third quarter of 2008 First quarter of 2009 7 116.52 Second quarter of 2009 Not dated within the taxable year 7 475.94 Fourth quarter of 2008 Second quarter of 20 10 4 168.04 Third quarter of 2010 170. 7 1 p 53 949.46 p 685 892.83 QQ I.) Supported by original VAT invo ice in the Petitioner's name with no BIR perm it to print p 7 16 .24

Amended Decision CTA CASE NO. 8007 RR m .) Supported by original VAT invoices in the Petitioner's name marked as VAT ZERO-RATED SALE Dated in the current quarter p 61,976.33 Not dated within the taxable quarter but 417.86 dated within the taxable year Second quarter of 2009 Not dated within the taxable year Fourth quarter of 2008 1,781.46 p 2 199.32 p 64 175.65 55 n.) Supported by original VAT invoices not in the Petitioner's name Dated in the current quarter p 6 203.11 Not dated within the taxable quarter but 3 685 .71 dated within the taxable year Second quarter of 2009 Third quarter of 2009 12 685.71 p 16 371.42 p 22 574.53 p TT o.) Supported by photocopies of VAT invoices in the Petitioner's name Dated in the current quarter 2 257.97 Not dated within the taxable quarter but dated within the taxable year First quarter of 2009 p 301.07 535.71 Second quarter of 2009 184.07 Third quarter of 2009 552.87 Not dated within the taxable year Fourth quarter of 2008 Third quarter of 2009 3 038.57 p 4,612.29 p 6 870.26 uu p.) Supported by original VAT invoice in the Petitioner's name subsequently classified as capital goods subject to amortization p 70 345.07 53,615.95 vv q.) Not supported by VAT invoices in the petitioner's name p Total Purchases of Goods other than Capital Goods p 6,074,115.80 Total Domestic Purchases P23,488,455. 76 Summary of Input Taxes on Importations of Goods ww a.) Supported by original bank ORs and original IEIRDs p 535 767.06 XX b.) Supported by original Bureau of Customs OR 482.00

Amended Decision CTA CASE NO. 8007 j yy c.) Not supported by bank/Bureau of Customs ORs and IEIRDs/IIDEs 10 944.64 p 547,193.70 Total Input Taxes on Importations Summary of Input Taxes on Services by Non-Residents zz Supported by original suppliers' invoices in the Petitioner's name, BIR Form No. 1600 (Monthly Remittance Return of Value-Added Tax and Other Percentage Taxes Withheld) and EFPS payment confirmation receipts p 620 580.66 p 620,580.66 Total Input Taxes on Services by Non- Residents GRAND TOTAL P26,739,378.08 Based on the above ICPA's findings, input VAT in the total amount of Php 720,555.47 should be deducted from petitioner's input VAT claim, to wit: Exhibit Particulars Total p 14 662.50 Input Taxes on Domestic Purchases Purchases of Services FF a.) Supported by original VAT ORs in the Petitioner's name Not dated within the taxable year Fourth quarter of 2007 First quarter of 2010 106 217.73 Third quarter of 2010 36 832.82 p 157,713.05 HH b.) Supported by original VAT ORs in the Petitioner's name with no BIR permit to p 14 983 .06 print II c.) Supported by original VAT ORs in the Petitioner's name marked as "Not a Valid p 51 245.89 Source of Input Tax" JJ d.) Supported by original VAT ORs in the Petitioner's name but not in the Company's TIN p 168,278.87 KK e.) Supported by original VAT ORs not in the / Petitioner's name

Amended Decision CTA CASE NO. 8007 Dated in the current quarter p 5 983 .62 Not dated within the taxable quarter but dated within the taxable year Second quarter of 2009 1 200.00 p 7 183.62 LL f.) Supported by photocop ies of VAT ORs in the Petitioner's name Dated in the current quarter p 1 614.03 Not dated within the taxable quarter but dated within the taxable year Fourth quarter of 2009 9,027. 31 p 10 641. 34 NN g.) Not supported by VAT ORs in the p 119 405.69 Petit ioner's name p 529 451.52 Total Purchases of Services Purchases of Goods Other Than Capital Goods 00 h.) Supported by original VAT invoices in the Petitioner's name Not dated within the taxable quarter but dated within the taxable year Third quarter of 2008 p 7 788.43 Not dated within the taxable year Th ird quarter of 2008 8 271. 58 First quarter of 2010 268 .39 Third quarter of 2010 4 795.71 p 21 , 124 .11 pp i.) Supported by original VAT invo ices in the acronym (SRPC) of Petit ioner's name Not dated with in the taxable quarter but dated within the taxable year Third quarter of 2008 p 6 743 .8 2 Not dated within the taxable year I 4 168.04 Second quarter of 2010 Third quarter of 2010 170 .7 1 p 11 ,08 2.57 QQ j.) Supported by original VAT invo ice in the Petiti oner's name wi th no BIR perm it to print p 716.24 RR k.) Supported by original VAT invo ice s in th e Petitioner's name marked as VAT ZERO - RATED SALE / 61,976. 33 Dated in the current quarter p

Amended Decision CTA CASE NO. 8007 Not dated within the taxable quarter but dated within the taxable year Second quarter of 2009 417.86 Not dated within the taxable year Fourth quarter of 2008 1,781.46 p 2 199.32 p 64 175.65 ss 1.) Supported by original VAT invoices not in the Petitioner's name Dated in the current quarter p 6 203.11 Not dated within the taxable quarter but dated within the taxable year Second quarter of 2009 3 685.71 Third quarter of 2009 12 685.71 p 16 371.42 p 22,574.53 TT m.) Supported by photocopies of VAT invoices in the Petitioner's name Dated in the current quarter p 2,257.97 Not dated within the taxable quarter but dated within the taxable year First quarter of 2009 p 301.07 Second quarter of 2009 535.71 Third quarter of 2009 184.07 Not dated within the taxable year Fourth quarter of 2008 552.87 Third quarter of 2009 3 038.57 p 4,612.29 vv n.) Not supported by VAT invoices in the p 6 870.26 petitioner's name p 53 615.95 Total Purchases of Goods other than p 180,159.31 Capital Goods Total Domestic Purchases p 709,610.83 Input Taxes on Importations of Goods yy o.) Not supported by bank/Bureau of Customs ORs and IEIRDs/IIDEs p 10,944.64 p 10,944.64 Total Input Taxes on Importations GRAND TOTAL p 720 555.47

Amended Decision CTA CASE NO. 8007 The input taxes under letters a, h and i shall be disallowed as the supporting invoices or official receipts are dated beyond the subject period. The input taxes under letters b, c, d, e, g, j, k, I, n and o shall also be denied for failure to meet the substantiation requirements under Sections 110(A) and 113(A) of the NIRC of 1997, as amended, in relation to Sections 4.110- 1, 4.110-8 and 4.113-1 of RR No. 16-05. The input taxes under letters f and m shall be disallowed for the reason that the supporting invoices or official receipts cannot be given evidentiary value for being mere photocopies in violation of the Best Evidence Rule. Further scrutiny of the said report and petitioner's supporting documents reveals that aside from the disallowance of Php 720,555.47, the input VAT of Php 263,179.53 should as well be disallowed for either the supporting invoice or official receipt did not comply with the invoicing requirements under the VAT law and regulations or was dated outside the period of claim or there was an over-claim of input tax by petitioner, to wit: [ Exhibit Supplier's Name Input VAT lI 1. Purchase of goods supported by invoice dated outside the period of claim. -- 009 Pacific Orient Winds Corp. p 26 412.00 Subtotal p 26,412.00 2. Purchase of goods supported by delivery receipt.

Amended Decision CTA CASE NO. 8007 001118 Accent Micro p 3 297.86 Subtotal p 3,297.86 3. Purchases of goods or services supported by blank OR or not legible OR. 00176 SM ACA Shell Forbes p 328.16 00187 SM ACA Shell Forbes 244.12 00196 SM ACA Shell Forbes 170.78 00197 SM ACA Shell Forbes 268.05 00202 SM ACA Shell Forbes 201.52 00207 SM ACA Shell Forbes 221.21 00646 SM ACA Shell Forbes 451.26 00648 SM ACA Shell Forbes 204.74 00668 SM ACA Shell Forbes 370.82 00669 SM ACA Shell Forbes 330.41 00670 SM ACA Shell Forbes 393.91 00689 SM ACA Shell Forbes 414.74 00690 SM ACA Shell Forbes 389.70 00701 SM ACA Shell Forbes 351.88 00708 SM ACA Shell Forbes 576.25 00710 SM ACA Shell Forbes 219.59 00711 SM ACA Shell Forbes 326.85 00779 SM ACA Shell Forbes 338.88 00786 SM ACA Shell Forbes 369.79 00796 SM ACA Shell Forbes 367.64 00826 SM ACA Shell Forbes 315.56 00896 SM ACA Shell Forbes 292.94 00901 SM ACA Shell Forbes 304.72 00911 SM ACA Shell Forbes 320.90 00914 SM ACA Shell Forbes 294.28 00946 SM ACA Shell Forbes 354.88 00947 SM ACA Shell Forbes 210.72 001005 SM ACA Shell Forbes 299.56 001074 SM ACA Shell Forbes 236.40 001087 SM ACA Shell Forbes 153.16 001129 SM ACA Shell Forbes 210.47 001183 SM ACA Shell Forbes 181.33 001196 SM ACA Shell Forbes 185.85 001239 SM ACA Shell Forbes 170.29 001240 SM ACA Shell Forbes 198.90 001348 SM ACA Shell Forbes 211.84 Subtotal p 10 482.10 4.Purchases of goods or services supported by invoices or official receipts wherein VAT was not separately shown GG9 B.S. Benin Construction & p 763.64 Supplies PP30 Rivera's Hollow Blocks 1 325.46 PP83 Rivera's Hollow Blocks 360.00 Binalonan Alfonso Lumber & PP117 Hardware 70.71

Amended Decision Binalonan Alfonso Lumber & 66.43 CTA CASE NO. 8007 Hardware 624.64 Page 22 of 26 Rivera's Hollow Blocks 3 096.43 Rivera's Hollow Blocks PP118 Binalonan Alfonso Lumber & 36.96 PP153 Hardware PP174 Binalonan Alfonso Lumber & 1 963.93 Hardware PP180 Binalonan Alfonso Lumber & 150.00 Hardware PP330 Rivera's Hollow Blocks 144.64 SM ACA Shell Forbes PP1198 Gerbaq Industrial Tech 42.86 PP1201 SM ACA Shell Forbes J. Tancio Enterprises, Inc. 6 956.57 008 SM ACA Shell Forbes 00103 SM ACA Shell Forbes 35.89 00108 SM ACA Shell Forbes 00124 Abstract Industrial Sales 2 517.86 00138 Forsanz Enterprise 00150 Forsanz Enterprise 271.32 00177 Forsanz Enterprise 00189 SM ACA Shell Forbes 56.79 00193 SM ACA Shell Forbes 00237 SM ACA Shell Forbes 39.64 00238 Forsanz Enterprise 00299 Forsanz Enterprise 8 970.00 00303 Abstract Industrial Sales 00310 Forsanz Enterprise 2507.14 00333 SM ACA Shell Forbes 00407 SM ACA Shell Forbes 675.00 00471 Forsanz Enterprise 00529 Bon Bon General Merchandise 3 037.50 00577 Shirts & Print Tradinq Corp. 00578 SM ACA Shell Forbes 244.19 00594 SM ACA Shell Forbes 00608 SM ACA Shell Forbes 305.35 00662 SM ACA Shell Forbes 00684 SM ACA Shell Forbes 272.37 00688 Bumanlag Brass Products 00693 SM ACA Shell Forbes 3 616.07 00695 SM ACA Shell Forbes 00697 SM ACA Shell Forbes 3 037.50 00699 Forsanz Enterprise 00706 SM ACA Shell Forbes 12 910.71 00735 Bottle Zone 00742 Bumanlaq Brass Products 2 410.71 00780 SM ACA Shell Forbes 00805 SM ACA Shell Forbes 418.32 00830 Forsanz Enterprise 00831 SM ACA Shell Forbes 432.20 00851 00870 3 278.57 00878 00879 14 378.57 3 369.64 393.85 356.21 280.39 350.95 387.68 1,446.43 362.74 434.00 321.46 3,133.93 350.08 4,500.00 1 446.43 370.68 261.83 I 3 037.50 339.52

Amended Decision CTA CASE NO. 8007 00886 Bottle Zone 9 375.00 00887 Bends Marketing 5 944.29 00940 Elan Premium Gifts 001084 Tionq San Marketing 578.57 Southern Control Industrial 34 224.00 001157 Supply 001188 Bends Marketing 5 357.14 5 944.29 Subtotal P1571 584.58 5. Importation of goods supported by document which does not show actual payment of VAT. WW9 & WW9a Vibrosystem Inc p 920.00 Subtotal p 920.00 6. Over-claimed input tax on purchases previously classified as goods other than capital goods in the third quarter of FY 2009 but subsequently reclassified as capital goods subject to amortization in the fourth quarter of FY 2009 UU1 and CCC, Original input VAT claim p.ll, item no. under goods other than 38 capital qoods p 70 345.07 Less: input tax amortization 5 862.08 p 64 482.99 upon reclassification to p 64,482.99 capital goods Overclaimed input tax Subtotal Total P263,179.53 Therefore, petitioner's valid input VAT claim amounts only to Php25,755,643.08, computed as follows: Input VAT Claim p 26 739/378.08 Less: Disallowances p 720,555.47 Per !CPA's findings Per this Court's findings 263,179.53 Total Valid Input VAT Claim p 983,735.00 p 25,755,643.08

Amended Decision CTA CASE NO. 8007 However, a portion of the creditable input VAT of Php 25,755,643.08 shall be applied against petitioner's reported output VAT liability of Php 94,133.59. Hence, only the remaining input VAT of Php 25,661,509.49 can be attributed to the entire zero-rated receipts declared by petitioner in the amount of Php 8,671,202,381.65. Consequently, only the input VAT of Php 24,101,040.15 represents petitioner's refundable excess input VAT attributable to the valid zero-rated receipts of Php 8,143,908,947.05, as computed below: Valid Input VAT p 25,755,643 .08 Less: Output VAT Valid Excess Input VAT 94,133 .59 Valid Zero-Rated Receipts p 25,661, 509.49 Divided by Total Reported Zero-Rated Receipts p 8,143,908,947.05 Multiplied by Val id Excess Input VAT P8,671,202,381.65 Refundable Excess Input VAT attributable to the Valid Zero- Rated X p 25,661,509.49 Receipts p 24, 101,040.15 Although petitioner carried-over the claimed excess input VAT of Php 26,645,244.88, including the refundable amount of Php24, 101,040.15, to the succeeding first 16 and second 17 quarters of FY 2010, the same remained unutilized until it was 16 Ex hibit " 0 ". 17 Ex hibit " P".

Amended Decision CTA CASE NO. 8007 fully deducted as " VAT Refund/TCC Claimed"18 from the total available input tax as of the second quarter of FY 2010. Thus, the excess input VAT of Php 15,371,220.0919 to be carried-over to the third quarter of FY 2010 no longer included the claimed input VAT of Php 26,645,244.88. WHEREFORE, petitioner's Motion for Reconsideration is hereby PARTIALLY GRANTED . The Decision dated May 7, 2012 is MODIFIED ordering respondent to refund or issue a tax credit certificate in favor of petitioner in the reduced amount of TWENTY FOUR MILLION ONE HUNDRED ONE THOUSAND FORTY AND 15 / 100 PESOS (Php 24,101,040.15), representing the latter's unutilized excess input VAT for the period January 1, 2008 to March 31, 2009 attributable to zero-rated receipts. SO ORDERED. We concur: ciate Justice ~.......X... \l...r-- ' ERNESTO D. ACOSTA AsEs~~~.~sUtiYce Presiding Justice 18 Exhibit " P", line 230. 19 Exhibit "P", line 29.

Amended Decision CTA CASE NO. 8007 CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Amended Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. Lc..-. o~ ERNESTO D. ACOSTA Presiding Justice