COMMISSIONER OF INTERNAL REVENUE v. TAGANITO MINING CORPORATION

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC COMMISSIONER OF INTERNA'L E.B. No. 376 REVENUE, (C.T.A. Case No. 7157) Petitirmer, Present: -versus- ACOSTA, P.J. CASTANEDA, Jr., BAUTISTA, UY, CASANOVA, and PALANCA-ENRIQUEZ, JJ: TAGANITO MINING CORPORATION, Prom ulgated: Respondent. ' ~AN f 9 2009 Ai"�'l/;:'n1-~A.A<.'�:_� /, . .tf,'ijl, ~ ,. X ------------------------------------------------------------------------------------ X DECISION ACOSTA, PJ.: Challenged in this Petition for Review En Bane filed on April 4, 2008 is the Decision of this Court's Second Division (Second Division) dated October 22 , 2007 and the subsequent Resolution dated February 28, 2008 affirming the assailed Decision. The dispositi ve portion of the assailed Decision reads: "WHEREFORE, premises considered, the instant Petition for Review is hereby PARTIALLY GRANTED. Respondent Commissioner of Internal Revenue is hereby ORDERED to REFUND or TO ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner in the reduced amount of TEN MILLION EIGHT HUNDRED NINETY NINE THOUSAND TWO HUNDRED EIGHTY TWO AND 06/100 PESOS (Pl0,899,282.06), representing unutilized input taxes attributable to zero- rated export sales for the four qumters of 2003. SO ORDERED."

' . IECISION C T.A. E.B. NO 376 (C T.A . Case No. 7157) Page2 The essential facts are as follows: Respondent Taganito Mining Corporation is a corporation duly organized and existing under Philippine laws with address at 4111 Floor, Solid Mills Building, DelaRosa Street, Legaspi Village, Makati City. It is duly registered with the Securities and Exchange Commission (SEC) and is a VAT-registered entity with Certificate of Registration No. 94-470-000373, issued by petitioner Commissioner of Internal Revenue on June 15, 1994. It is likewise registered with the Board of Investments (BOI) as an exporter of beneficiated nickel silicate ores and chromite ores with BOI Certificate of Regi stration No. EP-88-306.1 For the year 2003, respondent exported its products abroad to foreign buyers and generated export sales in the amoun' t of $10,542,771.66 or P567, 193,182.63. The said export sales were inwardly remitted and accounted for in accordance with the rules and regulations ofthe Bangko Sentral ng Pilipinas.2 For the same year, respondent paid and incurred input Value Added Tax (VAT) on its domestic purchases of taxable goods and services amounting to P1 ,393,595.77 and on importation of capital goods amounting to Pl0,170,438.89 for a total input tax of P11 ,564,034.66.3 Respondent filed its Original Quarterly VAT Returns on April 21, 2003, July 16, 2003, October 21, 2003 and January 22, 2004 for the first, second, third and fourth quarter respectively, with the following details:4 Quarter Zero-rated Sales VAT Input Taxes on VAT Input Taxes on Total VAT Input Importation of Capi tal Taxes First P133,433, 103 .94 Domestic Purchases of Second 187,084,8 12.45 Goods p 603 ,024.39 Thi rd 124,802,022. 15 goods and services p 203,5 10.43 8,086,003 .04 2,566 ,911.24 p 399,5 13.96 I 7,533,486.25 552 ,516 .79 2,433,442.2 1 133,469. 03 1 Joint Stipulation of Facts and simplification of Issues, Second Division Rollo, pages 77-79. 2 Annex "A" of the Petition for Review en bane, en bane rolla, page 29. 3 Exhibits "E- 1 to E-4", " H-1 to H-4", "K-1 to K-4", and "N-1 to N-4"; the claim is P 11,564,034.65 - the difference is due to the rounding off of numbers . 4 /d. 21

f � DECISION C. T.A. E. B. NO. 3 76 (C. T.A . Case ,1'0 . 7157) Page3 1 Fo urth 109,750,05 1. 60 1 308,095.99 ..1 0.00 308 ,095.98 1 P l ,393,595. 77 Pll,564,034.65 ~ ~~----~~~~ o. 1 P, 170,438.89 1 Total P555,069,990. 14 Believing that its export sales are subject to zero percent Val ue Added Tax (VAT), respondent fil ed a claim of refund with petitioner on December 29, 2004 for the amount of Pll ,564,034.65 , representing its unutilized input VAT that are directl y attributable to its zero-rated sales.5 Respondent fil ed its Petition for Review before this Court on February 24, 2005 when it failed to receive any action from petitioner on its claim for refund. The Petition was assigned to the Second Division of this Court. On September 28, 2005, respondent filed its Amended Quarterl y VAT Returns,6 in order to correct inadvertent errors on the figures reported in its Original Quarterly VAT Returns, specifically to reflect the proper carryover of input taxes from the previous year or quarter and to properl y report the amount of income and purchases of respondent.7 The I Amended Returns bear the following details: Q ua rt er Zero-rated Sales VAT Input Taxes on VAT Input Taxes on Total VAT Input Domestic Purchases of Taxes First p 132,468,393.66 Importation of Capital Second 185,955,839.82 goods and services Goods p 603 ,024.39 Third 141 ,418,316.68 p 399,513.96 8,086,003.04 Fo urth 107 ,350 ,632.47 p 203,510.43 2,566,9 11.24 Total P567, 193, 182.63 308,095.98 552,516.79 7,533,486.25 Pl l,564,034.66 133,469.03 2,433,442.21 308,095.98 0.00 Pl ,393,595.76 PI 0,170,438.89 On October 22, 2007, the Second Division promulgated the assailed Decis ion finding respondent entitled to the claim for refund but in the reduced amount of p 10,899,282. 06. Petitioner fil ed a Motion for Reconsideration on November 14, 2007. The said Motion was denied by the Second Division in a Resolution dated February 28, 2008. 5 Exhibit "P". 6 Exhibits "U to X", inclusive of submarkings. 7 Exhibit "Z", Second Division rolla, page 330. 2!

DECISION C. TA . E. B. NO. 376 (C. TA. Case No. 715 7) Page 4 On April 4, 2008, petitioner petitioned this Com1 sitting en bane for the review of the Second Division's De<;:ision and Resolution. The instant Petition seeks the setting aside of both the Decision and Resolution, and that a new order be made dismissing the instant case for lack of merit and/or absence ofj'urisdiction. Petitioner assigned the sole issue for this Court's disposition, to wit: THE HONORABLE COURT ERRED IN RESOLVING THAT RESPONDENT IS ENTITLED TO ITS CLAIM FOR REFUND OR ISSUANCE OF TAX CREDIT CERTIFICATE IN THE AMOUNT OF Pl1,564,034.658 REPRESENTING THE ALLEGED UNUTILIZED INPUT FOR THE PERIOD COVERING JANUARY 1, 2003 TO DECEMBER 31, 2003 . Petitioner theorize that respondent is not entitled to a refund or tax credit certificate in the reduced amount of Pl0,899,282.06, representing its alleged unutilized input tax because respondent failed to submit all documentary and relevant documents pertaining to the said amount during its administrative claim. Particularly, petitioner claims in his Memorandum filed before this Court sitting en bane, that respondent failed to comply with Section 2(c)(l)(2)(4) of Revenue Regulations (RR) No. 3-88 and Revenue Memorandum Order (RMO) No. 53-98. Petitioner continues that for respondent ' s fai lure, there was no sufficient compliance with the filing of administrative claim for refund which is a condition sine qua non to the filing of a judicial claim in accordance with Section 229 ofthe National Internal Revenue Code (NIRC) of 1997. Consequent!)(, respondent's administrative claim is considered merely pro forma. A pro forma administrative claim for refund produces no effect and warrants the dismissal of the instant petition. Petitioner also argues that even assuming for the sake of argument that respondent was able to prove entitlement to the refund before this Court; the Petition is dismissible on the ground of lack of jurisdiction for respondent ' s failure to comply with the condition 8 The Second Division granted respondent' s claim for refund or issuance of tax cred it certificate in the reduced amount of PI 0,899,282.06.

� DECJSWN 'C. T. A. E. B. NO. 376 (C. TA. Case. No. 7157) Page 5 sine qua non of fil ing a valid administrative claim for refund before resorting to any judicial recourse. This Court finds no merit in the Petition at bar. Sections 11 2 and 229 of the National internal Revenue Code (NIRC) of 1997 are relevant to the instant case. Said sections are pertinently quoted as fo llows: "SEC. 112. Refunds or Tax Credits of Input Tax. - (A) Zero-rated or Effectively Zero-rated Sales. - Any VAT- registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales wer e mad e, ap ply for . the issuanue 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: XXX XXX XXX (D) Period within which Refund or Tax Credit of Input Taxes shall be Made. - In proper cases, the Commiss ioner shall grant a r efund or issue the tax cr edit certificate for creditable input ta xes within one hund red twen ty (120) days from the date of su bmission of complete documents in support of the application fi led in accordance with Subsections (A) and (B) hereof. In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thi1iy (30) days from the receipt of the dec ision denying the claim or after the expiration of the one hundred twenty day-period, appeal the decision or the unacted claim with the Court of Tax Appeal. SEC. 229. Recovery of Tax Erroneously or Illega lly Collected. - No suit or proceeding shall; be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been euoneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessively or in any manner wrongfu ll y collected, until a claim for refund or credit has been dul y filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress.

DECISION C.TA. E.B. NO. 376 (C.TA. l 'ase No. 7157) Page 6 : ~~ In any case, no such suit or proceeding shall be 11led after the expiration of two (2) years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment: Provided, however, That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid." (Emphasis supplied) Apparentl y from the above, the Commissioner has 120 days from the complete submission of supporting documents to act on the taxpayer's claim. The taxpayer can file a suit or proceeding before this Court within 30 days from the denial of its claim or upon the expiration ofthe 120 days. The filing of an administrative claim before the Commissioner is a pre-requisite before this Court can take cognizance of the taxpayer's claim for refund. The administrative claim will afford the Commissioner an opportunity to correct the actions of subordinate officers; and to notify the Government that the taxes sought to be refunded are under question and that, therefore, such notice s'hould then be borne in mind in estimating the revenue available for expenditure.9 However, both the administrative claim before the Commissioner and the judicial claim before this Comi, should be filed within two years; otherwise, the taxpayer will lose its claim. The reason for this is the limitation set forth in Section 229 of the NIRC of 1997, which states that "[i}n any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date o(pavment o(the tax or penalty." When applied to a claim for refund of input VAT; the two year prescriptive period is counted from the filing of the quarterly returns. The Supreme Court explained in the case of Atlas Consolidated Mining and Development Corporation vs. Commissioner of Internal Revenue10 that: "lt is true that unlike corporate income tax, which is reported and paid on installment every qumier, but is eventually subjected to a final adjustment at the end of the taxable year, VAT is computed and paid on a purely quarterly basis without need for a final adjustment at the end of the taxable year. However, it is also equally true that until and unless the 9 Bermejo vs. Collector of Internal Revenue, G.R. No. L-3029, July 25, 1950. t~ 10 G.R.Nos. l41104& 148763,June8,2007. 25

DECISION C.TA. E.B. NO. 376 (C.T A. Case No. 71 57) Page 7 VAT-registered taxpayer prepares and submits to the BIR its quat1erly VAT return, there is no way of knowing with certainty just how much input VAT the taxpayer �may apply against its output VAT; how much output VAT it is due to pay for the quarter or ryow much excess input VAT it may carry-over to the following quarter; or how much of its input VAT it may claim as refund/credit. It should be recalled that not only may a VAT- registered taxpayer directly apply against his output VAT due the input VAT it had paid on its importation or local purchases of goods and services during the quarter; the taxpayer is also given the option to either (1) carry over any excess input VAT to the succeeding quarters for application against its future output VAT liabilities, or (2) file an application for refund or issuance of a tax credit certificate covering the amount of such input VAT. Hence, even in the absence of a final adjustment return, the determination of any output VAT payable necessarily requires that the VAT-registered taxpayer make adjustments in its VAT return every quarter, taking into consideration the input VAT which are creditable for the present quarter or had been carried over from the previous quarters. Moreover, when claiming refund/credit, the VAT-registered taxpayer must be able to establish that it does have refundable or creditable input VAT, and the same has not been applied against its output VAT liabilities - information which are supposed to be reflected in the taxpayer's VAT returns. Thus, an application for refund/credit must be accompanied by copies of the taxpayer's VAT return/s for the taxable quarter/s concerned. Lastly, although the taxpayer's refundable or creditable input VAT may not be considered as illegally or erroneously collected, its refund/credit is a privilege extended to qualified and registered taxpayers by the very VAT system adopted by the Legislature. Such input VAT, the same as any illegally or erroneously collected national internal revenue tax, consists of monetary amounts whi ch are currently in the hands of the government but must rightfull y be returned tG the taxpayer. Therefore, whether claiming refund/credit of illegally or erroneously collected national internal revenue tax, or input VAT, the taxpayer must be given equal opportunity for filing and pursuing its claim. For the foregoing reasons, it is more practical and reasonable to count the two-year prescriptive period for filing a claim for refund/credit of input VAT on zero-rated sales from the date of filing of the return and payment of the tax due which, according to the law then existing, should be made within 20 days from the end of each quarter. " (Emphasis supplied.)

DECISION C.TA. E. B. NO. 376 (C. TA . Case No. I )/) PageS Likewise, jurisprudence provid�es that if the Commissioner takes time in deciding the. claim, and the period of two years is about to end, the suit or proceeding must be started in the Court of Tax AJ tpeals belore the end of the two-year period witho ut awaiting the decision of the Commi8,sioner.11 This is so because of the positive requirement of Section 229 and the doctrine that delay of the Commissioner in rendering decision does . p not extend the peremptory period fix ed by the statute. - Perusals of the records of the case show that the claim for refund, both in the administrative and judicial levels, was filed within the two-year prescriptive period. Respondent filed on April 2 1, 2003 its quarterly return for the first quarter, which is the earliest quarter covered by the instant claim. Counting from this date, both the administrative and judicial claim for tefund fi led 'on December 29, 2004 and February 24, 2005, respectively, falls within the two-year prescriptive period. When respondent fil ed an appeal with this Court, it transformed the administrative claim for refund into a judicial claim for refund, because an appeal to the Court of Tax Appeals is manifestl y judicial 13 When respondent's claim was converted into a judicial . claim, what matters most are -- the filing of an administrative claim before the Commissioner, and that both the administrative and judicial claim are filed within the prescriptive period provided under the NIRC of 1997. Since respondent complied with all the requirements, therefore, there is no reason for this Court not to acquire jurisdiction over respondent's judicial claim of refund. Once jurisdiction is acquired, it is thi s Court that has the authori ty to determine the relevance and effects of respondent' s compliance and non-compliance with RR No. 3-88 and RMO No . 53-98 to its claim, and eventually, to determine whether or not respondent ' is entitled to the refund . The Second Division, however, found respondent entitled to its claim. 11 Commissioner oflnternal Revenue vs. Victorias Milling Co., lnc. ,G.R. No. L-241 08 January 3 1968. 12 . , ' Gibbs, et. al. vs. Co llector, G.R. No. L-13453 , Februarv29 1960. 13 J ' Lopez and Sons, Inc. v. Court ofTax Appeal s, 100 Phil. 850.

D ECI SI O N C. T.A. E. B. NO. 376 (C. TA. Case No. 7157) Page 9 While there can be n dispute that the taxpayer-claimant has the burden of proving the legal and factual bases of its claim for tax credit or refund; but, once it has submitted all the required documents, it is the function of petitioner to assess these documents with purposeful dispatch. 14 In its Letter of Refund, respondent had already attached some documents for the information and guidance of petitioner in granting the refund and an indication of respondent' s willingness to cooperate with petitioner as far as its claim of refund is concerned. Quoted herein for easy reference is the relevant portion of the letter: "Based on the foregoing, TMC is claiming for a tax credit/refund of the aforesaid VAT input taxes amounting to ELEVEN MILLION FIVE HUNDRED SIXTY FOUR THOUSAND THIRTY FOUR and 65/ 100 (p 11 ,564,034.65) in accordance with Section 112 of the National Internal Revenue Code, as amended, considering that TMC's export sales qualify as zero-rated transactions under Section 106(A)(2)(a)(l) of the same Code. Attached are the following documents in support of our claim: I 1.) Duly accomplished BIR Form 1914; 2) Original and amended VAT returns for the four (4) quarters of year 2003; 3) Summary list of Sales and Purchases for the year 2003; 4) Monthl y VAT Declaration 2003; 5) Certificate of Registration No. 94-470-000373; and 6) Audited Financial Statements for taxable years 2003 and 2002, with accompanying report of independent Auditors. We hope that with the foregoing, our claim will be given due course and will be favorably granted. You may notify TMC of further requirements to help facilitate the processing ofour request through the undersigned."(Emphasis supplied.) Respondent submitted documents which it thought would be sufficient in the processing of its claim. If petitioner believes that respondent fa iled to submit all the 14 Atlas Consolidated Mining and Development Corporation vs . Commissioner of Interna l Revenue, supra note 10.

.DECISlON C.TA. E.B. NO. 376 (C.TA. CaseNt ,. 71 57) Page 10 documents necessary for determining the propriety of the latter's claim, then, this Court sees no reason why he fail ed to inform respondent of any other documents he needs. The Letter of Refund was received by petitioner on December 29, 2004. Respondent, on the I .other hand, filed its judicial claim before this Court on February 24, 2005. Petitioner would have sufficient time to inform respondent of the documents needed. However, petitioner failed to do so; accordingly, there is no one to blame but petitioner himself. Petitioner should not pass off the consequences of his error to respondent. In this regard, respondent's failure to submit documents to the satisfaction of petitioner should not hinder or otherwise obstruct with respondent's right to claim for a refund of its unutilized input taxes, especially since that there was inaction on the part of petitioner on respondent's duly fil ed and supported appl ication. On the other hand, respondent should not be faulted for filing its claim before this Court considering that the two year prescriptive period is about to expire. It must be noted that an otherwise action on its part would be very fatal to its claim. To borrow the words of the Court of Appeals in the case Commissioner ofInternal Revenue vs. Bank of the Philippine Islands as Liquidator of Paramount Acceptance Corporation and the Court of Tax Appeal/5, which the High Court affirmed in G.R. No. 117254, January 2 1, 1999, viz: "Incidentally, the taxpayer could not be faulted for taking advantage of the full two-year period set by law for filing his claim for refund. Indeed, no provision 'in the tax ~~de requires that the claim for refund be filed at th e earliest instance in order to give the Commissioner an opportunity to rule on it and the court to review the ruling of the Commissioner of Internal Revenue on appeal. The law fixed the same period - two years- for filing a claim for refund with the Commissioner (Sec. 204, par. 3), and for filing of suit in court (Sec. 230) 16, unlike in protests of assessment under Sec. 229 which fixed the period (thirty days from receipt of the decision) before an appeal could be made in court. Indeed, only the latter case presupposes the existence of a prior deci sion of the Commissioner which could be subjected to review by the court. In fact, the Court of Tax Appeals itself acknowledges that the claim 15 CA-G.R. SP No. 34102, September 19, 1994. 16 Now, Section 229 ofthe NfRC of 1997.

DECISION C. T.A . E.B. NO. 376 (C. T.A. Case Nc 7157) Page 11 for refund with the 0 Hnmissioner could be pending simultaneously with a suit for refund filed b~~ l ore the former." (Emphasis supplied.) This Court, likewi se, will not give credence to petitioner's contention that respondent failed to show that its purchases of non-capital goods and services were made in the course of its trade and business; that it failed to show that the said purchases were properly supported by VAT invoices and/or official receipts and other documents such as entries made in its subsidiary purchase journal showing that it actually paid VAT in accordance with Sections 11 O(A)(2) and 113 of the NIRC of 1997, as amended , and in pursuance to Section 4.104-5(a) & (b) of Revenue Regulations No. 7-95. Section 4.104-5(a) & (b) of Revenue Regttlations No. 7-95, read: "Section 4.106-5. Substantiation of claims for input tax credit - (a) Input taxes shall be allowed only if the domestic purchases of good, properties or services is made in the course of trade or business. The input tax should be supported by an invoice or receipt showing the information as required under Section 108 (a) (now, Section 113) and 238 (now, Section 23 7) of the Code. xxx XXX XXX XXX (b) Input tax on importations shall be supported with the import entry or other equivalent document showing actual payment of VAT on imported goods." From the afore-cited Section, the creditable input tax may be evidenced by either a VAT invoice or official receipt showing all the information required under Section 113 and 237 of the NIRC of 1997. Input tax on importations shall be supported with import entries or other equivalent documents. Respondent submitted to this Court mvotces and/or official receipts 17 to substantiate its input tax on domestic purchases. Its input tax on importations were substantiated by machine validated Bureau of Customs' import entry declarations 18 and official receipts.19 17 Exhi bits "T-4-A-1 " to "T-4-L-19". 18 Exhibits "T-4-C-3 ", "T-4-F- 1", ."T-4-F-3", "T-4-1-1 ",and �'T-4-1-2". 19 Exh ibits "T-4-C-4", "T-4-F-2", "T-4-F-4", "T-4-I-3", and "T-4-1-5".

DECJSWN C.T.A. E.B. NO. 376(C.TA . Case No. 71 57) Page /2 The VAT invoices and receip'ts submitted by respondent, in support of ils daim of refund, had been examined and evaluated by an independent auditor, as well as by the Second Division itself ar1d found sufficient to substantiate respondent's purchases of goods and services in accordance with Section 4.104-5(a) and (b) ofRR No. 7-95. Hence, the Second Division found that the input taxes of P11 ,496,554.1 0 consist of input taxes on domestic purchases of goods/services in the amount of P 1,326,115.22 and input taxes on importation of capital goods in the amount of P10,170,438.88; that the refund of input tax corresponding to respondent's importations was a valid claim; and, although it was established that respondent was able to substantiate its domestic purchases of good and services, the amount of input VAT corresponding thereto was not entirely allowed as input tax credit. For his part, petitioner failed to present pieces of evidence that may controvert respondent' s entitlement to a refund. For all the foregoing, We quote with approval the findings of the Second Division: I "In the case at bench, record shows that petitioner was issued a Certification by the BOI attesting to the fact that petitioner is a BOI registered entity with 100% exports. The Certification was valid for the period May 21, 2003 to December 31, 2003. Under Section 3.4 of said RMO 9-00, said Certification shall serve as authority for the local suppliers of petitioner to avail of the benefits of zero-rating on their sales to petitioner covering the period May 21, 2003 to December 31, 2003. On the basis of said Certification, no output tax should, therefore, be shifted by the local suppliers to petitioner. Hence, in the absence of clear and convincing proof that petitioner's local suppliers passed on or shifted the VAT on such domestic purchases to petitioner, it cannot claim the amount of P597,272.04, as input tax credits on its domestic purchases for the period May 21, 2003 to December 31, 2003 XXX XXX XXX XXX As regards the input VAT payment of PI 0,170,438.88 on petitioner's importations, We find the same a valid claim considering that it was directly paid to the Bureau of Customs and is duly covered by machine validated BOC import entry declarations and official receipts, in accordance with the substantiation requirements prescribed under Section 4.104-5 (b) of Revenue Regulations No. 7-95. 31

.~ VECJSJON C. T.A. E. B. NO. 376 (C �.T.A. Case No. 7I5 1/ Page 13 In sum, petitioner'::. valid input tax credits amounts to P10,899,282 .06, which reprc:sents the sum of the input VAT of P728,843.18 o n its domestic purchases of goods/services for the period May 1-20, 2 03 and in put VAT payment of P10,170,438.88 on importations made for the yc.tr 2003~ Fifth Issue As regards the fifth issue of whether or not the input VAT of Pl 0,899,282.06 has been credited against any output tax or has been carried forward to the s ucceeding quarier or quarters, records show that the same was already net of output tax and was not carried over to the succeeding quarters. The i.. lit VAT claim of Pll ,564,034.65 (which includes the amount of PI 0,899,282.06 found by this Court as a valid claim) is already net of the output VAT liability of petitioner for taxable year 2003 in the amount of P 136.36. Furthermore, in its VAT return for the fourth quarter of 2004, petitioner deducted the total claim of Pll,564,034.65 as "Any VAT Refund/TCC Claimed" from the "Total Available Input Tax" as of the fourth quarter of 2003 (Exhibit "Y"). It is clear, therefore, that the input VAT claim of P 11,564,034.65 was not carried over to the succeeding quarter/s. For all the foregoing, this Court finds that petitioner has sufficiently proven its entitlement to a refund or issuance of a tax credit certificate, but in the reduced amount of P10,899,282.06, representing unutilized input taxes attributable to its zero-rated sales for the four quarters of2003." WHEREFORE, finding no reversible error in the assailed Decision promulgated on October 22, 2007 and Resolution dated February 28, 2008, the instant Petition for Review is hereby DISMISSED for lack of merit. SO ORDERED. ~---'<Z. c~ ERNESTO D. ACOSTA Presiding Justice We Concur: ~~�-~o <2 .cw-~t c;; - JtJANITO C. CASTANEDA, JR. Associate Justice

DECISION C.T.A. E.B. NO. 376 (C.T.A . Case No. 715 7) Page 14 E~.UY $ Associate Justice CAESAR A. CASANOVA Associate Justice O~ LGA~ PALA~ NCA~RIQUEZ Associate Justice CERTIFICATION Pursuant to Section 13, Article VIII 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 En Bane. ()__~ ~. ~~ ERNESTO D. ACOSTA Presid ing Justice 33