COMMISSIONER OF INTERNAL REVENUE v. NEW YORK BAY PHILIPPINES, INC.

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC COMMISSIONER OF INTERNAL CTA EB NO. 3062 REVENUE, (CTA Case No. 10628) Petitioner, -versus- MASTERCARD TRANSACTION CTA EB NO. 3066 SERVICES (PHILIPPINES) INC. (CTA Case No. 10628) (FORMERLY, NEW YORK BAY PHILIPPINES, INC.), Present: Respo nd en t. RINGPIS-LIBAN, P.J., X-------------------------- X BACORRO-VILLENA, MODESTO-SAN PEDRO, MASTERCARD TRANSACTION REYES-FAJARDO, SERVICES (PHILIPPINES) INC. CUI-DAVID, (FORMERLY, NEW YORK BAY FERRER-FLORES, and PHILIPPINES, INC.), ANGELES, JJ. Petitioner, -versus- COMMISSIONER OF INTERNAL REVENUE, Respondent. X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - X DECISION RINGPIS-LIBAN, P.l : TheCasy

DECISION CTA EB Nos. 3062 & 3066 (CTA Case No. 10628) Before the Court are the following: 1) Petition for Review1 filed by the Commissioner of Internal Revenue ("CIR"), docketed as CTI\ EB No. 3062, which prays for the cancellation and setting aside of the Decision2 dated July 11, 2024 ("Assailed Decision") and Resolution3 dated December 27, 2024 ("Assailed Resolution") promulgated by the Court of Tax Appeals ("CTA") Third Division, and that a new one be rendered denying the entire claim for refund of Mastercard Transaction Services (Philippines) Inc. (formerly New York Bay Philippines, Inc. 4 ("MTSP Inc."); and ) 2) Petition for Revie~ filed by MTSP Inc., docketed as CTA EB No. 3066, which prays for the: a. reversal and setting aside of the Assailed Decision and Assailed Resolution insofar as it denied MTSP Inc.'s claim for refund of excess and unutilized input Value- added Tax ("VAT") in the amount of Php7,155,551.43, and b. the issuance of a new decision ordering the CIR to refund or issue in favor of MTSP Inc. a tax credit certificate in the aggregate amount of Php9,311,595.17 representing its excess and unutilized input VAT for the four (4) quarters of calendar year 2019. The Parties l'viTSP Inc. is a domestic corporation organized and existing under the laws of the Philippines with principal place of business at Level 28, IBP Tower, Julia Vargas Avenue, Ortigas Center, Pasig City. It is a VAT-registered taxpayer under tax identification number (TIN) 000-217-994-000.6 On the other hand, the CIR is the duly appointed commissioner of the Bureau of Internal Revenue ("BIR"), vested by law to enforce and implem~ 1 Rollo (CTA EB No. 3062), pp. 9-32. 2 Penned by Associate Justice Catherine T. Manahan with Associate Justice Marian Ivy F. Reyes-Fajardo and Associate Justice HenryS. Angeles concurring. Docket, pp. 888-911. 3 Id, pp. 969-975. 4 Amendment of name in the Securities and Exchange Commission Amended Articles of Incorporation, See Rollo (CTA EB No. 3066), Minute Resolution dated January 23, 2025, p. 24. 5 Rollo (CTA EB No. 3066), pp. 25-47. 6 Docket, Decision dated July 11, 2024, The Parties, p. 888.

DECISION CTA EB Nos. 3062 & 3066 (CTA Case No. 10628) the provisions of the National Internal Revenue Code ("NIRC") of 1997, as amended, related laws, and their implementing rules and regulations. He holds office at the BIR National Office Building, BIR Road, Diliman, Quezon City.7 The Facts The facts as found by the Third Division are as follows: "[TvlTSP Inc.] filed its original Quarterly VAT Returns (BIR Form No. 2550-Q) for the 1st to 4th quarters of CY 2019 through the BIR's Electronic Filing and Payment System (eFPS) on the following dates: 2019 FILING REFERENCE NO. DATE OF FILING 1" Quarter 101900030142915 April 25, 2019 2"d Quarter 101900031410465 july 23, 2019 3'd Quarter 101900032691542 October 21,2019 4'h Quarter 102000034126824 January 21, 2020 Thereafter, [MTSP Inc.] filed amended Quarterly V1\T Returns for the 1" to 3'd quarters on the following dates: 2019 FILING REFERENCE NO. DATE OF FILING 1" Quarter 102000035177299 l'viarch 13, 2020 2"d Quarter 101900033621889 3'J Quarter 101900033623307 December 17, 201 9 On l\Iay 5, 2021, [TvlTSP Inc.] filed an Application for Tax Credits/Refunds (BIR Form No. 1914) with the BIR-VAT Credit Audit Division, requesting the refund of or issuance of tax credit certificate for its excess and unutilized input VAT for the four quarters of CY 2019 in the amount of [Php]33,386,031.16. On July 29,2021, New York Bay received the VAT Refund Notice dated July 9, 2021 partially granting its administrative claim in the amount of [Php]22,892,645.58. The BIR disallowed the amount of [Php]10,493,385.58 on the following grounds: Violation of invoicing requirements pursuant to Sec. 113 [Php ]1,665,009.28 in relation to Sec. 110 of the NIRC of 1997, as amended Disallowed input tax on big-ticket purchases 642,502.04 Disallowed per BIR Integrated System (ITS) 1,125.00 7 Id., p. 889. /"

DECISION 63,248.40 CTA EB Nos. 3062 & 3066 (CTA Case No. 10628) 312,596.85 Page 4 of 12 636,352.58 Additional output tax assessed on sale of real property 7,155,551.43 Disallowed ripened portion of prior years' DIT 10,000.00 Input tax discrepancy per BIR Form No. 1914 vs. Schedule of Purchases 25,000.00 Input VAT Allocated to Unqualified Zero-Rated Sales Compromise Penalty pursuant to Sec. 264 of the Tax [Php]10,511,385.58 Code, as amended Compromise Penalty pursuant to Sec. 255 of the Tax Code, as amended New York Bay flied the present Petition .for Review through electronic mail on /mgust 31, 2021, and physically flied the same on October 25, 2021. The Commissioner of Internal Revenue ("CIR") flied his Answer (Re: Petition for Review dated 31 August 2021) on FebtUary 11, 2022, and transmitted the BIR Records of the case on March 9, 2022."8 The Ruling ofthe Third Division On July 11, 2024, the CTA Third Division promulgated the Assailed Decision partially granting the Petition for Review, to wit: "ACCORDINGLY, the present Petition .for Review is PARTIALLY GRANTED. Respondent is ordered to refund or issue a tax credit certificate in favor of petitioner in the amount of [Php]2,156,043.74 representing its unutilized excess input V1\T attributable to its zero-rated sales for the four quarters of CY 2019. SO ORDERED."9 On July 29, 2024, the CIR flied a "Motion for Partial Reconsideration (Re: Decision promulgated on 11 July 2024)"10 while MTSP INC. flied a "Motion for Reconsideration (Re: Decision dated July 11, 2024)"11 on July 31, 2024. Both were denied by the CTA Third Division in the Assailed Resolution, to Wit: "Accordingly, the Decision of the Court in the above- captioned case dated February 5, 2024 is hereby AFFIRMED. ~ 8 Id., Decision dated July 11, 2024, pp. 889-890. 9 !d., Decision dated July 11, 2024, pp. 909-910. 10 !d., pp. 912-926. 11 !d., pp. 927-935.

DECISION CTA EB Nos. 3062 & 3066 (CTA Case No. 10628) SO ORDERED."12 The Proceedings in the Court ofTax Appeals En Bane On January 15, 2025, the CIR flied a "Motion for Extension to File Petition for Review"13, docketed as CTA EB No. 3062, which the court granted in a Minute Resolution14 on January 17,2025. On February 03, 2025, the CIR flied its "Petition for Review".15 ~feanwhile, l\ITSP Inc. flied a "Motion for Extension to File Petition for Review (with Motion to Amend Petitioner's Name)"16 on January 22, 2025, docketed as CT"~ EB No. 3066, praying for an additional fifteen (15) days or until February 06, 2025 within which to file the petition for review. The Court granted the same in a Minute Resolution17 dated January 23, 2025. On February 06, 2025, l\ITSP Inc. flied its "Petition for Review" 18� On February 07, 2025, a Minute Resolution 19 was issued consolidating CL-\ EB No. 3062 with CL\ EB No. 3066. Thereafter, on March 11, 2025, the Court issued a Minute Resolution20 ordering: 1) MTSP Inc. to file its comment on the CIR's "Petition for Review" in CTA EB No. 3062, within ten (10) days from notice; and 2) the CIR to file its comment on the MTSP Inc.'s "Petition for Review" in CTA EB No. 3066, within the same period. The CIR filed his "Comment and Opposition (Re: Petition for Review dated 03 February 2025)"21 ("Comment/Opposition") on October 15, 2024, while MTSP Inc. flied its "Comment (Re: Petition for Review in CTA EB No. 3062 dated February 3, 2025)"22 ("Comment") on March 31, 2025. ~ 12 Id., Resolution dated December 27, 2024, p. 975. 13 Rollo (CTA EB No. 3062), pp. 1-6. Record shows that the Commissioner of Internal received the Assailed Resolution on January 06, 2025; Docket, p. 968. 14 Id., p. 8. 15 Id., pp. 9-25. 16 Rollo (CTA EB No. 3066), pp. 1-6. Record shows that MTSP Inc. received the Assailed Resolution on January 07, 2025; Docket, p. 968. 17 Id., p. 24. 18 Id., pp. 25-47. 19 Id., p. 67. 20 Id., p. 68. 21 Id., pp. 69-78. 22 /d., pp. 80-93.

DECISION CTA EB Nos. 3062 & 3066 (CTA Case No. 10628) On April 15, 2025, a Minute Resolution was issued noting the comments filed by the CIR and MTSP Inc. and submitting the instant cases for decision. Assignment of Errors The CIR assigned the following errors in its "Petition for Review" in CTA EB No. 3062: 1) The CTA Third Division erred in ruling that 1\ITSP Inc.'s input tax in the amount of Php4,415,655.04 is attributable to its zero-rated sales; 2) The CT/\ Third Division erred in ruling that the claimed input VAT subject of the instant case remained unutilized; 3) The CTA Third Division erred in tuling that MTSP Inc. is partially entitled to the refund sought. 23 Conversely, 1\ITSP Inc. raised a single assignment of error in CTA EB No. 3066: The CL\ Third Division erred in denying MTSP Inc.'s claim for refund amounting to Php7,155,551.4324 The Arguments of the Parties CTA EB No. 3062 The CIR 's arguments: The CIR avers that there should be a determination whether the input VAT paid by MTSP Inc. is attributable to its zero-rated sales or effectively zero-rated sales. Simply stated, the excess input VAT being claimed for refund must not only be allocable to MTSP Inc.'s zero-rated sales, but should be directly attributable to the zero-rated sales. The CIR points out that 1\ITSP Inc. failed to present the VAT returns for the succeeding quarters of calendar year 2020 and 2021. This Court cannot rule that the same remained unutilized solely on the Amended Quarterly VAT ,-v Return for the 1" quarter of calendar year 2020. The VAT Returns for the 23 Rollo (CTA EB No. 3062), Petition for Review, Assignment of Error, pp. 13-14. 24 Rollo (CTA EB No. 3066), Petition for Review, Assignment of Errors and Summary of Arguments, par. 18, p. 32.

DECISION CTA EB Nos. 3062 & 3066 (CTA Case No. 10628) succeeding quarters of taxable year 2020 and 2021 should have been presented by MTSP Inc. to prove the subject claim is no longer included in the "Input Tax Carried Over from previous Period". The CIR finally asserts that MTSP Inc. failed to show its entitlement to the refund sought since it submitted documents not in compliance with the requirements provided by law. MTSP Inc. 's counter-m;guments: MTSP Inc. contends that Sections 110(A)(1)(3) and 112(A) of the NIRC of 1997, as amended, explicitly provides that creditable input V[\T which cannot be directly and entirely attributed to VI\T zero-rated, taxable, and/or exempt sales may be allocated proportionately on the basis of the volume of the taxpayer's sales. MTSP Inc. also maintains that it was able to prove by sufficient evidence that its excess and unutilized input VI\T for the four quarters of calendar year 2019 were not carried over and applied against any output VAT. Lastly, MTSP Inc. claims that it has complied with the requis1tes for claiming a refund or tax credit of excess and unutilized input VAT attributable to zero-rated sales or effectively zero-rated sales. CTAEBNo.3066 lviTSP Inc.'s arg11ments: MTSP Inc. submits that there is nothing in the NIRC of 1997, as amended, which implies that an invoice or an official receipt may not be antedated. According to MTSP Inc., the disallowed official receipts are valid even though they were antedated to May 2019, because they are duly-registered with the BIR pursuant to Section 238 of the NIRC of 1997, as amended, under the Authority to Print ("ATP") dated June 03,2019. In any case, MTSP Inc. declares that there is no basis for the court a quo's conclusion that the antedating of the subject official receipts will negate the VI\T-zero rating of an othenvise zero-rated transaction. The CIR 's cotmfncm;gument: The CIR stresses that MTSP Inc. failed to demonstrate that it is entitled to a refund of unutilized input VAT for the period January 01 to December 31, 2011'

DECISION CTA EB Nos. 3062 & 3066 (CTA Case No. 10628) The Ruling of the Court Ti1nelinessofPeddons The Court in Division issued the Assailed Resolution, denying the CIR's "Motion for Partial Reconsideration (Re: Decision promulgated on 11 July 2024)" and MTSP Inc.'s "Motion for Reconsideration (Re: Decision dated July 11, 2024)", on December 27, 2024. The CIR received said Resolution on January 08, 202525 whereas MTSP Inc. received it on Januaty 07, 202526. Pursuant to Rule 4, Section 2(a)(1)27 in relation to Rule 8, Section 3(b)"8 of the Revised Rules of the Court of Tax Appeals29 ("RRCTA"), the CIR and MTSP Inc. had fifteen (15) days from date of receipt of the resolution or until January 23, 2025 and Januaty 22, 2025, respectively, within which to file their petitions for review. On January 15, 2025, the CIR filed a "Motion for Extension to File Petition for Review"30, praying for an extension of fifteen (15) days to file. The Court granted the same in a Minute Resolution31 on Januaty 17, 2025. On February 03, 2025, the CIR timely ftled its "Petition for Review"32. Meanwhile, MTSP Inc. filed a "l\Iotion for Extension to File Petition for Review (with Motion to Amend Petitioner's Name)"33 on January 22, 2025, praying for an extension of fifteen (15) days to file. The Court granted the sa~ 25 Docket, p. 968. 26 Id. 27 Sec. 2. Cases within the jurisdiction of the Court en bane. - The Court en bane shall exercise exclusive appellate jurisdiction to review by appeal the following: (a) Decisions or resolutions on motions for reconsideration or new trial of the Court in Divisions in the exercise of its exclusive appellate jurisdiction over: XXX XXX XXX (1) Cases arising from administrative agencies - Bureau of Internal Revenue, Bureau of Customs, Department of Finance, Department of Trade and Industry, Department of Agriculture; x x x 28 Sec. 3. Who may appeal; period to file petition. - x x x (b) A party adversely affected by a decision or resolution of a Division of the Court on a motion for reconsideration or new trial may appeal to the Court by filing before it a petition for review within fifteen days from receipt of a copy of the questioned decision or resolution. Upon proper motion and the payment of the full amount of the docket and other lawful fees and deposit for costs before the expiration of the reglementary period herein fixed, the Court may grant an additional period not exceeding fifteen days from the expiration of the original period within which to file the petition for review. (Rules of Court, Rule 42, sec. 1a) 29 A.M. No. 05-11-07-CTA, November 22, 2005. 30 Rollo (CTA EB No. 3062), pp. 1-6. 31 Id., p. 8. 32 Id., pp. 9-25. 33 Rollo (CTA EB No. 3066), pp. 1-6. Record shows that MTSP Inc. received the Assailed Resolution on January 07, 2025; Docket, p. 968.

DECISION CTA EB Nos. 3062 & 3066 (CTA Case No. 10628) in a Minute Resolution34 dated January 23, 2025. On February 06, 2025, MTSP Inc. timely filed its "Petition for Review"35. Hence, the Court En Bane validly acquired jurisdiction over the two (2) pennons. We now proceed with the merits of the case. ~At the outset, it must be emphasized that the issues raised by the CIR and MTSP, Inc. in their petitions are mere reiterations of the same issues which had already been duly considered, passed upon and resolved by the Third Division in the 1\ssailed Decision and Assailed Resolution. CTA EB No. 3062 The Third Division did not err in partially granting MTSP Inc.'s claim for refund \'V'e do not subscribe to the CIR's argument that there should be direct attributability of the purchases or input VAT to the finished product whose sale is zero-rated. Section 112(A) of the NIRC of 1997, as amended, allows allocation of input taxes in case the same cannot be directly and entirely attributed to any of the sales, viz: "SEC. 112. Refunds or Tax Credits ofInput Tax. - (A) Zero-rated or Effectively Zero-rated Sales. Any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: ... Provided further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods or properties or services. and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions. it shall be allocated proportionately on the basis of the volume of sales: Provided ,a/ 34 !d., p. 24. 35 !d., pp. 25-47.

DECISION CTA EB Nos. 3062. & 3066 (CTA Case No. 1062.8) Page 10 of 12. finally, That for a person making sales that are zero-rated under Section 108(8)(6), the input taxes shall be allocated ratably between his zero-rated and non-zero-rated sales."36 Contrary to the CIR's argument, the provision above only mandates that the input tax paid or incurred is attributable to a taxpayer's zero-rated sales, and in this case, the court a quo already found that the excess and unutilized input VAT of MTSP Inc. amounting to Php25,048,689.32 is attributable to its valid zero-rated sales based on the evidence presented. The law does not require that the input tax be directly attributable to MTSP Inc.'s zero-rated sales. Input taxes that bear a direct or indirect connection with a taxpayer's zero-rated sales satisfy the requirement of the law. Ubi lex non distinguit nee nos distinguere debemos. 37 It is a well-recognized rule that where the law does not distinguish, courts should not distinguish. Furthermore, there is no need for ,VfTSP Inc. to present its VAT Returns for the 2"d quarter of calendar year 2020 and onwards. ~\s emphasized by the court a quo, MTSP Inc. already presented its Amended Quarterly VAT Return for the 1" quarter of calendar year 2020. Therein, the total amount of Php33,386,031.16 representing MTSP Inc.'s input VAT claim was already deducted as "VAT Refund/TCC claimed", thereby establishing that it did not carry over and utilize the amount claimed for refund in the succeeding quarters. ,\s to the CIR's argument that 1\ITSP Inc. failed to show its entitlement to the refund sought since it submitted documents not in compliance with the requirements provided by law, suffice it to say that We find the Third Division's conclusions and computations on the matter in order. From the foregoing, the CIR's assertions are devoid of merit. CTA EB No. 3066 The Third Division properly disallowed the input VAT amounting to Php 156,708,471.36 To reiterate, MTSP Inc. avers that the NIRC of 1997, as amended, does not prohibit the antedating of invoices or official receipts, and that the disallowed official receipts remain valid despite being antedated to May 2019, as they were duly registered with the BIR under ATP dated June 03, 20/v' 36 Emphasis and underscoring supplied. 37 Philippine Free Press, Inc. v. Court of Appeals (12.th Division), et al., G.R. No. 132.864, October 2.4, 2.005.

DECISION CTA EB Nos. 3062 & 3066 (CTA Case No. 10628) Nonetheless, the fact of antedating of the subject official receipts is not the issue in this case. .As pointed out by the Third Division, the subject official receipts were disqualified because they are not "duly registered receipts" "at the point of each sale", which constitutes non-compliance with the invoicing and substantiation requirements under the law. Section 237 of the NIRC of 1997, as amended, clearly requires that the taxpayer issue a duly registered receipt or invoice at the point of each sale. The official receipts issued by 1\ITSP Inc. for the transactions dated 1\Iay 9, 2019, May 10, 2019, and May 30, 2019 must pertain to a valid and subsisting ATP which cover the said dates. And yet, the official receipts in question bear serial numbers outside the /~cTP dated June 03, 2019. Said ATP covers only the official receipts with serial numbers 12751 to 13250. "'"Jl in all, We find no sufficient basis for MTSP Inc.'s Petition for Review. ACCORDINGLY, the instant Petitions for Review flied by Mastercard Transaction' Services (Philippines) Inc. and the Commissioner of Internal Revenue are both DENIED for lack of merit. SO ORDERED. MA. BELEN M. RINGPIS-LIBAN Presiding Justice WE CONCUR: JEANMARI

DECISION CTA EB Nos. 3062 & 3066 (CTA Case No. 10628) ~ L t ~- f=6ja,..~ MARIAN lVY@. REYE~-FAJARDO Associate Justice LAN~1~l&n1vm Associate Justice c~cAsisoci.ate J~=~-rL~Vs/ HENRY 1/.~GELES Associate Justice CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the cases were assigned to the writer of the opinion of the Court. f/J...A. ~1. ,._ .. '--- MA. BELEN M. RINGPIS-LIBAN Presiding J usticc