ACTUATE BUILDERS, INC. v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SECOND DIVISION ACTUATE BUILDERS, INC., CTA CASE NO. 9206 For: Refund Petitione~ -versus- Members: COMMISSION ER OF INTERNAL CASTANEDA, JR., Chairperson, REVENU E, MINDARO-GRULLA, and BACORRO-VILLENA, JJ. Respondent. Promulgated: FE8 1i ZOZO ----------------------------------------------------~-~-L--.-Jt->- q: x--------------------- -------x 4. It . DECISION MINDARO-GRULLA, J.: 5! �bmitted for decision on March 5, 2019 is a Petition for Review filed by Actuate Builders, Inc. against the Commissioner of Internal Revenue on November 23, 2015, praying for the refund or issuance of a tax credit certificate in the amount of P12,251,028.97, allegedly representing excess and unutilized input value-added tax (VAT) paid for the second (2nd) to fourth (4th) quarters of calendar year (CY) 2013.1 Petitioner Actuate Builders, Inc. is a corporation duly organized and exi~ting under the laws of the Philippines, with Securities and Exchange Commission Company Reg. No. CS201015526.2 It is also registered with the Bureau of Internal Revenue (BIR) as a VAT taxpayer, with Taxpayer Identification Number 007-883-702-000.3 1 Refer to the Pre-Trial Order dated June 1, 2016, Docket - Vol. I, p. 190. 2 Exhibit "P-1", Docket - Vol. II, pp. 471 to 493. 3 Exhibit "P-2", Docket - Vol. II, p. 495. l

CTA Case No. 9206 Page 2 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION On the other hand, respondent is vested with the power to decide tax cases, including applications for refunds and/or tax credits. He is represented in this case by the legal officers of the Legal Division, Revenue Region 8, Makati City, with office address at 2/F Legal Division, BIR Bldg., No. 313 Sen. Gil Puyat Ave., Makati City.4 On June 26, 2015, petitioner filed with the BIR an Application for Tax Credits/Refunds and the letter dated June 26, 2015, applying for refund of its alleged excess and unutilized input VAT in the amount of P12,251,028.97, for the 2nd to 4th quarters of the CY ending December 31, 2013. 5 Petitioner filed the instant Petition for Review on November 23, 2015. 6 Respondent filed his Answer on January 18, 2016/ interposing the following special and affirmative defenses, to wit: "SPECIAL AND AFFIRMATIVE DEFENSES 6. Respondent reproduces and repleads all the foregoing allegations insofar as they are relevant to her defenses which are discussed hereunder and incorporates them herein by way of reference and, in addition thereto, most respectfully avers THAT: 7. Petitioner's alleged claim for issuance of tax credit certificate is still subject to administrative routinary investigation/examination by the respondent's Bureau. 8. Taxes paid and collected are presumed to have been made in accordance with law, hence, not refundable. 9. Petitioner's claim for refund or issuance of tax credit certificate, if any, in the amount of Php12,251,028.97, representing alleged unutilized/excess input VAT for the second to fourth quarters of calendar year 2013, were not substantiated by proper documents, such [as] sales invoices, official receipts and others[;] pursuant to Revenue 4 Par. l.b, Stipulation of Fact, Joint Stipulation of Facts and Issue (JSFI), Docket- Vol. I, p. 175. 5 Exhibit "P-8", Docket- Vol. I, pp. 363 to 374. 6 Docket- Vol. I, pp. 10 to 25. 7 Docket- Vol. I, pp. 97 to 100. t

CTA Case No. 9206 Page 3 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION Regulations No. 7-95 in relation to Section[s] 113 and 237 of the 1997 Tax Code. 10. In an action for refund/credit, the burden of proof is on the petitioner to establish its right to [the] claimed refund[,] and failure to adduce sufficient proof is fatal to the claim for tax refund/credit. 11. It is incumbent upon the latter to show that it has complied with the provisions under Section 204 (c) in relation to Section 229 of the Tax Code. Otherwise, its failure to prove the same is fatal to its claim for refund. 12. Claims for refund are construed strictly against herein petitioner since the same partakes the nature of exemption from taxation (Commissioner of Internal Revenue vs. Ledesma, 31 SCRA 95) and as such, they are looked upon with disfavor (Western Minolco Corp. vs. Commissioner ofInternal Revenue, 124 SCRA 121)." The Pre-Trial Conference was set and held on March 17, 2016.8 Petitioner's Pre-Trial Briefwas filed on March 14, 2016,9 whereas the Pre Trial Brief (for the Respondent) was submitted on March 11, 2016. 10 The parties filed their Joint Stipulation of Facts and Issues on April 26, 2016, 11 which was approved and adopted by the Court in the Pre-Trial Order dated June 1, 2016.12 The Court also deemed the Pre-Trial terminated. During trial, petitioner presented its documentary and testimonial evidl'nce. Petitioner offered the testimonies of the following individuals: (1) Ms. Ma. Corazon C. Ramos, 13 Finance 8 Notice of Pre-Trial Conference dated January 29, 2016, Docket- Vol. I, pp. 102 to 103; Minutes of the hearing held on March 17, 2016, Docket- Vol. I, p. 143. 9 Docket- Vol. I, pp. 1o 1 to 113. 10 Docket-Vol. I, pp. 1'18 to 149. 11 Docket- Vol. I, pp. 175 to 183. 12 Docket- Vol. I, pp. 1''0 to 194. 13 Exhibit "P-10", Docket - Vol. I, pp. 118 to 138; Minutes of the hearing held on April 27, 2016, Docket- Vol. I, pp. 172 to 174. t.

CTA Case No. 9206 Page 4 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION Manager of petitioner; and (2) Ms. Myra Celeste Dabalos,14 the Court- commissioned Independent Certified Public Accountant (ICPA).15 Thereafter, the !CPA Report was submitted to the Court on June 6, 2016.16 The Formal Offer of Exhibits of Petitioner Actuate Builder's Inc. with Motion for Commissioner's Hearing was filed on September 13, 2016.17 Respondent, however, failed to file his comment thereon. 18 In the Resolution dated November 4, 2016/9 the Court granted petitioner's Motion for Commissioner's Hearing; set the case for a Commissioner's Hearing on November 28, 2016; and held in abeyance the resolution on petitioner's Formal Offer ofExhibits. On December 6, 2016, petitioner filed a Motion to Substitute Exhibit P-1.20 In the Resolution dated February 10, 2017,21 the Court resolved petitioner's Motion to Substitute and Formal Offer of Exhibits, and admitted certain Exhibits. The details of the denied Exhibits are as follows: "1 The exhibits listed below, for failure of the document offered and identified to correspond to the document marked: Exhibit Description in Formal Offer of Document marked Exhibit and Identified by . Witness as ABI's Certificate of Incorporation and P-1 ABI's Certificates of Articles of Incorporation and of Filing of Incorporation with Amended Articles of Company Incorporation with Company Reqistration No. CS201015526 14 Exhibit "P-53", Docket - Vol. I, pp. 206 to 219; Minutes of the hearing held on, and Order dated, August 3, 2016, Docket- Vol. I, pp. 246 to 247. 15 Oath of Commission dated April 27, 2016, Docket- Vol. I, p. 171; Minutes of the hearing held on April 27, 2016, Docket- Vol. I, pp. 172 to 174. 16 Docket- Vol. I, p. 200. 17 Docket - Vol. I, pp. 257 to 278. 18 Records Verification dated October 6, 2016 issued by the Judicial Records Division of this Court, Docket- Vol. I, p. 376. 19 Docket- Vol. I, pp. 378 to 379. 20 Docket - Vol. II, pp. 383 to 385. 21 Docket- Vol. II, pp. 411 to 414. L

CTA Case No. 9206 Page 5 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION P-11-E issued by the SEC on 23 Registration No. September 2010 CS201015526 issued by the SEC on 23 Summary of Results of Input September 2010 Tax Verification Review for the Summary of Results Period January 1, 2012 to of Input Tax December 31, 2012 Verification Review for the Period April ' 1, 2013 to December 31, 2013 2. The exhibits listed below, for failure of the document offered to correspond to the document marked: Exhibit Description in Formal Offer of Document marked P-2 Exhibit and Identified by Witness ABI's BIR Registration -- Certificate numbered ABI's BIR Registration OCN9RC0000291644 P-5 Certificate numbered issued by Revenue OCN9RC0000042745 District No. 050 on 26 issued by Revenue District November 2010 No. 050 on 08 April 2015 No dated was indicated. ABI's Quarterly VAT Return for the 4th Quarter of CY 2013 The Court noted that (1 October to 31 December this is an amended 2013) as filed on 27 January Quarterly VAT Return 2014 and that Exhibit 'P-5' included in the !CPA's exhibits pertains to the original Quarterly VAT Return for the 4th Quarter CY 2013 while Exhibit 'P-34' pertains to the amended Quarterly VAT Return for the 4th Quarter CY 2013. 3. Exhibits 'P-6-a', 'P-6-b', 'P-6-c', 'P-6-d', 'P-6-d-1', 'P-6- e ,I 'P-6-e-1'I 'P-6-f'I 'P-6-f-1'I 'P-7'I and 'P-9' for failure to f present their originals for comparison; and 4. Exhibits 'P-11-D-2-61' and 'P-11-D-7-327', for not being found in the records." L

CTA Case No. 9206 Page 6 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION On February 16, 2017, respondent filed a Manifestation, 22 stating that he will no longer be presenting any evidence in this case. The same was noted by the Court in its Resolution dated March 7, 2017. 23 Subsequently, on March 2, 2017, petitioner filed a Motion (Re: For Leave)/4 praying that it be granted leave to file its intended relief to the Resolution dated February 10, 2017, until March 17, 2017. Moreover, on March 17, 2017, petitioner also filed a Motion (Re: For Reconsideration and to Reopen Trial)/ 5 praying for the following: "(a) Reconsider the denial of admission of Exhibits 'P-6-a' to 'P-6-f' and 'P-11-E'; or to recall Ma. Corazon Ramos to authenticate Exhibits 'P-6-a' to 'P-6-f', in the event the Honorable Court declines to reconsider their offered admission; and (b) Reopen the proceedings in respect of Exhibits 'P-1', 'P-2', 'P-5', 'P-7' and 'P-9'." Respondent failed to file his comment on both Motions. 26 In the Resolution dated September 20, 2017,27 the Court: (i) granted petitioner's Motion (Re: For Leave), and Motion to Reopen Trial with respect to its prayer to set a commissioner's hearing to mark and submit Exhibits "P-1"I "P-2"I "P-5"I "P-7" and "P-9" to conform to the offer; (ii) set the commissioner's hearing on October 9, 2017; and (iii) held in abeyance the resolution on petitioner's Motion for Reconsideration. Thereafter, in the Resolution dated February 7, 2018,28 the Court admitted Exhibits "P-11-E" and "P-7", but still denied the admission of the following exhibits: 22 Docket- Vol. II, pp. 418 to 419. 23 Docket- Vol. II, p. 426. 24 Docket- Vol. II, pp. 422 to 424. 25 Docket- Vol. II, pp. 428 to 432. 26 Records Verification dated April 12, 2017 issued by the Judicial Records Division of this Court, Docket- Vol. II, p. 438. 27 Docket - Vol. II, pp. 445 to 446. 2B Docket- Vol. II, pp. 451 to 453. {_

CTA Case No. 9206 Page 7 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION 1) Exhibit "P-1" and "P-5", for failure of the documents offered and identified to correspond to the documents marked; and 2) Exhibits "P-6-a"I "P-6-b"I "P-6-c"I "P-6-d"I "P-6-d-1"I "P-6-e", "P-6-e-1", "P-6-f", "P-6-f-1", and "P-9", for failure to present their originals for comparison. On March 14, 2018, petitioner filed a Memorandum with Motion for Reconsideration and to Recall Witness, 29 praying for the Court to (1) schedule one (1) Commissioner's Hearing for the comparison and marking of Exhibits "P-9" and "P-2"; (2) to allow petitioner to recall and present its witness, Ma. Corazon C. Ramos, to identify and authenticate Exhibit "P-2"; and (3) grant a tax refund or direct the issuance of a tax credit certificate as may be warranted by the evidence. No comment was filed thereon by respondent.30 Thus, in the Resolution dated August 31, 2018,31 the Court: (1) granted petitioner's motion to recall witness; (2) set a Commissioner's Hearing on September 10, 2018 for the comparison and/or marking of Exhibits "P-2" and "P-9"; (3) set the hearing for the recall of petitioner's witness, Ms. Ma. Corazon C. Ramos, on September 19, 2018; (4) gave petitioner a period of five (5) days to file its Amended Formal Offer of Evidence; (5) gave respondent the same period from receipt of petitioner's Amended Formal Offer of Evidence to file his comment thereon; and (6) held in abeyance the resolution on petitioner's Motion for Reconsideration. At the hearing held on October 17, 2018,32 petitioner's witness, Ms. Ma. Corazon C. Ramos, was recalled to the witness stand, and upon motion of the counsel for petitioner, the latter was granted five (5) days or until October 22, 2018 to file its Supplemental Formal Offer of Evidence. And upon motion of respondent's counsel, the latter was also granted five (5) days from receipt of petitioner's Supplemental Formal Offer of Evidence to file his comment thereto. 29 Docket- Vol. II, pp. 454 to 469. 30 Records Verification dated April 18, 2018 issued by the Judicial Records Division of this Court, Docket- Vol. II, p. 498. 3l Docket- Vol. II, pp. 500 to 502. 32 Minutes of the hearing held on, and Order dated, October 17, 2018, Docket- Vol. II, pp. 525 to 526. {

CTA Case No. 9206 Page 8 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION On October 12, 2018, petitioner filed a Manifestation (Re: Submission of "Supplemental Sworn Witness Statement (Ma. Corazon C Ramos"), with attached Supplemental Sworn Witness Statement (Ma. Corazon C Ramos). 33 Thereafter, the Supplemental Formal Offer of Exhibits of Petitioner was filed on October 22, 2018,34 sans respondent's comment. 35 In the Resolution dated December 19, 2018,36 the Court granted petitioner's Motion for Reconsideration, and admitted Exhibits "P-54"I 37 "P-1"I "P-2"I and "P-9"I as part of petitioner's documentary evidence. Petitioner's exhibits are as follows: Exhibits: Description: P-1 ABI's Certificate of Incorporation and of Filing of Amended Articles of Incorporation with Company Registration No. CS201015526 issued by the SEC on 23 September 2010 P-2 ABI's BIR Registration Certificate numbered OCN9RC0000042745 issued by Revenue District No. 050 on 08 April 2015. P-3 ABI's Quarterly VAT Return for the 2nd Quarter C{ 2013 (1 April to 30 June 2013) as filed on 25 July 2013. P-4 ABI's Quarterly VAT Return for the 3'd Quarter Cf 2013 (lJuly to 30 September 2012) as filed via eFPS on 25 October 2012. P-5 ABI's Quarterly VAT Return for the 41h Quarter Cf 2013 (1 October to 31 December 2013) as filed on 27 January 2014. 33 Docket- Vol. II, pp. 527 to 533. 34 Docket- Vol. II, pp. 538 to 543. 35 Records Verification dated November 16, 2018 issued by the Judicial Records Division of this Court, Docket- Vol. II, p. 551. 36 Docket - Vol. II, pp. 553 to 555. 37 Supplemental Sworn Witness Statement (Ma. Corazon C Ramos}, Docket -Vol. II, pp. 544 to 548. L,

CTA Case No. 9206 Page 9 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION P-6 Ms. Ma. Corazon Ramos' Sworn Certification of the method of the summaries. P-6-f-1 Schedule of Actuate's sales for the Fourth Quarter 0( 2013 arranged by customer. P-7 PEZA Certificate of Registration of Diversified Technology Solutions International, Inc. P-8 The letter of Actuate's counsel, Nisce Mamuric Guinto Rivera & Alcantara, to the Bureau of Internal Revenue, containing the applications for VAT refund. P-8-a ABI's Appilications for Tax Credit /Refund for the Second Quarter 0( 2013. P-8-b ABI's Applications for Tax Credit/Refund for the Third Quarter 0( 2013. P-8-c ABI's Applications for Tax Credit/Refund for the Fourth Quarter 0( 2013. P-9 Certification issued by the Department of Finance. P-10 Sworn Witness Statement of Ma. Corazon C. Ramos. P-11 Independent Certified Public Accountant Report P-11-B Summary VAT Returns filed (for the period covering the First Quarter of 2013 to the First Quarter of 2016). P-11-C Comparison of Input tax per Petitioner's Schedule of Input Tax Against Quarterly VAT Returns. P-11-D-1-1 Invoices, Official Receipts and Other documents to P-11-D- supporting Petitioner's Input VAT claim for the month 1-1022 of April 2013. P-11-D-2-1 Invoices, Official Receipts and Other documents To P-11-D- supporting Petitioner's Input VAT claim for the month 2-823 of May 2013. P-11-D-3-1 Invoices, Official Receipts and Other documents To P-11-D- supporting Petitioner's Input VAT claim for the month 3-490 of June 2013. P�ll-D-4-1 Invoices, Official Receipts and Other documents t

CTA Case No. 9206 Page 10 of 46 Aduate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION to P-11-D- supporting Petitioner's Input VAT claim for the month 4-665 of July 2013. P-11-D-5-1 Invoices, Official Receipts and Other documents to P-11-D- supporting Petitioner's Input VAT claim for the month 5-609 of August 2013. P-11-D-6-1 Invoices, Official Receipts and Other documents to P-11-D- supporting Petitioner's Input VAT claim for the month 6-824 of September 2013. P-11-D-7-1 Invoices, Official Receipts and Other documents to P-11-D- supporting Petitioner's Input VAT claim for the month 7-21 of October 2013. P-11-D-8-1 Invoices, Official Receipts and Other documents to P-11-D- supporting Petitioner's Input VAT claim for the month 8-726 of November 2013. P-11-D-9-1 Invoices, Official Receipts and Other documents To P-11-D- supporting Petitioner's Input VAT claim for the month 9-732 of December 2013. P-11-E Summary of Results of Input Tax Verification Review for the period January 1, 2012 to December 31, 2012 P-11-E-1 Input tax claimed on purchase of goods and services that are supported by VAT Invoices (for goods) or VAT ORs (for services) that are issued in the name of the petitioner in the quarter when the input taxes are claimed. P-11-E-2 Input tax claimed on domestic purchase of goods supported by a VAT invoice with correction in the Company's name with counter signature. P-11-E-3 Input tax claimed on domestic purchase of goods supported by a VAT invoice with correction in the Invoice amount with counter signature. P-11-E-4 Input tax claimed on domestic purchase of goods supported by a VAT invoice with correction in the Invoice date with counter signature. P-11-E-5 Input tax claimed on domestic purchase of goods supported by a VAT invoice not dated within the VAT-taxable quarter but within the VAT taxable year. P-11-E-6 Input tax claimed on domestic purchases of services supported by a VAT or not dated within the VAT- taxable quarter but within the VAT-taxable year. t

CTA Case No. 9206 Page 11 of 46 Actuate Bui/de~ Inc. vs. Commissioner ofInternal Revenue DECISION P-11-E-7 Input tax claimed on domestic purchases of goods supported only by a Certified True Copy of the VAT Invoice. P-11-E-8 Input tax claimed on domestic purchase of goods supported by VAT documents other than a VAT Invoice. P-11-E-9 Input tax claimed on domestic purchases of goods supported by other Non-VAT document. P-11-E-10 Over-claimed Input VAT on allowed portion. P-11-E-11 Input tax claimed on domestic purchases of goods supported by TIN-NV/NON VAT Sales Invoices. P-11-E-12 Input tax claimed on domestic purchase of goods supported by a VAT invoice but without invoice date. P-11-E-13 Input tax claimed on domestic purchase of goods supported by a VAT Invoice issued in the Petitioner's name without the Petitioner's TIN and/or address but supported by VAT OR with TIN and Address. P-11-E-14 Input tax claimed on domestic purchase of goods supported by a VAT Invoice issued in the Petitioner's name without the Petitioner's TIN and/or address and supported by VAT OR or any other document without TIN and/or Address. P-11-E-15 Input tax claimed on domestic purchase of goods supported by a VAT Invoice but not dated within the taxable year. P-11-E-16 Input tax claimed on domestic purchase of goods supported by a VAT Invoice but without BIR's Authority to Print/Permit to Print. P-11-E-17 Input tax claimed on domestic purchase of goods supported by a VAT Invoice but not an original copy. P-11-E-18 Input tax claimed on domestic purchase of goods supported by a VAT Invoice with correction in the amount without counter signature. P-11-E-19 Input tax claimed on domestic purchase of goods supported by a VAT Invoice with correction in the year of the invoice date without counter signature. L

CTA Case No. 9206 Page 12 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION P-11-E-20 Input tax claimed on domestic purchase of goods supported by a VAT Invoice with correction in the month/day of the invoice date. P-11-E-21 Input tax claimed on domestic purchase of goods supported by a VAT Invoice with corrections in the TIN written in the Invoice without counter signature but in the name of the petitioner. P-11-E-22 Input tax claimed on domestic purchase of goods supported by a VAT Invoice with incorrect TIN of Petitioner but supported by VAT OR with correct TIN and Address. P-11-E-23 Input tax claimed on domestic purchase of goods supported by a VAT Invoice with incorrect TIN of Petitioner and supported by VAT OR or any other document without TIN and/or Address. P-11-E-24 Supplier's name in the supporting document is different from the supplier's name indicated in the summary list of purchase of goods. P-11-E-25 Input tax claimed on purchases of goods supported by a VAT Invoice dated August 31, 2013 onwards with ATP dated PRIOR to January 1, 2011. P-11-E-26 Input tax claimed on domestic purchase of goods supported by a VAT Invoice dated January 18, 2013 onwards with ATP dated January 1, 2011 to January 17, 2013, the new ATP is NOT issued on or before August 30, 2013 and the term "valid until October 31, 2013 only" is NOT stamped prominently on the face of the invoice. P-11-E-27 Input tax claimed on domestic purchase of goods supported by a VAT documents other than a VAT Invoice. P-11-E-28 Input tax claimed on domestic purchase of goods supported by other Non-VAT document. P-11-E-29 Input tax claimed on domestic purchases of services supported by a VAT OR but not an original copy. P-11-E-30 Input tax claimed on domestic purchases of services supported by a VAT OR not issued in the name of the petitioner but with TIN and address of the Petitioner. P-11-E-31 Input tax claimed on domestic purchases of services supported by a VAT OR not issued in the name of the t

CTA Case No. 9206 Page 13 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION Petitioner but without TIN and/or address of the petitioner. P-11-E-32 Input tax claimed on domestic purchases of services supported by Non VAT Registered TIN OR only. P-11-E-33 Input tax claimed on domestic purchases of services supported by VAT OR issued in the Petitioner's name but without the Petitioner's TIN and/or Address and supported by VAT Invoice or any other document also without TIN and/or Address P-11-E-34 Input tax claimed on domestic purchases of services supported by a VAT OR but not dated within the taxable year. P-11-E-35 Input tax claimed on domestic purchases of services supported by VAT OR but with alteration in the name of the Petitioner P-11-E-36 Input tax claimed on domestic purchases of services supported by TIN-NV/NON VAT Official Receipts P-11-E-37 Input tax claimed on domestic purchases of services supported by VAT OR but without BIR's Authority to Print/Permit to Print P-11-E-38 Input tax claimed on domestic purchases of services supported by a VAT OR with correction in the OR date without counter signature P-11-E-39 Input tax claimed on domestic purchases of services supported by VAT OR issued in the name of the Petitioner with incorrect TIN and supported by VAT OR or any other document also without TIN and/or Address P-11-E-40 Input tax claimed on domestic purchase of services supported by VAT OR. "However, the sentence "This is not a source of input tax." Is printed in the VAT OR P-11-E-41 Input tax claimed on domestic purchases of services supported by VAT OR dated January 18, 2013 onwards with ATP dated January 1, 2011 to January 17, 2013, the new ATP is NOT issued on or before August 30, 2013 and the term "valid until October 31, 2013 only" is NOT stamped prominently on the face of the receipt P-11-E-42 Input VAT claimed twice L

CTA Case No. 9206 Page 14 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION P-11-E-43 Input tax claimed on domestic purchases of goods and services WITHOUT supporting documents P-11-F Summary of Official Receipts with Corresponding Invoices P-11-F-1 to Petitioner's Official Receipts with Corresponding Invoices and Other P-11-F-622 Supporting Documents P-11-G Summary of sales per Return vs. should be gross receipts P-11-H Comparison of Gross Receipts per Return Against Collections per ORs. P-20 & sub Quarterly Value-Added Tax Return (BIR Form 2550- Markings Q) for the pt quarter of taxable year 2014 filed on April 25, 2014 P-21 Quarterly Value-Added Tax Return (BIR Form 2550-Q) for the 2nd quarter of taxable year 2014 filed on July 25, 2014. P-22 Quarterly Value-Added Tax Return (BIR Form 2550-Q) for the 3'd quarter of taxable year 2014 filed on October 27, 2014 P-23 & sub Quarterly Value-Added Tax Return (BIR Form 2550- markings Q) for the 4th quarter of taxable year 2014 filed on January 26, 2015 P-24 Quarterly Value-Added Tax Return (BIR Form 2550-Q) for the pt quarter of taxable year 2015 filed on April 27, 2015 P-25 Quarterly Value-Added Tax Return (BIR Form 2550-Q) for the 2nd quarter of taxable year 2015 filed on July 25, 2015 P-26 & sub Amended Quarterly Value-Added Tax Return (BIR markings Form 2550-Q) for the 2nd quarter of taxable year 2015 filed on December 21, 2015 P-27 Quarterly Value-Added Tax Return (BIR Form 2550-Q) for the 3rd quarter of taxable year 2015 filed on October 23, 2015 P-28 Amended Quarterly Value-Added Tax Return (BIR Form 2550-Q) for the 3'd quarter of taxable year 2015 filed on December 21, 2015 t

CTA Case No. 9206 Page 15 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION P-29 & sub Quarterly Value-Added Tax Return (BIR Form 2550 markings Q) for the 4th quarter of taxable year 2015 filed on January 25, 2016 P-30 Quarterly Value-Added Tax Return (BIR Form 2550-Q) for the pt quarter of taxable year 2016 filed on April 23, 2016 P-31 Quarterly Value-Added Tax Return (BIR Form 2550-Q) for the 151 quarter of taxable year 2013 filed on April 25, 2014 P-32 Amended Quarterly Value-Added Tax Return (BIR Form 2550-Q) for the 3rct quarter of taxable year 2013 filed on January 27, 2014 P-33 Independent Auditors Report with Audited Financial Statement for Calendar Year ended December 31, 2013 P-34 & sub Amended Quarterly Value-Added Tax Return (BIR markings Form 2550-Q) for the 4th quarter of taxable year 2013 filed on March 18, 2014 P-35 PEZA Certificate No. 2013-0571 Certifying VAT Zero- Rating of Diversified Technology Solutions International Inc. P-36 Petitioner's Schedule of Input Tax claimed for April. P-37 Petitioner's Scheduled of Input Tax claimed for May P-38 Petitioner's Scheduled of input Tax claimed for June P-39 Petitioner's Schedule of Input Tax claimed for July P-40 Petitioner's Schedule of Input Tax claimed for August P-41 Petitioner's Schedule of Input Tax claimed for September P-42 Petitioner's Schedule of Input Tax claimed for October P-43 Petitioner's Schedule of Input Tax claimed for November P-44 Petitioner's Schedule of Input Tax claimed for December t.

CTA Case No. 9206 Page 16 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION P-45 Petitioner's summary List of Sales for the Second P-46 Quarter of 2013 P-47 P-48 Petitioner's Summary List of Sales for the Third P-49 Quarter of 2013 P-50 Petitioner's Summary List of Sales for the Fourth P-51 & Quarter of 2013 P-52 Petitioner's Summary List of Purchases for the Second P-53 Quarter of 2013 Petitioner's Summary List of Purchases for the Third Quarter of 2013 Petitioner's Summary List of Purchases for the Fourth Quarter of 2013 PEZA Certificates No. 2013-0457 Updated Issues Nos. 0030 & 0039 Judicial Affidavit of Myra Dabalos In view of the filing of petitioner's Memorandum on March 14, 2018,38 and the report that no memorandum has been filed by the respondent, 39 the case was deemed submitted for decision on March 5, 2019.40 THE ISSUE The parties submitted this lone issue for the Court's resolution, to wit: "Whether the petitioner is entitled to a refund or tax credit of e[x]cess or unutilized input VAT payments for the 2"d to 4th Quarter[s] of CY 2013 in the amount of PHP12,251,028.97."41 38 Docket- Vol. II, pp. 454 to 470. 39 Records Verification dated February 20, 2019 issued by the Judicial Records Division of this Court, Docket- Vol. II, p. 556. 40 Resolution dated March 5, 2019, Docket- Vol. II, p. 557. 41 Par. 2, Stipulation of Issue, JSFI, Docket- Vol. I, p. 175. L

CTA Case No. 9206 Page 17 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION Petitioner's arguments: Petitioner argues that it has presented its Certificate of Registration proving that it is a VAT-registered taxpayer; that it proved that it engaged in zero-rated or effectively zero-rated sales; that it incurred input taxes for the period of the claim in the total amount of P12,251,028.97; and that its administrative and judicial claims were timely filed. Respondent counter-arguments: In his Answer, respondent counter-argues that petitioner's claim is still subject to administrative routinary investigation/ examination by the respondent's Bureau; that its claim for refund or issuance of tax credit certificate was not substantiated by proper documents, such as sales invoices, official receipts and other documents pursuant to Revenue Regulations (RR) No. 7-95 in relation to Sections 113 and 237 of the 1997 Tax Code; and that partaking of the nature of exemptions, claims for refund are strictly construed against petitioner, and as such, they are looked upon with disfavor. THE COURTS RULING The instant Petition for Review is partly meritorious. Requisites for the grant of the refund or issuance of tax credit certificate under the law. Section 112 of the National Internal Revenue Code (NIRC) of 1997, as amended by Republic Act (RA) No. 9337,42 provides as follows: "SEC. 112. Refunds or Tax Credits ofInput Tax. - 42 AN ACf AMENDING SEcnONS 27, 28, 34, 106, 107, 108, 109, 110, 111, 112, 113, 114, 116, 117, 119, 121, 148, 1S1, 236, 237 AND 288 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES. j

CTA Case No. 9206 Page 18 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION (A) Zero-Rated or Effectively Zero-Rated Sales. - Any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales under Section 106(A)(2)(a)(1), (2) and (b) and Section 108(6)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods of properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales: xxx. XXX XXX XXX (C) Period within which Refund or Tax Credit of Input Taxes shall be Made.- In proper cases, the Commissioner shall grant a refund or issue a tax credit certificate for creditable input taxes within one hundred twenty (120) days frorn the date of submission of complete documents in support of the application filed in accordance with Subsection (A) hereof. In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty day-period, appeal the decision or the unacted claim with the Court of Tax Appeals." Pursuant to the above provisions, jurisprudence has laid down certain requisites which the taxpayer-applicant must comply with to successfully obtain a credit/refund of input VAT. Said requisites are classified into certain categories, to wit: As to the timeliness of the filing of the administrative and judicial claims: t.

CTA Case No. 9206 Page 19 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION 1. The claim is filed with the BIR within two years after the close of the taxable quarter when the sales were made;43 2. That in case of full or partial denial of the refund claim, or the failure on the part of the Commissioner to act on the said claim within a period of 120 days, the judicial claim has been filed with this Court, within 30 days from receipt of the decision or after the expiration of the said 120-day period;44 With reference to the taxpayer's registration with the BIR: 3. The taxpayer is a VAT-registered person;45 In relation to the taxpayer's output VAT: 4. The taxpayer is engaged in zero-rated or effectively zero-rated sales;46 5. For zero-rated sales under Section 106(A)(2)(a)(1), (2) and (b), and 108(8)(1) and (2), the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with BSP rules and regulations; 47 As regards the taxpayer's input VAT being refunded: 6. The input taxes are not transitional input taxes;48 7. The input taxes are due or paid;49 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 43 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No. 166732, April 27, 2007; San Roque Power Corporation vs. Commissioner of Internal Revenue, G.R. No. 180345, November 25, 2009; and AT&T Communications Services Philippines, Inc. vs. Commissioner ofInternal Revenue, G.R. No. 182364, August 3, 2010. 44 Steag State Power, Inc. (Formerly State Power Development Corporation) vs. Commissioner of Internal Revenue, G.R. No. 205282, January 14, 2019; Rohm Apollo Semiconductor Philippines vs. Commissioner ofInternal Revenue, G.R. No. 168950, January 14, 2015. 45 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, supra; San Roque Power Corporation vs. Commissioner of Internal Revenue, supra; and AT&T Communications Services Philippines, Inc. vs. Commissioner ofInternal Revenue, supra. 46 !d. 47 !d. 48 !d. 49 !d. L

CTA Case No. 9206 Page 20 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION directly and entirely attributable to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume; 50 and 9. The input taxes have not been applied against output taxes during and in the succeeding quarters.51 Petitioner's administrative and judicial claims were timely filed. The first requisite pertains to the filing of the refund claim for tax credit or refund of input VAT before the BIR, within two (2) years from the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made. The present claim covers the 2"d, 3rd, and 4th quarters of CY 2013, which closed on June 30, 2013, September 30, 2013 and December 31, 2013, respectively. Counting two (2) years from the said dates, petitioner had until June 30, 2015, September 30, 2015 and December 31, 2015, respectively, within which to file its administrative claim for tax credit certificate or refund. Considering that petitioner's administrative claim for the said quarters was filed on June 26, 2015, 52 the same was timely made, thereby fulfilling the said first requisite. The second requisite is to the effect that the judicial claim must have been filed within thirty (30) days from receipt of respondent's decision or after the expiration of the 120-day period under Section 112(C) of the NIRC of 1997, as amended. Considering that there is no indication that respondent issued a decision relative to petitioner's administrative claim, the determination of the 120+30-day period, as applied to this case, is shown as follows: Date of Filing of End of 120 End of 30 days Date of Filing of Administrative Claim days for from expiration Petition for of the 120 days Review respondent to decide the 50 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, supra; and San Roque Power Corporation vs. Commissioner ofInternal Revenue, supra. 51 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, supra; San Roque Power Co~ooration vs. Commissioner of Internal Revenue, supra; and AT&T Communications Services Philippines, Inc. vs. Commissioner ofInternal Revenue, supra. 52 Exhibit "P-8", Docket- Vol. I, pp. 363 to 374. L

CTA Case No. 9206 Page 21 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION claim June 26, 2015 October 24, 2015 November 23, 2015 November 23, 2015 Since the instant Petition for Review was filed on November 23, 2015, 53 petitioner's judicial claim was likewise timely made. Such being the case, petitioner fulfilled both of the first and second requisites. Petitioner is a VAT-registered person. Petitioner likewise complied with the third requisite, since it was proved that petitioner is a VAT registered person.54 Petitioner is engaged in zero- rated or effectively zero-rated sales. Relative to the determination of whether petitioner is engaged in zero-rated or effectively zero-rated sales, the applicable provision is Section 108(B)(3) of the NIRC of 1997, as amended. It provides: "SEC. 108. Value-added Tax on Sale of Services and Use or Lease ofProperties. - XXX XXX XXX (B) Transactions Subject to Zero Percent (0%) Rate. - The following services performed in the Philippines by VAT- registered persons shall be subject to zero percent (0%) rate: XXX XXX XXX 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." (Emphasis ours) 53 Docket- Vol. I, pp. 10 to 25. 54 Exhibit "P-2", Docket- Vol. II, p. 495. L

CTA Case No. 9206 Page 22 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION The special law pertinent to this case is RA No. 7916,55 otherwise known as "The Special Economic Zone Act of 1995'~ Sections 8 and 24 thereof, as amended RA No. 8748,56 read as follows: "SECTION 8. ECOZONE to be Operated and Managed as Separate Customs Territory. - The ECOZONE shall be managed and operated by the PEZA as separate customs territory. XXX XXX xxx." (Emphasis ours) "SECTION 24. Exemption form National and Local Taxes. -Except for real property taxes on land owned by developers, no taxes, local and national, shall be imposed on business establishments operating within the ECOZONE. In lieu thereof, five percent (5%) of the gross income earned by all business enterprises within the ECOZONE shall be paid and remitted as follows: (a) Three percent (3%) of the National Government; (b) Two percent (2%) which shall be directly remitted by the business establishments to the treasurer's office of the municipality or city where the enterprise is located." (Emphasis ours) Based on the foregoing provisions, a Special Economic Zone or "ECOZONE" is treated as a separate customs territory, and business establishments operating within the ECOZONE is exempt from national and local taxes, except for real property taxes on land owned by developers. Needless to state, such tax exempt status of said business establishments or enterprises operating within the ECOZONE includes exemption from the imposition of VAT. In Commissioner of Internal Revenue vs. Toshiba Information Equipment (Phils.), Inc., 57 the Supreme Court held: 55 AN ACf PROVIDING FOR THE LEGAL FRAMEWORK AND MECHANISMS FOR THE CREATION, OPERATION, ADMINISTRATION, AND COORDINATION OF SPECIAL ECONOMIC ZONES IN THE PHIUPPINES, CREATING FOR THIS PURPOSE, THE PHIUPPINE ECONOMIC ZONE AUTHORITY (PEZA), AND FOR OTHER PURPOSES. 56 AN ACf AMENDING REPUBUC ACf NO. 7916, OTHERWISE KNOWN AS THE "SPECIAL ECONOMIC ZONE ACf OF 1995". 57 G.R. Nu: 150154, August 9, 2005. L

CTA Case No. 9206 Page 23 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION "xxx. The national territory of the Philippines outside of the proclaimed borders of the ECOZONE shall be referred to as the Customs Territory. Section 8 of Rep. Act No. 7916, as amended, mandates that the PEZA shall manage and operate the ECOZONES as a separate customs territorv; thus, creating the fiction that the ECOZONE is a foreign territory. As a result, sales made by a supplier in the Customs Territory to a purchaser in the ECOZONE shall be treated as an exportation from the Customs Territory. Conversely, sales made by a supplier from the ECOZONE to a purchaser in the Customs Territory shall be considered as an importation into the Customs Territory. XXX XXX XXX Indubitably, no output VAT may be passed on to an ECOZONE enterprise since it is a VAT-exempt entity. The VAT treatment of sales to it, however, varies depending on whether the supplier from the Customs Territory is VAT-registered or not. Sales of goods, properties and services by a VAT- registered supplier from the Customs Territory to an ECOZONE enterprise shall be treated as export sales. If such sales are made by a VAT-registered supplier, they shall be subject to VAT at zero percent CO%). In zero-rated transactions, the VAT-registered supplier shall not pass on any output VAT to the ECOZONE enterprise, and at the same time, shall be entitled to claim tax credit/refund of its input VAT attributable to such sales. Zero-rating of export sales primarily intends to benefit the exporter (i.e., the supplier from the Customs Territory), who is directly and legally liable for the VAT, making it internationally competitive by allowing it to credit/refund the input VAT attributable to its export sales." (Emphases ours) Simply put, while an ECOZONE is geographically within the Philippines, it is deemed a separate customs territory and is regarded in law as foreign soil. Sales by suppliers from outside the borders of the ECOZONE to this separate customs territory are deemed exports t..

CTA Case No. 9206 Page 24 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION and treated as export sales. These sales are zero-rated or subject to tax rate of zero percent.58 In its Quarterly VAT Returns for the 2"d, 3rd and 4th quarters of Cf 2013,59 petitioner reported total sales of P254,507,683.86, which included total zero-rated receipts in the amount of P217,794,160.81, as shown below: Vatable Sales/Receipts 2nd Quarter 3rd Quarter 4th Quarter Total Zero-rated Receipts p 5 427 184.98 p 5 589 961.37 p 25 696 376.70 p 36 713 523.05 Total Sales/Receipts 86 223 950.24 53 582 109.75 77 988 100.82 217 794 160.81 P91,651,135.22 P59,172,071.12 P103,684,477 .52 P254,507,683.86 Moreover, based on petitioner's Summary List of Sales (SLS) for the said quarters, it generated zero-rated sales of P218,303,548.8660 for the services rendered to Diversified Technology Solutions International, Inc. (DTSII) and Anthem Solutions, Inc. (ASI). In proving that the said clients are duly registered with the PEZA, petitioner presented the following documents: 1. PEZA amended Certificate of Registration No. 03-15-IT with PEZA Certification No. 2013-0571 for DTSII;61 and 2. PEZA Certificates No. 2013-0457, Updated Issues Nos. 0030 and 0039 for ASI.62 Thus, the sales of services by petitioner to DTSII and ASI, being business enterprises in the ECOZONE, is subject to the VAT at zero percent (0%), pursuant to Section 108(8)(3) of the NIRC of 1997, as amended, in relation to Section 24 of RA No. 7916, as amended by RA No. 8748. 58 Commissioner ofInternal Revenue vs. Sekisui Jushi Philippines, Inc., G.R. No. 149671, July 21, 2006. 59 Exhibits "P-3", "P-4" and "P-5", Docket- Vol. I, pp. 309 to 330 (including 5L5 and SLP). 60 Exhibit "P-11-F" 2nd Quarter p 86 212 149.25 3rd Quarter 54 166 989.55 4th Quarter 84,899 410.06 Total P225 278 548.86 Less: Exhibit P-11-F-417 to P-11-F-418, OR No. 0521, 6,975,000.00 twice added in the 41" quarter Total as adiusted P218 303 548.86 61 Exhibits "P-7" and "P-35", Docket- Vol. I, p. 361 and USB. 62 Exhibits "P-51" and "P-52", Docket- Vol. I, pp. 220 to 221. L.

CTA Case No. 9206 Page 25 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION In any event, relative to its zero-rated transactions, petitioner must further comply with the invoicing requirements under the law. This must be so because compliance with all the VAT invoicing requirements is required to be able to file a claim for input taxes attributable to zero-rated sales.63 To be sure, the taxpayer claiming the refund must further comply with the invoicing and accounting requirements mandated by the NIRC, as well as by revenue regulations implementing them.64 Relative thereto, Section 113 (A)(2), (B)(l), (2)(c) and (3) of the NIRC of 1997, as amended, reads as follows: "Sec. 113. Invoicing and Accounting Requirements for VAT-registered Persons. - (A) Invoicing Requirements. - A VAT-registered person shall issue: XXX XXX XXX (2) A VAT official receipt for every lease of goods or properties, and for every sale, barter, or exchange of services. (B) Information Contained in the VAT Invoice or VAT Official Receipt. -The following information shall be indicated in the VAT invoice or VAT official receipt: (1) 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 pays or is obligated to pay to the seller with the indication that such amount includes the value-added tax: Provided, That: XXX XXX XXX (c) If the sale is subject to zero percent (0%) value- added tax, the term 'zero-rated sale' shall be written or printed prominently on the invoice or receipt; 63 JRA Philippines, Inc. vs. Commissioner ofInternal Revenue, G.R. No. 171307, August 28, 2013. 64 Takenaka Corporation-Philippine Branch vs. Commissioner of Internal Revenue, G.R. No. 193321, October 19, 2016, citing Western Mindanao Power Corporation vs. Commissioner of Internal Revenue, G.R. No. 181136, June 13, 2012. t

CTA Case No. 9206 Page 26 of 46 Actuate Sui/de~ Inc. vs. Commissioner ofInternal Revenue DECISION XXX XXX XXX (3) The date of transaction, quantity, unit cost and description of the goods or properties or nature of the service; and xxx" (Underlining supplied) The foregoing provision is implemented by Revenue Regulations (RR) No. 16-05. Specifically, Section 4.113-1 thereof provides, in part, as follows: "Sec. 4.113-1. Invoicing Requirements.- (A) A VAT-registered person shall issue: - XXX XXX XXX (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 by the word 'VAT' in their invoice or official receipts. Said documents shall be considered as a 'VAT Invoice' or VAT official receipt. All purchases covered by invoice/receipts other than VAT Invoice/VAT Official Receipt shall not give rise to any input tax. VAT invoice/official receipt shall be prepared at least in duplicate, the original to be given to the buyer and the duplicate to be retained by the seller as part of his accounting records. (B) Information contained in VAT invoice or VAT iiificia/ 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 pays or is obligated to pay to the seller with the indication that such amount includes the VAT; Provide~ That: (a) The amount of tax shall be shown as a separate item in the invoice or receipt; L

CTA Case.No. 9206 Page 27 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION XXX XXX XXX (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; xxx" (Emphases supplied) (3) In the case of sales in the amount of one thousand pesos (!i'l,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." Thus, the foregoing must still be complied with by petitioner. In addition to the above requirements, the official receipts (ORs) must be duly registered with the BIR as prescribed under Section 237, in relation to Section 238, both of the NIRC of 1997, as amended, which provide: "SEC. 237. Issuance of Receipts or Sales or Commercial Invoices. - All persons subject to an internal revenue tax shall, for each sale or transfer of merchandise or for services rendered valued at Twenty-five pesos (P25.00) or more, issue duly registered receipts or sales or commercial invoices, prepared at least in duplicate, showing the date of transaction, quantity, unit cost and description of merchandise or nature of service... " "SEC. 238. Printing of Receipts or Sales or Commercial Invoices. - All persons who are engaged in business shall secure from the Bureau of Internal Revenue an authority 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 by the Secretary of Finance, upon recommendation of the Commissioner." (Emphasis supplied) t.,

CTA Case No. 9206 Page 28 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION In support of its zero-rated receipts and to prove compliance with the VAT invoicing requirements provided by the above-quoted laws and regulations, petitioner submitted the corresponding ORs and invoices.65 Upon examination of the said documents, the ICPA accounted for a total amount of P218,303,548.86, representing receipts of petitioner's zero-rated sales of services, as reflected in her Summary of Official Receipts with Corresponding Invoices.66 A comparison of the zero-rated receipts per Quarterly VAT Returns for the 2"d, 3rd and 4th quarters of CY 201367 as against the !CPA's verification per ORs reveals a net difference of P509,388.05, broken down as follows: CY 2013 Per Return PerORs Difference 2nd Quarter p 86 223,950.24 p 86.212 149.25 p 11.800.99 3rd Quarter 4th Quarter 53,582,109.75 54,166,989.55 (584 879.80) Total Receipts 77,988,100.82 77,924 410.06 P217,794,160.81 P218,303,548.86 63,690.76 P(509,388.05) Out of the total amount of P218,303,548.86 substantiated zero- rated receipts, the amount of P1,103,500.00, as detailed in the !CPA's Summary of Official Receipts with Corresponding Invoices,68 should not be considered as valid zero-rated receipts as they were made to clients without proof of PEZA registration, and the word "zero-rated" do not appear on the VAT official receipts, in violation of Section 113(B)(2)(c) of the NIRC of 1997, as amended, to wit: Customer OR No. OR Date Amount Exhibit I PSEI Firesafetv System 554 121912013 p 37 500.00 Net Pacific Inc. 245 312312013 "P-11-F-543" to "P-11-F-545" I Diversified Technology Systems Inc. 566 11712014 10 000.00 1 056,000.00 "P-11-F-11" to "P-11-F-12" Total P1,103,500.00 "P-11-F-612" to "P-11-F-613" Further, as correctly pointed out by the ICPA, since PSEI Firesafety System is not a PEZA-registered entity, this should be subjected to 12% output VAT in the amount of P4,017.86 (P37,500/1.12x12%).69 In this regard, it must be pointed out that petitioner impliedly admitted said VAT imposition at the rate of 12% 65 Exhibits "P-11-F-1" to "P-11-F-622". 66 Exhibit "P-11-F". 67 Exhibits "P-3", "P-4" and "P-5", Line 17, Docket, Vol. I, pp. 309, 315 and 321. 68 Supra, Note 66. 69 No. 8, letter b, Exhibit "P-11". L

CTA Case No. 9206 Page 29 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION when it recognized the finding of the ICPA for an additional output tax due.7� Conversely, while receipts from Net Pacific Inc. and Diversified Technology Systems Inc., in the respective amounts of P10,000.00 and P1,056,000.00, should likewise be subjected to 12% VAT, should nonetheless be disregarded for being dated outside the period of claim. Moreover, the "Collections included in the summary list ofsales with missing OR " made by petitioner to DTSII in the amount of P1,500,000.0071 shall not qualify as zero-rated receipt for being unsupported by official receipt, in violation of Section 113(A)(2) of the 1997 NIRC, as amended. However, petitioner's unreported collections from DTSII covered by OR No. 542 in the amount of P37,000.00 shall be added to the declared zero-rated receipts per VAT Return.72 Thus, for purposes of the fourth requisite, only the amount of P215,700,048.86 represents petitioner's valid zero-rated receipts, computed as follows: Total Receipts per ORs p 218,303,548.86 Less: Adjustments/Disallowances 1,103,500.00 Sales to non-PEZA Clients 1 500,000.00 Receipts not covered by VAT zero-rated OR P215,700,048.86 Total Valid Zero-rated Receipts Having resolved that petitioner had VAT zero-rated receipts in the total amount of P215,700,048.86 for the 2nd to 4th quarters of CY 2013, the Court shall proceed to determine whether petitioner complied with the remaining requisites. There is no need to comply with the fifth requisite. 70 Par. 26;1'etitioner's Memorandum, Docket- Vol. II, p. 463. 71 NoteD, letter c, Exhibit "P-11-H". 72 NoteD, letter b, Exhibit "P-11-H". L

CTA Case No. 9206 Page 30 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DEC I SJ 0 N As earlier stated, the fifth requisite is to the effect that petitioner must prove that the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with BSP rules and regulations, but only for zero-rated sales under Section 106(A)(2)(a)(1), (2) and (b), and 108(8)(1) and (2), all of the NIRC of 1997, as amended. Since the legal basis for petitioner's zero-rated sales is Section 108(8)(3) of the NIRC of 1997, as amended, in relation to Section 24 of RA No. 7916, as amended by RA No. 8748, the instant case need not comply with the said fifth requisite. The input VAT being claimed do not appear to be uansftmnalinputtaxe~ In its Quarterly VAT Returns for the 2nd, 3rd, and 4th quarters of CY 2013/3 petitioner declared input VAT due of Pl1,019,196.54 from domestic purchases of goods other than capital goods, and input VAT paid of P1,231,832.43 from domestic purchases of services, or input VAT in the total amount of P12,251,028.97, which is the subject of the present claim, broken down as follows: 2"d Quarter 3"' Quarter 4'" Quarter Total Input Tax due on p 4,763,531.02 P3,028,520.23 P3,227,145.29 P11,019,196.54 Domestic Purchases of Goods Other than Capital 258,848.56 450,636.94 522,346.93 1,231,832.43 Goods (Line 21F) Input Tax paid on 1"5,022,379.58 P3,479,157.17 P3,749,492.22 P12,251,028.97 Domestic Purchase of Services (Line 21J) Total The above input taxes do not appear to be transitional input taxes, as understood under Section 111(A) of the NIRC of 1997, as amended, to wit: "SEC. 111. Transitional/Presumptive Input Tax Credits. (A) Transitional Input Tax Credits. - A person who becomes liable to value-added tax or any person who elects to be a VAT-registered person shall, subject to the filing of an inventory according to the rules and regulations prescribed by the Secretary of Finance, upon recommendation of the 73 Exhibits "P-3", "P-4" and "P-34", Docket- Vol. I, pp. 309 to 360. L

CTA Case No. 9206 Page 31 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION Commissioner, be allowed input tax on his beginning inventory of goods, materials and supplies equivalent to two percent (2%) of the value of such inventory or the actual value-added tax paid on such goods, materials and supplies, whichever is higher, which shall be creditable against the output tax." 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.74 As there is no showing that the claimed input VAT are transitional input VAT, petitioner has complied with the sixth requisite for the grant of an input VAT refund. A portion of input taxes incurred or paid were attributable to its zero-rated sales. The seventh requisite for the successful prosecution of input VAT claim is to the effect that the input VAT being refunded should be due or paid. Thus, the fulfillment of the said requisite would depend on petitioner's compliance with the invoicing and substantiation requirements provided by law, as stated earlier. To support its input VAT claim of P12,251,028.97, petitioner submitted various invoices, ORs and other documents/5 which were examined by the ICPA. Based on the !CPA's Report/6 the input VAT in the total amount of P3,831,174.35, detailed below, should be disallowed for petitioner's failure to meet the substantiation 74 Fort Bonifacio Development Corporation vs. Commissioner of Internal Revenue, G.R. Nos. 158885 and 170680, April 2, 2008. 75 Exhibits "P-11-D-1-1" to "P-11-D-1-1022" for the month of April 2013; Exhibits "P-11-D-2-1" to "P-11-D-2-823" for the month of May 2013; Exhibits "P-D-11-3-1" to "P-11-D-3-490" for the month of June 2013; Exhibits "P-11-D-4-1" to "P-11-D-4-665" for the month of July 2013; Exhibits "P-11-D-5-1" to "P-11-D-5-609" for the month of August 2013; Exhibits "P-11-D-6-1" to Exhibits "P-11-D-6-824" for the month of September 2013; Exhibits "P-11-D-7-1" to "P-11-D- 7-621" for the month of October 2013; Exhibits "P-11-D-8-1" to "P-11-D-8-726" for the month of November 2013; Exhibits "P-11-D-9-1" to "P-11-D-9-732" for the month of December 2013. 76 Exhibit "P-11", !CPA Report, pp. 7 to 10; Exhibit "P-11-E". L

CTA Case No. 9206 Page 32 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION requirements under Sections 110(A), 113(A) and (B), and 237 of the NIRC of 1997, as amended, in relation to Sections 4.110-1, 4.110-2, 4.110-8 and 4.113-1 of RR No. 16-05, as amended, to wit: Exhibit DISALLOWANCES Total Goods Services Goods/ P-11-E-8 Input tax claimed on domestic Services P-11-E-9 purchase of goods supported P-11-E-17 by VAT documents other than P240 777.14 P240,777.14 P-11-E-10 a VAT Invoice (i.e., VAT OR P-11-E-11 etc.) 88 853.59 88 853.59 P-11-E-12 P-11-E-13 Input tax claimed on domestic 316 979.02 316 979.02 P810.03 purchase of goods supported 16,815.69 16 005.66 P-11-E-14 by other Non-VAT document Input tax claimed on domestic 418 411.86 418 411.86 I P-11-E-15 purchase of goods supported P-11-E-16 by a VAT Invoice but not an I P-11-E-18 oriqinal copy Overclaimed Input VAT on 66 178.23 66 178.23 P-11-E-19 Allowed Portion Input tax claimed on domestic 278 057.82 278 057.82 purchase of goods supported by TIN-NV/NON VAT Sales 67 054.92 67 054.92 Invoices Input tax claimed on domestic 46 627.96 46 627.96 purchase of goods supported by a VAT invoice but without 83 857.12 83 857.12 invoice date Input tax claimed on domestic 128 479.83 128 479.83 purchase of goods supported by a VAT Invoice issued in the 55.344.74 55.344.74 Petitioner's name without the Petitioner's TIN and/or address but supported by VAT OR with TIN and Address Input tax claimed on domestic purchase of goods supported by a VAT Invoice issued in the Petitioner's name without the Petitioner's TIN and/or address and supported by VAT OR or any other document wiihout TIN and/or Address Input tax claimed on domestic purchase of goods supported by a VAT invoice but not dated within the taxable vear Input tax claimed on domestic purchase of goods supported by a VAT Invoice but without BIR's Authority to Print/Permit to Print Input tax claimed on domestic purchase of goods supported by a VAT invoice with correction in the amount without counter signature Input tax claimed on domestic purchase of goods supported by a VAT invoice with correction in the year of the invoice date without counter siqnature L

CfA Case No. 9206 Page 33 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION P-11-E-20 Input tax claimed on domestic 88 268.25 88 268.25 P-11-E-21 purchase of goods supported P-11-E-22 by a VAT invoice with 30 289.55 30 289.55 P-11-E-23 correction in the month/day of P-11-E-24 the invoice date 48 637.27 48 637.27 P-11-E-25 Input tax claimed on domestic po; cnase of goods supported 262 060.52 262 060.52 P-11-E-26 by a VAT Invoice with corrections in the TIN written 7 131.43 7 131.43 P-11-E-27 in the Invoice without counter P-11-E-28 signature but in the name of 25 052.14 25 052.14 P-11-E-29 the Petitioner P-11-E-30 Input tax claimed on domestic 562 353.11 562 353.11 purchase of goods supported by VAT Invoice with incorrect 399 282.48 399 282.48 TIN of Petitioner but 90 113.96 90 113.96 supported by VAT OR with correct TIN and Address 62 337.42 62 337.42 Input tax claimed on domestic purchase of goods supported 4,843.18 4,843.18 by VAT Invoice with incorrect Tit. of Petitioner and supported by VAT OR or any other document without TIN and/or Address Supplier's name in the supporting document is different from the supplier's name indicated in the summary list of purchase of Qoods Input tax claimed on input VAT on purchases of goods supported by a VAT Invoice dated August 31, 2013 onwards with ATP dated P><IOR to January 1 2011. Input tax claimed on input VAT on purchases of goods supported by a VAT Invoice dated January 18, 2013 onwards with ATP dated January 1, 2011 to January 17, 2013, the new ATP is NOT issued on or before August 30, 2013 and the term "valid until October 31, 2013 only" is NOT stamped prominently on the face of the invoice. Input tax claimed on domestic purchase of goods supported bf VAT documents other than a VAT Invoice (i.e., VAT OR etc.) Input tax claimed on domestic purchase of goods supported by other Non-VAT document Input tax claimed on domestic purchases of services supported by a VAT OR BUT NOT AN ORIGINAL COPY Input tax claimed on domestic purchases of services supported by a VAT OR not issued in the name of the Petitioner but WITH TIN and address of the Petitioner L

CTA Case No. 9206 Page 34 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue 2 660.49 31 832.14 DECISION 28841.54 P-11-E-31 Input tax claimed on domestic 2 660.49 117 436.12 P-11-E-32 purchases of services 31 832.14 P-11-E-33 s"Opported by a VAT OR not 360.00 P-11-E-34 issued in the name of the 28841.54 49 011.11 P-11-E-35 Petitioner but WITHOUT TIN 117 436.12 P-11-E-36 and/or address of the 1849.09 P-11-E-37 Petitioner 360.00 835.82 P-11-E-38 Input tax claimed on domestic 49 011.11 P-11-E-39 purchases of services 3 395.99 P-11-E-40 supported by Non VAT 1 849.09 105 274.58 Registered TIN OR only 835.82 P-11-E-41 Input tax claimed on domestic 2,106.00 purchases of services 3 395.99 supported by VAT OR issued in 105 274.58 the Petitioner's name but without the Petitioner's TIN . 2,106.0_0 and/or Address and supported by VAT Invoice or any other document also without TIN and/or Address Input tax claimed on domestic purchases of services supported by a VAT OR but not dated within the taxable vear Input tax claimed on domestic purchases of services supported by a VAT OR but with alteration in the name of the Petitioner Input tax claimed on domestic purchases of services sur.ported by TIN-NV/NON VAT Official Receipts Input tax claimed on domestic purchases of services supported by a VAT OR but without BIR's Authority to Print/Permit to Print Input tax claimed on domestic purchases of services supported by a VAT OR with correction in the OR date without counter signature Input tax claimed on domestic purchase of services supported by VAT OR issued in the name of the Petitioner with incorrect TIN and supported by VAT OR or any other document also without TIN and/or Address Input tax claimed on domestic purchase of services supported by VAT OR. However, the sentence "This is not a source of input tax. "is printed in the VAT OR Input tax claimed on input VAT on purchases of services supported by VAT OR dated January 18, 2013 onwards with ATP dated January 1, 2011 to January 17, 2013, the new ATP is NOT issued on or before August 30, 2013 and the term "valid until October 31, 2013 only" is NOT stamped prominently on the t.

CTA Case No. 9206 Page 35 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION face of the receipt. P-11-E-42 Input VAT claimed twice 10 902.71 10 902.71 P-11-E-43 Input tax claimed on domestic purchase of goods and services WITHOUT supporting 88 861.53 88 861.53 documents P3 831,174.35 P3,330,719.31 P411,593.51 P88861.53 Total In addition to the above-mentioned disallowances, the input VAT in the amount of P244,174.57 shall likewise be disallowed for petitioner's failure to meet the invoicing and substantiation requirements stated in the aforementioned law and revenue regulations, to wit: EXHIBIT P-11-D Input Vat SUB-MARKING Claimed Reason for Disallowance I. Input Tax on Domestic Purchases of Goods Other than Capital Goods Input VAT incurred during the first quarter. Sales Invoice is dated 11912013 and 3-1 to 3-3 " 19 285.71 OR is dated Feb 6 2013. 2-399 to 2-403 13 423.93 Sales Invoices do not have VAT breakdown 1-154to 1-156 19 285.71 No VAT Breakdown Sales Invoice (Exhibit "P-11-D-7-369") does not have VAT 7-368 to 7-371 10 429.28 breakdown. 9-235 to 9-2::7 17 724.11 No VAT Breakdown 3-461 to 3-463 21 364.72 Sales Invoices do not have VAT breakdown 3-336 to 3-337 10 097.94 ATP not shown in the Sales Invoice (Exhibit "P-11-D-3-337"} 5-345 to 5-348 11,238.75 Sales Invoices do not have VAT breakdown 5-137 to 5-138 13 500.00 No VAT Breakdown Input VAT incurred during the first quarter. 6-542 to 6-544 1147.07 Sales invoice dated 214113. Subtotal 1'137,497.22 II. Input Tax on Domestic Purchases of Services Per Check Voucher, purchase of delivery services. 2-47 to 2-49 p 19 032.00 Official Receipt has no VAT breakdown. Per check voucher, this is payment for installation of glass, aluminum and accessories for Avida project. 8-28 to 8-29 22L500.00 Official Receipt does not have VAT breakdown. Per check voucher, this is payment for installation of glass, aluminum and accessories for Avida Corporate Office. 7-444 to 7-446 14 464.29 Official Receipt does not have VAT breakdown. Per Check Voucher, Exhibit "P-11-D-9-135", Payment for Rental. 9-135 to 9-136 13 928.57 OR does not include VAT breakdown. Per Sales Invoice, Exhibit "P-11-D-5-294", this is for purchase of LABOR and materials. Official receipt does not include VAT 5-292 to 5-295 14 166.77 breakdown Per Exhibit "P-11-D-5-324", this pertains to purchase of 5-322 to 5-325 11 292.86 freight services. OR does not have VAT breakdown. L

CTA Case No. 9206 Page 36 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION 5-318 to 5-321 Per Exhibit "P-11-D-5-320", this pertains to purchase of Subtotal 11 292.86 freiqht services. OR does not have VAT breakdown. P106,677.3S Total P244,174.57 Moreover, input VAT amounting to P1,379,237.38,77 which were dated outside the period of claim, shall also be disallowed, detailed as follows: INVOICE INVOICE INVOICE Input Vat 77 Included in "Exhibit P-11-E-5", "Input tax claimed on domestic purchase of goods supported by VAT Invoice not dated within the VAT-taxable quarter but within the VAT-taxable year". t

CTA Case No. 9206 Page 37 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION 1�180 to 1�186 CONLUCK INFINITY INDUSTRIAL, INC. 96096 3/14/13 19,165.00 2,053.41 96572 3/14/13 16,790.00 1,798.95 1-180 to 1�186 CONLUCK INFINITY INDUSTRIAL, INC. 96563 3/1S/13 6,725.00 9S712 2/21/13 9,129.00 720.55 1�180 to 1�186 CONLUCK INFINITY INDUSTRIAL, INC. 3/21/13 222,300.00 978.10 108 2,120.00 23,817.86 1-180 to 1-186 CONLUCK INFINITY INDUSTRIAL, INC. 68297 3/27/13 22,000.00 227.14 68139 3/20/13 2,357.14 1-196 to 1-198 IVM PHILS. SERVICES & CONTRACTOR 14077 11,02S.OO INC. 2/28/13 1,181.24 14075 6,063.20 1-201 to 1-206 . MC HOME DEPOT INC. 2/28/13 649.63 14076 17,300.00 1-201 to 1-206 MC HOME DEPOT INC. 2/28/13 1,853.58 14053 15,000.00 1-213 to 1-224 ULTRA PETRONNE INTERIOR SUPPLY 2/7/13 1,607.14 CORPORATION 14073 9,000.00 2/26/13 964.29 1-213 to 1-224 ULTRA PETRONNE INTERIOR SUPPLY 14054 2,070.00 CORPORATION 2/7/13 221.79 14071 27,500.00 1-213 to 1-224 ULTRA PETRONNE INTERIOR SUPPLY 2/23/13 2,946.43 CORPORATION 14078 13,750.00 2/28/13 1,473.21 1-213 to 1-224 ULTRA PETRONNE INTERIOR SUPPLY 487 S4,288.00 CORPORATION 488 2/6/13 3,660.00 5,816.57 3754 2/14/13 12,500.00 392.14 1-213 to 1-224 ULTRA PETRONNE INTERIOR SUPPLY 1504 3/11/13 148,990.00 CORPORATION 3/22/13 1,339.29 1230 2,086.48 15,963.21 1-213 to 1-224 ULTRA PETRONNE INTERIOR SUPPLY 2/25/13 CORPORATION 1535 11,602.69 223.54 2/19/13 1-213 to 1-224 ULTRA PETRONNE INTERIOR SUPPLY 1534 2,0S8.13 1,243.15 CORPORATION 2/19/13 1518 1,098.25 220.51 1-213 t 1_224 lii.TRA PETRONNE INTERIOR SUPPLY 3/8/13 ' CORPORATION 1520 6,040.00 117.67 0 3/22/13 1556 4,672.09 647.15 . 1-225 to 1-228 SPACE CREATION INC. 3/12/13 29,250.00 73328 3/27/13 7,3SO.OO 500.58 1-225 to 1-228 SPACE CREATION INC. 29123 2/20/13 8985 3/6/13 66,600.00 3,133.93 1-229 to 1-231 AMORISA ENTERPRISES 3737 3/2/13 S1,000.00 787.50 71308 3/16/13 1-232 to 1-234 OFFICEFAB E-SERVICES PHILIPPINES, 71272 3/1S/13 7,2SO.OO 7,13S.71 INC. 7130S 3/16/13 49,SSS.OO S,464.29 71128 3/12/13 39,87S.OO 1-235 to 1-242 OFFICEFAB E-SERVICES PHILIPPINES, 71189 3/13/13 69,300.00 776.79 INC. 71196 3/13/13 108,000.00 5,309.46 71014 3/8/13 33,3SO.OO 4,272.32 1-235 to 1-242 OFFICEFAB E-SERVICES PHILIPPINES, 189813 3//27/13 72,960.00 7,425.00 INC. 189803 3/26/13 14,840.00 11,S71.43 189806 3/26/13 3,S73.21 1-235 to 1-242 OFFICEFAB E-SERVICES PHILIPPINES, 189810 3/26/13 900.00 7,817.14 INC. 189810 3/26/13 43,0SO.OO 1,S90.00 1410262635 3/22/13 1-235 to 1-242 OFFICEFAB E-SERVICES PHILIPPINES, 141026263S 3/22/13 S,3S8.00 96.42 INC. 1410262S91 3/22/13 S,3S8.00 4,612.50 0713S8 3/18/13 3S,480.00 1-235 to 1-242 OFFICEFAB E�SERVICES PHILIPPINES, 071394 3/19/13 3S,480.00 S1S.16 li'jC. 071449 3/21/13 4,619.2S S8.93 071588 3/23/13 84,480.00 3,782.14 1_235 to 1_242 1 7~~ICEFAB E-SERVICES PHILIPPINES, 071589 3/23/13 26,SOO.OO 19.29 070906 22,525.00 494.92 1-243 to 1-245 WORLD HOME DEPOT CORPORATION 071551 3/6/13 32,150.00 9,051.43 071550 3/22/13 11,100.00 2,839.29 1-246 to 1-248 Multi Rich Home Decors, Inc. 071587 3/22/13 86,730.00 2,413.39 3/23/13 1S,92S.OO 3,444.64 1-261 to 1-264 SKYDRAGON CONSTRUCTION 0601 3/11/13 19,225.00 1,189.29 PRODUCTS INC. 2,77S.OO 9,292.SO 69,511.50 1,706.25 1-278 to 1-280 AMORISA ENTERPRISES 2,0S9.82 297.32 1-281 to 1-28S LEXUS INDUSTRIAL ENTERPRISE CO 7,447.66 1-281 to 1-28S LEXUS INDUSTRIAL ENTERPRISE CO 1-281 to 1-28S LEXUS INDUSTRIAL ENTERPRISE CO 1-286 to 1-291 LEXUS INDUSTRIAL ENTERPRISE CO 1-286 to 1-291 LEXUS INDUSTRIAL ENTERPRISE CO 1-286 to 1-291 LEXUS INDUSTRIAL ENTERPRISE CO 1-286 to 1-291 LEXUS INDUSTRIAL ENTERPRISE CO 1-327 to 1-339 NEWTON HARDWARE & LUMBER 1-327 to 1-339 NEWTON HARDWARE & LUMBER 1-327 to 1-339 NEWTON HARDWARE & LUMBER 1-327 to 1-339 NEWTON HARDWARE & LUMBER 1-327 to 1-339 NEWTON HARDWARE & LUMBER 1-340 to 1-343 HILT! PHILS. INC. 1-340 to 1-343 HILTI PHILS. INC. 1-340 to 1-343 HILTI PHILS. INC. 1-344 to 1-349 LEXUS INDUSTRIAL ENTERPRISE CO 1-344 to 1-349 LEXU5 INDUSTRIAL ENTERPRISE CO 1-344 to 1-349 LEXUS INDUSTRIAL ENTERPRISE CO 1-344 to 1-349 LEXUS INDUSTRIAL ENTERPRISE CO 1-344 to 1-349 LEXUS INDUSTRIAL ENTERPRISE CO 1-350 to 1-355 LEXUS INDUSTRIAL ENTERPRISE CO 1-350 to 1-355 LEXUS INDUSTRIAL ENTERPRISE CO 1-3SO to 1-35S LEXUS INDUSTRIAL ENTERPRISE CO 1-350 to 1-355 ' LEXUS INDUSTRIAL ENTERPRISE CO 1-356 to 1-361 SPACE CREATION INC. l

erA Case No. 9206 Page 38 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION 1-356 to 1-361 SPACE CREATION INC. 0493 3/4/13 108,360.00 11,610.00 1-356 to 1-361 SPACE CREATION INC. 0499 3/8/13 6,000.00 642.86 1-356 to 1-361 SPACE CREATION INC. 0497 3/4/13 1-362 to 1-366 CONLUCK INF!Nffi INDUSTRIAL, INC. 96090 3/13/13 48,762.00 5,224.50 1-362 to 1-366 CONLUCK INFINm INDUSTRIAL, INC. 96081 3/9/13 4,312.00 462.00 1-367 to 1-371 GCK INTERNATIONAL INC. 5745 3/18/13 1-367 to 1-371 GCK INTERNATIONAL INC. 5746 3/18/13 49,039.00 5,2S4.17 1-367 to 1-371 GCK INTERNATIONAL INC. 5780 3/21/13 159,500.00 17,089.28 1-372 to 1-375 ABLESTAR UN! TRADING 3643 3/4/13 10,616.79 1-372 to 1-375 ABLESTAR UN! TRADING 3642 3/8/13 99,090.00 1-376 to 1-382 Cebu Oversea Hardware Co., Inc. 458741 1/24/13 17,050.00 1,826.78 1-376 to 1-382 Cebu Oversea Hardware Co., Inc. 464148 3/11/13 11,700.00 1,253.57 1-376 to 1-382 Cebu Oversea Hardware Co., Inc. 464183 3/12/13 11,490.00 1,231.07 1-376 to 1-382 Cebu Oversea Hardware Co., Inc. 464128 3/11/13 4,403.00 1-376 to 1-382 Cebu Oversea Hardware Co., Inc. 464127 3/11/13 118,400.00 471.75 1-397 to 1-400 1~0-KRYSCON Enterprises 4503 3/14/13 40,700.00 12,685.71 1-397 to 1-400 MO-KRYSCON Enterprises 4504 3/14/13 70,881.50 4,360.71 1-996 to 1-998 MO-KRYSCON Enterprises 4553 3/19/13 ULTRA PETRONNE INTERIOR SUPPLY 14803 3/16/13 6,430.25 7,594.45 1-401 to 1-406 CORPORATION 8,560.00 688.96 ULTRA PETRONNE INTERIOR SUPPLY 14812 3/20/13 32,776.00 917.14 1-401 to 1-406 CORPORATION 17,412.50 ULTRA PETRONNE INTERIOR SUPPLY 14813 3/20/13 7,010.00 3,511.73 1-401 to 1-406 CORPORATION 1,865.63 ULTRA PETRONNE INTERIOR SUPPLY 14100 3/14/13 7,170.00 1-401 to 1-406 CORPORATION 751.08 ULTRA PETRONNE INTERIOR SUPPLY 14820 3/23/13 6,840.00 1-407 to 1-410 CORPORATION 768.22 ULTRA PETRONNE INTERIOR SUPPLY 14818 3/23/13 9,000.00 1-407 to 1-410 CORPORATION 7306 732.86 NEW GOLD BOND MARKmNG CORP. 7358 3/4/13 988.00 1-411 to 1-414 NeW GOLD BOND MARKmNG CORP. 460806 3/11/13 964.29 1-411 to 1-414 CEBU OVERSEA HARDWARE CO. INC. 460706 2/28/13 1,140.00 1-415 to 1-418 CEBU OVERSEA HARDWARE CO. INC. 2/25/13 46,400.00 105.86 1-415 to 1-418 16230 1-435 to 1-446; Llanera Hardware 3/7/13 6,336.00 122.14 16243 2,380.00 4,971.43 1-1012 Llanera Hardware 3/7/13 88,060.00 1-435 to 1-446; 16227 678.86 Llanera Hardware 3/7/13 1,500.00 255.00 1-1012 16303 9,435.00 1-435 to 1-446; Llanera Hardware 3/9/13 5,395.00 16229 160.71 1-1012 Llanera Hardware 3/7/13 1,500.00 1-435 to 1-446; 16418 578.04 Llanera Hardware 3/16/13 14,250.00 1-1012 16332 160.71 1-435 to 1-446; Llanera Hardware 3/12/13 5,000.00 16412 1,526.79 1-1012 Llanera Hardware 3/16/13 24,420.00 1-435 to 1-446; 16140 535.71 Llanera Hardware 3/2/13 10,000.00 1-1012 16402 2,616.43 1-435 to 1-446; Llanera Hardware 16402 3/15/13 2,470.00 Llanera Hardware 16244 3/15/13 1,071.43 1-1012 Llanera Hardware 16289 3/7/13 7,500.00 1-435 to 1-446; Llanera Hardware 16285 3/9/13 264.64 Llanera Hardware 16282 3/9/13 14,520.00 1-1012 Uanera Hardware 16281 3/9/13 14,520.00 803.57 1-435 to 1-446; llanera Hardware 16408 3/9/13 Uanera Hardware 16404 3/16/13 2,360.00 109.30 1-1012 Uanera Hardware 16421 3/15/13 7,800.00 1,446.43 1-447 to 1-460 Llanera Hardware 16435 3/16/13 29,505.00 1-447 to 1-460 Uanera Hardware 16409 3/18/13 18,340.00 252.85 1-447 to 1-460 Uanera Hardware 16403 3/16/13 22,625.00 835.71 1-447 to 1-460 Llanera Hardware 070922 3/15/13 10,290.00 3,161.26 1-447 to 1-460 LEXUS INDUSTRIAL ENTERPRISE CO 071028 3/7/13 1,510.00 1,965.00 1-447 to 1-460 LEXUS INDUSTRIAL ENTERPRISE CO 071084 3/8/13 6,880.00 2,424.13 1-447 to 1-460 LEXUS INDUSTRIAL ENTERPRISE CO 071055 3/11/13 5,250.00 1,102.50 1-447 to 1-460 LEXUS INDUSTRIAL ENTERPRISE CO 3/9/13 6,120.00 161.78 1-447 to 1-460 2,400.00 737.15 1-447 to 1-460 18,500.00 562.50 1-447 to 1-460 34,075.00 655.72 1-447 to 1-460 16,200.00 257.14 1-447 to 1-460 53,425.00 1,982.14 1-461 to 1-467 3,650.89 1-461 to 1-467 1,735.71 1-461 to 1-467 5,724.11 1-461 to 1-467 L

CTA Case No. 9206 Page 39 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION 1�461 to 1-467 LEXUS INDUSTRIAL ENTERPRISE CO 069646 2/6/13 1,300.00 139.29 070921 3/7/13 13,640.00 1,461.43 1�461 to 1-467 LEXUS INDUSTRIAL ENTERPRISE CO 3/21/13 01S 3/20/13 6,000.00 642.86 1-468 to 1�477 RO�ED ENTERPRISES 018 3/18/13 107,947.60 11,S65.82 020 3/20/13 2,801.40 1�468 to 1�477 RO�ED ENTERPRISES 019 3/18/13 26,146.40 2,713.76 013 3/25/13 25,328.80 4,272.07 1�468 to 1-477 RO-ED ENTERPRISES 29403 3/25/13 39,872.00 29404 3/26/13 753.21 1-468 to 1�477 RO�ED ENTERPRISES 7471 3/26/13 7,030.00 514.29 7470 3/26/13 4,800.00 25,071.43 1-468 to 1�477 RO�ED ENTERPRISES 7469 234,000.00 271.72 3/14/13 2,536.00 22,371.43 1�478 to 1-481 Multi Rich Home Decors, Inc. 14099 208,800.00 3/5/13 6,128.57 1-478 to 1-481 Multi Rich Home Decors, Inc. 14084 57,200.00 3/9/13 4,680.63 1-482 to 1-485 NEW GOLD BOND MARKmNG CORP. 14093 43,686.00 3/9/13 21,091.16 I 1�482 to 1-485 NEW GOLD BOND MARKmNG CORP. 14091 196,850.80 3/9/13 2,220.42 1-486 to 1�489 NEW GOLD BOND MARKmNG CORP. 14090 20,724.00 3/6/13 814.29 1�497 to 1-503 ULTRA PETRONNE INTERIOR SUPPLY 14680 7,600.00 CORPORATION 3/20/13 5,089.28 13730 3/20/13 47,500.00 1-497 to 1�503 ULTRA PETRONNE INTERIOR SUPPLY 13731 3/27/13 1,028.57 CORPORATION 0765 3/27/13 9,600.00 1,028.57 68304 3/21/13 9,600.00 38,0S7.14 1-497 to 1-503 ULTRA PETRONNE INTERIOR SUPPLY 11924 3/22/13 355,200.00 CORPORATION 11928 3/20/13 24.64 11925 3/22/13 230.00 10,693.93 1-497 to 1-503 ULTRA PETRONNE INTERIOR SUPPLY 11926 3/20/13 99,810.00 CORPORATION 11918 3/9/13 236.79 11902 3/11/13 2,210.00 3,498.21 1-497 to 1-503 ULTRA PETRONNE INTERIOR SUPPLY 11903 3/11/13 32,650.00 18,996.43 CORPORATION 11904 3/14/13 177,300.00 11906 3/12/13 211.71 1-504 to 1-506 ULTRA PETRONNE INTERIOR SUPPLY 11905 3/14/13 1,976.00 903.21 C0RPORATION 11908 3/15/13 8,430.00 10,596.43 11909 3/15/13 98,900.00 1,205.36 1-507 to 1-511 . PERFECTBUILD TRADE CORP. 11912 3/20/13 11,250.00 3,912.82 11916 3/18/13 36,520.00 7,714.29 1 1-507 to 1-511 PERFECTBUILD TRADE CORP. 11915 3/18/13 72,000.00 1,542.86 1891 3/18/13 14,400.00 24,139.93 1-512 to 1-514 CAL ASIA 1616 3/15/13 225,306.00 10,534.13 1860 98,318.72 4,274.99 1-551 to 1-556 MC HOME DEPOT INC. 3/23/13 39,900.00 3,241.07 14821 30,250.00 7,821.43 i 1-584 to 1-589 SBC Construction Supply 3/25/13 73,000.00 1,845.44 14823 17,224.14 1,002.27 1-584 to 1-589 SBC Construction Supply 3/23/13 9,354.50 14819 350.36 1-584 to 1-589 SBC Construction Supply 3/27/13 3,270.00 14827 2,410.71 1-584 to 1-589 SBC Construction Supply 3/27/13 22,500.00 464568 3/27/13 964.29 1-590 to 1-597 SBC Construction Supply 12054 3/27/13 9,000.00 12053 3/9/13 1,266.73 1-590 to 1-597 SBC Construction Supply 096759 3/25/13 11,822.89 096813 3/9/13 3,645.00 1-590 to 1-597 SBC Construction Supply 096757 3/25/13 34,020.00 780.00 16562 3/26/13 7,280.00 677.14 1-590 to 1-597 SBC Construction Supply 16572 3/26/13 6,320.00 16573 3/22/13 17,947.29 1-590 to 1-597 SBC Construction Supply 16521 3/16/13 167,508.00 5,946.43 16410 3/19/13 55,500.00 26,932.50 1-590 to 1-597 SBC Construction Supply 16460 3/20/13 251,370.00 16480 3/20/13 180.00 1-598 to 1-601 SBC Construction Supply 16481 3/21/13 1,680.00 2,794.29 16492 3/23/13 26,080.00 1,379.62 ~ 16548 12,876.50 117.86 1-598 to 1-601 SBC Construction Supply 1,100.00 6,019.29 56,180.00 1,522.50 1-602 to 1-607 SBC Construction Supply 14,210.00 214.29 1-602 to 1-607 SBC Construction Supply 2,000.00 451.07 4,210.00 2,768.57 1-602 to 1-607 SBC Construction Supply 25,840.00 1,071.42 10,000.00 1-627 to 1-629 Trustcom Technology & Trading 1-643 to 1-654 Officefab E~Services Philippines, Inc. 1-643 to 1-654 Officefab E-Services Philippines, Inc. 1-683 to 1-686 Ultra Petronne Interior Supply Corporation 1-683 to 1-686 Ultra Petronne Interior Supply Corporation 1-683 to 1-686 Ultra Petronne Interior Supply Corporation 1-687 to 1-691 Ultra Petronne Interior Supply Corporation 1-692 to 1-695 . C~bu Oversea Hardware Co., Inc. 1-716 to 1-719 SBC Construction Supply 1-716 to 1-719 SBC Construction Supply 1-725 to 1-728 AVO Marketing Corporation 1-725 to 1-728 AVO Marketing Corporation 1-729 to 1-731 AVO Marketing Corporation 1-738 to 1-743 Llanera Hardware 1-738 to 1-743 Uanera Hardware 1-738 to 1-743 Llanera Hardware 1-738 to 1-743 Uanera Hardware 1-738 to 1-743 Llanera Hardware 1-738 to 1-743 Llanera Hardware 1-738 to 1-743 Llanera Hardware 1-738 to 1-743 Llanera Hardware 1-738 to 1-743 Uanera Hardware 1-744 to 1-747 ' Llanera Hardware ~

CTA Case No. 9206 Page 40 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION 1-748 to 1-750 : SOGO Builders Supply, Inc. 35809 3/22/13 25,712.00 2,754.86 35810 3/22/13 7,686.00 823.50 1-748 to 1-750 50GO Builders Supply, Inc. 16228 3/7/13 10,000.00 96859 3/23/13 1,071.43 1-754 to 1-764 Llanera Hardware 96593 3/21/13 21,740.00 2,329.29 96595 3/20/13 2,750.00 1-772 to 1-779 Conluck Infinity Industrial, Inc. 96576 3/19/13 15,200.00 294.64 96575 3/19/13 24,618.00 1,628.57 1-772 to 1-779 Conluck Infinity Industrial, Inc. 96574 3/19/13 12,340.00 2,637.64 96594 3/20/13 5,406.00 1,322.14 1-772 to 1-779 Conluck Infinity Industrial, Inc. 96596 3/20/13 6,435.00 96597 3/20/13 16,485.00 579.22 1-772 to 1-779 Conluck Infinity Industrial, Inc. 96861 3/21/13 60,817.00 689.46 96871 3/25/13 3,920.00 1,766.25 1-772 to 1-779 Conluck Infinity Industrial, Inc. 96870 3/26/13 4,920.00 6,516.10 96864 3/25/13 9,412.00 420.00 1-772 to 1-779 Conluck Infinity Industrial, Inc. 9054 3/27/13 5,015.00 527.14 1,008.43 1-780 to 1-787 Conluck Infinity Industrial, Inc. 0604 3/12/13 288,000.00 537.32 30,857.14 1-780 to 1-787 Conluck Infinity Industrial, Inc. 0610 3/22/13 16,950.00 1,816.07 1-780 to 1-787 Conluck Infinity Industrial, Inc. 10,260.00 1,099.28 1-780 to 1-787 Conluck Infinity Industrial, Inc. 192.86 1-780 to 1-787 Conluck Infinity Industrial, Inc. 428.57 1-780 to 1-787 Conluck Infinity Industrial, Inc. 211.61 1-788 to 1-798 r C.onluck Infinity Industrial, Inc. 5,678.57 1,419.64 1-801 to 1-803 Skydragon Construction Products, Inc. 1,306.D7 5,683.93 1-804 to 1-805; Space Creation, Inc. 9,341.25 1-802 1,135.71 1-809 to 1-812; Space Creation, Inc. 1050.54 1-979 to 1-181 2,410.71 1-809 to 1-812; Space Creation, Inc. 0607 3/18/13 1,800.00 1-979 to 1-181 4,258.93 1-809 to 1-812; Space Creation, Inc. 0606 3/16/13 4,000.00 4,173.75 1-979 to 1-181 2,839.29 . 1-809 to 1-812; Space Creation, Inc. 0608 3/18/13 1,975.00 2,839.29 1-979 to 1-181 187199 3/5/13 53,000.00 187230 3/15/13 13,250.00 2,839.29 1-813 to 1-819 Cebu Evergreen Industries, Inc. 187229 3/15/13 12,190.00 187187 3/4/13 53,050.00 4,457.68 1-813 to 1-819 Cebu Evergreen Industries, Inc. 187200 3/5/13 87,185.00 187437 3/27/13 10,600.00 401.79 1-813 to 1-819 Cebu Evergreen Industries, Inc. 401.79 187436 3/27/13 9,805.00 5,464.29 1-813 to 1-819 Cebu Evergreen Industries, Inc. 14,425.71 1,071.43 1-813 to 1-819 Cebu Evergreen Industries, Inc. 5,592.86 1,783.93 1-813 to 1-819 Cebu Evergreen Industries, Inc. 1-820 to 1-829; Cebu Evergreen Industries, Inc. 1-976; 1-977 1-820 to 1-829; Cebu Evergreen Industries, Inc. 187237 3/19/13 22,500.00 1-976; 1-977 1-820 to 1-829; Cebu Evergreen Industries, Inc. 187236 3/19/13 39,750.00 1-976; 1-977 ' 1-820 to 1-829; Cebu Evergreen Industries, Inc. 187203 3/5/13 38,955.00 1-976; 1-977 1-820 to 1-829; Cebu Evergreen Industries, Inc. 187205 3/6/13 26,500.00 1-976; 1-977 1-820 to 1-829; Cebu Evergreen Industries, Inc. 187191 3/4/13 26,500.00 1-976; 1-977 1-820 to 1-829; Cebu Evergreen Industries, Inc. 187204 3/6/13 26,500.00 1-976; 1-977 1-820 to 1-829; Cebu Evergreen Industries, Inc. 187206 3/6/13 41,605.00 1-976; 1-977 3774 3/23/13 7,500.00 1-830 to 1-832 .-AMORISA ENTERPRISES 3774 3/23/13 7,500.00 3781 3/27/13 51,000.00 1-830 to 1-832 AMORISA ENTERPRISES 29250 3/11/13 134,640.00 1-830 to 1-832 AMORISA ENTERPRISES 0605 3/12/13 10,000.00 1-843 to 1-844; MULTI RICH HOME DECORS INC. 29284 3/11/13 52,200.00 1-970 29364 3/18/13 16,650.00 1-1013 SPACE CREATION INC 1-845 to 1-848 MULTl RICH HOME DECORS INC. 1-845 to 1-848 MULTl RICH HOME DECORS INC. tv

CTA Case No. 9206 Page 41 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION 1-490 to 1-496; CFAL OASIS DEVELOPMENT CORP. 12613, 3/16/13 to 18,230.43 2,111.87 1�969 12334, 3/31/13 12607, 12326, 12328, 12443, 12377, 12376, 692432 2/27/13 70,0SO.OO 7,50S.36 692235 2/26/13 17,2SO.OO 1,848.21 692080 2/22/13 20,000.00 2,142.86 1-

CTA Case No. 9206 Page 42 of 46 Actuate Builders, Inc. vs. Commissioner ofIntemal Revenue DECISION Thus, out of the reported input VAT of P12,251,028.97, only the amount of P6,796,442.67 pertains to petitioner's valid input VAT for the 2nd to 4th quarters of CY 2013, computed as follows: Input VAT per Claim P12,251,028.97 Less: Disallowances P3,330,719.31 3,831,174.35 Per !CPA Report 411,593.51 1. On domestic purchase of goods 88,861.53 2. On domestic purchase of services 3. Goods and services WITHOUT P1,516,734.6079 suooortinq documents 106,677.35 1,623,411.95 Per Cour-t's further verification P6,796,442.67 1. On domestic purchase of goods 2. On domestic purchase of services Total Valid Input VAT Considering that there are both zero-rated or effectively zero-rated sales and taxable 78 The supporting documents contained in the file as Exhibit "P-11-D-1-295" to "P-11-D-1-326" actually contain Exhibits "P-11-D-1-327" to "P-11-D-1-341". 79 Pl37,497.22 + P1,379,237.38. L

CTA Case No. 9206 Page 43 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION sales, the said amount of f/#6,796,442.67 shall be proportionately allocated on the basis ofsales volume. 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. In this case, for the subject period of claim, there exists zero- rated or effectively zero-rated sales and taxable sales. However, considering that petitioner's input VAT cannot be directly or entirely attributed to any of the said transactions, the valid input VAT of ~6,796,442.67 shall be allocated proportionately on the basis of the volume of petitioner's total sales, as shown below: Taxable Sales/Receipts* p 38,970 665.97 Divided by the adjusted Total Sales/Receipts* 256,801,826.78 Multiplied by Total Valid Input VAT Valid input VAT allocated to sales subject to the 12% VAT 6,796,442.67 P1,031,386.34 Total Valid Zero-Rated Receipts P215,700,048.86 Divided by the adjusted Total Sales/Receipts* 256,801,826.78 Multiplied by Total Valid Input VAT 6,796,442.67 Valid Input VATallocated to valid zero-rated sales P5,708,654.94 *amounts as adjusted80 80 2"" Quarter 3"' Quarter 4'" Quarter Total 1'5 427,184.98 1'5,589 961.37 1'25,696 376.70 Vatable Sales/Receipts (per P36, 713,523.05 Return) 21257' 142.92 Add: Adjustment P38 970 665.97 (P270 857.15* divided by 12%) Vatable Sales (as adjusted) Zero-rated Receipts (per Return) P86 223 950.24 1'53,582,109.75 1'77,988,100.82 P217 794,160.81 Add: collections from DTSII 37 000.00 based on OR but not included P217,831,160. in SLS 81 Zero-rated Receipts (as adjusted) t

CTA Case No. 9206 Page 44 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION Thus, for purposes of, and with regard to petitioner's compliance with the eight requisite, only the amount of P1,031,386.34 represents petitioner's valid input VAT attributable to sales subject to the 12% VAT, while the amount of P5,708,654.94 denotes valid input VAT attributable to valid zero-rated sales. The subject valid input taxes have not been applied against output taxes during and in the succeeding quarters. Having determined that petitioner had valid input VAT attributable to its zero-rated sales, the Court shall now determine whether the same was applied against its output VAT liability during and in the succeeding quarters, relative to the ninth requisite for the successful prosecution of an input VAT refund claim. In the subject period, petitioner has an output VAT liability in the amount of P4,405,622.77.81 Moreover, additional output tax due in the amount of P270,857.1582, accounted by the ICPA as collections subject to VAT not included in SLS, shall also be considered. Since petitioner's valid input VAT in the amount of P1,031,386.34 allocated to sales subject to the 12% VAT is not enough to cover the said output VAT liability, the output VAT still due against petitioner is computed as follows: Output VAT (1"4,405,622.77 + 1"270,857.15) p 4,676,479.92 Less: Valid Input VAT allocated to Sales subject to the 12% VAT 1,031,386.34 Output VAT Still Due P3,64S,093.S8 The valid input VAT attributable to valid zero-rated receipts in the amount of P5,708,654.94 shall then be utilized against the said remaining output VAT liability of petitioner in the amount of Total Sales/Receipts as adjusted -��-� ---� P256,80J..826. 78 *Exhibit "P-11" (cc: No.8, letters a and b, p. 6; letters a and b, p. 11), p. 12. 81 Line 15B of Exhibits "P-3". "P-4". and "P-5". Docket. Vol. I. oo. 309. 315 and 321 I 2"dQuarter 3"' Quarter I 4111 Quarter Total I P651 262.20 P670 795.36 I Output VAT per Return P3 083 565.21 I P4 405 622.77 I 82 Exhibit "P-11", p. 12 No. 8, letters a and b, p. 6; letters a and b, p. 11. L

CTA Case No. 9206 Page 45 of 46 Actuate &ilders, Inc. vs. Commissioner ofInternal Revenue DECISION P3,645,093.58. Correspondingly, only the remaining input VAT of P2,063,561.36 represents petitioner's unapplied/excess input VAT attributable to its valid zero-rated receipts, as determined below: Substantiated Input VAT Allocated to Zero-Rated Receipts p 5,708,654.94 Less: Output VAT still due 3,645,093.58 Excess input VAT attributable to valid zero-rated receipts P2,063,561.36 Needless to state, the said amount of P2,063,561.36 is part of the subject refund claim of P12,251,028.97. It is noteworthy that petitioner deducted the input VAT amount of P15,108,795.90 as "VAT Refund(TCC claimed"in its Amended 2nd Quarterly VAT Return of CY 2015,83 which included the subject claim of P12,251,028.97. By virtue thereof, the subject claim, which includes the above-stated amount of P2,063,561.36, did not form part of the excess input VAT of P29,569,439.3384 as of the end of the 2nd quarter of CY 2015 to be carried over/ applied to the succeeding quarters. Thus, petitioner is deemed to have fulfilled the said ninth requisite in the refund of input VAT under Section 112(A) of the NIRC of 1997, as amended. In fine, petitioner is entitled to the refund of, or issuance of tax credit certificate in, the amount of P2,063,561.36. ' WHEREFORE, in light of the foregoing considerations, the instant Petition for Review is PARTIALLY GRANTED. Accordingly, respondent is ORDERED TO REFUND or TO ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner in the amount of P2,063,561.36, representing petitioner's excess and unutilized input VAT attributable to its zero-rated sales for the 2nd, 3rd and 4th quarters of CY 2013. 83 Line 23D, Exhibit "P-26". p 2 857 766.93 ..__,,,, ""'""'"1\JII VI Y'""'l '''-'""'''""'/ ''-"'-"'-'1UIIII....Uo 12.251,028.97 P15 108,795.90 Exhibit CY 2013 "P-31" 1st Quarter "P-3" 2nd Quarter PS 022 379.58 "P-4" 3rdQuarter 3 479,157.17 "P-5" 4th Quarter 3 749,492.22 Total "--�- �-- 84 Line 29, Exhibit "P-26". t

CTA Case No. 9206 Page 46 of 46 Actuate Builders, Inc. vs. Commissioner ofInternal Revenue DECISION SO ORDERED. ~N.M~~.r:~ CIELITO N. MINDARO-G"ULLA Associate Justice WE CONCUR: ~~-(;;;'c.. ~;-f. J'tiANITO C. CASTANEDA, JR. Associate Justice ' JEAN MARIE"'A ATTESTATION I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. iOfUAuN~I"T:O�c.cC,ASa.T.;AiN-cE:wD.<A.e,~J1lf.~'. Associate Justice 2nd Division Chairperson CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairper$'Jn's Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. Presiding Justice