HAWORTH FURNITURE (PHILIPPINES) INC. v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OFTAX APPEALS QUEZON CITY THIRD DIVISION HAWORTH FURNITURE CTA Case No. 10936 (PHILIPPINES) INC., Members: MANAHAN, Chairperson, Petitioner, REYES-FAJARDO, and ANGELES, lL - versus - Promulgated: COMMISSIONER OF DEC 0 5 2025 INTERNAL REVENUE, Respondent. X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X DECISION REYES-FAJARDO, J.: We resolve the Petition for Review posted on July 22, 2022, by Haworth Furniture (Philippines), Inc., assailing Commissioner of Internal Revenue's partial denial of its claim; it now seeks additional refund of P18,723,103.07, representing previously denied refund of its unutilized input value-added tax (VAT) attributable to its zero-rated sales for calendar year 2020. FACTS Petitioner Haworth Furniture (Philippines), Inc. is a corporation duly organized and existing under Philippine laws.1 It is registered with the Bureau of Internal Revenue (BIR) as a VAT taxpayer, under Tax Identification Number (TIN) 009-146-891-000. 2 It is likewise registered with the Bureau of Customs (BOC) as an importer.3 Ex hibits " P-2" and " P-3," Docket - Vol. 3, pp. 116-:! to 1170. 2 Exhibit " P-5," Dockt>t - Vol. 3, p. 1172. 3 Exlubit "P-.f-1," Docket - Vol. 3, p. 1171.

DECISION CTA Cast' No. 109'\fl Respondent is the Commissioner of the BIR who has the authority to grant tax credit/refund under the law; and he is being sued in his capacity as the head of BIR a government agency tasked, among others, with the assessment and collection of all national internal revenue taxes.4 On March 31, 2022, petitioner filed with the BIR its Application for Tax Credits/Refunds (BIR Form No. 1914),5 with the letter dated March 30, 2022/' requesting for issuance of a cash refund of its unutilized input VAT tax credits attributable to zero-rated sales, for the 1st to 41h quarters of calendar year (CY) 2020, in the aggregate amount of f'28,972,987.73. On June 22, 2022, petitioner received the VAT Refund Notice dated June 9, 2022, partially denying its application.? On July 22, 2022, petitioner filed this Petition for Review.H On December 12, 2022, respondent filed an AnswerY On March 9, 2023, the Pre-Trial Conference was held.l0 On March 24, 2023, the parties submitted their Joint Stipulation of Facts and Issues, 11 approved by the Court by Resolution dated April 24, 2023.12 On May 24,2023, the Court issued a Pre-Trial Order.13 ' Pur. 1.2, Slipu!Jtion of Fuels, Joint Stipulation of Facts ami Issues USFI), Dorkt't- Vol. 1, p. :\91. ' Exhibit "P-8," BIR RPnmls- Folder 1 of 27 (Exhibit "R-7") p. -!5. Exhibit "P-9," Dorht- Vol. \ pp. 118-t to 1188. PM. 1.1, Slipulution of Facts, )SF!, Dot kPt- Vol. 1, p. 391; Exhibits" P-11" to "P-11-5," Dorkt't- Vol. 1, pp. H to 60. s DockPt- Vol. 1, pp. 7to :11. OockPt- Vol. 1, pp. 2:19to 250. . . 111 R('Solulion ddLPd jdnuary 12,2023, Oockd- Vol. 1, p. 297; NolKP of Pn'-Tndl Conft.::.renn' dJtcd jJnuury 16, 202'\, DockPt- Vol. 1, pp. 298 to 301; Minutes of the hPMin!] held on, and OrdPr dated, March 9, 202:\, Dockl'l- Vol. 1, pp. 3.f9to :151 Jnd 35Gto 358, fPSpPCtiV{'Jy. 11 DockPt- Vol. 1, pp ..\91 to -tm. 12 Oockl'l- Vol. 1, pp. -!06 to -!07. '' OorkPt- Vol. 1, pp. 559to 57-t.

DECISION CT A C>st' No. 10916 Trial ensued. Petitioner presented: (1) Mr. James R. Bomotano,l~ petitioner's Finance Manager; (2) Ms. Rumia Mae Dela Cruz, 1" licensed Customs Broker in GCLPI Gateway Container Line Phils. Inc.; (3) Ms. Rubielyn Bulingit,1n Account Receivable Assistant of Top Logistics International Corporation (Top Logistics); (4) Mr. Lito T. Adona,17 licensed Customs Broker for petitioner; (5) Mr. Ildefonso Chan,1H President of iCONFORMA INC. (iCONFORMA); and (6) Mr. Joseph Cedric V. Calica, 19 the Court-commissioned Independent Certified Public Accountant (ICPA).2o On October 13, 2023, petitioner filed its Formal Offer of Evidence,11 to which respondent filed his Comment/Opposition on November 13, 2023.22 By Resolution dated February 23, 2024, 23 the Court admitted petitioner's offered exhibits, except: (1) Exhibits "P-20-A-749" and "P-20-A-753," for failure of the documents marked to correspond with the description in the formal offer of exhibits, as petitioner offered "Official Receipts and Sales on Purchases of Goods other than Capital Goods and Services for the 1st to 4th Quarters of 2020 consisting of 898 pages," whereas the subject exhibits were issued in taxable year 2021; and (2) Exhibit "P-25-B-55," for being unreadable or improperly scanned. Thereafter, respondent presented Revenue Officer Juvy May M. Donato, as witness. 2~ Exhibit "P-14," DockPt- Vol. 1, pp. ~58 to ~72; Minulr'S ofllw hParinz held on, and Ordc�r datr�d, July 19,2023, DockPt- Vol. 1, pp. 611 ,mel 613 to 615, n�spediwly. 15 Exhibit "P-15," DockPl- Vol. 1, pp. 526to 530; Minutr�s of the lwarinz lwld on, am! Ordpr datc'd, julv 19, 202:'>, Docket- Vol. 1, pp. 611 and 613 to 615, respectively. Exhibit "P-16," Docket- Vol. 1, pp. 537to 5�B; tv!inutes of the !waring held on, and OrdPr datl'd, july 19,2023, Docket- Vol. 1, pp. 611 and 613 to 615, n�specliwly. Exhibit "P-17," Docket- Vol. 1, pp. 5~6 to 550; Minutes of llw lwannz lwld on, am! Ordc'r datPd, Sc'ptPmlwr 28, 202:'>, Docket- Vol.?>, pp. 1065to 1068. . Exhibit "P-18," Dockr't- Vol. 1, pp. 590 to 60~; Minutl's of tlw lwanng hPld on, and Ordc�r datr�d, Sc�ptPtnbl'f 28, 202\ Dockl't- Vol. \ pp. 1065 to 1068. . Exhibit "P-44," Dockc't- Vol. 3, pp. 10~8 to 1061; Minutc�s of the lwanng held on, and OrdPr datPd, Septc'mhc�r 28,2023, Dockl'l- Vol. 3, pp. 1065 to 1068. . . Oatil ojCon11nission dated july 19, 202\ Dockl'l- Vol. 1, p. 612; Mmutc's of the hParn'ji lwld on, and Order dated, july 19, 202\ Docket - Vol. 1, pp. 611, and 613 to 6b, rpspecliw�ly. Dockl'l- Vol. 3, pp. 11:l9to 111i1. DorkPt- Vol. 3, pp. n73 to 1393. Dockr�t- Vol. 3, pp. B97to 1399. Exhibit "R-6," Dockl'L- \'ol. 1, pp. 251 to 21i2; Minutes of tlw !waring lwld on, and Ordn datc�d, April25, 202~, Dockl'l- Vol. 3, pp. 1400 to 1~02.

DECISION CT A Cdse No. 1ll9:\o On May 6, 2024, respondent filed a Formal Offer of Evidence/" to which petitioner filed its Comment on May 20, 2024.2" By Resolution dated October 1, 2024,27 the Court admitted all of respondent's offered exhibits. On November 20, 2024, this case was submitted for decision,2H considering respondent's Memorandum filed on October 30, 2024;29 and petitioner's Memorandum filed on November 4, 2024.'0 ISSUE Is petitioner entitled to its claim for VAT refund in the amount of PhP28,972,987.73 allegedly representing Petitioner's unutilized VAT Input Tax for calendar year 2020? 31 ARGUMENTS Petitioner argues that (1) it complied with all the requisites for the granting of tax refund; (2) it has sufficiently established its payment for input VAT on importation; (3) none of its 2020 official receipts (ORs) or sales invoices (Sis) is tampered, as the completion of the said ORs and Sis was authorized; (4) the disallowance due to unsupported zero-rated sales is erroneous because all of its input VAT for 2020 are supported with the necessary ORs, Sis and importation documents; and (5) ORs and invoices are compliant with the invoicing requirements. Respondent retorts that (a) petitioner failed to prove its entitlement for tax refund and compliance with all documentary and evidentiary requirements; (b) its 2020 ORs or invoices were clearly and admittedly tampered with, hence it cannot be used to claim tax refund or credit; (c) it claimed input tax beyond the allowable period; DockPl- Vol.\ pp. 1-!0-! lo1-!10. Dock,�l- Vol.'\, pp. 1-!11 to 1-!23. DockPl- Vol.~. pp. H29lo1~~0. MinutP RPsolution ddtPd NovPmlwr 20, 202-i:, Docket- Vol.?., F� 1-l9-l. Dockl�l- Vol. :1, pp. H32lo HH. Dockl'l- Vol. 3, pp. H~7lo H93. :<1 lsSUl', )SF!, Dockl'l- Vol. 1, p. 392.

DECISION CTA Cos<' No. 10930 PJg<' 5 of :\9 (d) it failed to comply with invoicing requirements resulting to their claim to be denied; (e) and BIR is allowed to use Third Party Information to determine the validity of the petitioner's claim. RULING The Petition is partly meritorious. Requisites for the ;,;rant of the refund or issuance of tax credit certificate under the law. Section 112 (A) and (C) of the 1997 National Internal Revenue Code (NIRC), as amended, provides: SEC. 112. Refuuds or Tn.r Credits of luput Tnx. - (A) Zero-Rnted or Effectively Zero-Rated Sales. - Anv 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, applv 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 I06(A)(2)(a)(l ), (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 Ba11glw Se11tml 11g Pilipi11ns (BSP): Provided, further, That where the taxpaver 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 entirelv attributed to anv one of the transactions, it shall be allocated proportionately ~n the basis of the volume of sales: Provided, jillallrJ, 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. (C) Period withi11 which Refulld of l11p11t Taxes shall be Made. In proper cases, the Commissioner shall grant a refund for creditable input taxes within ninety (90) days from the date of submission of the official receipts or invoices and other documents in support of the application filed in accordance with Subsections (A) and (B) hereof: Provided, That should the CommiSSIOner fmd that the grant of refund is not proper, the Commissioner must state in writing the legal and factual basis for the denial.

DECISION CT A Casr' No. 10936 PdgP Aof 39 In case of full or partial denial of the claim for tax refund, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim, appeal the decision with the Court of Tax Appeals: Provirlerl, however, That failure on the part of anv official, agent, or emplovee of the BIR to act on the applicatio~ within the ninety (90)-dav period shall be punishable under Section 269 of this Code. Jurisprudence has laid down requisites which the taxpayer- applicant must comply with to successfully obtain an input VAT refund claim, to wit: 1. the refund claim is filed with the BIR within two (2) years after the close of the taxable quarter when the sales were made;'2 2. in case of full or partial denial of the refund claim rendered within a period of ninety (90) days from the date of submission of the ORs or invoices and other documents in support of the application, the judicial claim is filed with this Court within thirty (30) days from receipt of the decision;" 3. the taxpayer is a VAT-registered person;'~ 4. the taxpayer is engaged m zero-rated or effectively zero-rated sales;'" 5. for zero-rated sales under Section 106(A)(2)(a)(l), (2) and (b) and Section 108(B)(l) and (2V" the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with the Bangko Sentral ng " Intel Teclznoiogy Plziiippines, Inc. z�s. Connnissioncr ofinterrwi Revenue, G.R. No. 166732, April 27, 2007; San Roque Power Corporation us. Col/lnzissioncr of Internal Revenue, G.R. No. 18lH-l5, Nowmher 25, 2009; and AT[tT Col/1/llllllicotions Serl'iccs Plzilippincs, Inc. z�s. Comznissioncr of Internal RePcnue, G.R. No. 182:\6-l, August :l, 2010. 3' RdPr Ln Energy Dcvclopnzcnt Corporation vs. Comnzissioncr of Internal Revenue, G.R. No. 2ll'o:ln7, lv!drch 17, 2021; Cmmnissioncr of Internal Rcpcnuc vs. CE Cascnum Water and Energy Conzpm11;. Inc., G.R. No. 212727, Fehrudry 1, 202\ ctnd Commissioner of Intcnwi Revenue us. Vcstos Scrz�iccs Plzilippincs, Inc., G.R. No. 255085, MMch 29, 202:1. Intel Tccllnology Plrilippincs, Inc. vs. Co111missioncr of Internal Rcucnuc, suprJ; San. R~quc <-t Pozucr Corporation us. Connnissioncr of Internal Revenue, supra; Jnd AT&T Comnwmcatwns Servia's Philippines, l11c. vs. Connnissioncr of1ntcrnal Revenue, su prJ. '' Ibid. '" UnJPr R.A. No. 1096:1, Section 106(A)(2)(o)(2) wds n�ntnnhl'fl'd to Sc'ctwn 1ll6(A)(2)(d)(3) while Section 106(A)(2)(b) was dl'il'tPd. HowPV<'r, there wds no mrrl'sponding onwndnwntto llw suhsPllions citc�d in Section 112(A) of tlll' NlRC of 1997, dS amendPJ. ~

DECISION CTA Case No. 10Y:16 PagP 7 of :\9 Pilipinas (BSP) rules and regulations;"7 6. the input taxes are not transitional input taxes;.1x 7. the input taxes are due or paid;"9 8. the input taxes claimed are attributable to zero-rated or effectively zero-rated sales. However, where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes cannot be directly and entirely attributable to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume;~0 and 9. the input taxes have not been applied against output taxes during and in the succeeding quarters.~1 Relative to the fourth and seventh requisites, petitioner's compliance with all the VAT invoicing requirements is required to be able to file a claim for input taxes attributable to zero-rated sales.~2 The invoicing and substantiation requirements should be followed because it is the only way to determine the veracity of the taxpayer's claims. ~.1 Compliance with all the VAT invoicing requirements provided by tax laws and regulations is mandatory.~~ Section 113 (A) and (B), 237, and 238 of the NIRC, as amended, in relation to Section 4.113-1 (A) and (B) of Revenue Regulations (RR) No. 16-2005,~5 provides: '' Intel Technology Philippines, lr1c. z�s. Connnissioner of lntemal ReZ'e1111e, supra; San Roque Power Corporation vs. Conmzissioncr of Internal Rcl'CIIIIC, supra; and AT&T Conmwnications Scruiccs Philippines, Inc., vs. Connnissioncr of In tcmal Revenue, supra. " Ibid. " Ibid . Tcclnrolog~; P!Iilippincs, Inc. Z'S. Conmtissioncr ofliitcrnal RcPCIJitc, supra; and San Roque Intel .w Power Corporation �us. Connnissioncr of Intcmal Rcucrwc, supru. " Intel Tecl111ology Philippines, Inc. vs. Connnissioncr of lntemal Revenue, supra; San Roque Power Corporation vs. Cornmissioncr of Internal Revenue, supru; and AT&T Connnwucati0/15 Scruiccs PIIilippilzes, Inc. us. Connnissioner oflntemal Rcz,cnuc, supru. ,, [.R.A. Philippines, Inc. vs. Commissioner of Internal Rcucnuc, G.R. No. 171'\07, August 28, 201:1 . .n Nippon Express (Pirilippi1zes) Corporation us. Conunissioncr of Internal Revenue, G.R. No. -t.J- 1<J1.fYS, )Tucllv~c2o:n\,m2u0m1i8ca. tions Plzilippincs, Inc. vs. Connnissioncr of I11ternal Rcucnuc, G.R. No. Eastern 183531, March 25, 2015. L' SUBJECT: Consolidated Value-Added Tax Regulations of 21HJ5.

DECISION CTA Cisl' No. lll9:\6 SEC. 113. Invoicing and Accounting Requimnents for VAT- registered Persons. - (A) Inuoicing Requimnents. - A VAT-registered person shall ISSUe: (1) A VAT invoice for every sale, barter or exchange of goods or properties; and (2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services. (B) Inforwntion Contnined in the VAT Invoice or VAT Ojficinl Receipt. -The following information shall be indicated in the VAT invoice or VAT official receipt: (I) A statement that the seller is a VAT-registered person, followed by his Taxpayer's Identification Number (TIN); (2) The total amount which the purchaser pavs or is obligated to pay to the seller with the indication that such amount includes the value-added tax: Provided, That: (a) The amount of the tax shall be shown as a separate item in the invoice or receipt; (b) If the sale is exempt from value-added tax, the term 'VAT-exempt sale' shall be written or printed prominently on the invoice or receipt; (c) If the sale is subject to zero percent (0%) value-added tax, the term 'zero-rated sale' shall be written or printed prominentlv on the invoice or receipt; (d) If the sale involves goods, properties or services some of which are subject to and some of which are VAT zero-rated or VAT-exempt, the invoice or receipt shall clearlv indicate the break- down of the sale price between its taxable, exempt and zero-rated components, and the calculation of the value-added tax on each portion of the sale shall be shown on the invoice or receipt: Provided. That the seller may issue separate invoices or receipts for the taxable, exempt, and zero-rated components of the sale. (3) The date of transaction, quantity, unit cost and description of the goods or properties or nature of the service; and (4) In the case of sales in the amount of One thousand pesos (Pl,OOO) or more where the sale or transfer is made to a VAT- registered person, the name, business style, if any, address and Taxpayer Identification Number (TIN) of the purchaser, customer or client.

DECISION CT A CasP No. 109~6 Page 9 of :l9 SEC. 237. lss/1171/Ce of Receipts or Snles or Cowwercinlllluoices. - (A) lssltllltce. - All persons subject to an internal revenue tax shall, at the point of each sale and transfer of merchandise or for services rendered valued at One hundred pesos (P100) or more, issue duly registered receipts or sale or commercial invoices, showing the date of transaction, quantity, unit cost and description of merchandise or nature of service: Provided, ltoweucr, That where the receipt is issued to cover pavment made as rentals, commissions, compensation or fees, receipts or invoices shall be issued which shall show the name, business stvle, if any, and address of the purchaser, customer or client: Provided, jiu�tlter, That where the purchaser is a VAT-registered person, in addition to the information herein required, the invoice or receipt shall further show the Taxpayer Identification Number (TIN) of the purchaser. SEC. 238. Pri111i11g of Receipts or Snles or Cowwercinl f11uoices. - All persons who are engaged in business shall secure from the Bureau of Internal Revenue an authoritv to print receipts or sales or commercial invoices before a printer can print the same No authority to print receipts or sales or commercial invoices shall be granted unless the receipts or invoices to be printed are serially numbered and shall show, among other things, the name, business style, Taxpayer Identification Number (TIN) and business address of the person or entity to use the same, and such other information that may be required by rules and regulations to be promulgated bv the Secretary of Finance, upon recommendation of the Commissioner. SEC. 4.113-1. fllvoicillg Requirewe11ts.- (A) A VAT-registered person shall issue: - (1) A VAT invoice for everv sale, barter or exchange of goods or properties; and (2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services. Only VAT-registered persons are required to print their TIN followed b.v the word 'VAT in their invoice or official receipts. Said document; shall be considered as a 'VAT Invoice' or 'VAT official receipt.' All purchases covered by invoices/receipts other than VAT Invoice/VAT Official Receipt shall not give rise to any input tax.

DECISION CT A C1se No. 109:\6 VAT invoice/ official receipt shall be prepared at least in duplicate, the original to be given to the buver and the duplicate to be retained by the seller as part of his accounting records. (B) I11fommtio11 colltni11erl ill VAT i11voice or VAT official receipt. -The following information shall be indicated in VAT invoice or VAT official receipt: (1) A statement that the seller is a VAT-registered person, followed by his TIN; (2) The total amount which the purchaser pavs or is obligated to pay to the seller with the indication that such amount includes the VAT; Provirlerl, That: (a) The amount of tax shall be shown as a separate item in the invoice or receipt; (b) If the sale is exempt from VAT, the term 'VAT- exempt sale' shall be written or printed prominently on the invoice or receipt; (c) If the sale is subject to zero percent (0%) VAT, the term 'zero-rated sale' shall be written or printed prominently on the invoice or receipt; (d) If the sale involves goods, properties or services some of which are subject to and some of which are VAT zero-rated or VAT-exempt, the invoice or receipt shall clearlv indicate the break-down of the sale price between its taxable, exempt and zero-rated components, and the calculation of the VAT on each portion of the sale shall be shown on the invoice or receipt. The seller has the option to issue separate invoices or receipts for the taxable, exempt, and zero-rated components of the sale. (3) In the case of sales in the amount of one thousand peso (PI,OOO.OO) or more where the sale or transfer is made to a VAT- registered person, the name, business style, if any, address and TIN of the purchaser, customer or client, shall be indicated in addition to the information required in (1) and (2) of this Section. First and Second Requisites: petitioner's administrative and judicial claims for input VAT refund were timely filed. Section 112(A) of the NIRC, as amended, requires the taxpayer to file an administrative claim for input VAT refund, within two (2) years from the close of the taxable quarter when the sales were made.

DECISION CTA CaSl' No. 10936 Section 112(C) of the same Code grants the BIR a period of ninety (90) days from date of submission of the official receipts or invoices and other supporting documents, to decide on the taxpayer's administrative claim for input VAT refund. At present, said invoices, official receipts, and other supporting documents are submitted upon the filing of the taxpayer's administrative claim for input VAT refund.4" In turn, the taxpayer, may appeal to the Court, within thirty (30) days: a) from receipt of adverse decision rendered within said ninety(90)-day period; or b) after the lapse of said ninety (90)-day period, whichever is earlier. Petitioner's administrative claim for input VAT refund for the four (4) quarters CY 2020 or the period from January 1, 2020 to December 31, 2020 was timely filed on March 31, 2022.47 Counting ninety (90) days from March 31, 2022, or until June 29, 2022, to act on the claim. On June 22, 2022, petitioner received BIR's adverse decision of its administrative claim.4K Counting thirty (30) days from June 22, 2022, petitioner had until July 22, 2022, to seek judicial redress. The timely filing of petitioner's Petition for Review on July 22, 2022,4Y clothed the Court with jurisdiction over CTA Case No. 10936. Third Requisite: petitioner is a VAT- registered taxpayer. Petitioner is a VAT-registered taxpayer, with TIN 009-146-891- 000, as evidenced by Certificate of Registration No. OCN 9RC0000545752. so Fourth and Fifth Requisites: petitioner was able to partially establish that it was engaged in zero- rated sales for CY 2020, in the amount of F423,185,704.19. '" SeP Zucllig-Plwnna Asia Pacific Ltd. PIIils. ROHQ 1'. Commissioner of lnlcrnalRcPcnnc (CIR), G.R. No. 2-!-!-15-t, July 15, 2020. BPginning Junp 11, 201-t or upon L'fft'cllVIly of RPVL'llUP rvh,morundum CiRUldr (RNIC) No. 5-!-201-l, Llw dorunwnls df(' dl'Pllll'd cnmplt'lP upon filing of Llw taxpdyPr's ddn1inistrulivt' dait~ for it:p.u~,v A~ n'fun~L . . II " �, , 47 Exhibil "P-R," BIR Records- Foldn 1 of 2; (Exhibil R-7 ), p. ~o; Exlub1l P-9, Doc h l- Vol. 3, pp. 11&� Lo 1188. .. , , , _, Pdr. 1.1, Slipuldbon of fads, JSFI, Docket- Vol. 1, p. ~91; Exluh1Ls P-11 to P-11-::>, ..J0 Dmkel- Vol. 1, pp ..J,.t LobO. "o Dockel- Vol. 1, pp. 7lo ~1. ''' Exhihil "P-5," Dockl>L- Vol. 3, p. 1172.

DECISION CTA ClSl' No. 10~16 Pag<' 12 of.\~ In its Amended Quarterly Value-Added Tax Returns for CY 2020, petitioner declared an amount of P525,739,242.34; of which N27,371,104.33, are zero-rated sales: Period Exhibit VATable Zero-rated Total Covered No. SalesfReceivts Sales/Receipts SalesjRecei pts l" Quarter 1' 19,428,054.01 1' 44,830,070.79 ?nd Quarter "P-7"51 r 64,258,124.80 3�" Quarter "P-7-1"J2 3, 1 8 6 , 1 4 7 . 5 7 11,237,242.51 4'" Quarter "P-7-2"5.'> 63,856,419.59 ?62,331,765.05 14,423,390.08 .I'P-41"J-l 11,897,516.84 108'972,025.98 326,188,184.64 1"98,368,138.01 1"427,371,104.33 120,869,542.82 Total 1"525,739,242.34 ICPA traced petitioner's zero-rated sales, 55 on the following items: (a) considered export sales to entities registered with the Philippine Economic Zone Authority (PEZA); and (b) sales to persons or entities whose exemption under international agreements, to which the Philippines is a signatory, effectively subject such sales to the zero-percent VAT rate. The presentation of the ICPA is hereby adopted: A. Considered export sales to PEZA registered entities No. Customer Name Sale of Goods Sale of Total Zero-rated l'1A77,(n8.00 Services Sales 1. ADP Phi\ippinPs, Inc. 1'809, 19:> .1111 !'2,286,8:>:\.110 995,808.00 Conn�ntrix Drlksh St�rvices \~99,J.l1A3 Philippim�s Corporc1tion ~,72:>,111111.00 995,808.110 J (CDS PC) 811, 1611.8tH.30 3A99,1~1Ao 1. DTCC M<~nilrl ~,7?o,OOO.OO ?,763,?9\.7~ ~. EY GDS (CS) Phi\ippinPs, Int. 80,160,801.511 66,7117,99~A~ Globdl Pc1ynwnls Proces~ Ccnlrl' ?,765, ?93.74 1,179,871).?() 0. Inc. 67,119,99U~ 18,097.30 ING Business Shctn�d Snvin�s 1,1'9,870.211 30,?,?> ?,81PO 6. BV Brc1nch Office 3~. ??9.50 J,?31,8P.OII LPgdlo Hcc1lth TPchnologiPs ~.no, 177.78 50,?>3?,831.?0 7. Phi\ippim�s, Inc. 76,339.~38.?0 ~ 1?,0011.00 o, ?31,8~2.00 ?1A67,8~s.oo Optum Gl()bcll Solutions 1 6 , B o.oo ~,7??,] ?7.78 H,187,.\06.1J:\ 8. (Phi\inni!WS), Inc. 23, ?~6. ?~9.7:\ 76,359.~?>8.20 21,~67,8~8.00 P,utJwrs Group PrimP Servin's 14,187,306.01 9. Solutions Philippines, Inc. 33,796, ?~9.73 Principe~] Gh1hal St>rvices 10. (Philippines) LLC RPed ElsPVil'r SIMn�d SQrvin�s 11. PhilillrdnPs, Inc. 1o. Shell Shctn�d St>rvin�s Asic~ B.V. Soldfwinds Softwon� Asic~ PtP n. Ltd Phil. Br,uKh H. Svkt>s A<>id, Inc Tel us lnll�rnctliondl Philippi!WS, 1o. Inc. 16. TPnel Globdl Busim'ss Cl�nter, ct DotkPt- Vol.\ pp.1175to 117h. 3" DtltkPt- Vol. 3, pp. 1177tll1178. " Dlltkl't- Vol. 3, pp. 1179to 1.180. '" Amendt'd USB (Exhibit "P-41-:1''). ss Exhibits "P-21-B" and "P-21-C." Dotkt't- Vol. 2, pp. 7061o 711.

DECISION CT A C!Sl' No. 109~6 Pag1' 1:1 of ~9 Inc. 8,oo0,000.00 Thomson RL�utPrs Corpordlion 17. Pte. Ltd.- Phil. Br<11Kh -l-l,9~9,S9S.2:1 918,700.56 ~5,858, ?93.79 348,913.00 Tfd\'PIPr' s lnlL'rlldlionctl Holt�! 348,915.00 18. Group, Inc. 6,154,569.00 h, 15~.569.00 13H7838 VL�rizon Communicc1Lions Phils. 36,960.00 19. Inc. 10,~08.00 1 ?~,070.}8 I' 420,367,854.94 \A/cslPrn Union SPrvicPs 1'409,500,796.00 36,900.00 20. Philippines, lm:. 1'10,867,057.94 Honl')/WPillnlenMliondl 21. Philippines, Inc. Subtotal B. Sales to person or entities whose exernption under international agreements to which the Philippines is a signatory effectively subject such sales to VAT at zero-percent 1. Asic1n Dl'vPiopnwnt Bonk (ADB) 1'6,68?,431.39 1'6,68?,431.59 Credit GurtrdnlPP cllld 1'1()? .30 2. lnvPslnwnl f,Kililv (CGIF) 1,l 02.30 319,713.00 I' 7,003,249.09 VVnrld Hcctllh OrgcJni.~:cJLion 319,715.00 1'427,371,104.03"' 3. (WHO) Subtotal I' 7,003,249.09 - Grand Total 1'416,504,046.09 1'10,867,057.94 A. Considered export sales to PEZA- registered entities Sales of goods and services by a VAT-registered taxpayer, such as petitioner, to entities located within ecozones are considered "export sales" subject to VAT zero-rating, pursuant to Sections 106(A)(2)(a)(5) and 108(B)(3) of the NIRC, as amended, and as implemented by Sections 4.106-5(a)(5) and 4.108-5 of RR No. 16-2005, as amended, which provides: SEC. 106. Vnlu~-ndded Tnx 011 Snl~ of Goods or Properties.- (A) Rnte 1111d Bnse ofTnx.- ... (2) The following sales by VAT-registered persons shall be subject to zero percent (0%) rate: (a) Export Sales.- The term 'export sales' means: (5) Those considered export sales under Executive Order No. 226, otherwise known as the Omnibus Investment Code of 1987, and other special laws; and37 :;._, Lower hy f'lO.~O wlwn n)inpdrcd with Lotul zpro-rdll'd sdil's/ n'CI'ipls pPr VAT n'lurns of 1'-!27.~71, 10~.3'\. " Emph.lSis suppliud.

DECISION CTA Cus<' No. 109:16 Pur,<' H of 19 SEC. 108. Vnlue-nrlrlcrl Tax 011 Sale of Services a11rl Use or Lmse of Properties. - (A) Rate a111l Bnse of Tm:. - ... (B) Tm11snctiol/s Subiect to Zero PcrCfllt (0%) Rnte. - The following services performed in the Philippines bv VAT-registered persons shall be subject to zero percent (0%) rate: (3) Services rendered to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatorv effectively subjects the supply of such services to zero percent (0";(,) rate; 38 SEC. 4.106-5. Zero-Rated Sales of Goods or Properties.- ... The following sales bv VAT-registered persons shall be subject to zero percent (0%) rate: (a) Exp01t sales.-' Export Sales' shall mean: (5) Transactions considered export sales under Executive Order No. 226, otherwise known as the Omnibus Investments Code of 1987, and other special laws. 'Cousidered expo1t sales uuder Executive Order No. 226' shall mean the Philippine port F.O.B. value determined from invoices, bills of lading, inward letters of credit, landing certificates, and other commercial documents, of export products exported directlv by a registered export producer, or the net selling price of export products sold bv a registered export producer to another export producer, or to an export trader that subsequently exports the same; Provirlerl, That sales of export products to another producer or to an export trader shall onlv be deemed export sales when actuallv exported by the latter, as evidenced by landing certificates or similar commercial documents; Prouirled,furtlicr, That pursua11t to EO 226 a111l other special laws, even without actual exportation, the following shall be considered constructively exported: (1) sales to bonded manufacturing warehouses of export-oriented manufacturers; (2) sales to export processing zones pursuaut to Republic Act (RA) Nos. 7916, as ameuded, 7903, 7922 aud otller similar exp01t processiug zones; (3) sale to c11terprises duly registered and accredited wit/1 the Subic Bay Metropolita11 Authority purs11a11t to RA 7227; (4) sales to registered export traders operating bonded '" Emphasis suppli<'d.

DECISION CT A Ccls<' No. 1093h h�ading warehouses supplying raw materials in the manufacture of export products under guidelines to be set bv the Board in consultation with the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC); (5) sales to diplomatic missions and other agencies and/ or instrumentalities granted tax immunities, of locallv manufactured, assembled or repacked products whether paid for in foreign currency or not. (c) Sales to Perso11s or E11tities Dee111erl Tax-exe111pt lllf(fer Special Lmu or flllematio11al Agree111ell t" - Sales of goods or property to persons or entities who are tax-exempt under special laws, e.g. sales to enterprises duly registered and accredited with the Subic Bav Metropolitan Authoritv (SBMA) pursuant to R.A. No. 7227, sales to enterprises duly registered and accredited with the Philippine Economic Zone Authority (PEZA) or international agreements to which the Philippines is signatory, such as, Asian Development Bank (ADB), International Rice Research Institute (IRRI), etc., shall be effectively subject to VAT at zero-rate." "SEC. 4.108-5. Zero-Rated Sale of Services.- (b) Transactions Subject to Zero Percent (0"/o) VAT Rate. - The following services performed in the Philippines by VAT- registered persons shall be subject to zero percent (0%) rate: (3) Services rendered to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects the supply of such services to zero percent (0%) rate;" 59 Based on the foregoing, in order for an export sale to qualify for VAT zero-rating under Section 106(A)(2)(a)(5) of the NIRC as amended, the following essential elements must be present: 1. the sale was made by a VAT-registered person; and, 2. there was sale of goods or services to an entity which is entitled to incentives under Executive Order No. (EO) 226, otherwise known as the Omnibus Investment Code (OIC) of 1987, and other special laws. As for the first essential element, it is already settled that petitioner is a VAT-registered person. '" Emrhasis surrlic>J.

DECISION CTA CasP No. 1090.6 Page 16 of :19 With regard to the second essential element, petitioner must present the following documents: 1. the Sis/ORs as proof of sale of goods and ORs as proof of sales of services; and 2. proof of entitlement to zero-rating under the ore, other special laws, or international agreements to which the Philippines is a signatory. In compliance with the second essential element, petitioner presented the following: (1) Sis; (2) ORs with the related service invoices; and (3) various certifications issued by PEZA confirming the VAT zero-rating of the transactions of petitioner's clients to its local suppliers of goods, properties and services, detailed as follows: No. Customer Name Total Zero-Rated St OR with the PEZA Certification SalesjReceipts related Service ADP Philippilws, Exhibit NoY 1 Period of Inc. f' 2,286,85?>.()() Invoice Validity Exhibit No.'"' 1. "P-21-B-18.'' "P-21-B- "P-22-C" YPar 2020 ContPnlrix Duksh 6~," "P-21-C-2," "P- 5Prvill'S PhilippinPs 21-C-\" "P-21-C-~," Corpora lion "P-21-C-5," "P-21-C- 8," "P-21-C-9," "P- 2. (CDS PC) 21-C-26," "P-21-C- 27," "P-21-C-28," "P- 21-C-29" 995,808.00 "P-21-B-17" "P-22-H" YPar 2020 DTCC l'vlanila \~99,1~U5 "P-21-B-8'' "P-22-K" Y<�a r 2020 :l. YPar 2020 "P-21-B-l:l," "P-21-B- "P-22-P" EY CDS (CS) ~.723,000.00 16," "P-21-B-27," "P- "P-22-S" Yc>ar 2020 Philippi!WS, Inc. "P-22-U" y ('df 2020 21-B-28" ~- 80, 160,8o:l.30 "P 21-B-7," "P-21-B- Global Paymenls 9," "P-21-B-2\" "P- Pron~ss C('nlrl' Inc. 21-B-2~." "P-21-B- 23," "P-21-B-26," "P- INC Busi1wss 21-B-29," "P-21-B- Shdn'J 5(1fVict'S BV :lll," "P-21-B-32," "P- 6. Brtuh:h O.ffitc 21-B-:13," "P-21-B- 39," "P-21-B-~2," "P- 21-B-~:l," "P-21-B- ~9," "P-21-B-50," "P- 71-B-60," "P-'1-B-63" 2,765,29U~ "P-21-B-:\1," "P-21-B- 72" �"' Anwnded USB (Exhihil "P-~:l-:1''). �� 1 Anwnd<>d USB (Exhihil "P-~3-:\'').

DECISION 67,119,994.H "P-21-B-6," "P-21-B- "P-22-W" y,,ar 2020 CTA CusP No. 10936 10," "P-21-B-11," "P- "P-22-AA" YPar 2020 Page 17 of :\9 21-B-5:\," "P-21-B- Lt'gdLO HL'dilh 3-t," "P-21-B-68," "P- Tl't�lmolo)~ies 21-B-69," "P-21-C- 14," "P-21-C-15," "P- Philippi Ill'S, lnr. 21-C-11\" "P-21-C- 7. 17" Oplum Gloh<>l Solutions 1,129,870.20 "P-21-B-59," "P-21-B- 63" 8. (PhilippinPs), Inc. Pdrliwrs Group :\4,229.50 "P-21-B-+," "P-21-C- "P-22-00" YPar 2020 PrimP St�rvin's 10," "P-21-C-11" Mayo, Solutions 2020 [0 "P-21-B-51," "P-21-B- "P-22-YY" Ope 31, 9. Philippin<'s, Inc. 50,3:'.2,8:11.20 32," "P-21-B-o1," "P- "P-22-FF" 2020 "P-22-HH" Prinlipal GlobJl 21-B-62" "P-22-11" YP<>r 2020 "P-22-KK" SL'fVil"l'S 2,251,84200 "P-21-B-H," "P-21-B- YPdr 2020 43," "P-21-B-4o" 10. (Philippitws) LLC YPar 2020 RPPJ Elsl'Vil'r "P-21-B-38," "P-21-B- ShurpJ St'rvil't'S 4,722,127.78 47," "P-21-B-70," "P- YPdf 2020 11. PhilippiJWS, Inc. 21-B-79" Slwll Sh<>n�J 76,339,4:\8.20 "P-21-B-55," "P-21-B- 5Prviu:'S Asid B.V. 56," "P-21-B-611," "P- 12. 21-B-67," "P-21-B- SolmwinJs 77," "P-21-B-78" Softwart' Asia Plt' B. UJ Phil. Branch 21,467,848.00 "P-21-B-1" 14. Syk<'s Asia, Inc "P-21-B-12," "P-21-B- "P-22-l'vltvl" Yt�ar 2020 H187,:10o.rn :\4," "P-21-B-:lo," "P- TPius Inll�rnJLIOnal Yt�<>r 2020 Philippint�s, Inc. 21-B-:17," "P-21-B-{8" YPdr 2020 15. 31,790,2~9.7:\ "P-21-B-80," "P-21-B- "P-22-NN" ~5,858,295.79 81," "P-21-C-18," "P- No1w Tt'!Wl Glohdl 21-C-19," P-21-C-20," "P-22-PP" Y1'ur 2020 Businpss CPnll'r, No1w Jon. 1 lo Inc "P-21-C-21" JunP 30, "P-21-B-~0," "P-21-B- "P-22-RR" 16. -11," "P-21-B-57," "P- "P-22-VV" 2020 Thomson RPult'rs 21-B-58," "P-21-C- Nmw Nmw Corporation Plt'. 22," "P-21-C-23," "P- UJ. - Phil. Branch 21-C-2~," "P-21-C- _7o-" 17. Trdvdpr's 3~8,915.00 "P-21-B-5," "P-21-B- InlL'fllillional HotPl H," "P-21-B-15" 18. Group, Inc. Vt�rizon o,13-t,369.00 "P-21-B-7:\," "P-21-B- Communicdlions 1:\4,478.'.8 7-t," "P-21-B-75," "P- 19. Phils. Inc. 21-B-76" "P-21-B-19," "P-21-C- VVPslt)rn Union 1," "P-21-C-30," "P- S<�rvitPS Philippitws, 20. Inc 21-C-12," "P-21-C- HotwywPll B" 1nlcrndliondl %,960.00 "P-21-C-6," P-21-C- 21. Philippitws, Inc. T TOTAL 1'420,36 7 ,854. 93

DECISION CTA ClSt> No. 109:'>A Pdg<' 18 of '\9 The ICPA noted the following exceptions: Customer Name Exhibit No. Sales Amount Reason Sale ofGoodso2 Travph_,r's lnll)rnational Nonl' I' 87,4511.00 No 51 or OR submittc>d Hot1�l Croup, Inc. R7A5h.OO No PEZA C<�rtificulion Trdvt'lt>r's Inll1 fllJLionJ1 "P-21-B-~," 15,80?dl0 Holt>I Croup, In<. b8,200.00 "P-21-B-H" Subtotal "P-21-B-15" 1'348,915.00 Sale ofScruicc"" \"ll'SlPrn Union SL'rvin's "P-21-C-1" und I' 4A,B8..!0 5d1Ps not ddssifipJ as zpro- PhilippiiWS, Inc. "P-21-C-'\0" I' 46,138.40 rJtt>d sdll'S in tlw OR 1'395,053.40 Subtotal Total We likewise found that the amount of P3,790,346.44 should be disallowed: Customer SljOR Sales Amount Reason for Disallowance Name Exhibit No. Date Snlc o(Gt1ods "P-21-B-79" ]ulv 21, 2020 !' ),h11,0:\H.'Jll No PEZA-issued n'rli(i.:cllion Global "P-)1-B-30" _lulv 21, 702l) 1,()~~.~b :>6 of fl')',lSlration ur VAT zero- riJlino Pi:lV1lll'l1l 1'3,655,454.46 Pnx:Pss No PEZA-issued n-:rtification CL'ntrc, IrK. ol rvgislr<Jlinn or VAT zero- Subtotal Snlc o(Scruio: "P-)1-C-7" .Julv !9,2020 l' 36,960.lX) mlin~~ Hlmevwell 77,'J:\I.'J8 Date per OR is bevond tlw InlPrnali~.mal ' l l, l l l l l l . l l l l vLJlid.iLv pt.�riod indi,�dlcd in Philippitws, I' 134,891.98 Inc 1'3,790,346.44 tlw '~nrrespl)nding PEZA \Vl'Sll'rn Union n'rlilin"llilm nl VAT 7t'rO- Servil"l'S Philippines, "P-'1-C-1.1" Sl�pt. l-J., l()")[l ralinp Inc. Supported by OR wilh ADP (Philipplllt-'s), l'rHSll rt'S bul llw Inc. ~�l)ll n lPrsi gncl t ure thl'rvon Subtotal Total differs from thal of tht' nulhurizt>d. si,;',nall~rv appparing on lhP OR; Jll) proof of <Juthonlv to validate "P-'1-C-29" Odnber 71'-l, 2020 such t'rasun':-> In sum, out of the r420,367,854.94 reported sales to PEZA- registered entities, only the amount of r416,182,455.10, qualifies as VAT zero-rated sales, computed below: ,, Exhibits "P-2-t-1" and "P-2-t-K," !CPA Report (Exhibit "P-43"), Dock<�L- Vol. 2, pp. 72R und 730, rPSpl'l"livdy. "' Exhibit "P-24-]," !CPA Report (Exhibit "P-43"), Dockt>L- Vol. 2, p. 729.

DECISION CTA CusP Nu. 109'16 Tolul n'rorlt'd /.l'ro-rdl('d sall'S lo PEZA-rPpisll'n'J Pntitips I' ~20,367,854.94 U.'ss: DisallnwdJKl'S I' :l95,05:UO PPr !CPA report Pl'r Lhis Court's furllwr wrificaliun I' \790,'\~6.~~ ToLd DisallowJn<:t'S Total valid zero-rated sales to PEZA-registered entities I' ~.185,399.8~ 1'416,182,455.10 B. Sales to person or entities whose exemption under international agreements subject such sales to VAT at zero percent (0%). Section 106(A)(2)(a)(c) of the NIRC as amended, categorically provides that "[s]ales to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects such sales to zero rate." Relative thereto, Sections 4.106-5 of RR No. 16-2005, as amended by RR No. 4-2007, provides: SEC. 4.106-5. Zero-Rated Soles of' Goods or Properties. - ... The following sales bv VAT-registered persons shall be subject to zero percent (0%) rate: (a) Export sales. - ... (c) 'Sales to Persons or Entities Deemed Tax-exempt under Special Law or International Agreement' - Sales of goods or property to persons or entities who are tax-exempt under special laws or international agreements to which the Philippines is signatory, such as, Asian Development Bank (ADB), International Rice Research Institute (IRRI), etc., shall be effectively subject to VAT at zero-rate."� Thus, in order to be entitled to VAT zero-rating under Sections 106 (A) (2) (a) (c) of the NIRC as amended, there is a need to comply with following essential elements: 1. the sale was made by a VAT-registered person; and, 2. there was sale of goods to an entity who is tax-exempt under international agreement to which the Philippines is a signatory. ,...,~ Emphdsis suppliPJ.

DECISION CTA Case Nu.109:l6 As for the first essential element it IS already settled that petitioner is a VAT-registered person. With regard to the second essential element, petitioner must present the following documents: 1. proof of entitlement to zero-rating under international agreements to which the Philippines is a signatory; and 2. Sis as proof of sale of goods. Petitioner sold goods to Asian Development Bank (ADB), Credit Guarantee and Investment Facility (CGIF), and World Health Organization (WHO). As for ADB, the BIR has already acknowledged in Sections 4.106-5 of RR No. 16-2005, as amended, that ADB is among the entities who have international agreements with Philippines. Thus, petitioner's sale of goods to it is subject to VAT at zero-rate. Concerning CGIF, petitioner presented the BIR Letter dated March 3, 2013. '�3 It establishes that CGIF is a trust fund under the ADB without separate legal personality. Article 13.2 of its Articles of Agreement dated 27 November 2013 provides that the privileges, immunities and exemptions accorded to ADB pursuant to the Agreement Establishing the ADB shall apply to CGIF. Section 56 of the Agreement Establishing the ADB (22 August 1966) declares that "the Bank, its assets, property, income, operations, and transactions shall be exempt from all taxation and customs duties." Given these provisions, CGIF enjoys the same tax privileges as ADB. Thus, petitioner's sales to CGIF are effectively zero-rated. With regard to WHO, petitioner presented BIR Ruling No. ITAD 103-12."" It confirms that WHO has a Host Agreement between the Republic of the Philippines. Sections 11 and 12, Article IV thereof, provides that WHO's assets, income and other property shall be exempt from all direct and indirect taxes. VAT being an indirect tax, cannot be passed on to WHO as a buyer, transferee, or lessee. Accordingly, the sale of goods and services, and the sale and lease of properties, in the Philippines, to WHO are subject to VAT at zero percent or exempt from VAT, as applicable. "' Exhihil "P-22-F," AnwmkJ USB (Exhihil "P-~:l-:\''). ��" Exhihil "P-22-WW," AnwnJr�J USB (Exhihil "P-.!:\-?,'').

DECISION CTA Cast' No. 109'lo In view of the foregoing evidence, We are convinced that the ADB, CGIF, and WHO are indeed tax-exempt entities. Thus, petitioner's sales of goods to them shall be effectively subject to VAT at zero percent (0% ). To prove its sales of goods to the foregoing VAT-exempt entities, petitioner submitted the corresponding Sis. Based on the evidence presented, the total amount of f'7,003,249.09 qualifies for VAT zero-rating: No. Customer Total Zero-Rated SI Exhibit No."' Name Sales 1. ADB 1' o,682,-m .5\1 "P-21-B-20," "P-21-B-21," "P-21-B-22," "P-21-B-71" 2. CGIF 1,1ll?.50 "P-21-B-:1:\'' :119,715.00 "P-21-B-2," "P-21-B-1" 1. WHO Total 1"7,003,249.09 In sum, out of petitioner's declared zero-rated sales/receipts for CY 2020 of f'427,371,104.33, only the amount of f'423,185,704.19 qualifies for VAT zero-rating, computed as follows: 1'1 Quarter 2nd Quarter 3"' Quarter 411� Quarter CY 2020 1'11 ,2:17,2~ 7.51 Zt.'nl-rJLL'd 1'4~,8:10,070.79 (17~.Oo:l.OO)"' SdiPs/ R<'et'ipts pn (87.~56.00) (87.~56.00) VAT returns (~6,B8AO) 1'2()2,3."\1,7()5.05 1'108,972,025.98 1'427,171,10-1.33 Less: DisallowJ.nC('S Per !CPA rcport a.No 51 or OR suhmillPd (87A56.00) (2oH59.00) h. f\o PEZA (~6,118AO) C<'rlifit.�JUun c. Sal<'S not du.ssificd u.s b'ro-rdlcd su IPs in llw OR Per Court's further l'crification d. SaiL'S mddt' to Glohdl Paynwnls AsiJ- P,Kifil- Philippinps, Inc., \vhich d<ws nol hu Vl' d PEZA-issuPd (�('rlificalion of n'r,istralion or VAT z<)ro-rdlinp_ (1,655.~5~Ao) (\655A5~Ao) h. No PEZA- iSSUl'd (:lo,%0.00) (:lo,<JO!JOO) CPrlifkdlion (77,9'.1.98) (77,9:\1.98) c. Dall' pPr OR is bt'vond llw validity np;�iod indkJl<'d in " Anwndt>d CSB (Exhibit "P--J:\-."1"). "' Sum of1'15,8o:l.OO und 1'158,200.00, Exluhits "P-21-B-1r dnd "P-21-B-15."

DECISION CTA Cas<' No. 109:16 Page' 22 of :19 till' t�orn�sponding PEZA L<'rlification of VAT zpro-rdlillB J. Supportc'J hy OR with cra,un'' hut the t�ounlersignulun' thl1 l\1l)ll differs from lhdl of tlw JuthorizpJ signJLory dpp('dring on thP OR (20,000 .00) (20,000.00) Diffpn�nn' hPtWPt'll zero-rcJlt)d sd lesI n't.('ipls pPr n'lttrns vs pt>r !CPA- pn'pdrPU sdwJu]c'S (.:10) (.:10) Valid Zero-Rated SalesjReceipts 1'44,609,020.39 1'11,063,239.51 1'258,561,418.31 1'108,952,025.98 1'423,185,704.19 Sixth Requisite: The input VAT being claimed docs not appear to he transitional input VAT. Section lll(A) bY of the NIRC as amended, states that transitional input taxes are realized when: one, a person not previously liable for VAT, becomes liable for said tax; and two, on newly VAT-registered persons. Transitional input tax credit operates to benefit newly VAT-registered persons, whether or not they previously paid taxes in the acquisitions of their beginning inventory of goods, materials and supplies. During the period of transition from non-VAT to VAT status, the transitional input tax credit serves to alleviate the impact of the VAT on the taxpayer.7� None of these conditions are present in the case of the petitioner. Seventh Requisite: Not all of petitioner's input VAT being claimed for refund were duly substantiated. Section llO(A) of the NIRC as amended, provides: SEC. 111. TransitionaVPrcsumptiz�c Input VAT Credits.- (A) Transitional Input VAT Credits.- A pl'I'Slll1 who lwconws lidhh' to valuP-addc'U tax or dny twrsnn who t�lerts to \w d VAT-n)gislt'n'J pt�rsun shall, suhjt>rl to liw filing of dll invt�ntorv Jtn)rdinf to Llw rulps c1nd rPpuldtions prPsrrihPd hv llw SPcrPLdrv of FinJnn�, upon n<ommPnJdlion of tlw CommissionPr, hP dilowPJ inPut VAT on hJis heginning inventory of goods, maleridls dnd suppliPs l'quivdlPnllo l\YO pl'rn�nl (2ll~~) of Llw value of such invPnlory or tlw ,.Htual VdiUl'-dl.h.kd ldX pc1id on such goods, mdlcridb unJ supplies, whidwver is higlwr, whkh shdll hl' nl'dile1hll' Jgdinsl tlw oulpulldx. Fort Bonifacio Ocuclopmcnt Corporation Z'S. Conu-nissioncr of Internal RClY'/lliC, ct al., ct seq., C.R. Nos. 13RRR3 and 1706RO, April2, 2009.

DECISION CTA C1sl' No. 1OY3h SEC.110. Tax Credits.- (A) Creditn/7/e I11p11t VAT. - (I) Anv input VAT evidenced bv a VAT invoice or official receipt issued in accordance with Section 113 hereof on the following transactions shall be creditable against the output tax: (a) Purchase or importation of goods: (i) For sale; or (ii) For conversion into or intended to form part of a finished product for sale including packaging materials; or (iii) For use as supplies 111 the course of business; or (iv) For use as materials supplied in the sale of service; or (v) For use in trade or business for which deduction for depreciation or amortization is allowed under this Code. (b) Purchase of services on which a value-added tax has actually been paid. (2) The input VAT on domestic purchase or importation of goods or properties bv a VAT-registered person shall be creditable: (a) To the purchaser upon consummation of sale and on importation of goods or properties; and (b) To the importer upon payment of the value- added tax prior to the release of the goods from the custody of the Bureau of Customs. Provided, That the input tax on goods purchased or imported in a calendar month for use in trade or business for which deduction for depreciation is allowed under this Code, shall be spread evenly over the month of acquisition and the fifty-nine (59) succeeding months if the aggregate acquisition cost for such goods, excluding the VAT component thereof, exceeds One million pesos (Pl,OOO,OOO): Provided, however, That if the estimated useful life of the capital good is less than five (5) vears, as used for depreciation purposes, then the input VAT shall be spread over such a shorter period: Provided, jitrther, That the amortization of the input VAT shall only be allowed until December 31, 2021 after which taxpayers with unutilized input VAT on capital goods purchased or imported shall be allowed to applv the same as scheduled until fullv utilized:

DECISION CTA Case' No. lll~:\6 Provided, finallv, That in the case of purchase of services, lease or use of properties, the input tax shall be creditable to the purchaser, lessee or licensee upon pavment of the compensation, rental, rovalty or fee." The above provisions are implemented by Sections 4.110-1 to 4.110-3 of RR No. 16-2005, as amended: "SECTION 4.110-1. Credits for lnpnt VAT. - 'Input VAT' means the VAT due on or paid bv a VAT-registered person on importation of goods or local purchases of goods, properties, or services, including lease or use of properties, in the course of his trade or business. It shall also include the transitional input VAT and the presumptive input VAT determined in accordance with Sec. Ill of the Tax Code. It includes input VAT which can be directlv attributed to transactions subject to the VAT plus a ratable portion of anv input VAT which cannot be directlv attributed to either the taxable or exempt activity. Any input VAT on the following transactions evidenced bv a VAT invoice or official receipt issued bv a VAT-registered person in accordance with Sees. 113 and 237 of the Tax Code shall be creditable against the output tax: (a) Purchase or importation of goods: Cl) For sale; or (2) For conversion into or intended to form part of a finished product for sale including packaging materials; or (3) For use as supplies in the course of business; or (4) For use as materials supplied in the sale of services; or (5) For use in trade or business for which deduction for depreciation or amortization is allowed under the Tax Code, (b) Purchase of real properties for which a VAT has actually been paid; (c) Purchase of services in which a VAT has actuallv been paid. (d) Transactions 'deemed sale' under Sec. 106 (B) of the Tax Code; (e) Transitional input tax allowed under Sec. 4.111 (a) of these Regulations;

DECISION CTA Cusl' No. 1093n (f) Presumptive input tax allowed under Sec. 4.111 (b) of these Regulations; (g) Transitional input tax credits allowed under the transitory and other provisions of these Regulations. SEC. 4.110-2. Perso11S 1'v7w Cnn Aunil of tile lnpnl VAT Cmlil. - The input tax credit on importation of goods or local purchases of goods, properties or services by a VAT-registered person shall be creditable: (a) To the importer upon pavment of VAT pnor to the release of goods from customs custodv; (b) To the purchaser of the domestic goods or properties upon consummation of the sale; or (c) To the purchaser of services or the lessee or licensee upon payment of the compensation, rental, royal tv or fee. SEC. 4.110-3. C/ni111 for lnpnt VAT on Depreciable Goods. Where a VAT-registered person purchases or imports capital goods, which are depreciable assets for income tax purposes, the aggregate acquisition cost of which (exclusive of VAT) in a calendar month exceeds One Million pesos (P1,000,000.00), regardless of the acquisition cost of each capital good, shall be claimed as credit against output tax in the following manner: (a) If the estimated useful life of the capital good is five (5) years or more - The input tax shall be spread evenlv over a period of sixty (60) months and the claim for input tax credit will commence in the calendar month when the capital good is acquired. The total input taxes on purchases or importations of this type of capital goods shall be divided bv 60 and the quotient will be the amount to be claimed monthlv. (b) If the estimated useful life of a capital good is less than five (5) years - The input tax shall be spread evenly on a monthly basis by dividing the input VAT bv the actual number of months comprising the estimated useful life of the capital good. The claim for input tax credit shall commence in the calendar month that the capital goods were acquired. Where the aggregate acquisition cost (exclusive of VAT) of the existing or finished depreciable capital goods purchased or imported during anv calendar month does not exceed one million pesos (P1,000,000.00), the total input taxes will be allowable as credit against output tax in the month of acquisition. Capital goods or properties refers to goods or properties with estimated useful life greater thr1n one (1) vear and which are treated as depreciable assets under Sec. 34(F) of the Tax Code, used

DECISION CT A CusP No. lll~~li directly or indirectly in the production or sale of taxable goods or services. The aggregate acquisition cost of depreciable assets in any calendar month refers to the total price, excluding the VAT, agreed upon for one or more assets acquired and not on the payments actually made during the calendar month. Thus, an asset acquired on installment for an acquisition cost of more than r�1,000,000.00, excluding the VAT, will be subject to the amortization of input tax despite the fact that the monthly payments/ installments may not exceed Pl,OOO,OOO.OO. Coustructiou i11 progress (CIP) is the cost of construction work which is not yet completed. CIP is not depreciated until the asset is placed in service. Normally, upon completion, a CIP item is reclassified and the reclassified asset is capitalized and depreciated. CIP is considered, for purposes of claiming input tax, as a purchase of service, the value of which shall be determined based on the progress billings. Until such time the construction has been completed, it will not qualify as capital goods as herein defined, in which case, input tax credit on such transaction can be recognized in the month the payment was made: Prouirlerl, that an official receipt of payment has been issued based on the progress billings. In case of conb�act for the sale of service where only the labor will be supplied by the contractor and the materials will be purchased by the contractee from other suppliers, input VAT credit on the labor contracted shall still be recognized on the month the payment was made based on progress billings while input VAT on the purchase of materials shall be recognized at the time the materials were purchased. (a) The amortization of the input VAT shall onlv be allowed until December 31, 2021 after which taxpayers with unutilized input VAT on capital goods purchased or imported shall be allowed to apply the same as scheduled until fullv utilized: Prouirled, That in the case of purchase of services, lease or use of properties, the input VAT shall be creditable to the purchaser, lessee or licensee upon payment of the compensation, rental, royal tv or fee. Once the input VAT has already been claimed while the construction is still in progress, no additional input VAT can be claimed upon completion of the asset when it has been reclassified as a depreciable capital asset and depreciated. Relative thereto, Section 4.110-8 of RR No. 16-2005 provides for the substantiation requirements of input tax credits, as follows: SEC. 4.110-8. Su/Jstautiatiou of' Iuput VAT Credits.-

DECISION CTA CIS<' No. 109",1, P�g<' 27 of :l9 (a) Input VAT for the importation of goods or the domestic purchase of goods, properties or services is made in the course of h�ade or business, whether such input VAT shall be credited against zero-rated sale, non-zero-rated sales, or subjected to the 5% Final Withholding VAT, must be substantiated and supported by the following documents, and must be reported in the information returns required to be submitted to the Bureau: (1) For the importation of goods - import entry or other equivalent document showing actual pavment of VAT on the imported goods. (2) For the domestic purchase of goods and properties - invoice showing the information required under Sees. 113 and 237 of the Tax Code. (3) For the purchase of real propertv- public instrument i.e., deed of absolute sale, deed of conditional sale, contract/ agreement to sell, etc., together with VAT invoice issued by the seller. (4) For the purchase of services - official receipt showing the information required under Sees. 113 and 237 of the Tax Code. A cash register machine tape issued to a registered buyer shall constitute valid proof of substantiation of tax credit only if it shows the information required under Sees. 113 and 237 of the Tax Code. In order to prove entitlement to credits for input VAT due or paid, petitioner must not only present the supporting documents prescribed under Section 4.110-8 of RR No. 16-2005, but must likewise comply with the invoicing requirements under Sections 113(A) and (B), 237 and 238 of the NIRC, as amended, as implemented by Section 4.113-1(A) and (B) of RR No. 16-2005. Based on petitioner's amended Quarterly VAT Returns for CY 2020, its excess input VAT claim of P28,972,987.73 emanated from the total current input VAT of f40,777,164.29 related to its domestic purchases of goods other than capital goods, importation of goods other than capital goods, domestic purchase of services, and services rendered by non-residents, as summarized below:

DECISION CT A CasP No. 109'\6 Particulars 1'' Quarter 2"" Quarter 3"1 Quarter 41h Quarter Total (Exhibit "P-7'")'' (E XIllb l t "P- 1 1~- 'T,_ (Exhibit "P-7-2")" (Exhibit "P-~1'T~ lnput VAT on 1'31,777.15 1"466.07 1'3,000.00 1'16,037.88 1'12,268.20 6,927,845.36 current 1,784,040.45 1,028,666.52 1,566,652.88 2,548,485.51 2,299,804.00 6,288,446.26 19,320,666.16 5,108,966.26 33,017,887.68 transactions: 799,664.10 - - 799,664.10 - Domestic 1"21,703,021.02 1"40,777,164.29 1'4,084,310.52 1"7,320,112.78 1"7,669' 719.97 11,804,176.56 purchases of 2,331,366.48 382,337.71 7,667,770.35 1,427,702.02 1"14,040,250.67 1"28,972,987.73 goods other than 1"1,752,944.04 1"6,937,775.07 1"6,242,017.95 capital o-oods Domestic purchase of services Importation of goods other than capital aoods Services rendered bv Non-residents Total current input VAT for taxable year 2020 Less: Output Tax Claim for Refund To support the above input VAT, petitioner submitted, among others, the following: (1) Schedule of Purchases of Goods other than Capital Goods and Purchase of Services; 73 (2) Schedule of Importations other than Capital Goods/h (3) Schedule of Services Rendered by Non-resident; 77 (4) ORs and Sis; 7H (5) importation documents (i.e., Single Administrative Document, Commercial Invoice, Statement of Settlement of Duties and Taxes, and Assessment Notice);79 (6) Haworth Singapore Pte. Ltd Debit Note;Ho and (7) Monthly Remittance Return of Value Added Tax and Other Percentage Taxes Withheld (BIR Form No. 1600),H1 which were all examined and verified by the ICPA. Respondent complains that the 2020 ORs or Sis issued by iCOFORMA and Top Logistics were clearly and admittedly tampered with. Hence, petitioner failed to prove the veracity thereof; hence, the ORs or Sis cannot be used to claim tax refund.H2 Docket- Vol.'\, pp. 1175 to 1176. .' Dtll"kPl- V,,J. '\, pp. 1177to 1178. DockPt- Vol. 0\, pp. 1179 to 1180. Anwndt'U USB (Exhibit "P-~~-3"). Exhibit "P-20-A," !CPA Report (Exhibit "P-~3"), Dockt�t- Vol. 2, pp. 676to 69~. Exhibit "P-20-B," !CPA Report (Exhibit "P-~:1''), Dockl'l- Vol. 2, pp. 695to h98. Exhibit "P-20-C," !CPA Report (Exhibit "P-~~"), DockPt- Vol. 2, p. 699. Exhibits "P-20-A-1" to "P-20-A-807," Anwndt'd USB (Exhibit "P-~:l-:1''). Exhibits "P-20-5-1" to "P-20-5-372," AnwndPd USB (Exhibit "P-~3-3"). 1'(_1 Exhibit "P-20-C-1 to "P-20-C-2," AnwndpJ USB (Exhibit "P-n-'1"). I< I Exhibits "P-20-C-\" Anwndt�d USB (Exhibit "P-~3-:1''). r- RL'SponJL�nt's A'fcnwrrmdmn, Doch'l- Vol.\ dl 1-!53.

DECISION CTA CJs<' No. 109% PJ)\<' 29 of 39 Petitioner counters that none of its 2020 ORs or Sis was tampered with, as the completion (modifications with countersignatures) of the same were made by the President of iCONFORMA, Mr. Ildefonso Chan, and the Accounting Assistant of Top Logistics, Ms. Rubielyn Bulingit, whose authority cannot be denied..H3 We find for the petitioner. First, there is no law prohibiting taxpayers with non-compliant invoices or receipts from requesting their suppliers to indicate the required information therein. Second, the corrections made by Mr. Chan and Ms. Bulingit appeared to be minor, involving only the completion of the petitioner's business name. Specifically, Mr. Chan corrected petitioner's name from "Phil" to "Philippines" and "U" to "Unit,"K.J while Ms. Bulingit completed the missing business name of petitioner in the subject ORs.H" Third, the 2020 ORs and Sis issued by iCONFORMA and Top Logistics are deemed valid, as the completion thereof was authorized and ratified by their respective Board of Directors. Both Mr. Chan and Ms. Bulingit explained and confirmed that they countersigned the same, upon petitioner's request, and such acts were confirmed and ratified by no less than their Boards of Directors, as evidenced in their respective Secretary's Certificates.H6 Lastly, petitioner benefits from the disputable presumption that the ordinarv course of business has been observed in the correction of 0 the subject ORs, pursuant to Section 3(q), Rule 131 of the Rules of Court. H7 Respondent, on the other hand, failed to present any evidence to overcome this presumption or to show that the said corrections were fraudulent or falsified. " PM. 126, Munorandun1 [For Petitioner Hawortil Furniture (Pililippines) Inc.], Docket- Vol. 1, p. 1-!87. :-:-+ Transcript of the StpnogrJphic Nolps (TSN) during Llw ht>dring lwld on St'plPmlwr 28, 202:1, p. 20. " TSN during tlw hPdring lwld on july 1'1, 202:1, pp. 49to 50. '" Exhibits "P-16-'\" Jnd "P-18-2," Do<"k<'t- Vol.'\, pp. 1256 dlld 1280. 'c Section 3. Disputabh� pn�sumplions. - Tlw following presumptions drP SdliSfdllory if uncontradicted, huln1ay h' conlradidl'd and OVl'fConw hy otlwr PvidPnLP: (q) TlMt tlw ordinary coursp of busi1wss has hl't'n follnwt'd;

DECISION CTA CciS<' No. 109:\o From the foregoing, We are convinced of the veracity of subject ORs and Sis. Section 1, Rule 131 XKof the Rules of Court, as amended,H9 embodies, inter alia, the principle of burden of evidence. To be precise, when a prima facie case was established by a party through satisfactory evidence, the burden of evidence is shifted to the other party to negate the same, via presentation of sufficient countervailing evidence. It is determined by the progress of the trial, and shifts to one party when the other party has produced sufficient evidence to be entitled as a matter of law to a ruling in his [or her] favor. People v. Mirandilla, Jr. (Mirandil/a, jr.)Yll explained: Emden of evidence is that logical necessity which rests on a party at any particular time during the trial to create a prima facie case in his [or her] favor or to overthrow one when created against him [or her]. A prinwfncif case arises when the partv having the burden of proof has produced evidence sufficient to support a finding and adjudication for him [or her] of the issue in litigation."1 In retrospect, the evidence presented by petitioner imprinted in our mind the validity of the subject ORs and Sis. Consistent with Section 1, Rule 131 of the Rules of Court as amended, as interpreted in Mirandil/a, Jr., the burden of evidence is shifted to respondent, who is tasked to counteract our impression, through its presentation of countervailing evidence. Yet, no such evidence was produced. On that account, we conclude that the 2020 ORs and Sis issued by iCONFORMA and Top Logistics are deemed valid and may be used to claim input VAT refund. Upon scrutiny and verification of the evidence submitted by petitioner, the ICPA found that the input VAT in the total amount of f>500,894.11 should be disallowed for failure to comply with the substantiation and invoicing requirements under the VAT law and regulations, itemized as follows: SPclion 1. Burdl'll of proof c1nd hurd.Pn of Pvidl'l1Cl'.- ... Buflh'n of PvidpncP is LhP duly of d pdrty to pn'sPnl l'VidPnn' suffidPnl Lo l'Sldhlish or n'hul d fdd in iss til' to Pslahlish d prima facie CJSl'. BuniPn of Pvidl'IKP mc1y shift from one pdrly to tlw ollwr in Liw umrSl' of Llw pnKPPdings, dl'Pl'nding on Llw PxigPJKiPs of Llw <ci'>P. (1a) A.M. 19-0R-13-SC G.R. No. 1Rf>.l17, July 27.. 2011. Emrhc~'i' 'urplil'd.

DECISION CTA ClS<' No. 1ll9:l6 Pagt' :l1 of 39 Input VAT from domestic purchases of goods other than capital Reason for Summary goods and input VAT from domestic purchase of services9' disallowance Reference 1't Quarter 2nd 3"1 Quarter 4th Quarter Total Exhibit "P-24- A"'-' Quarter No valid Exhibit "P-24- supporting 8"9-l documents Exhibit "P-24- !'52,543.05 !'1,370.27 !'23,288.19 !'26,129.40 !'1 03,330.91 33,219.72 No TIN of the C"Y3 753.63 - - 1,652.55 - petitioner Exhibit "P-24- - - 33,219.72 0"96 - - Wron<>.~ TIN of - 753.63 the _petitioner Exhibit "P-24- No business E"q; stvle Exhibit" P-24- - 1,65�.55 VAT amount not F"9S separately Exhibit" P-24- G"'' shown 111 the Exhibit "P-24- supporting H"!UO documents - 30,271.99 - 3,000.00 33,271.99 Incomplete nan1e of petitioner - 6,723.11 5,646.68 207,772.10 220,141.89 61,806.00 61,806.00 Not in the - period of claim - - No sales invoices/ official receipts submitted 9,838.93 3,000.00 24,610.29 9,268.70 46,717.42 Total disallowances by the ICPA 1'98,007.88 1'41,365.37 1'53,545.16 1'307,975.70 1'500,894.11 We agree with the above ICPA findings, except for the observation under Exhibit "P-24-F."Hn The ICPA disallowed input VAT amounting to 13220,141.89 on petitioner's purchase of services, citing the incomplete name of petitioner (i.e., the omission of the word "Inc.") in the ORs. Upon further verification, We also find the following input VAT in the amount ofr205,656.58 valid: INPUT VAT l;;t 2nd Jrd Sis/ORs Exhibit No. Quarter Quarter Quarter 4th Quarter CY2020 "P-20-A-432" j"P-20-A-435" 1'331.53 - - 1'331.53 - Exhibit "P-20-A," /CPA Report (Exhibit "P-B"), Dockt't- Vol. 2, pp. 676 to 69~. en Exhibit "P-~3," DockPt- Vol. 2, p. 720. "-I- Exhibit "P--!:l," Dmkt�t- Vol. 2, p. 721. Exhibit "P-~\" DockPt- Vol. 2, p. 722. Exhibit "P-~\" Dockc't- Vol. 2, !'� 72:\. Exhibit "P-~\" Dockt�t- Vol. 2, p. 72~. Exhibit "P-~:l," Om ket- Vol. 2, p. 723. Exhibit" P-~\" Dockl't- Vol. 2, p. 726. Exhibit "P-~3," Dmkl't- Vol. 2, p. 727. JUJ Exhibit "P-~\" DockPt- Vol. 2, p. 723.

DECISION CT A CaS<' No. 10936 "P-20-A-433/ "P-20-A-435" - - 131.55 - 131.55 - 742.58 "P-20-A-434" /"P-20-A-435" - - 742.58 13,608.00 1'13,608.00 45,878.40 "P-20-A-603" /"P-20-A-807" - - - 45,878.40 119,838.92 119,838.92 22,550.40 "P-20-A-604" /"P-20-A-807" - - - 22,550.40 2,575.20 2,575.20 P205,656.58 "P-20-A-605" /"P-20-A-807" - - - P204,450.92 "P-20-A-606" /"P-20-A-807" - - - "P-20-A-607" /"P-20-A-807" - - - Total - - Pl,205.66 Although petitioner's name, as indicated in the ORs supporting the input VAT of 1'220,141.89 and 1'205,656.58 does not include the word "Inc.," the TIN reflected therein establishes that "Haworth Furniture (Philippines), Inc." and "Haworth Furniture (Philippines)" refer to the same entity. Thus, despite the omission of the word "Inc.," the ORs may still be considered compliant with the invoicing requirements. As to the remaining amount, We find that the disallowance of input VAT in the amount of 1'14,485.31 102 is proper, but on the ground that the official receipts lack information regarding the nature of the service rendered. Thus, the disallowed input VAT of 1'220,141.89, as found by the ICPA under Exhibit "P-24-F," should be reduced to 1'14,485.31. Accordingly, the total disallowed input VAT by the ICPA is modified to f'295,237.53,1ln as computed below: Reason for Summary Input VAT from domestic purchases of goods other than capital disallowance Reference goods and input VAT from domestic purchase of services'''' Exhibit "P-2~-A" 1 '15 1'' Quarter 2nd Quarter 3"' Quarter 4"' Quarter CY 2020 Exhibit "P-2~-B" 1''" No VdiiJ Exhibit "P-2~-C" "" Exhibit "P-2~-D'' "" supporting Exhibit "P-2~-E" "'' dncunwnls 1'52,5-10.05 1'1,370.27 1'2\288.19 f'26,129AO 1'103,330. 91 No TIN of lill' ~\219.72 75~.6~ pPliliOIWr - - - :\1,719.7? 1,652.5o Wrong TIN of tlw - petitioner - - - 75:\.h~ No husinPss slvlP - - - 1,002.55 VAT dmount not sepdrdlPlv shown :00,271.99 - 3,000.00 3:\,271.99 ]i('_ Total input VAT Jisallowt'd hy tlw !CPA undl'r Exhibit "P-2-l-F" amounting to 1'220,1~1.89ll'ss wrifit'U valid input VAT of 1'205,656.58. Total input VAT Jisallowl'd by llw ICPA of 1'500,89~.11 Jpss valid input VAT of 1'205,f>56.58. Exhibit "P-20-A," JCPA Report (Exhibit "P-~:1''), Dotkl't- Vol. 2, pp. 676to h9~. itlS Exhibit "P-~\" Dm kl'l- Vol. 2, p. 720. Exhibit "P-.J1," Docket- Vol. 2, p. 721. IIC Exhibit "P--B," Dotkl't- Vol. 2, p. 722. Exhibit "P-~3," DotkPl- Vol. 2, p. 72:1. Exhibit "P-~3," Dotkl't- Vol. 2, p. 72~.

DECISION CTA Cose No. 109:\li Pu!jl' 1:1 of :l9 in Llw su pporling dtKU tlll'lllS Int�ompl('ll' lldll1P of rwlilimwr Exhibit "P-2-t-F""" - 6,721.11 S,h-!6.68 207,772.10 220,1-t1.89 Exhihil "P-?.f-G"; 11 h1,80h.OO 61,806.00 Nol in Llw J1l'riod - - - of dc.1im Exhihil "P-2-t-H" 112 9, 7h8.20 -!6,717.-t? 1'307,975.70 1'500,894.11 No Sd IPs 20-t,-!50.92 205,656.58 invoin's/ official 1'103,524.78 1'295,237.53 fPCPipls suhmilled 9,8:l8H\ C\,000.00 7.f,h1ll.79 Total disallowances by the ICPA 1'98,007.88 1'41,365.37 1'53,545.16 LPss: Adjustnwnl tnddl' Lo Exhihil - - 1, 705.h6 "P-2-t-F" Adjusted 1'98,007.88 1'41,365.37 1'52,339.50 disallowances Moreover, out of the total valid input VAT of N0,276,270.18m as determined by the ICPA, We find that the input VAT of 1"2,779,019.65 should additionally be disallowed, for the following reasons: Name of InvoicejOR Exhibit Input VAT from domestic purchases of goods other than cdpital goods and input VAT Supplier No. from domestic purchase of services! 1-t 1st Quarter 2nd Quarter I 3rd Quarter 4th Quarter CY 2020 1. Domestic Vurc/111se of ser1.1ices suvvorted lJit ORs but the 11a ture of services rendered was uot indica ted therein "P-20-A-1," "P-211-A- 2" I' l,lbS.ll - !' 1,165.1.~ "P-20-A-14," "P-20-A- DHL Exrn'ss 1n�' lXlh.T\ - - - bt-hTJ.. Philippinl's "P-20-A-lb" to "P-20- Corr. A-7(\ "P-JO-A-!1" 5,61::\.71 - 5,6"1:1._7} "P-20-A-22," "P-20-A- 13" 77~X\ - - )7~.K.> .,P-211-A-311" to "P-211- A-3)" 617.75 - - - 617.75 "P-2Ll-A-~H" to "P-20- A 14:1," "P-)11-A-14r 894,5113.411 - KY-!,SO~.-!Ll "P-20-A-1-l-:::.'' ltl "P- 20-A-157;� T-20-A- lSK .111,77b.h~ - - - 30,776.(-,-t "P-20-A--1 J9" ln "P- 20-A-17V .,P-211-A- 177'' ~3,838.2-1- - - - 3S,t�nK.2--l- konfclrnla, ilK. "P-211-A-17:\;' "P-211- A-1U' 576.1111 - - - S7h.Oll "P-20-A-17::/' to" P- 20-A-1811;' "P-20-A- 1 ~1" ~,717.411 - - - ~,717.411 "P-20-A-323" Lo "P- 20-A-338,'. "P-20-A- 3Y/' l' 34,~K~.77 - - 14,KB-1.72 ��p )11 A 3411" tc,"P- - 177,:::.71'1.88 - - 122,J76.KK I ill Exhihil "P--!:1," Dockl'l- Vol. 2, p. 725. Ill Exhihil "P--!:1,'. Doch>L- Vol. 2, p. 726. 112 Exhibit "P-~'1" Docket- Vol. 2, p. 727. 11:1 Told I input VAT for Loxobl<' Y""r 2020 of N0,777,16.t.29 Jpss lolol inpul VAT disallowl'U bv Llw ICP A of 1'500,89-!.11. II" Exhihil "P-20-A," !CPA Rcpurt (Exhibil "P-Lq, Dockc'l- Vol. 2, pp. 67h lo 69-t. c(\

DECISION CT A CJs<' No. 10936 Pag<' :l-� of :\9 20-A-332," "P-20-A- :rs.i" "P-20-A-.i:J-.r' tc~ "P- - 20-A-373/' "P-2ll-A- ?.7o" 1K1,71o.?Y - - 1~1,71h.2ll "P-20-A-�-�3" tP "P- - 20-A-~55:' "P-20-A- !' W2,7~1.7ll -LS6" !' 6?.,H~~.:10 7~,:l.17.b0 6.\H~ ..?.O "P-20-A--f:JT' ln "P- !(l:J,:l,L.J:i. /l) 20-A-~75," "P-20-A- :_{)1,5l)Y.--I-0 -!76" - 1~1.67ll.77 2,003.52 141,670.77 "P-2ll-A-l77" to "P- S?.h.7! 1'877,662.14 20-A-~HH," "P-20-A- !' 107.56 --!~9" - - 6l,ll7BA~ 1lP.9R 61,l17H.--t--t 3ll6,7J-t./() "P-20-A--+~0" Lo "P- 760.~7 20-A-520," "P-20-A- .?.On,7.1~. 70 131.78 521" 1,0;~A1 "P 20 A 6-B" to "P- 1,171.77 20-A-663," "P-20-A- 1,:1K9.21 I' 4,188.58 66-l" - - - 1 K2,N1.7il !' 5,9-.tO.OO "P-20-A-bh:::/' ln "P- I' 5,940.00 1'887,790.72 20-A-673/' "P-2ll-A- n7n" - - - 7~�.157.hll "P-20-A-677" lo "P- 20-A-b'JH," "P-2ll-A- fJl)l)" - - 7ti3,3lJJ. /() "P-20-A-7llll" to "P- 20-A-71~," "P-2ll-A- 715" - - - 351,5BY.-Hl "P-2ll-A-716" to "P- 21l-A-71K," "P-2ll-A- 71Y" - - - 1 ,0h3.5! Wilk Widl' World Express Ct1fJ'tlralitln "P-70-A-n10" - - - 536]) 1'2,768,891.07 Subtotal 1'978,773.33 1'339,177.89 1'573,277.71 ?, Domestic purchase ol services supported b11 a bill i11g im.JOice 011 h1 "P-70-A-636" - - - !' 107.:Jh DHL Express "P-70-A-657" - - - 107.9K Philippirws "P-70-A-hW' - - - 26ll.K7 Cl'rp. "P 20 A (1?.'.1" - L11.7K "P-20-A-6~0" - - - 1.on~1 Fuji Xewx "P- 'll-A-6~1" - - - 1,171.77 Philippinl's, ] Ill". "P-20-A-6~2" - - - 1,389.71 I' 4,188.58 Subtotal - - - 3. Domestic purchases ofgoods or seruices �without supporting documents P<lvrt)ll 5l'rViO'S ProvidPr, Inc - - - - I' 5,Y..tO.ll0 Subtotal - - - I' 5,940.00 Total 1'978,773.33 1'339,177.89 1'573,277.71 1'2,779,019.65 Based on the foregoing, relative to petitioner's compliance with the seventh requisite, out of the P40,777,164.29 total input VAT claim, only the amount of f>37,702,907.11 represents petitioner's valid input VAT, as computed below: Disallowances Input VAT Per ICPA Per the Court's Claim CY2020 Report further verification Valid Input VAT 1''Quarter I' 4,084,310.52 I' 3,007,529.31 2nd Quarter 7,320,112.78 !' 98,007.88 I' 978,773.33 6,939,569.52 41,365.37 339,177.89

DECISION CT A CaS<' No. 10Y~6 3'" Quarter 21,703,021.02 52,339.50 573,277.71 21,077,403.81 4th Quarter 7,669,719.97 103,524.78 887,790.72 6,678,404.47 "295,237.53 1'2,779,019.65 Total 1'40,777,164.29 1'37,702,907.11 A portion of the valid input VAT of 1'37,702,907.11 zs attributable to petitioner's zero-rated sales/receipts for CY 2020. The eighth requisite is to the effect that the input taxes claimed are attributable to zero-rated or effectively zero-rated sales. However, where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes cannot be directly and entirely attributable to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume. As stated earlier, for the four (4) quarters of CY 2020, petitioner's reported total sales/receipts consisted of both VATables sales/ receipts and zero-rated sales/ receipts. However, considering that petitioner's input VAT cannot be directly identified with specific sales, this Court shall allocate the valid input VAT of P37,702,907.11 proportionately on the basis of the volume of its sales, as follows: 1't Quarter 2nd Quarter 3"' Quarter 4th Quarter CY2020 1'19,428,054.01 1'3,186,147.57 1'63,856,419.59 S~1lcs per VAT I'll ,897,516.84 1'98,368,138.01 return VA Table Sales/ Receipts Zero-rated 44,830,070.79 11,237,242.51 262,331,765.05 108,972,025.98 427,371 '104.33 Sales/ Receipts Total 1'64,258,124.80 1'14,423,390.08 1'326,188,184.64 1'120,869,542.82 1'525,739,242.34 A!!octllion Ft1ctor (Pcrccntt1gc of et1ch type of stiles to to ttl! Stiles) VA Table 30.2343930% ?2.0901435~�� 19.5765581% 9.8432712"�� Sales/Receipts 69.7656070% 80.4234419% 90.1567288% Zero-rated 77.9098565% Sales/Receipts Total 100.0000000% 100.0000000% 100.0000000% 100.0000000% Valid Input I' 6,678,404.47 I' 37,702,907.11 VAT I' 3,007,529.31 I' 6,939,569.52 1'21 ,077,403.81 lnpu t VAT Allomtion Per E11ch Tr;pe of St1/es (A//ociltion filet or nwl tiplied by ut1/id input VAT) VA Table " 909,308.23 "1,532,960.87 " 4,126,230.20 " 657,373.46 "7,225,872.76 Sales/Receipts 5,406,608.65 16,951,173.61 30,477,034.35 Zero-Rated 2,098,221.08 6,021,031.01 Sales/Receipts I' I' 3,007,529.31 I' 6,939,569.5? I' 6,678,404.47 I' 37,702,907.11 Total 21,077,403.81

DECISION CTA CusP No. 1(19:\6 Thus, with regard to petitioner's compliance with the eighth requisite, only the amount of 1330,477,034.35 represents its valid input VAT attributable to its total reported zero-rated sales/receipts for CY 2020. The input VAT has not bem applied against output taxes during and in tlzc succeeding quarters. With respect to input taxes attributable to zero-rated sales, it is the taxpayer who is given the option to either: (1) charge a portion of its input taxes attributable to zero-rated sales to the output taxes, and refund the balance, if any; or (2) refund all of the input taxes attributable to zero-rated sales. The Supreme Court in Chevron Holdings, Inc. (Formerly: Caito.: Asia Limited) vs. Commissioner of Internal Revenue115 (Chevron) ruled that: ..., the input tax attributable to zero-rated sales may, at the option of the VAT-registered taxpayer, be: (1) charged against output tax from regular 12";{, VAT-able sales, and any unutilized or 'excess' input tax may be claimed for refund or the issuance of tax credit certificate; or (2) claimed for refund or tax credit in its entirety. It must be stressed that the remedies of charging the input tax against the output tax and applying for a refund or tax credit are alternative and cumulative. Furthermore, the option is vested with the taxpayer-claimant. It goes without saying that the CTA, and even the Court may not, on its own, deduct the input tax attributable to zero-rated sales from the output tax derived from the regular twelve percent (12";{,) VAT-able sales first and use the resultant amount as the basis in computing the allowable amount for refund. The courts cannot condition the refund of input taxes allocable to zero-rated sales on the existence of 'excess' creditable input taxes, which includes the input taxes carried over from the previous periods, from the output taxes. These procedures find no basis in law and jurisprudence. lib Here, Petitioner chose the first option as it opted to claim a refund of its excess input tax of 1328,972,987.73 after charging its aggregate output VAT in the amount of Pl1,804,176.56 against its total input VAT for the period in the amount of 1340,777,164.29. Following the same computation, since the valid input VAT allocated to VATable sales/receipts is not enough to cover petitioner's output tax due for each quarter except for the 2nd quarter, '" G.R. No. 215159, July 5, 2022. ''" Emphusis suppli<>d. L------------------------- ----

DECISION CTA CJSl' No. 10SI:\6 the input VAT allocated to zero-rated sales/ receipts shall be utilized to pay for the remaining output tax, as shown below: Output VAT 1'1 Quarter 2nd Quarter 3�d Quarter 4"� Quarter CY 2020 1'2,331,:1o6AH 1'382,337. 71 1'7,662,770.35 I' 1,~27,7lP.02 I' 11,80~.17fl.51i Duell:' 909,308.23 1,532,960.87 U2o,230.20 657,373A6 7,225,87? .76 Less: Input VAT I' U22,058.25 I' (1,150,623.16) I' .\536,5~0.15 I' 770,328.56 I' ~.578,303.80 AtlrihutJhi<' to 2,098,221.08 5,{()6,608.65 16,951,173.61 6,021,031.01 3lH77,03-U5 Dt'dared VATdblt' 1'(676,162.83) 1'(6,557,231.81) 1'(13,414,633.46) 1'(5,250,702.45) 1'(25,898,730.55) Sa IPs/ Rt~n.}ipls Output VAT Still Om' (Exn'sS Input VAT) Less: Input VAT Attributa bll' to DtlddrPd Zrro- Rat<'t.l SJIPs/Receipts Excess Input VAT Attributable to Declared Zero- Rated Sales/Receipts Based on the foregoing, petitioner had excess input VAT for the CY 2020 in the amount of P25,898,730.55, which can be attributed to its entire declared zero-rated salesjreceipts in the amount of P427,371,104.33. However, as stated earlier, petitioner was able to properly substantiate only the amount of !"423,185,704.19 out of its total declared zero-rated sales/receipts of P427,371,104.33. Thus, the input VAT attributable to petitioner's valid zero-rated sales/receipts of 1'423,185,704.19 amounts only to P25,600,096.42, as computed below: Excess Input 1'' Quarter 2"'' Quarter 3"' Quarter 4'" Quarter CY 2020 VAT I' 676,162.83 1'6,557,231.81 I' 13,414,633.46 I' 5,250,702.45 1'25,898,730.55 44,830,070.79 11,237,242.51 262,331,765.05 108,972,025.98 427,371,104.33 Attributable to 44,609,020.39 11,063,239.51 258,561,418.31 108,952,025.98 423,185,704.19 Declared Zero- Rated Sales/ Receipts Divided bv Declared Zero- Rated Sales/ Receipts Multiplied by Valid Zero- Rated ttc Li1w 158, Exhibits "P-7," "P-7-1," "P-7-2," Dnckt't- Vol. \ pp. 1175, 1177 and 1179, rt'spt'ctiwly; Exhibit "P-~1," Anwnded USB (Exhibit "P-~3-3").

DECISIO N CTA Cas<' No. 10936 PdgP ?,H o09 Sales/ Receipts Excess Input 1"672,828.77 1"6,455,696.40 1"13,221,832.48 1"5,249,738.77 P25,600,096.42IIS VAT Attributable to Valid Zero- Rated Sales(Recei pts Finally, it was established that although the input VAT claim of 1'28,972,987.73 (including the valid excess input VAT of 1'25,600,096.42) was carried over by petitioner in its Amended Quarterly Value Added Tax Return for the 1st quarter of CY 2021, the same remained unutilized as it was deducted as "VAT Refund/TCC claimed" in the same Return,119 preventing the carry-over of the said amount in the succeeding taxable quarters. Hence, petitioner is deemed to have fulfilled the ninth requisite for the refund/ tax credit ofinputVAT under Section 112(A) of the NIRC as amended. Correspondingly, petitioner has sufficiently proven its entitlement to the refund or issuance of tax credit certificate in the amount of 1'25,600,096.42, representing excess and unutilized input VAT attributable to its zero-rated sales/receipts for the four (4) quarters of CY 2020. However, considering that respondent has partially granted petitioner's claim in the amount of 1'10,249,884.66 per VAT Refund Notice dated January 9, 2022,120 only the amount of 1'15,350,211.76 shall be granted to petitioner as an additional refund, thus: Refund able excess input VAT per the Court's I" 25,600,096.42 com putation Less: A mount refunded by respondent per VAT Refuurl (1 0,249,884.66) fi5,350,211. 76 Notice dated June 9, 2022 Additional excess input VAT for refund WHEREFORE, premises considered, the present Petition for Review is PARTIALLY GRANTED. Respondent is ORDERED TO REFUND to petitioner the amount of P15,350,211.76, representing its excess and unutilized input VAT attributable to zero-rated sales for the 1st to 4th quarters of CY 2020. II~ 5 umnhllion of Llw exn�ss inpul VAT allrihuldhlc lo valid z(~ro-raLPJ SdlPs/n~n~irLs for Llw ,,, ft u r qudflers of CY 2020 (!'672,H2H.77 + 1'6,455,696.-10 + I'B,221,H32.-IH + 1'5,2-!9,738.77). 1 Line 2:'>0, Exhihil "P-B," Om kl'l- Vol. 3, p. 1217. I ].1) Exhihil "P-11," Dockl'l- Vol. 2, p. H.

DECISION CTA CaS<' No. 109.)o Pagl' 39 of 39 SO ORDERED. ~&....f.~-~~ MARIAN rv'J1F. REY:Ifu:-FAJARDO Associate Justice WE CONCUR: c~�z-~--- CATHERINE T. MANAHAN Associate Justice !/OL With Separate Concurring and Dissenting Opinion HENRYS. ANGELES Associate Justice ATTESTATION I attest that the conclusions in the above Decision were reached m consultation before the case was assigned to the writer of the opinion of the Court's Division. c~�J-~ CATHERINE T. MANAHAN Associate Justice Chairperson 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. MA. BELEN M. RINGPIS-LIBAN Acting Presiding Justice

REPUBLIC OF THE PHILIPPINES COURTOFTAXAPPlliUB QUEZON CITY THIRD DIVISION HAWORTH FURNITURE CTA Case No. 10936 (PHILIPPINES) INC., Members: Petitioner, MANAHAN, Chairperson, REYES-FAJARDO, and -versus- ANGELES, JJ. COMMISSIONER OF Promulgated: INTERNAL REVENUE, Respondent. OEC 0 5 2025 X------- - ----------- -- -------~ _I_;_ ~~/!'~ ':"'_: ---- -X SEPARATECONC~G AND DISSENTING OPINION ANGELES, J.: The ponencia in the instant case partially grants the Petition for Review, directing the refund of P15,350,211.76 to the petitioner, representing its excess and unutilized input value-added tax (VAT) attributable to zero-rated sales for the 1st to 4 th quarters of calendar year (CY) 2020.1 The computation of said amount is detailed as follows: Refundable excess input VAT per the Court's P25,600,096-42 computation (10,249,884.66) Less: Amount refunded by respondent per P15,350,211. 762 VAT Refund Notice dated June 9, 2022 Additional excess input VAT for refund With due respect, I join the majority's Decision, subject to the payment of additional docket fees corresponding to P10,249,884.66, comprising the portion previously granted by the respondent Commissioner of Internal Revenue (CIR). In elaborating ' Decision, p. 38 . 2 Ibid.

SEPARATE CONCURRING AND DISSENTING OPINION CTA Case No. 10936 Page 2 of8 my concurrence, I find it necessary to underscore this Court's acquisition of jurisdiction over the subject matter, and the proper exercise thereof in the present case. The Court's acquisition of jurisdiction over the subject matter Settled is the rule that jurisdiction over the subject matter or nature ofthe action refers to the power of a court to hear and determine cases of a general class to which the proceedings in question belong.3 It is conferred only by law.4 It cannot be fixed by the will of the parties nor can it be acquired, enlarged or diminished by any act of the parties.s It is axiomatic that what determines the nature of an action, as well as which court has jurisdiction over it, are the allegations in the complaint and the character of the relief sought,6 irrespective of whether or not the plaintiff is entitled to recover upon all or some ofthe claims asserted therein.7 In this case, the Court's jurisdiction over the subject matter is anchored in Section 112 of the Tax Code, as amended by Republic Act (R.A.) No. 10963, otherwise known as the Tax Reform for Acceleration and Inclusion (TRAIN) Act, which prescribes the applicable rules governing the refund of input taxes. It reads: "SEC. 112. Refunds ofInput Tax. - XXX "(C) Period within which Refund ofInput Taxes shall be Made. -In proper cases, the Commissioner shall grant a refund for creditable input taxes within ninety (go) days from the date of submission of the official receipts or invoices and other documents in support of the application filed in accordance \\ith Subsections (A) and (B) hereof: Provided, That should the Commissioner find that the grant of refund is not proper, the Commissioner must state in writing the legal and factual basis for the denial. "In case of full or partial denial ofthe claim for tax refund, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim, appeal the ' Heirs of Concha, Sr. v. Spouses Lumocso, G.R. No. 158121, December 12, 2007 [Per C.J. Puna, First Division]. 4 City ofLapu-Lapu v. Phil. Economic Zone Authority, G.R. Nos. 184203 & 187583, November 26, 2014 [Per J. Leonen, Second Division]. s Municipality of Sogod v. Rosa/, G.R. No. 38204, September 24, 1991 [Per J. Medialdea, First Division]. 6 Cubero v. Laguna West Multi-Purpose Cooperative, Inc., G.R. No. 166833, November 30, 2006 [Per J. Carpio Morales, Third Division]. ' Platinum Tours and Travel Inc. v. Panlilio, G.R. No. 133365, September 16, 2003 [Per J. Corona, Third Division].

SEPARATE CONCURRING AND DISSENTING OPINION CTA Case No. 10936 Page 3 of8 decision with the Court of Tax Appeals: Provided, however, That failure on the part of any official, agent, or employee of the BIR to act on the application �within the ninety (90)-day period shall be punishable under Section 269 of this Code. (Emphasis and underscoring supplied) Complementing this, Section 7 of R.A No. 1125,s as amended by RA No. 9282,9 unequivocally confers upon the Court of Tax Appeals (CTA) with exclusive appellate jurisdiction over decisions of the CIR concerning tax refund claims, as follows: "SEC. 7. Jurisdiction.- The CTA shall exercise: "(a) Exclusive appellate jurisdiction to re\iew by appeal, as herein pro-vided: "(1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue; (Emphasis and underscoring supplied) From the foregoing statutory provisions, it is clear that the CTA is vested with exclusive appellate jurisdiction over decisions of the CIR denying claims for refund of internal revenue taxes. Accordingly, it is the decision itself of the CIR denying the tax refund claim that is subject to appeal before the CTA, rather than the specific amount disallowed in the claim. Consequently, for purposes of invoking the CTA's jurisdiction over the subject matter in cases of partial denial of a tax refund application, the taxpayer-claimant cannot selectively appeal to the CTA only the portion of the claim that was disallowed or otherwise adverse to its interest. It bears emphasis that a partial denial is inseparable from a partial grant, such that the act of disallowing a portion of the claim inherently encompasses the portion that was allowed. Put differently, for purposes of determining the CTA's jurisdiction, the CIR's decision on a tax refund application must be treated as indivisible and considered in its entirety. Here, the Court in Division holds exclusive appellate jurisdiction over the subject matter, as the proceedings involve the CIR's partial s An Act Creating the Court of Tax Appeals. 9 An Act Expanding the Jurisdiction of the Court of Tax Appeals (CTA), elevating its rank to the level of a Collegiate Court with Special Jurisdiction and enlarging its membership, Amending for the Purpose Certain Sections of Republic Act No. 1125, As Amended, otherwise known as the Law Creating the Court of Tax Appeals, and for other purposes.

SEPARATE CONCURRING AND DISSENTING OPINION CTA Case No. 10936 Page 4 of8 denial of the petitioner's administrative claim for refund of unutilized input VAT. While the petitioner, in its Petition,'0 confines its challenge to the denied portion of P18,732,103.07, this limitation in no way restricts the Court's jurisdiction to take cognizance of the CIR's entire decision on the petitioner's tax refund claim for CY 2020, totaling P28,972,987.73� This conclusion adheres to the well-settled principle that jurisdiction over the subject matter is conferred solely by law, and is not contingent upon the acts, omissions, or limitations of the parties. The Court's exercise of jurisdiction Having ascertained that this Court has properly acquired jurisdiction over the subject matter, it becomes imperative to examine whether the Court lawfully exercises its authority in resolving the issue framed by the pleadings or stipulated by the parties. This inquiry ensures that the Court's exercise of jurisdiction in the present case is both lawful and proper. In evaluating the scope of this Court's authority, it is crucial to distinguish between jurisdiction over the subject matter and jurisdiction over the issue. As previously noted, the former refers to the court's power to hear and adjudicate cases ofthe general class to which the proceedings belong-a power conferred solely by law, and independent of any consent or waiver by the parties. The latter, on the other hand, pertains to the court's authority to resolve specific questions properly raised in the pleadings or tried with the express or implied consent of the parties. Unlike jurisdiction over the subject matter, which is fundamental and cannot be conferred by agreement, jurisdiction over the issue arises from the acts or omissions of the parties, particularly through their pleadings or failure to timely object to evidence beyond the issues raised. This distinction was eloquently articulated in Bernabe v. Vergara," where the Supreme Court held: XXX And, furthermore, the question ofjurisdiction attempted to be raised in this case is not the kind of question that confers jurisdiction upon this Court. The jurisdiction involved is not one over the subject- matter but at most over the issue or over the persons of the parties. A Court of First Instance has jurisdiction over a case involving P200 or more, and therefore the Court of First Instance of Nueva Ecija had jurisdiction to render judgment in the amount of P350. The question of whether or not there was a proper issue raised in the pleading as to said amount, is not a question of jurisdiction over the subject- matter, but jurisdiction over the issue. In this regard we reiterate '" Docket- Vol. I, p. 7, par. 1; p. 27. " G.R. No. 48652, September 16, 1942 [Per J. Moran, En Bane].

SEPARATE CONCURRING AND DISSENTING OPINION CTA Case No. 10936 Page 5 of8 what we have said in Reyes vs. Diaz, G. R. No. 48754, November 26, 1941: "There is in our Constitution or in the law aforecited nothing which may lend the word 'jurisdiction' therein used a broader meaning than jurisdiction over the subject-matter. On the contrary, having due regard to the manifest purpose of the law, which is to confine the appellate jurisdiction of this Court to cases of vital importance involving questions of fundamental character, such, for instance, as the question of validity of statute, treaty or ordinance, or the legality of any tax, import or assessment which may affect the very existence of the government, or criminal cases wherein life imprisonment or death penalty is imposed, we are of the opinion and so hold, that the issue ofjurisdiction which confers appellate powers upon this Court in a given case is not such question as is dependent exclusively upon minor matters of fact or upon a mere construction of the pleadings, but that which has reference to the more important question of jurisdiction of the trial court over the subject-matter as determined by law. "Jurisdiction over the subject-matter is the power to hear and determine cases of the general class to which the proceedings in question belong (C. J. S. p. 36) and is conferred by the sovereign authority which organizes the court and defines its powers (Banco Espafiol Filipino vs. Palanca, 37 Phil., 921; Perkins vs. Dizon, 40 Off. Gaz., No. 7, 3d Sup., p., 216; Ng Si Chok vs. Vera, G.R. No. 45674). The question, therefore, of whether a court has jurisdiction over the subject-matter, calls for interpretation and application of the law ofjurisdiction which distributes the judicial power among the different courts in the Philippines and since the ruling on the matter is of far-reaching consequences, affecting, as it may, the very life and structure of our judicial system, the law has deemed it wise to place the power and authority to act thereon in the highest court of the land." XXX XXX XXX ... Whether certain ballots are or are not pertinent to the issue raised in the pleadings, is merely a question of relevancy of evidence. It may be true that the court by an erroneous ruling on such question may encroach upon issues completely foreign to those defined in the pleadings, but in such case the question of jurisdiction that may arise would not be one ofjurisdiction over the subject-matter but of jurisdiction over the issue. In order that a court may validly try and decide a case, it must have jurisdiction over the subject-matter and jurisdiction over the persons of the parties. (Banco Espafiol Filipino vs. Palanca, 37 Phil., 921; Perkins vs. Dizon, 40 Off. Gaz., No.7, 3d Sup., p., 216.) But in some

SEPARATE CONCURRING AND DISSENTING OPINION CTA Case No. 10936 Page 6 ofS instances it is said that the court should also have jurisdiction over the issue (15 C. J., 734; Hutts us. Martin, 134 Ind., 587; 33 N. E., 676), meaning thereby that the issue being tried and decided by the court be within the issues raised in the pleadings. But this kind of jurisdiction should be distinguished from jurisdiction over the subject-matter, the latter being conferred by law and the former by the pleadings. Jurisdiction over the issue, unlike jurisdiction over the subject-matter, may be conferred by consent either express or implied of the parties. (Rule 17, sec. 4, Rules of Court.) Although an issue is not duly pleaded it may validly be tried and decided if no timely objection is made thereto by the parties. This cannot be done when jurisdiction over the subject-matter is involved. In truth, jurisdiction over the issue is an expression of a principle that is involved in jurisdiction over the persons of the parties. Where, for instance, an issue is not duly pleaded in the complaint, the defendant cannot be said to have been served with process as to that issue. (Cf. Atkins, Kroll & Co. us. Domingo, 44 Phil., 680.) At any rate, whether or not the court has jurisdiction over a specific issue is a question that requires nothing except an examination ofthe pleadings, and this function is without such importance as to call for the intervention of this court." (Emphasis and underscoring supplied) Here, although the petitioner elevated to this Court only the denial of P18,723,103.07, the parties nonetheless stipulated that the issue to be resolved by the Court encompasses the entirety of the original refund claim filed with the Bureau of Internal Revenue for CY 2020, to wit: Whether petitioner is entitled to its claim for VAT refund in the amount of Php28,972,987.73 allegedly representing petitioner's unutilized VAT Input Tax for calendar year 2020.'2 This stipulation was reflected in the Pre-Trial Order, 13 and the full amount was subjected to examination by the Independent Certified Public Accountant.'4 Accordingly, the Court's review naturally extends to the entire refund claim of P28,972,987.73, and not merely the portion denied, amounting to P18,723,103.07. Given that the parties have stipulated that the entirety of the original refund claim of !'28,972,987.73 constitutes the issue for the " Division Docket- Vol. I, Joint Stipulation of Facts and Issues, p. 392; Emphasis supplied. '' Id., Pre-Trial Order, p. 567. '" Division Docket- Vol. II, !CPA Report, pp. 655-674�

SEPARATE CONCURRING AND DISSENTING OPINION CTA Case No. 10936 Page 7 o�8 Court's resolution, and that this issue was duly tried by the parties, it would, at first glance, appear that the Court is properly exercising its jurisdiction. Nevertheless, in my considered view, the Court's exercise of jurisdiction in this case is circumscribed by the fact that the petitioner has paid docket fees corresponding only to the denied portion off'18,723,103.07.1s While payment of the prescribed docket fees is a jurisdictional requirement, ideally tendered upon the filing of the initiatory pleading, I am mindful that prevailing jurisprudence reflects a liberal approach, whereby the Supreme Court refrains from outright dismissal of the action in cases where a deficiency in payment exists, so long as such deficiency is promptly rectified. In Fedman Development Corp. v. Agcaoili,'6 the High Court held: The non-payment of the prescribed filing fees at the time of the filing of the complaint or other initiatory pleading fails to vest jurisdiction over the case in the trial court. Yet, where the plaintiff has paid the amount offiling fees assessed by the clerk ofcourt, and the amount paid turns out to be deficient, the trial court still acquires jurisdiction over the case, subject to the payment by the plaintiff of the deficiency assessment. (Emphasis supplied) Similarly, in Camaso v. TSM Shipping (Phils), Inc.,'? the Supreme Court ruled that the non-payment of prescribed docket fees does not, in itself, warrant the outright dismissal of the case, provided that the fees are subsequently paid within a reasonable period, and that there is no showing of intent on the part of the claimant to defraud the government, viz.: Verily, the failure to pay the required docket fees per se should not necessarily lead to the dismissal of a case. It has long been settled that while the court acquires jurisdiction over any case only upon the payment of the prescribed docket fees, its non-payment at the time of filing of the initiatory pleading does not automatically cause its dismissal provided that: (a) the fees are paid within a reasonable period; and (b) there was no intention on the part of the claimant to defraud the government. In this case, it is evident that the petitioner acted in good faith and harbored no intention to defraud the government, having duly paid the docket fees corresponding to the denied portion of its refund claim, which coincides with the amount specifically alleged in its Petition as the subject of its appeal before this Court.'8 '' Division Docket- Vol. I, pp. 2-6. ;6 G.R. No. 165025, August 31, 2011 [Per J. Bersamin, First Division]. '' G.R. No. 223290, November 07,2016 [Per J. Perlas-Bernabe, First Division]. '' Di\~sion Docket- Vol. I, p. 7; p. 27.

SEPARATE CONCURRING AND DISSENTING OPINION CTA Case No. 10936 Page 8 of8 All told, I concur with the ponencia, albeit strictly conditioned upon the inclusion, in its dispositive portion, of an order directing: (1) The Third Division Clerk of Court to assess and determine the additional docket fees to be paid by the petitioner corresponding to P10,249,884.66; and (2) The petitioner to promptly remit said fees. Accordingly, only upon compliance with the foregoing shall the respondent be mandated to refund P15,350,211.76 in favor of the petitioner, as determined by the ponencia to constitute the petitioner's excess and unutilized input VAT attributable to zero-rated sales for CY 2020. HENR~GELES Associate Justice