WELLFORM TRADING CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SECOND DIVISION WELLFORM TRADING CTA CASE NO. 9086 CORPORATION, Petitioner, Members: -versus- Castaneda, Jr., Chairperson, Casanova, and Manahan, JJ. COMMISSIONER OF Promulgated: INTERNAL REVENUE, NOV Z7 Z017 Respondent. ~ / 'f: Jo / �IIJ , x----------------------------------------------------------------------------------x DECISION CASTANEDA, JR., l,.: THE CASE This resolves the Petition for Review filed on July 10, 2015 by Wellform Trading Corporation, praying for this Court to declare as null and void, for lack of factual and legal bases, the assessment notice that assessed petitioner for alleged deficiency value-added tax r (VAT) in the amount of P96,527,897.39, inclusive of interest, for the period covering January 1 to June 30, 2012.

DECISION CfA CASE NO. 9086 THE FACTS Petitioner Wellform Trading Corporation is registered with the Securities and Exchange Commission (SEC) on August 2, 1991, with SEC Company Registration No. AS091-194034 and with the Bureau of Internal Revenue (BIR) on May 21, 1996, with Tax Identification Number 000-080-369-000. Petitioner holds office at 355 Cavite corner Gapan Streets, Barangay 148, Zone 13, Tendo, Manila. It is primarily engaged in the business of buying, selling, distributing, and marketing at wholesale and retail of fermented liquor, bottled water and other beverages. 1 On the other hand, respondent is the duly appointed Commissioner of the Bureau of Internal Revenue (BIR) who has the power to decide disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto or other matters arising under the National Internal Revenue Code (NIRC) or other laws or portions thereof administered by the BIR. He holds office at the BIR National Office Building, Agham Road, Diliman, Quezon City. On March 18, 2013, petitioner received Letter of Authority (LOA) No. LOA-VOS-2013-00000120/SN: eLA201100016722 dated March 14, 2013 authorizing the representatives of BIR Revenue District No. V08-Assessment Division to conduct an examination for VAT for the period covering January 1, 2012 to June 30, 2012 pursuant to Revenue Memorandum Order No. 20-2012.2 On April 3, 2013, petitioner received from respondent its First Request for Presentation of Records dated April 1, 2013.3 This was followed by the Second and Final Notice for rt- Presentation of Records dated April 16, 2013, received by petitioner on April 18, 2013.4 1 Par. 1, Admitted Facts, Joint Stipulation of Facts and Issues (JSFI), Docket, Vol. II, pp. 789-790. 2 Par. 3, Admitted Facts, JSFI, Docket, Vol. II, p. 790. 3 Par. 4, Admitted Facts, JSFI, Docket, Vol. II, p. 790. 4 Par. 5, Admitted Facts, JSFI, Docket, Vol. II, p. 790.

DECISION CfA CASE NO. 9086 On April 26, 20135, May 8, 20136 and May 22, 20137, petitioner submitted supporting documents in response to the above requests. On May 22, 2013, petitioner received from respondent a Reminder Letter for the submission of its Books of Accounts, Official Receipts, Summary List of Sales and Purchases and Expense Receipts. 8 Petitioner again submitted supporting documents on June 11, 20139 and July 5, 201310� Subsequently, petitioner received a Subpoena Duces Tecum on July 26, 2013. 11 Thus, another set of documents were submitted by petitioner on August 14, 2013 in compliance with respondent's subpoena. 12 However, respondent issued a Preliminary Assessment Notice (PAN) together with the Details of Discrepancies dated October 2, 2014, which was received by petitioner on October 3, 2014. 13 On November 13, 2014, petitioner received from respondent Formal Assessment Notice (FAN) dated November 11, 2014, Details of Discrepancies, Assessment Notice No. Vf-ELA16722-12-14-1046, Analysis of Sales per TPI from AITEID, and Schedule of Supported Input Taxes; wherein the latter assessed the former for deficiency VAT in the amount of P96,527,897.39 inclusive of interest for taxable period January 1 to June 30, 2012.14 As a response to respondent's FAN, petitioner filed on December 12, 2014 an Administrative Protest by way of a Request for Reconsideration of the assessment contained in the respondent's j<- 5 Exhibit "P-18", Docket, Vol. II, p. 1193. 6 Exhibit "P-19", Docket, Vol. II, p. 1194. 7 Exhibit "P-21", Docket, Vol. II, p. 1195. 8 Par. 6, Admitted Facts, JSFI, Docket, Vol. II, p. 790. 9 Exhibit "P-23", Docket, Vol. II, p. 1196. 10 Exhibit "P-25", Docket, Vol. II, pp. 1197-1199. 11 Par. 7, Admitted Facts, JSFI, Docket, Vol. II, p. 790. 12 Exhibit "P-27", Docket, Vol. II, p. 1200. 13 Par. 8, Admitted Facts, JSFI, Docket, Vol. II, p. 790. 14 Par. 10, Admitted Facts, JSFI, Docket, Vol. II, p. 791.

DECISION CTA CASE NO. 9086 FAN with the Office of the Regional Director Jonas DP Amara of Revenue Region No. 8- Makati.15 Petitioner alleges that despite the filing of the administrative protest, respondent did not issue any decision thereon. Thus, feeling aggrieved by the VAT assessment, and mindful of the reglementary period relative to respondent's inaction on the protest, petitioner filed the instant Petition for Review on July 10, 2015. On September 10, 2015, respondent filed an Answer by registered mail, 16 interposing the following defenses: "4. Petitioner was assessed of deficiency value- added tax for taxable period January 1, 2012 to June 30, 2012 for the reason that during the administrative investigation of its tax case by the Bureau of Internal Revenue (BIR), petitioner failed to substantiate or submit supporting evidence against the BIR findings, more specifically shown under the Details of Discrepancies attached to the Preliminary Assessment Notice (PAN) dated October 2, 2014 and Formal Assessment Notice (FAN) dated November 11, 2014, which are briefly discussed hereunder, viz: XXX XXX XXX 5. Petitioner was assessed by the respondent for deficiency value-added tax for taxable period of January 1, 2012 to June 30, 2012 within the prescriptive period under Section 203 of the 1997 Tax Code; 6. The assessments issued against petitioner for deficiency value-added tax for were made in accordance with law and regulations. 7. Assessment are prima facie presumed correct and made in good faith. The taxpayer has the duty of proving otherwise. In the absence of proof of any fo;- 15 Par. 11, Admitted Facts, JSFI, Docket, Vol. II, p. 791. 16 Docket, Vol. II, pp. 759-762.

DECISION CTA CASE NO. 9086 irregularities in the performance of official duties, an assessment will not be disturbed (Aban, Law of Basic Taxation in the Philippine, Jst Edition, p. 109)." The case was subsequently set for Pre-Trial Conference on November 12, 2015. 17 Respondent's Pre-Trial Brief18 was later filed on November 6, 2015, while the Pre-Trial Brief for the petitioner was filed on November 9, 2015. 19 On November 27, 2015, the parties filed their Joint Stipulation of Facts and Issues.20 Thereafter, a Pre-Trial Order was issued by the Court on January 19, 2016.21 Trial ensued, giving both parties the opportunity to present their respective documentary and testimonial evidence. After presentation, marking, identification and offer, the Court admitted, as part of petitioner's documentary evidence, Exhibits "P- 1" to "P-33-A", except for Exhibits "P-9-a", "P-10-a", "P-12-a" and "P- 13-a". 22 On the other hand, the Court admitted, as part of respondent's evidence, Exhibits "R-1" to "R-9-a".23 Thereafter, the Memorandum for Respondent was filed by registered mail on October 21, 201624, while the Memorandum for the Petitioner25 was filed on November 25, 2016. Accordingly, the r instant case was considered submitted for decision on December 2, 2o16. 26 17 Docket, Vol. II, p. 764. 18 Docket, Vol. II, pp. 766-772. 19 Docket, Vol. II, pp. 777-785. 20 Docket, Vol. II, pp. 789-797. 21 Docket, Vol. II, pp. 801-806. 22 Resolution dated July 26, 2016, Docket, Vol. III, pp. 1245-1246. 23 Resolution dated September 20, 2016, Docket, Vol. III, pp. 1259-1260. 24 Docket, Vol. III, pp. 1272-1275. 25 Docket, Vol. III, p. 1277-1308. 26 Docket, Vol. III, p. 1309.

DECISION CTA CASE NO. 9086 THE ISSUES The parties submitted the following issues 27 for this Court's disposition: 1. Whether respondent's allegation that petitioner has undeclared sales amounting to P99,660,220.47 based on benchmark rate has factual and legal bases; 2. Whether respondent's allegation that petitioner has undeclared sales amounting to P41,760,025.41 based on computerized matching has factual and legal bases; 3. Whether respondent disallowance of petitioner's input tax representing 97�/o of the total input tax credits claimed for taxable period January to June 2012 has factual and legal bases; and 4. Whether petitioner is liable for the alleged deficiency value-added tax and increments for taxable period January to June 2012 in the amount of P96,527,897.39. THE COURT'S RULING Respondent assessed petitioner of deficiency VAT amounting to P96,527,897.39, inclusive of interest, for the period covering January 1 to June 30, 2012, computed as follows: 28 VATable sales per VAT returns p 99,660,220.47 p 422,462,011.11 Add: Sales not subjected to VAT 41,760,025.41 141,420,245.88 Undeclared sales p 563,882,256.99 Gross receipts subject to VAT p 67,665,870.84 Output tax due Less: Input tax claimed per return p 49,131,702.18 27 Issues, JSFI, Docket, Vol. II, p. 792. 28 Exhibit "P-1", Docket, Vol. II, p. 1112.

DECISION p 47,727,546.63 47,986,581.09 1,145,121.09 CTA CASE NO. 9086 259,034.46 p 1,563,739.16 p 66,520,749.75 p 2,996.57 - 1,563,739.16 Less: Unsupported input tax Excess input tax carried over 2,996.57 p 64,957,010.59 to succeeding quarter 31,570,886.80 VAT payable Less: Tax payments p 96,527,897.39 Add: Creditable VAT withheld per return Less: Unsupported creditable VAT withheld Basic tax due Add: Interest (07.26.12 to 12.29.14) Total amount due Sales not subjected to VAT amounting to P99,660,222.47 Respondent computed the alleged sales not subjected to VAT as follows: 29 Computed VATable Sales based on Benchmark Rate p 522,122,233.58 Less: Total VATable Sales per VAT Return 422,462,011.11 Sales Not Subjected to VAT p 99,660,222.47 Benchmark Sales/Receipts= Current Input Tax Credit Claimed VAT Rate-Benchmark Rate Current Input Tax Claimed for the pt and 2nd quarters P49,131,702.18 Benchmark Rate for Other Wholesaling 2.59% Benchmark Sales/Receipts= P49,13L702.18 12%-2.59% Benchmark Sales/Receipts= P49,13L702.18 9.4100% Benchmark Sales/Receipts= P522,122,233.58 Petitioner opposes the computation and alleges that the industry benchmark cannot be used as the best evidence to support an assessment of a deficiency tax. According to petitioner, this was even admitted by respondent's own witness. Petitioner further alleges that there was no mention from the objectives of the benchmarking program on the imposition of taxes on the mere basis of a benchmark which could bring about a deficiency assessment against a taxpayer.~ 29 Exhibit "P-2", Docket, Vol. II, p.1113.

DECISION CTA CASE NO. 9086 On the other hand, respondent claims that the assessment was based on best evidence obtainable because of petitioner's failure and refusal to make certain records available despite issuance of Subpoena Duces Tecum dated July 23, 2013. Respondent avers that since there is no means by which the correctness and accuracy of petitioner's receipts can be ascertained, assessment based on estimate was used pursuant to Section 2.4(a) of Revenue Memorandum Circular (RMC) No. 23-2000. An examination of the assessment shows that respondent arrived at the sales allegedly not subjected to VAT amounting to P99,660,222.47 by comparing petitioner's gross sales based on industry benchmark rate pursuant to Revenue Memorandum Order (RMO) No. 05-2012 with the sales reported per VAT Returns. Specifically, RMO No. 05-2012 defined benchmarking of taxpayers as the process of setting a standard to determine the performance level of taxpayers in a given line of industry or sector. According to respondent, the computed VATable sales based on benchmark rate less total VATable sales per VAT return is the best evidence obtainable so as to determine the amount of petitioner's deficiency VAT liability. It is significant to note that the objectives of profiling and benchmarking activities under RMO No. 05-2012 are limited to the following: "I. Objectives: This Order aims to prescribe the revised/updated policies, guidelines and/or procedures in the conduct of taxpayer profiling and benchmarking activities to all Regional and Revenue District Offices (RDOs). It also provides an effective tool in addressing collection problems, plugging tax leakages and implementing a risk- to-revenue based audit and enforcement activities. ~

DECISION CTA CASE NO. 9086 Specifically, this Order is issued to: 1. Address the downward trend in revenue collections by providing an environment that levels the playing field among all taxpayers belonging to the same industry; 2. Empower revenue officials and employees concerned to deal with the numerous incidence of registered taxpayers who are neither filing their tax returns nor paying the correct taxes; and 3. Adopt a set of principles and methods that provide the basic formula in computing the benchmark and guide the district offices concerned towards a more systematic or well-balanced implementation of the Benchmarking Program." Also, the same RMO No. 5-2012 provides for the guidelines in the conduct of benchmarking, including the benchmarking cycles: "III. General Policies XXX XXX XXX 5. Guided by the procedures herein provided, LTS Audit Division Chiefs; [sic] to the extent applicable to it, and Revenue District Officers shall ensure that the benchmarking cycle is completed within the required timeframe. The following shall likewise be observed: a. In cases where Letters of Authority have been issued to taxpayers, the LT Audit Division Chiefs, and RDOs concerned shall take into consideration the established benchmark in the industry where the subject taxpayer belongs before considering the case closed and terminated; b. Any downtrend deviation from the Jz-- benchmark shall be fully explained and such

DECISION CTA CASE NO. 9086 data shall form part of the inputs in the revision of final benchmark rates; c. All issues and concerns raised by taxpayers in the implementation of this program that call for immediate action shall be the responsibility of the implementing office. Reports of action taken thereon must be furnished the Benchmarking Committee. 6. Taxpayers whose tax compliance is below the duly established and approved benchmark shall be classified as follows: Classifications Risk to Revenue/Gap to Benchmark High Risk Taxpayers Over 30�/o below benchmark Middle Risk Taxpayers 16�/o to 30�/o below benchmark Low Risk Taxpayers 15�/o or less below benchmark 7. Taxpayers classified as high risk shall be the top priority target for enforcement actions, such as Surveillance, CRM/POS Post Evaluation, Oplan Kandado, Inventory Stocktaking and Audit; 8. The Benchmarking Committee shall be responsible for reporting and recommending the appropriate actions that may be taken and/or sanctions that may be imposed against taxpayers or any other person found to be supplying/submitting false or fabricated data purportedly to meet the benchmark requirements; XXX XXX XXX IV. Guidelines and Procedures for the Conduct of Benchmarking Benchmarking Cycles: 1. Gather taxpayer data. XXX XXX XXX~

DECISION CTA CASE NO. 9086 2. Prepare the taxpayers profile. XXX XXX XXX 3. Evaluate the result and Establish Benchmark. XXX XXX XXX 4. Notice to Taxpayer. In view of the established standard rate of tax compliance or the benchmark, the RDOs may now proceed to notify taxpayers who fall below the benchmark that they should rectify their tax returns and improve their tax compliance. xxx XXX XXX XXX The RDOs shall ensure that all information are correct and the benchmark data were thoroughly reviewed and validated as against the return/information obtained per taxpayer before sending out the notification letters. The Notice to be sent to the taxpayers is not a notice of investigation that will bar the taxpayer from amending his return. However, within fifteen (15) days from receipt of said Notice, the taxpayer must explain fully in writing its failure to measure up in compliance with set industry benchmark. Failure to satisfactorily establish its reasons, the taxpayer may be issued a Letter of Authority or be subject to other enforcement activities. 5. Evaluate Taxpayers' Response/Reactions. The RDO must evaluate the reasons put forward by the taxpayers in its response. Based on this evaluation, the RDO should make a recommendation whether taxpayer should be subjected to enforcement activities, issued an electronic Letter of Authority (eLA) or not. 6. Analyze and Prepare Reports and Recommendation. J<-

DECISION CTA CASE NO. 9086 Evaluation involves a risk to revenue analysis. Thus, a proper report by the Revenue District Officer to the Regional Director or by the xxx has to be made with conclusions, whether taxpayer fall under the high risk, middle- or low-risk category bracket. Reports should likewise include recommendations for proper enforcement actions such as immediate issuance of Letter of Authority, if none has been issued yet, conduct of Post Evaluation on CRM/POS Machines, placing establishment under surveillance, or conduct of inventory stock taking. 7. Enforcement Actions - Assess and Collect Deficiency Taxes. The conduct of Oplan Kandado or Inventory Stock Taking, as the case maybe, will almost always trigger the issuance of Letters of Authority. Audit activities and processes embodied under Revenue Regulations No. 12- 99 are to be complied with in coming up with assessment notices. 8. Evaluate, Compare & Adjust the Final Benchmark. Under this stage, comparison of the initially benchmarked data under Cycle 3 must be compared for purposes of computing the revised benchmark under Cycle 9. The results of evaluation may either be a downtrend benchmark or an uptrend benchmark revision. 9. Revise Benchmark. The Committee shall come up with the 'schedule benchmark' by line of industry in every audit division (LTS), regional and district offices. Areas with low compliant taxpayers must be identified and monitored. The Audit Division Chiefs/Revenue District Officers and Regional Directors shall use the scheduled benchmark as a tool in classifying taxpayers as high risk, middle risk or low risk taxpayers. These revised /k-

DECISION CTA CASE NO. 9086 benchmarks should serve as a guide to improve voluntary compliance. 10. Monitor the activities and accomplishments on benchmarking. Prepare and submit the reports in soft copies (MsExcel format) as provided under paragraph V hereof. 11. Periodically review the statistical method utilized to arrive at the benchmarks. Recommend the revision of benchmark and/or method or strategies, if necessary. 12. Considering the unique characteristics of taxpayers covered by the Large Taxpayers Service, the following additional steps should be undertaken, when applicable, to wit: 12.1. From the groupings by industry, classify taxpayers as 'old existing' and 'newly enlisted' taxpayers; 12.2. For the old taxpayers, proceed with the process of tax profiling; for those under the newly enlisted taxpayers, compare their VAT & IT compliance with the initial benchmark; 12.3. Newly enlisted taxpayers whose VAT & Income Tax (IT) compliance are below benchmark shall be issued with benchmark notices requiring them to upgrade/enhance their tax payments. Those who will not improve given enough time to do so shall be subjected to tax enforcement activities." (Emphases supplied) A perusal of the foregoing shows that the purpose of the benchmarking program and of deriving the benchmarking rate is mainly to establish measurement or a set of standards to be used to cr.- measure and monitor the performance/compliance of taxpayers in a particular industry and improve voluntary tax compliance. There is

DECISION CTA CASE NO. 9086 nothing in the foregoing which would show that the benchmark rate should be used in computing the tax liability of the taxpayer. At best, the benchmarking program may be used in recommending enforcement actions such as immediate issuance of Letter of Authority, if none has been issued yet, conduct of Post Evaluation on CRM/POS Machines, placing establishment under surveillance, or conduct of inventory stock taking. Moreover, it is important to stress that while the enforcement actions, such as the conduct of Oplan Kandado or Inventory Stock Taking, as the case may be, will almost always trigger the issuance of Letters of Authority, the same RMO requires that the audit activities and the processes embodied under Revenue Regulations No. 12-99 should still be complied with in coming up with assessment notice. Clearly, in this case, respondent should have assessed petitioner based on its own investigation pursuant to the electronic Letter of Authority (eLA) issued and in compliance with Revenue Regulations No. 12-99, and not by merely using the benchmark rate in arriving at the alleged computed VATable sales of petitioner. Thus, the use of the benchmark rate in computing petitioner's tax liability has no legal basis. As to respondent's claim that the assessment was arrived at on the basis of the Best Evidence Obtainable, the Court finds relevant Section 6(B) of the NIRC of 1997, as amended, which requires that the assessment of the tax be determined based on the Best Evidence Obtainable in the absence of accounting records or other records. Section 6(B) of the Tax Code, reads: "SEC. 6. Power of the Commissioner to Make Assessments and Prescribe Additional Requirements for Tax Administration and Enforcement - XXX XXX XXX (B) Failure to Submit Required Returns, Statements, Reports and other Documents. - When a report required r-- by law as a basis for the assessment of any national internal revenue tax shall not be forthcoming within the

DECISION CTA CASE NO. 9086 time fixed by laws or rules and regulations or when there is reason to believe that any such report is false, incomplete or erroneous, the Commissioner shall assess the proper tax on the best evidence obtainable. In case a person fails to file a required return or other document at the time prescribed by law, or willfully or otherwise files a false or fraudulent return or other document, the Commissioner shall make or amend the return from his own knowledge and from such information as he can obtain through testimony or otherwise, which shall be prima facie correct and sufficient for all legal purposes." (Emphasis supplied) Relevantly, Section 5 of the NIRC gives respondent vast powers which he could exercise in obtaining the best evidence, as follows: "SEC. 5. Power of the Commissioner to Obtain Information and to Summon, Examine, and Take Testimony of Persons. - In ascertaining the correctness of any return, or in making a return when none has been made, or in determining the liability of any person for any internal revenue tax, or in collecting any such liability, or in evaluating tax compliance, the Commissioner is authorized: (A) To examine any book, paper, record, or other data which may be relevant or material to such inquiry; (B) To obtain on a regular basis from any person other than the person whose internal revenue tax liability is subject to audit or investigation, or from any office or officer of the national and local governments, government agencies and instrumentalities, including the Bangko Sentral ng Pilipinas and government-owned or - controlled corporations, any information such as, but not limited to, costs and volume of production, receipts or sales and gross incomes of taxpayers, and the names, addresses, and financial statements of corporations, mutual fund companies, insurance companies, regional operating headquarters of multinational companies, joint accounts, associations, joint ventures or consortia and registered partnerships, and their members; J2-

DECISION CTA CASE NO. 9086 (C) To summon the person liable for tax or required to file a return, or any officer or employee of such person, or any person having possession, custody, or care of the books of accounts and other accounting records containing entries relating to the business of the person liable for tax, or any other person, to appear before the Commissioner or his duly authorized representative at a time and place specified in the summons and to produce such books, papers, records, or other data, and to give testimony; (D) To take such testimony of the person concerned, under oath, as may be relevant of material to such inquiry; and (E) To cause revenue officers and employees to make a canvass from time to time of any revenue district or region and inquire after and concerning all persons therein who may be liable to pay any internal revenue tax, and all persons owning or having the care, management or possession of any object with respect to which a tax is imposed. The provisions of the foregoing paragraphs notwithstanding, nothing in this Section shall be construed as granting the Commissioner the authority to inquire into bank deposits other than as provided for in Section 6(F) of this Code." The power of the Commissioner to assess on the best evidence obtainable was likewise elaborated in the case of Commissioner of Internal Revenue vs. Hantex Trading Co. Inc. 30, wherein the High Court ruled as follows: "The law allows the BIR access to all relevant or material records and data in the person of the taxpayer. It places no limit or condition on the type or form of the medium by which the record subject to the order of the BIR is kept. The purpose of the law is to enable the SIR Jc- to get at the taxpayer's records in whatever form they 3o G.R. No. 136975, March 31, 2005.

DECISION CTA CASE NO. 9086 may be kept. Such records include computer tapes of the said records prepared by the taxpayer in the course of business. In this era of developing information-storage technology, there is no valid reason to immunize companies with computer-based, record-keeping capabilities from BIR scrutiny. The standard is not the form of the record but where it might shed light on the accuracy of the taxpayer's return. In Campbell, Jr. v. Guetersloh, the United States (U.S.) Court of Appeals (5th Circuit) declared that it is the duty of the Commissioner of Internal Revenue to investigate any circumstance which led him to believe that the taxpayer had taxable income larger than reported. Necessarily, this inquiry would have to be outside of the books because they supported the return as filed. He may take the sworn testimony of the taxpayer; he may take the testimony of third parties; he may examine and subpoena, if necessary, traders' and brokers' accounts and books and the taxpayer's book accounts. The Commissioner is not bound to follow any set of patterns. The existence of unreported income may be shown by any practicable proof that is available in the circumstances of the particular situation. Citing its ruling in Kenney v. Commissioner, the U.S. appellate court declared that where the records of the taxpayer are manifestly inaccurate and incomplete, the Commissioner may look to other sources of information to establish income made by the taxpayer during the years in question. XXX XXX XXX The rule is that in the absence of the accounting records of a taxpayer, his tax liability may be determined by estimation. The petitioner (Commissioner of Internal Revenue) is not required to compute such tax liabilities with mathematical exactness. Approximation in the calculation of the taxes due is justified. To hold otherwise would be tantamount to holding that skillful concealment is an invincible barrier to proof. However, the rule does not apply where the estimation is fv-

DECISION CTA CASE NO. 9086 arrived at arbitrarily and capriciously." (Emphasis supplied and citations omitted) In other words, while respondent has the power to assess petitioner on the best evidence obtainable and may resort to the exercise of its powers under Section 5 of the NIRC and to approximation in the calculation of the taxes due, the same should not be arrived at arbitrarily and capriciously. In this case, respondent based the assessment against petitioner for sales allegedly not subject to VAT on the computed VATable sales based on benchmark rate less total VATable sales per VAT return. Noticeably, respondent made no determination of the actual VATable sales of petitioner, considering that the benchmark rate used by respondent pertains to the sales of other wholesaling companies as reflected in the computation. There was also no showing as to how the benchmark rate was derived by respondent, or that it can at least be used to approximate the actual VATable sales of petitioner. What can only be deduced from the computation is that respondent merely assumed that the amount of VATable sales of other wholesaling companies is the same with the VATable sales of petitioner. At this juncture, it must be pointed out that in order to stand the test of judicial scrutiny, the assessment must be based on actual facts. The presumption of correctness of assessment being a mere presumption cannot be made to rest on another presumption. Hence, assessment should not be based on mere presumptions no matter how reasonable or logical said presumptions may be.31 Consequently, while there is a presumption of correctness of assessment issued by respondent, being a mere presumption, the same cannot be made to rest on another presumption, which is respondent's presumption that the amount of VATable sales of other wholesaling companies is the same with the VATable sales of petitioner. The Court further observes that while the computation of petitioner's VATable sales was based on presumptions and ?c- 31 Commissioner of Internal Revenue vs. Alberto D. Benipayo, G.R. No. L-13656, January 31, 1962; Commissioner ofInternal Revenue vs. Island Garment Manufacturing Corporation and the CourtofTaxAppeals, G.R. No. L-46644, September 11, 1987.

DECISION CTA CASE NO. 9086 estimations, respondent, however, was able to further assess petitioner for undeclared sales based on sales per particular customer. Although in the succeeding discussion, the Court shall still determine whether these data were verified, it does not change the fact that the computed benchmark sales/receipt is not the best evidence obtainable in computing petitioner's liability since respondent could derive and verify evidence and data from third parties. Also, contrary to respondent's allegation, it appears from the records that petitioner was able to submit documents to address respondent's request for documents pursuant to the eLA.32 Clearly, the use of benchmark rate in determining petitioner's total VATable sales is not the best evidence that can be obtained by respondent and that the use of the same in making an assessment has no support in law. Thus, for being without factual or legal basis, the deficiency VAT arising from the alleged sales not subjected to VAT should be cancelled. Undeclared Sales amounting to P41,760,025.41 As to the alleged undeclared sales, respondent assessed petitioner of deficiency VAT on the alleged undeclared sales in this wise: 33 Undeclared Sales amounting to P41,760,025.41: Comparison of sales per Third Party Information (TPI) and sales per Summary List of Sales (SLS) disclosed that there were undeclared sales from customers in the amount of P3,053,348.68, hence petitioner was assessed of VAT pursuant to Section 106 of the tax code. Sales per particular Customers (TPI) p 41 816,269.15 Sales declared per SLS 56,243.74 Undeclared Sales (Annex B) P41,760,025.41 32 Exhibits "P-18" to "P-27", Docket, Vol. II, pp. 1193 to 1200. 33 Exhibit "P-2", Docket, Vol. II, p. 1113.

DECISION CTA CASE NO. 9086 Petitioner alleges that there was failure to verify the allegations stemming from third party information through externally sourced data as required by RMO No. 04-2003. Moreover, considering that the data gathered from third party sources came from BIR's RELIEF system, it is necessary that the guidelines and policies set under RMO Nos. 42-2003 and 46-2004 must be met, that includes the requirement for the BIR to secure sworn statements or certifications from TPI sources. Without verification or certification from the third- party sources as to the veracity of the information used by respondent, such information cannot be considered as a "third party information". As mentioned in the Details of Discrepancies, respondent derived the alleged undeclared sales by comparing third party information and purchases from the alleged third-party sources and sales by the petitioner which were reflected in the summary list of sales. However, as testified by respondent's witness Mr. Renan A. Plata during cross-examination, he was not able to secure the required certifications from these third-party sources.34 Also, there was no showing from the records that these pieces of information were verified. These findings cast doubts as to the reliability and correctness of the assessment for deficiency VAT on the alleged sales not subjected to VAT and the alleged undeclared sales. Moreover, it must be emphasized that while respondent has the power to assess petitioner on the best evidence obtainable and may resort to the exercise of its powers under Section 5 of the NIRC and to approximation in the calculation of the taxes due, the same should not be arrived at arbitrarily and capriciously. In this case, instead of exerting his best effort in gathering information from other sources to verify the alleged undeclared sales and instead of taking into consideration the documents submitted by petitioner, respondent chose to resort to presumptions and heavily relied on the results of the unverified third party matching and on the benchmark rate in estimating petitioner's sales and tax liability.~ 34 Transcript of Stenographic Notes taken during the hearing held on July 27, 2016, pp. 15-16.

DECISION CTA CASE NO. 9086 Therefore, respondent's finding that petitioner has sales not subject to VAT and undeclared sales lacks factual and legal bases. Nevertheless, as to the alleged unsupported input tax, the Court shall determine the propriety of the assessment based on the evidence presented by the parties considering that respondent computed the same based on his examination of petitioner's supporting documents. Unsupported Input Tax amounting to P47,727,546.63 Respondent's verification disclosed that petitioner failed to submit the required VAT Invoices or Official Receipts (OR) to support the claimed input taxes, thus, respondent disallowed the same pursuant to the provision imposed under Section 110(A)(1) of the NIRC which provides that any input tax claimed evidenced by a VAT Invoice or official receipt issued in accordance with Section 113 of the NIRC shall be creditable against output tax, to wit: Input tax claimed per VAT returns p 49,131 702.18 Supported input tax 1,404 155.55 Unsupported input tax P47,727,546.63 Based on the documents submitted, the Court-commissioned ICPA, Mr. Ericson D. Tadeja, found that the total input VAT declared in the 1st and 2nd Quarterly VAT Returns of taxable year 2012 amounting to P49,131,702.8735 was composed of the following major and minor purchases: 36 Major Purchases p 18,722,361.32 Asia Brewery Incorporated (ABI) 24,471,344.86 Interbev Philippines, Inc. (IPI) Sub-total p 43,193,706.18 Minor Purchases 35 Exhibits "P-11" and "P-14", Docket, Vol. II, pp. 1178 and 1189. Quarter Input VAT Claimed 1st P24 658,734.40 2nd 24 472,968.47 P49,131,702.87 36 Exhibits "P-32-A", ICPA Report, p. 8.

DECISION 5 937,996.69 CTA CASE NO. 9086 p 49,131,702.87 Various suppliers Total input tax claimed per return Upon examination of the submitted documents, the findings of the !CPA may be summarized as follows: Findings Reference Exhibit VAT Amount A. Purchases from ABI and IPI (major purchases) 1. Purchases of Goods supported by original VAT-registered sales invoices IC 13A 13A.1 to (A6I and IPI) 13A.2594 A6I IPI p 19 016 947.20 21 849 285.42 sub-total p 40,866. 232.62 2. Purchases of Goods supported by Debit Memos (A6I and IPI) A6I p 204 592.30 IPI 324 141.46 sub-total p 528733.76 3. Purchases of Goods supported by Credit Memos (A6I and IPI) A6I p (1 006,584.06) IPI (822 639.04) sub-total 1'(1829.223.10) 4. Purchases of Goods Supported by photocopied/scanned VAT-registered IC-136 136.1 to 136.215 sales invoices (A6I and IPI) p 323 460.86 A6I ,. 3 304 502.04 IPI 3,627. 962.90 sub-total p 43 193 706.18 Total Purchases from ABI and IPI (major purchases) B. Purchases from suppliers other than ABI and IPI (minor purchases) 1. Purchases of goods and capital goods supported by VAT-registered IC-14A 14A.1 to 14A.89 p 158 586.17 sales invoices IC-146 146.1 to 146.298 4 012 579.22 2. Purchases of services supported by VAT-registered official receipts 14C.1 to 14C.756 140.1 to 140.209 p 4171,165.39 sub-total 14E.1 to 14E.52 3. Purchases of goods, capital goods and services supported by VAT- IC-14C p 583 591.48 registered official receipts but are outside the taxable period 4. Purchases of goods, capital goods and services which are not properly IC-140 583 749.82 supported by VAT-reqistered invoices or official receipts 5. Purchases of goods, capital goods and services which are IC-14E 5 842.92 substantiated by tape receipts but are unreadable 6. Purchases of goods, capital goods and services which are unaccounted IC-14F 593,647.08 due to lack of documents p 1 766. 831.30 sub-total 5 937,996.69 p 49 131,702.87 Total Purchases from suppliers other than ABI and IPI (minor purchases) GRAND TOTAL Based on the foregoing, the Court finds that the amount of P1,766,831.30 (items 8.3 to 8.6) must be disallowed for petitioner's ~

DECISION CTA CASE NO. 9086 failure to meet the substantiation requirements under Sections 110(A) and 113(A) and (B) of the NIRC of 1997, as amended by Republic Act No. 9337, and as implemented by Sections 4.110-2, 4.110-8 and 4.113-1 of Revenue Regulations No. 16-05. In addition to said exceptions, the examination of the documents submitted by petitioner leads to the findings as discussed below. A. Input VAT from Domestic Purchases of Goods from Asia Brewery Incorporated {ABI) and Interbev Philippines Incorporated (IPI) Records reveal that petitioner's input VAT on domestic purchases from ABI and IPI from January to June 2012 amounted to P18,722,361.33 and P24,471,344.86, respectively, net of monthly debit and credit memos, to wit: VAT claimed Upon further verification, the Court finds that the total input VAT of P10,602,806.07 must be disallowed due to the following grounds: Jv- 37 Annex IC-8A, ICPA Report p. 583, Exhibit "P-32-C". 38 Annex IC-9, ICPA Report p. 652, "Exhibit P-32-C"; Exhibits "P-13A.2565" to "P-13A.2568", and "P-13A.2584" to "P-13A.2594". 39 Annex IC-8A, ICPA Report p. 599, Exhibit "P-32-C". 40 Annex IC-9, ICPA Report p. 653, Exhibit "P-32-C"; Exhibits "P-13A.2563" to "P-13A.2564" and "P-13A.2578" to "P-13A.2583". 41 Annex IC-86, ICPA Report p. 623, Exhibit "P-32-C". 42 Annex IC-9, ICPA Report p. 654, Exhibit "P-32-C"; Exhibits "P-13A.2569" to "P-13A.2577".

DECISION CTA CASE NO. 9086 Exhibit No.

DECISION 13A.79 139709 1/18/2012 3,060.00 CTA CASE NO. 9086 13A.80 139143 1/9/2012 4,991.79 Page 25 of 42 13A.81 139142 1/9/2012 12,045.00 13A.88 139221 1/10/2012 11,185.71 Asia Brewery Inc. 13A.89 139220 1/10/2012 32,170.50 Asia Brewery Inc. 13A.90 139191 1/10/2012 19,575.00 Asia Brewery Inc. 13A.96 139287 1/11/2012 3,664.29 Asia Brewery Inc. 13A.97 139286 1/11/2012 2,367.86 Asia Brewery Inc. 13A.101 139330 1/12/2012 2,728.29 Asia Brewery Inc. 13A.102 139329 1/12/2012 9,426.43 Asia Brewery Inc. 13A.103 139331 1/12/2012 3,780.00 Asia Brewery Inc. 13A.107 139356 1/13/2012 3,461.79 Asia Brewery Inc. 13A.108 139355 1/13/2012 22,660.50 Asia Brewery Inc. 13A.109 139354 1/13/2012 10,160.14 Asia Brewery Inc. 13A.114 139477 1/14/2012 14,496.43 Asia Brewery Inc. 13A.115 139476 1/14/2012 7,852.50 Asia Brewery Inc. 13A.116 139475 1/14/2012 22,237.50 Asia Brewery Inc. 13A.117 139420 1/14/2012 11,185.71 Asia Brewery Inc. 13A.118 139419 1/14/2012 19,207.50 Asia Brewery Inc. 13A.119 139481 1/14/2012 18,304.50 Asia Brewery Inc. 13A.126 139503 1/16/2012 11,195.36 Asia Brewery Inc. 13A.127 139502 1/16/2012 25,778.57 Asia Brewery Inc. 13A.128 139530 1/16/2012 Asia Brewery Inc. 13A.129 139529 1/16/2012 930.00 Asia Brewery Inc. 13A.130 139519 1/16/2012 17,056.50 Asia Brewery Inc. 13A.131 139520 1/16/2012 6,962.79 Asia Brewery Inc. 13A.132 139546 1/16/2012 Asia Brewery Inc. 13A.133 139545 1/16/2012 1,339.29 Asia Brewery Inc. 13A.141 139591 1/17/2012 960.00 Asia Brewery Inc. 13A.142 139590 1/17/2012 Asia Brewery Inc. 13A.143 139592 1/17/2012 11,797.50 Asia Brewery Inc. 13A.144 139577 1/17/2012 5,940.00 Asia Brewery Inc. 13A.145 139576 1/17/2012 Asia Brewery Inc. 13A.146 139575 1/17/2012 28,795.50 Asia Brewery Inc. 13A.149 139694 1/18/2012 5,029.29 Asia Brewery Inc. 13A.150 139695 1/18/2012 3,690.00 Asia Brewery Inc. 13A.151 139691 1/18/2012 3,976.50 Asia Brewery Inc. 13A.152 139692 1/18/2012 Asia Brewery Inc. 13A.155 139725 1/19/2012 13,671.64 Asia Brewery Inc. 13A.156 139724 1/19/2012 13,012.50 Asia Brewery Inc. 13A.157 139726 1/19/2012 16,778.57 Asia Brewery Inc. 13A.158 139774 1/19/2012 21,829.93 Asia Brewery Inc. 13A.159 139773 1/19/2012 18,064.50 Asia Brewery Inc. 13A.162 139834 1/20/2012 Asia Brewery Inc. 13A.167 139835 1/20/2012 9,225.00 Asia Brewery Inc. 13A.168 139874 1/21/2012 7,818.00 Asia Brewery Inc. 13A.169 139897 1/21/2012 3,150.00 Asia Brewery Inc. 13A.170 139896 1/21/2012 2,325.00 Asia Brewery Inc. 13A.171 139895 1/21/2012 20,055.00 Asia Brewery Inc. 13A.172 139894 1/21/2012 5,139.00 Asia Brewery Inc. 13A.173 139893 1/21/2012 27,964.29 Asia Brewery Inc. 13A.179 139929 1/23/2012 47,729.79 Asia Brewery Inc. 13A.180 139928 1/23/2012 5,340.00 Asia Brewery Inc. 13A.181 139927 1/23/2012 16,228.50 Asia Brewery Inc. 13A.182 139926 1/23/2012 1,920.00 Asia Brewery Inc. 13A.183 139925 1/23/2012 5,349.00 Asia Brewery Inc. 13,021.29 Asia Brewery Inc. 3,690.00 Asia Brewery Inc. 3,976.50 Asia Brewery Inc. 12,573.64 13,803.21 15,549.00

DECISION CfA CASE NO. 9086

DECISION CTA CASE NO. 9086 Sub-total (February 2012) , 2,126,280.00 Interbev Philippines Incorporated 136.201 75803 3/23/2012 p 47,614.29 3/19/2012 Interbev Philippines Incorporated 136.202 75523 3/15/2012 20,880.00 Interbev Philippines Incorporated 136.203 75326 5/5/2012 , 303.75 Sub-total (March 2012) 5/18/2012 68,798.04 Interbev Philippines Incorporated 5/2/2012 Interbev Philippines Incorporated 13A.2220 01411 5/2/2012 p 17,400.00 Interbev Philippines Incorporated 13A.2316 01458 5/2/2012 136.204 00032 5/1/2012 24,360.00 5/2/2012 17,400.00 6/4/2012 Interbev Philippines Incorporated 136.205 00036 6/4/2012 24,360.00 6/4/2012 Interbev Philippines Incorporated 136.206 00037 6/5/2012 24,360.00 6/5/2012 Interbev Philippines Incorporated 136.207 00039 17,400.00 1/2/2012 Interbev Philippines Incorporated 136.208 00048 1/3/2012 , 17,400.00 1/3/2012 142,680.00 Sub-total (May 2012) 1/3/2012 Interbev Philippines Incorporated 136.210 00804 1/3/2012 p 17,400.00 1/3/2012 Interbev Philippines Incorporated 136.211 00805 1/3/2012 24,360.00 1/3/2012 Interbev Philippines Incorporated 136.212 00807 1/3/2012 17,400.00 1/3/2012 Interbev Philippines Incorporated 136.213 00813 1/3/2012 24,360.00 Interbev Philippines Incorporated 136.214 00815 1/3/2012 1/3/2012 , 17,400.00 Sub-total (June 2012) 1/3/2012 100,920.00 1/3/2012 2. Supported by VAT invoices with incorrect TIN ofpetitioner. 1/3/2012 1/4/2012 Interbev Philippines Incorporated 13A.1518 71276 1/4/2012 p 20,880.00 1/4/2012 Interbev Philippines Incorporated 13A.1519 71373 1/4/2012 24,360.00 1/4/2012 Interbev Philippines Incorporated 13A.1520 71366 1/4/2012 24,300.00 1/4/2012 Interbev Philippines Incorporated 13A.1521 71358 1/4/2012 47,614.29 1/4/2012 Interbev Philippines Incorporated 13A.1522 71292 1/4/2012 24,360.00 1/4/2012 Interbev Philippines Incorporated 13A.1523 71304 1/4/2012 17,400.00 1/4/2012 Interbev Philippines Incorporated 13A.1524 71302 1/4/2012 17,400.00 1/4/2012 Interbev Philippines Incorporated 13A.1525 71378 1/4/2012 24,360.00 1/5/2012 Interbev Philippines Incorporated 13A.1526 71314 1/5/2012 17,400.00 1/5/2012 Interbev Philippines Incorporated 13A.1527 71289 1/5/2012 24,360.00 Interbev Philippines Incorporated 13A.1528 71353 17,400.00 Interbev Philippines Incorporated 13A.1529 71327 Interbev Philippines Incorporated 13A.1530 71345 17,400.00 Interbev Philippines Incorporated 13A.1531 71296 17,400.00 17,400.00 Interbev Philippines Incorporated 13A.1532 71331 17,400.00 Interbev Philippines Incorporated 13A.1533 71473 17,400.00 Interbev Philippines Incorporated 13A.1534 71425 Interbev Philippines Incorporated 13A.1535 71426 24,360.00 Interbev Philippines Incorporated 13A.1536 71407 Interbev Philippines Incorporated 13A.1537 71394 45,900.00 Interbev Philippines Incorporated 13A.1538 71438 Interbev Philippines Incorporated 13A.1539 71399 17,400.00 Interbev Philippines Incorporated 13A.1540 71444 17,400.00 26,550.00 17,400.00 17,400.00 Interbev Philippines Incorporated 13A.1541 71442 26,550.00 Interbev Philippines Incorporated 13A.1542 71435 17,400.00 Interbev Philippines Incorporated 13A.1543 71397 Interbev Philippines Incorporated 13A.1544 71449 29,065.71 Interbev Philippines Incorporated 13A.1545 71455 Interbev Philippines Incorporated 13A.1546 71429 20,880.00 Interbev Philippines Incorporated 13A.1547 71432 Interbev Philippines Incorporated 13A.1548 71445 17,400.00 Interbev Philippines Incorporated 13A.1549 71476 Interbev Philippines Incorporated 13A.1550 71478 17,400.00 Interbev Philippines Incorporated 13A.1551 71500 Interbev Philippines Incorporated 13A.1552 71514 17,400.00 Interbev Philippines Incorporated 13A.1553 71501 17,400.00 17,400.00 24,360.00 22,620.00 20,880.00 24,360.00

DECISION 13A.1554 71479 1/5/2012 24,360.00 CTA CASE NO. 9086 13A.1555 71502 1/5/2012 24,360.00 Page 28 of 42 13A.1556 71491 1/5/2012 24,360.00 13A.1557 71470 1/5/2012 17,400.00 Interbev Philippines Incorporated 13A.1558 71472 1/5/2012 17,400.00 Interbev Philippines Incorporated 13A.1559 71486 1/5/2012 17,400.00 Interbev Philippines Incorporated 13A.1560 71504 1/5/2012 17,400.00 Interbev Philippines Incorporated 13A.1561 71564 1/6/2012 20,880.00 Interbev Philippines Incorporated 13A.1562 71561 1/6/2012 24,360.00 Interbev Philippines Incorporated 13A.1563 71542 1/6/2012 17,400.00 Interbev Philippines Incorporated 13A.1564 71541 1/6/2012 17,400.00 Interbev Philippines Incorporated 13A.1565 71544 1/6/2012 17,400.00 Interbev Philippines Incorporated 13A.1566 71533 1/6/2012 17,400.00 Interbev Philippines Incorporated 13A.1567 71523 1/7/2012 24,360.00 Interbev Philippines Incorporated 13A.1568 71599 1/7/2012 17,400.00 Interbev Philippines Incorporated 13A.1569 71600 1/7/2012 17,400.00 Interbev Philippines Incorporated 13A.1570 71590 1/7/2012 17,400.00 Interbev Philippines Incorporated 13A.1571 71659 1/9/2012 22,620.00 Interbev Philippines Incorporated 13A.1572 71686 1/9/2012 22,620.00 Interbev Philippines Incorporated 13A.1573 71655 1/9/2012 17,400.00 Interbev Philippines Incorporated 13A.1574 71647 1/9/2012 17,400.00 Interbev Philippines Incorporated 13A.1575 71667 1/9/2012 17,400.00 Interbev Philippines Incorporated 13A.1576 71644 1/9/2012 17,400.00 Interbev Philippines Incorporated 13A.1577 71650 1/9/2012 17,400.00 Interbev Philippines Incorporated 13A.1578 71643 1/9/2012 35,700.00 Interbev Philippines Incorporated 13A.1579 71673 1/9/2012 22,620.00 Interbev Philippines Incorporated 13A.1580 71678 1/9/2012 6,960.00 Interbev Philippines Incorporated 13A.1581 71679 1/9/2012 25,328.57 Interbev Philippines Incorporated 13A.1582 71782 1/12/2010 22,620.00 Interbev Philippines Incorporated 13A.1583 71785 1/12/2010 24,360.00 Interbev Philippines Incorporated 13A.1584 71784 1/12/2010 22,620.00 Interbev Philippines Incorporated 13A.1585 71721 1/12/2010 17,400.00 Interbev Philippines Incorporated 13A.1586 71764 1/12/2010 32,040.00 Interbev Philippines Incorporated 13A.1587 71730 1/12/2010 26,550.00 Interbev Philippines Incorporated 13A.1588 71714 1/12/2010 17,400.00 Interbev Philippines Incorporated 13A.1589 71715 1/12/2010 35,700.00 Interbev Philippines Incorporated 13A.1590 71739 1/12/2010 17,400.00 Interbev Philippines Incorporated 13A.1591 71712 1/12/2010 21,302.14 Interbev Philippines Incorporated 13A.1592 71713 1/12/2010 Interbev Philippines Incorporated 13A.1593 71865 1/12/2011 490.18 Interbev Philippines Incorporated 13A.1594 71814 1/12/2011 20,880.00 Interbev Philippines Incorporated 13A.1595 71813 1/12/2011 17,400.00 Interbev Philippines Incorporated 13A.1596 71841 1/12/2011 17,400.00 Interbev Philippines Incorporated 13A.1597 71842 1/12/2011 12,180.00 Interbev Philippines Incorporated 13A.1598 71859 1/12/2011 5,220.00 Interbev Philippines Incorporated 13A.1599 71811 1/12/2011 47,271.43 Interbev Philippines Incorporated 13A.1600 71843 1/12/2011 47,957.14 Interbev Philippines Incorporated 13A.1601 71844 1/12/2011 3,480.00 Interbev Philippines Incorporated 13A.1602 71812 1/12/2011 27,780.00 Interbev Philippines Incorporated 13A.1603 71820 1/12/2011 17,400.00 Interbev Philippines Incorporated 13A.1604 71914 1/12/2012 17,400.00 Interbev Philippines Incorporated 13A.1605 71915 1/12/2012 10,440.00 Interbev Philippines Incorporated 13A.1606 71913 1/12/2012 6,960.00 Interbev Philippines Incorporated 13A.1607 71916 1/12/2012 17,400.00 Interbev Philippines Incorporated 13A.1608 71970 1/12/2012 17,400.00 Interbev Philippines Incorporated 13A.1609 71919 1/12/2012 19,882.50 Interbev Philippines Incorporated 45,900.00 Interbev Philippines Incorporated Interbev Philippines Incorporated Interbev Philippines Incorporated

DECISION 13A.1610 73010 1/12/2012 28,380.00 CTA CASE NO. 9086 13A.1611 71999 1/12/2013 13,050.00 Page 29 of 42 13A.1612 71998 1/12/2013 11,310.00 13A.1613 72014 1/12/2013 17,400.00 Interbev Philippines Incorporated 13A.1614 71996 1/12/2013 17,400.00 Interbev Philippines Incorporated 13A.1615 72020 1/12/2013 17,400.00 Interbev Philippines Incorporated 13A.1616 72005 1/12/2013 17,400.00 Interbev Philippines Incorporated 13A.1617 72055 1/12/2014 26,357.14 Interbev Philippines Incorporated 13A.1618 72074 1/12/2014 17,400.00 Interbev Philippines Incorporated 13A.1619 72075 1/12/2014 17,400.00 Interbev Philippines Incorporated 13A.1620 72086 1/12/2014 6,960.00 Interbev Philippines Incorporated 13A.1621 72087 1/12/2014 10,440.00 Interbev Philippines Incorporated 13A.1622 72090 1/12/2014 17,400.00 Interbev Philippines Incorporated 13A.1623 72199 1/12/2017 17,400.00 Interbev Philippines Incorporated 13A.1624 72224 1/12/2017 24,360.00 Interbev Philippines Incorporated 13A.1625 72215 1/12/2017 22,620.00 Interbev Philippines Incorporated 13A.1626 72178 1/12/2017 26,550.00 Interbev Philippines Incorporated 13A.1627 72195 1/12/2017 15,660.00 Interbev Philippines Incorporated 13A.1628 72196 1/12/2017 6,085.71 Interbev Philippines Incorporated 13A.1629 72201 1/12/2017 15,660.00 Interbev Philippines Incorporated 13A.1630 72213 1/12/2017 17,400.00 Interbev Philippines Incorporated 13A.1631 72251 1/12/2017 20,880.00 Interbev Philippines Incorporated 13A.1632 72216 1/12/2017 17,400.00 Interbev Philippines Incorporated 13A.1633 72202 1/12/2017 24,360.00 Interbev Philippines Incorporated 13A.1634 72241 1/12/2017 21,060.00 Interbev Philippines Incorporated 13A.1635 72238 1/12/2017 5,220.00 Interbev Philippines Incorporated 13A.1636 72239 1/12/2017 29,700.00 Interbev Philippines Incorporated 13A.1637 72324 1/12/2018 20,880.00 Interbev Philippines Incorporated 13A.1638 72274 1/12/2018 17,400.00 Interbev Philippines Incorporated 13A.1639 72272 1/12/2018 8,700.00 Interbev Philippines Incorporated 13A.1640 72273 1/12/2018 8,700.00 Interbev Philippines Incorporated 13A.1641 72286 1/12/2018 17,400.00 Interbev Philippines Incorporated 13A.1642 72285 1/12/2018 26,550.00 Interbev Philippines Incorporated 13A.1643 72275 1/12/2018 33,068.57 Interbev Philippines Incorporated 13A.1644 72269 1/12/2018 22,620.00 Interbev Philippines Incorporated 13A.1645 72270 1/12/2018 24,360.00 Interbev Philippines Incorporated 13A.1646 72288 1/12/2018 17,400.00 Interbev Philippines Incorporated 13A.1647 72334 1/12/2018 47,271.43 Interbev Philippines Incorporated 13A.1648 72423 1/12/2019 20,880.00 Interbev Philippines Incorporated 13A.1649 72411 1/12/2019 20,880.00 Interbev Philippines Incorporated 13A.1650 72374 1/12/2019 13,920.00 Interbev Philippines Incorporated 13A.1651 72375 1/12/2019 10,440.00 Interbev Philippines Incorporated 13A.1652 72369 1/12/2019 12,180.00 Interbev Philippines Incorporated 13A.1653 72370 1/12/2019 18,034.82 Interbev Philippines Incorporated 13A.1654 72490 1/12/2020 15,214.29 Interbev Philippines Incorporated 13A.1655 72497 1/12/2021 17,400.00 Interbev Philippines Incorporated 13A.1656 72500 1/12/2021 8,700.00 Interbev Philippines Incorporated 13A.1657 72501 1/12/2021 8,700.00 Interbev Philippines Incorporated 13A.1658 72512 1/12/2021 24,360.00 Interbev Philippines Incorporated 13A.1659 72505 1/12/2021 4,350.00 Interbev Philippines Incorporated 13A.1660 72506 1/12/2021 30,570.00 Interbev Philippines Incorporated 13A.1661 72508 1/12/2021 25,328.57 Interbev Philippines Incorporated 13A.1662 72503 1/12/2021 10,440.00 Interbev Philippines Incorporated 13A.1663 72504 1/12/2021 22,628.57 Interbev Philippines Incorporated 13A.1664 72573 1/12/2021 35,700.00 Interbev Philippines Incorporated 13A.1665 72564 1/12/2021 17,400.00 Interbev Philippines Incorporated Interbev Philippines Incorporated Interbev Philippines Incorporated Interbev Philippines Incorporated

DECISION 13A.1666 72559 1/12/2021 26,550.00 CTA CASE NO. 9086 13A.1667 72609 1/12/2023 24,300.00 Page 30 of 42 13A.1668 72649 1/12/2024 17,400.00 13A.1669 72679 1/12/2025 22,620.00 Interbev Philippines Incorporated 13A.1670 72677 1/12/2025 18,701.79 Interbev Philippines Incorporated 13A.1671 72678 1/12/2025 28,380.00 Interbev Philippines Incorporated 13A.1672 72717 1/12/2025 48,642.86 Interbev Philippines Incorporated 13A.1673 72695 1/12/2025 24,720.00 Interbev Philippines Incorporated 13A.1674 72718 1/12/2025 31,260.00 Interbev Philippines Incorporated 13A.1675 72787 1/12/2026 17,400.00 Interbev Philippines Incorporated 13A.1676 72786 1/12/2026 49,671.43 Interbev Philippines Incorporated 13A.1677 72769 1/12/2026 17,400.00 Interbev Philippines Incorporated 13A.1678 72805 1/12/2026 38,580.00 Interbev Philippines Incorporated 13A.1679 72831 1/12/2027 21,745.71 Interbev Philippines Incorporated 13A.1680 72952 1/12/2030 36,133.93 Interbev Philippines Incorporated 13A.1681 72953 1/12/2030 Interbev Philippines Incorporated 13A.1682 72944 1/12/2030 980.36 Interbev Philippines Incorporated 13A.1683 73020 1/12/2031 24,360.00 Interbev Philippines Incorporated 13A.1684 73023 1/12/2031 17,400.00 Interbev Philippines Incorporated 13A.1685 73015 1/12/2031 24,360.00 Interbev Philippines Incorporated 13A.1686 73019 1/12/2031 26,550.00 Interbev Philippines Incorporated Interbev Philippines Incorporated 13A.1687 73105 2/1/2012 , 24,985.71 Interbev Philippines Incorporated 13A.1688 74433 2/1/2012 3,519,792.85 Interbev Philippines Incorporated 13A.1689 74483 2/1/2012 16,980.00 Sub-total (January 2012) 13A.1690 74443 2/1/2012 17,400.00 Interbev Philippines Incorporated 13A.1691 73075 2/1/2012 19,572.86 Interbev Philippines Incorporated 13A.1692 73077 2/1/2012 20,880.00 Interbev Philippines Incorporated 13A.1693 74459 2/1/2012 22,620.00 Interbev Philippines Incorporated 13A.1694 74452 2/1/2012 24,360.00 Interbev Philippines Incorporated 13A.1695 74453 2/1/2012 26,550.00 Interbev Philippines Incorporated 13A.1696 73157 2/2/2012 46,585.71 Interbev Philippines Incorporated 13A.1697 73183 2/3/2012 56,700.00 Interbev Philippines Incorporated 13A.1698 73291 2/6/2012 36,608.57 Interbev Philippines Incorporated 13A.1699 73323 2/6/2012 17,400.00 Interbev Philippines Incorporated 13A.1700 73329 2/6/2012 9,128.57 Interbev Philippines Incorporated 13A.1701 73395 2/7/2012 26,983.93 Interbev Philippines Incorporated 13A.1702 73337 2/7/2012 47,614.29 Interbev Philippines Incorporated 13A.1703 73394 2/7/2012 17,400.00 Interbev Philippines Incorporated 13A.1704 73373 2/7/2012 20,880.00 Interbev Philippines Incorporated 13A.1705 73342 2/7/2012 23,232.86 Interbev Philippines Incorporated 13A.1706 73398 2/7/2012 26,014.29 Interbev Philippines Incorporated 13A.1707 73333 2/7/2012 35,700.00 Interbev Philippines Incorporated 13A.1708 73412 2/8/2012 38,580.00 Interbev Philippines Incorporated 13A.1709 73593 2/12/2011 47,614.29 Interbev Philippines Incorporated 13A.1710 73599 2/12/2011 26,550.00 Interbev Philippines Incorporated 13A.1711 73505 2/12/2011 6,960.00 Interbev Philippines Incorporated 13A.1712 73582 2/12/2011 26,550.00 Interbev Philippines Incorporated 13A.1713 73648 2/12/2013 45,900.00 Interbev Philippines Incorporated 13A.1714 73643 2/12/2013 56,700.00 Interbev Philippines Incorporated 13A.1715 73659 2/12/2013 26,550.00 Interbev Philippines Incorporated 13A.1716 73660 2/12/2013 35,700.00 Interbev Philippines Incorporated 13A.1717 73691 2/12/2014 3,480.00 Interbev Philippines Incorporated 13A.1718 73730 2/12/2014 36,128.57 Interbev Philippines Incorporated 13A.1719 73747 2/12/2015 35,400.00 Interbev Philippines Incorporated 13A.1720 73739 2/12/2015 21,600.00 Interbev Philippines Incorporated 1,301.79 Interbev Philippines Incorporated 21,745.71 Interbev Philippines Incorporated Interbev Philippines Incorporated

DECISION CTA CASE NO. 9086 Interbev Philippines Incorporated 13A.1721 73790 2/12/2015 25,671.43 Interbev Philippines Incorporated 13A.1722 73746 2/12/2015 26,014.29 73820 2/12/2016 Interbev Philippines Incorporated 13A.1723 73819 2/12/2016 433.93 73873 2/12/2017 6,739.29 Interbev Philippines Incorporated 13A.1724 73864 2/12/2017 24,300.00 73879 2/12/2017 26,091.43 Interbev Philippines Incorporated 13A.1725 74046 2/12/2021 39,608.57 74112 2/12/2022 25,328.57 Interbev Philippines Incorporated 13A.1726 74083 2/12/2022 2,603.57 74074 2/12/2022 35,605.71 Interbev Philippines Incorporated 13A.1727 74082 2/12/2022 35,700.00 74175 2/12/2023 46,585.71 Interbev Philippines Incorporated 13A.1728 74255 2/12/2024 25,328.57 Interbev Philippines Incorporated 13A.1729 74306 2/12/2027 36,634.29 74307 2/12/2027 6,960.00 Interbev Philippines Incorporated 13A.1730 74350 2/12/2028 26,700.00 74338 2/12/2028 16,530.00 Interbev Philippines Incorporated 13A.1731 74394 2/12/2028 17,400.00 74357 2/12/2028 18,701.79 Interbev Philippines Incorporated 13A.1732 74381 2/12/2028 19,572.86 74363 2/12/2028 24,360.00 Interbev Philippines Incorporated 13A.1733 74358 2/12/2028 24,360.00 Interbev Philippines Incorporated 13A.1734 41,417.14 74550 3/1/2012 p 1,496,018.59 Interbev Philippines Incorporated 13A.1735 74508 3/1/2012 20,880.00 Interbev Philippines Incorporated 13A.1736 74528 3/1/2012 20,880.00 74516 3/1/2012 19,569.64 Interbev Philippines Incorporated 13A.1737 74525 3/1/2012 24,360.00 74593 3/2/2012 17,400.00 Interbev Philippines Incorporated 13A.1738 74584 3/2/2012 6,960.00 Interbev Philippines Incorporated 13A.1739 74585 3/2/2012 17,400.00 74579 3/2/2012 17,400.00 Interbev Philippines Incorporated 13A.1740 74598 3/2/2012 17,400.00 74676 3/3/2012 17,400.00 Interbev Philippines Incorporated 13A.1741 74790 3/6/2012 25,328.57 Interbev Philippines Incorporated 13A.1742 74737 3/6/2012 24,720.00 Interbev Philippines Incorporated 13A.1743 74749 3/6/2012 35,700.00 74727 3/6/2012 48,300.00 Sub-total (February 2012) 13A.1744 74854 3/7/2012 46,585.71 Interbev Philippines Incorporated 74844 3/7/2012 6,960.00 74851 3/7/2012 26,550.00 Interbev Philippines Incorporated 13A.1745 74910 3/8/2012 26,014.29 74882 3/8/2012 46,928.57 Interbev Philippines Incorporated 13A.1746 74943 3/9/2012 24,720.00 Interbev Philippines Incorporated 13A.1747 74944 3/9/2012 19,294.29 74976 3/9/2012 33,068.57 Interbev Philippines Incorporated 13A.1748 74932 3/9/2012 24,360.00 Interbev Philippines Incorporated 13A.1756 74965 3/9/2012 43,020.00 Interbev Philippines Incorporated 13A.1757 12,171.43 Interbev Philippines Incorporated 13A.1758 p 623,371.07 Interbev Philippines Incorporated 13A.1759 p 8944380.55 Interbev Philippines Incorporated 13A.1760 p 10,602,806.07 Interbev Philippines Incorporated 13A.1764 Interbev Philippines Incorporated 13A.1774 Interbev Philippines Incorporated 13A.1775 Interbev Philippines Incorporated 13A.1776 Interbev Philippines Incorporated 13A.1777 Interbev Philippines Incorporated 13A.1795 Interbev Philippines Incorporated 13A.1796 Interbev Philippines Incorporated 13A.1797 Interbev Philippines Incorporated 13A.1806 Interbev Philippines Incorporated 13A.1807 Interbev Philippines Incorporated 13A.1813 Interbev Philippines Incorporated 13A.1814 Interbev Philippines Incorporated 13A.1815 Interbev Philippines Incorporated 13A.1816 Interbev Philippines Incorporated 13A.1817 Sub-total (March 2012) TOTAL DISALLOWANCES- INTERBEV PHILIPPINES INC. TOTAL DISALLOWANCES- ABI & IPI

DECISION CTA CASE NO. 9086 It was noted that the above amounts were based on the original invoice amounts, without adjustments for the debit/credit memos (DM/CM) issued by ABI and IPI, thus, the Court deemed it necessary to further adjust the above input VAT amounts applying the pertinent DM/CM issued by ABI and IPI. However, since the DM/CM were issued on a monthly basis without specifying the invoices unto which those specifically pertain to, the Court finds it reasonable to pro-rate the net DM/CM per month among the allowed and disallowed input VAT claims. Consequently, the Court finds that the input VAT amounts of P1,584,789.36 and P8,513,233.37 must be disallowed from the input VAT claimed on domestic purchases of goods from ABI and IPI, respectively, or in the aggregate amount of P10,098,022.73 from January to June 2012, to wit: Amount Total Influt Ratio DM/CM Pro-rated Total Disallowed VAT Claim [C={A/8)] {Q) Disallowances DM/CM (A} l!!l (96,298.83) Attributable to F=(A-E) Disallowed Input VAT [E=(CxD)] Asia Brewery p 9,900.00 p 1,671,165.11 0.59% p (570.48) p 9,329.52 (Beer) - January Asia Brewery 1,325,064.68 1,637,274.86 80.93% (81,863.74) (66,253.23) 1,258,811.45 (Bottled Water) - January 323,460.84 2,496,589.93 12.96% (52,581.03) (6,812.45) 316,648.39 Asia Brewery p 1,658,425.52 (_Bottled Water) - May_ p 4,386,312.8543 p 4,386,312.86 100.00% (219,315.64) p (73,636.16) p 1,584,789.36 Sub-total - ABI 3,622,298.57 100.00% (181,114.93) p (219,315.64) p 4,166,997.21 3,622,298.5944 5,200,393.40 13.31% (260,019.67) Interbev - January 692,169.11 45 4 315 254.16 3.31% (181,114.93) 3,441,183.66 142 680.00 3,596,920.39 2.81% 81 092.74 (34,608.46) 657,560.65 Interbev- February 100,920.00 43,147.09 2 681.26 145 361.26 1,210.59 102,130.59 Interbev - March p 8,944,380.55 Interbev - May 1'(431,147.18) p 8,513,233.37 Interbev - June p 10,602 806.07 P(504 783.34) PlO 098 022.73 Sub-total- IPI TOTAL B. Input VAT from Other Domestic Purchases of Goods and Services After examination of the documents submitted to support the input VAT claimed on domestic purchases of goods and services other than ABI and IPI, the Court finds that the amount of Jc- 43 p 866,520.00 + p 3,519,792.85 = p 4,386,312.85 44 p 2,126,280.00 + p 1,496,018.59 = p 3,622,298.59 45 p 68,798.04 + p 623,371.07 = p 692,169.11

DECISION CTA CASE NO. 9086 P4,163,498.10 must likewise be disallowed due to the following grounds: Exhibit No. Supplier Invoice/OR Date Disallowed No. Input Tax 1. Input VAT amount were not separately indicated in the supporting invoices/DRs and without petitioner's address and/or TIN 14A.3 D.U. Machine Shop 19223 1/4/2012 p 105.00 14A.4 New Filipino Trading 68435 2/1/2012 3.21 14A.5 Valete's Brake, Clutch Parts and Gen. Merchandise 20554 1/4/2012 56.78 14A.6 Lian Auto Supply various various 150.00 14A.11 WDM Truckparts Center 2349 1/9/2012 40.71 14A.12 Joint Trading 11366 1/18/2012 21.43 14A.13 Lian Auto Supply 125283 1/18/2012 16.07 14A.15 Lian Auto Supply 125690 1/29/2012 46.61 14A. 21 D.U. Machine Shop 19381 1/23/2012 5.36 14A. 22 Jojin Trading 11390 1/23/2012 4.29 14A.24 Lian Auto Supply various various 68.04 14A.31 Valete's Brake, Clutch Parts and Gen. Merchandise various 1/23/2012 46.61 14A.38 Lian Auto Supply various various 209.46 14A.45 Toni's Petron Service Station 10973 2/4/2012 34.29 14A.49 EMC Hardware 39377 2/16/2012 314.89 14A.58 WDM Truckparts Center 2425 2/21/2012 26.25 14A.59 Ageo Auto Parts 9918 2/28/2012 32.14 14A.61 WDM Truckparts Center 25287 2/27/2012 40.71 14A.63 New JOM Auto Parts & Gen. Mdse. 7248 2/10/2012 211.07 14A.65 Toni's Petron Service Station 204176 2/10/2012 62.68 14A.69 Lian Auto Supply various various 109.60 14A.71 Valete's Brake, Clutch Parts and Gen. Merchandise various various 30.54 14A.76 Lian Auto Supply various 3/11/2012 120.53 14A.80 JBCC Auto Supply and General Merchandise 32519 3/20/2012 10.71 14A.82 Lian Auto Supply various various 396.43 14A.83 ME Shopping Center 446 3/21/2012 18.21 14A.88 Valete's Brake, Clutch Parts and Gen. Merchandise 22407 3/19/2012 85.71 14B.1 North-West Enterprises 0103 2/4/2012 12,174.11 14B.4 CMT Hauling Services 0619 1/16/2012 2,272.71 14B.5 E.M. Mendoza Trucking 292 1/20/2012 19,587.24 14B.7 J.P. Opef\a Trucking, Inc. 4956 1/21/2012 6,154.71 14B.8 J.P. Opefia Trucking, Inc. 4955 1/21/2012 4,245.57 14B.10 E.C. Creencia Trading 1468 1/18/2012 2,031.32 14B.12 Renz Trucking 516 1/24/2012 54,097.22 14B.14 G. Malijan trucking 2179 1/24/2012 5,665.71 14B.15 J.P. Opef\a Trucking, Inc. 4957 1/21/2012 5,752.50 14B.16 Hizon Transport Services and Trading Inc. 4644 2/6/2012 83,038.88 14B.17 3 Kids Enterprises 289 1/31/2012 21,739.50 14B.21 C. Gubatan Enterprises 782 2/2/2012 11,292.39 14B.22 C. Gubatan Enterprises 778 1/24/2012 2,973.32 14B.23 D' Bar Logistics 157 2/6/2012 2,166.11 14B.24 E. P. Bautista Trucking Services 172 2/6/2012 7,244.07 14B.25 E. P. Bautista Trucking Services 170 1/30/2012 15,345.43 14B.27 G. Malijan trucking 2185 2/6/2012 2,166.11 14B.28 J.P. Opef\a Trucking, Inc. 4971 2/18/2012 2,166.11 14B.29 Hizon Transport Services and Trading Inc. 4645 2/6/2012 70,988.04 14B.30 Good Deal Hauling Services 1932 2/6/2012 2,430.43 14B.31 AGN Trucking & Trading 3682 3/1/2012 3,813.43 14B.32 Robien Trucking 99 2/11/2012 9,425.14 14B.33 MRTC Trucking Services Corp. 650 2/6/2012 2,973.32 14B.34 Jelly's Trucking Services 440 2/6/2012 2,272.71 14B.35 New Jamaica Security Agency various 7/15/2011 5,041.07 14B.36 Robien Trucking 120 2/23/2012 13,513.49 14B.37 D' Bar Logistics 164 2/20/2012 2,548.39

DECISION CTA CASE NO. 9086 14B.38 E. M. Mendoza Trucking 307 2/20/2012 28,927.61 14B.39 3 Kids Enterprises 296 2/20/2017 22,362.86 14B.40 JZ Valencia Enterprises 607 3/3/2012 13,474.18 14B.41 Leavil Trucking Services 135 2/20/2012 14B.42 E. P. Bautista Trucking Services 177 2/13/2012 6,962.46 14B.44 Good Deal Hauling Services 1942 2/20/2012 2,079.46 14B.45 Good Deal Hauling Services 1860 3/19/2012 12,449.18 14B.46 Renz Trucking 546 3/5/2012 7,312.86 14B.47 Jelly's Trucking Services 447 2/17/2012 36,523.29 14B.48 Jelly's Trucking Services 445 2/17/2012 2,166.11 14B.49 North-West Enterprises 112 3/3/2012 2,166.11 14B.50 Lee & Sons Printing Corp. 8551 3/5/2012 13,230.75 14B.51 Verson Trucking Services 944 2/27/2012 14B.52 J.P. Opef\a Trucking, Inc. 4979 3/12/2012 921.03 14B.53 Joanne & Janine Enterprises 2861 3/13/2012 3,356.25 14B.54 C. Gubatan Enterprises 787 2/23/2012 9,183.38 14B.55 Our Beverly Village Trucking Corp. 1664 2/20/2012 19,240.37 14B.56 Degits Trucking Services 66 2/25/2016 12,042.46 14B.57 Robien Trucking 119 2/28/2012 5,191.18 14B.58 ContGeo Cargo Solutions 393 2/27/2012 7,459.29 14B.59 MRTC Trucking Services Corp. 663 2/27/2012 3,356.25 14B.60 D' Bar Logistics 168 3/3/2012 3,356.25 14B.61 D' Bar Logistics 172 7,004.10 14B.62 Good Deal Hauling Services 1855 3/5/2012 2,548.39 14B.63 Hizon Transport Services and Trading Inc. 5062 3/6/2012 10,807.50 14B.64 Verson Trucking Services 942 2/27/2012 2,272.71 14B.65 Hizon Transport Services and Trading Inc. 5064 3/12/2012 63,943.82 14B.66 J.P. Opef\a Trucking, Inc. 4985 3/12/2012 2,548.39 14B.67 E. P. Bautista Trucking Services 185 3/5/2012 65,021.36 148.68 JZ Valencia Enterprises 608 3/3/2012 6,406.82 14B.69 North-West Enterprises 107 3/3/2012 9,110.68 14B.70 JZ Valencia Enterprises 613 3/16/2012 14,508.16 14B.71 Rapid Movers & Forwarders Co., Inc. 5752 3/3/2012 7,133.57 14B.72 Rapid Movers & Forwarders Co., Inc. 5758 3/3/2012 11,389.61 14B.73 Rapid Movers & Forwarders Co., Inc. 5765 3/3/2012 11,552.79 14B.74 Rapid Movers & Forwarders Co., Inc. 5754 3/3/2012 5,551.29 14B.75 Rapid Movers & Forwarders Co., Inc. 5756 3/3/2012 11,754.00 14B.76 Rapid Movers & Forwarders Co., Inc. 5757 3/3/2012 19,673.23 14B.77 Rapid Movers & Forwarders Co., Inc. 5755 3/3/2012 20,360.27 14B.78 Rapid Movers & Forwarders Co., Inc. 5753 3/3/2012 11,423.29 14B.80 LFH Venture Merchandising Corp. 66 2/3/2012 9,853.63 14B.81 C. Gubatan Enterprises 795 5/3/2012 18,073.14 14B.82 Our Beverly Village Trucking Corp. 1667 2/27/2012 43,428.75 14B.83 Joanne & Janine Enterprises 2862 3/13/2012 7,176.25 14B.84 Renz Trucking 552 12/3/2012 3,356.25 14B.85 E. M. Mendoza Trucking 314 5/3/2012 13,166.89 14B.86 3 Kids Enterprises 301 5/3/2012 39,398.84 14B.87 E. C. Creencia Trading 1487 5/3/2012 24,679.71 14B.88 CMT Hauling Services 628 2/27/2012 23,316.43 14B.90 San Joseph Sea Oil Gasoline Station 490 3/2/2012 2,272.71 14B.91 Golden Eye Trucking 579 3/26/2012 2,272.71 14B.92 MRTC Trucking Services Corp. 673 3/12/2012 3,099.11 14B.93 MRTC Trucking Services Corp. 672 3/12/2012 2,973.32 14B.94 ContGeo Cargo Solutions 459 3/12/2019 15,031.88 14B.95 3 Kids Enterprises 311 3/12/2019 4,307.89 14B.96 E. M. Mendoza Trucking 319 3/14/2012 2,272.71 14B.97 Mary Rose Cargo Movers, Inc. 364 3/12/2012 7,569.86 14B.98 Wide Area Network Transport Services 924 3/19/2012 5,351.51 14B.99 E. P. Bautista Trucking Services 192 3/19/2012 9,897.82 14B.101 E. C. Creencia Trading 1493 3/14/20112 4,821.11 14B.103 Rapid Movers & Forwarders Co., Inc. 5812 3/30/2012 2,430.43 14B.104 Rapid Movers & Forwarders Co., Inc. 5808 3/30/2012 5,293.82 14B.105 Rapid Movers & Forwarders Co., Inc. 5811 3/30/2012 11,961.99 6,920.57 18,821.68

DECISION CTA CASE NO. 9086 14B.106 J.P. Opefia Trucking, Inc. 4991 3/30/2012 2,111.95 14B.107 Verson Trucking Services 1769 3/19/2012 3,356.25 14B.108 Hizon Transport Services and Trading Inc. 5066 3/19/2012 70,543.03 14B.109 G. Malijan trucking 2193 3/12/2012 16,541.20 14B.110 G. Malijan trucking 2194 3/12/2012 5,644.80 14B.111 Joanne & Janine Enterprises 2860 3/13/2012 14,106.00 14B.113 Our Beverly Village Trucking Corp. 1677 3/19/2012 2,272.71 14B.114 Rapid Movers & Forwarders Co., Inc. 5810 3/30/2012 6,441.96 14B.115 Rapid Movers & Forwarders Co., Inc. 5814 3/30/2012 6,202.71 14B.116 Lee & Sons Printing Corp. 8567 3/21/2012 6,160.71 14B.117 Renz Trucking 565 4/2/2012 93,082.82 14B.118 G. Malijan trucking 2201 3/19/2012 2,737.61 14B.120 Hizon Transport Services and Trading Inc. 5089 4/16/2012 44,395.85 14B.121 Jelly's Trucking Services 461 3/28/2012 2,079.46 14B.122 AGN Trucking & Trading 3699 3/27/2012 2,928.11 14B.123 Robien Trucking 131 3/31/2012 2,398.18 14B.124 Wide Area Network Transport Services 937 3/28/2012 2,548.39 14B.125 D' Bar Logistics 259 3/26/2012 2,272.71 14B.126 AGN Trucking & Trading 3698 3/27/2012 2,548.39 14B.127 Rapid Movers & Forwarders Co., Inc. 5809 3/30/2012 8,662.48 14B.128 Rapid Movers & Forwarders Co., Inc. 5813 3/30/2012 18,723.13 14B.129 Mary Rose Cargo Movers, Inc. 371 3/26/2012 19,046.04 14B.130 Joanne & Janine Enterprises 914 3/30/2012 10,193.57 14B.131 C. Gubatan Enterprises 611 3/23/2012 2,548.39 14B.132 E. C. Creencia Trading 1505 4/2/2012 7,281.99 14B.134 E. M. Mendoza Trucking 329 3/29/2012 9,373.46 14B.135 MRTC Trucking Services Corp. 682 3/26/2012 2,398.18 14B.136 JZ Valencia Enterprises 622 4/2/2012 50,155.71 14B.137 3 Kids Enterprises 320 4/3/2012 4,978.82 14B.138 Renz Trucking 566 4/2/2012 59,980.78 14B.141 San Joseph Sea Oil Gasoline Station 495 4/3/2012 2,577.43 14B.142 North-West Enterprises 117 4/21/2012 2,272.71 14B.143 JZ Valencia Enterprises 618 4/2/2012 41,178.02 14B.144 C. Gubatan Enterprises 623 4/10/2012 9,606.92 14B.145 Riddle Trucking Service 282 4/11/2012 4,891.86 14B.147 Joanne & Janine Enterprises 920 4/24/2012 11,586.40 14B.148 Verson Trucking Services 582 4/23/2012 5,526.11 14B.149 Rapid Movers & Forwarders Co., Inc. 5851 4/20/2012 11,093.45 14B.150 Rapid Movers & Forwarders Co., Inc. 5845 4/20/2012 10,915.40 14B.151 D' Bar Logistics 266 5/12/2015 3,567.75 14B.152 AGN Trucking & Trading 107 4/23/2012 2,548.39 14B.153 ContGeo Cargo Solutions 470 4/17/2012 2,548.39 14B.154 MRTC Trucking Services Corp. 695 9,120.47 14B.155 Mary Rose Cargo Movers, Inc. 155 4/21/2012 9,436.25 14B.156 E. M. Mendoza Trucking 335 4/23/2012 18,547.26 14B.157 3 Kids Enterprises 328 4/23/2012 5,628.96 14B.158 Robien Trucking 140 4/25/2012 6,558.95 14B.159 E. C. Creencia Trading 1507 4/24/2012 5,387.57 14B.160 Hizon Transport Services and Trading Inc. 5106 4/30/2012 64,554.17 14B.161 E. P. Bautista Trucking Services 203 4/21/2012 5,139.43 14B.162 Renz Trucking 596 4/30/2012 53,704.60 14B.164 Golden Eye Trucking 595 4/23/2012 5,139.43 14B.165 AGN Trucking & Trading 104 4/23/2012 7,645.18 14B.166 Robien Trucking 145 5/19/2012 4,618.51 14B.167 VJ TEC Trucking Services 385 5/2/2012 1,906.09 14B.168 J.P. Opefia Trucking, Inc. 99 4/23/2012 4,879.41 14B.169 Verson Trucking Services 586 4/23/2012 5,904.64 14B.170 Hizon Transport Services and Trading Inc. 5103 4/30/2012 69,231.34 14B.171 North-West Enterprises 124 5/19/2012 4,434.08 14B.172 JZ Valencia Enterprises 630 5/5/2012 67,481.94 14B.173 Jelly's Trucking Services 474 4/26/2012 4,332.21 14B.175 Riddle Trucking Service 293 5/2/2012 5,786.68 14B.176 C. Gubatan Enterprises 632 4/26/2012 7,645.18

DECISION CTA CASE NO. 9086 14B.177 Joanne & Janine Enterprises 931 4/30/2012 1,612.18 14B.178 Mary Rose Cargo Movers, Inc. 383 4/28/2012 21,680.57 14B.179 E. M. Mendoza Trucking 343 4/30/2012 14B.180 3 Kids Enterprises 6335 5/2/2012 2,170.41 14B.181 E. C. Creencia Trading 1512 5/3/2012 16,909.00 14B.182 Renz Trucking 594 4/30/2012 4,504.33 14B.183 LFH Venture Merchandising Corp. 90 5/12/2024 81,121.14 14B.184 North-West Enterprises 128 5/19/2012 43,725.14 14B.185 MRTC Trucking Services Corp. 706 5/14/2012 14B.186 Hizon Transport Services and Trading Inc. 5110 5/7/2012 7,147.93 14B.188 E. P. Bautista Trucking Services 213 5/5/2012 6,757.33 14B.189 LFH Venture Merchandising Corp. 89 5/14/2012 43,650.21 14B.190 Joanne & Janine Enterprises 940 5/7/2012 11,680.70 14B.191 Joanne & Janine Enterprises 937 S/7/2012 36,188.38 14B.192 C. Gubatan Enterprises 635 5/8/2012 10,075.61 14B.193 Riddle Trucking Service 354 5/7/2012 22,527.73 14B.194 Our Beverly Village Trucking Corp. 1696 5/7/2012 5,096.79 14B.196 JRS Express various 2,548.39 14B.198 JRS Express various 5-01-12 2,166.11 14B.199 JRS Express various various 14B.201 Wide Area Network Transport Services 985 various 21.43 14B.202 Wide Area Network Transport Services 978 5/21/2012 45.01 14B.203 Robien Trucking 147 5/21/2012 31.07 14B.204 MRTC Trucking Services Corp. 707 5/19/2012 8,617.95 14B.205 Mary Rose Cargo Movers, Inc. 387 5/21/2012 17,497.70 14B.206 E. M. Mendoza Trucking 350 5/9/2012 1,937.57 14B.207 3 Kids Enterprises 343 5/21/2012 6,241.61 14B.208 E. C. Creencia Trading 1521 5/21/2012 5,387.57 14B.209 Renz Trucking 606 5/21/2012 9,400.82 14B.210 Z. S. M. Trucking Services 461 5/21/2012 19,552.85 14B.211 Rapid Movers & Forwarders Co., Inc. 5873 5/21/2012 2,943.59 14B.212 Rapid Movers & Forwarders Co., Inc. 5874 5/25/2012 52,810.32 14B.213 Rapid Movers & Forwarders Co., Inc. 5875 5/25/2012 4,468.36 14B.214 Rapid Movers & Forwarders Co., Inc. 5872 5/25/2012 9,217.61 14B.215 Wide Area Network Transport Services 986 5/25/2012 2,609.10 14B.217 Joanne & Janine Enterprises 955 5/21/2012 2,369.68 14B.218 Mary Rose Cargo Movers, Inc. 297 5/22/2012 2,775.64 14B.219 MRTC Trucking Services Corp. 720 2,548.39 14B.220 3 Kids Enterprises 347 5/28/2012 32,219.19 14B.221 E. M. Mendoza Trucking 354 5/31/2012 5,521.71 14B.223 Z. S. M. Trucking Services 408 5/21/2012 1,937.57 14B.224 CMT Hauling Services 654 5/28/2012 14,344.20 14B.225 E. P. Bautista Trucking Services 219 5/28/2012 13,165.93 14B.226 J.P. Opefia Trucking, Inc. 15 5/21/2012 2,973.32 14B.227 Verson Trucking Services 1924 5/21/2012 3,356.25 14B.228 Hizon Transport Services and Trading Inc. 5119 6/9/2012 8,313.96 14B.229 Dennis Trucking Services 6350 5/21/2012 5,522.36 14B.230 Renz Trucking 621 5/19/2012 4,082.04 14B.231 Mary Rose Cargo Movers, Inc. 567 6/11/2012 65,172.96 14B.232 Renz Trucking 623 6/2/2012 2,012.70 14B.234 North-West Enterprises 132 6/11/2012 61,392.77 14B.235 San Joseph Sea Oil Gasoline Station 553 6/16/2012 2,548.39 14B.236 E. P. Bautista Trucking Services 227 6/2/2012 45,118.69 14B.237 C. Gubatan Enterprises 646 6/6/2012 10,288.11 14B.238 C. Gubatan Enterprises 644 6/18/2012 2,726.68 14B.239 Our Beverly Village Trucking Corp. 1710 6/1/2012 4,796.36 14B.243 Robien Trucking 207 6/4/2012 2,091.29 14B.244 415 6/20/2012 10,870.34 14B.246 z. S. M. Trucking Services 22 6/11/2012 3,356.25 14B.248 5925 6/13/2012 2,031.32 14B.249 J.P. Opefia Trucking, Inc. 5926 6/22/2012 2,138.49 14B.250 Rapid Movers & Forwarders Co., Inc. 5922 6/22/2012 4,278.06 14B.251 Rapid Movers & Forwarders Co., Inc. 5921 8,317.80 Rapid Movers & Forwarders Co., Inc. 3,527.68 Rapid Movers & Forwarders Co., Inc. 5,497.18 13,261.46

DECISION CTA CASE NO. 9086 14B.252 Rapid Movers & Forwarders Co., Inc. 5949 6/29/2012 14,761.92 14B.254 MRTC Trucking Services Corp. 725 6/11/2012 1,937.57 14B.255 Rapid Movers & Forwarders Co., Inc. 5950 6/2/2012 14B.256 3 Kids Enterprises 363 6/18/2012 19,637.96 14B.257 ContGeo Cargo Solutions 500 6/22/2012 9,586.36 14B.258 MRTC Trucking Services Corp. 739 6/23/2012 2,430.43 14B.261 Joanne & Janine Enterprises 978 6/25/2012 10,267.76 14B.264 J.P. Opeiia Trucking, Inc. 0029 6/30/2012 17,074.21 14B.266 Rapid Movers & Forwarders Co., Inc. 5948 6/29/2012 2,166.11 14B.267 E. P. Bautista Trucking Services 232 6/30/2012 16,952.34 14B.270 E. P. Bautista Trucking Services 236 6/30/2012 5,004.64 14B.274 JRS Express various 3,096.24 14B.276 Manna & Genesis Food house 5246 various 14B.277 North-West Enterprises various 2/9/2012 45.01 14B.278 Rosvilla Trading 276322 2/15/2012 96.05 14B.280 JRS Express various 2/6/2012 1,660.72 14B.284 JRS Express various various 96.96 14B.285 Northern Star Investigation and Security Agency various 2/20/2012 23.58 14B.288 Green R Hotel 25427 2/29/2012 21.43 14B.290 JRS Express 43343 2/24/2012 1,660.72 14B.294 Magic Mart Co. 865 2/28/2012 80.36 14B.295 JRS Express 45197 3/10/2012 11.79 14B.296 Green R Hotel 25721 3/30/2012 71.79 14B.297 Northern Star Investigation and Security Agency various 3/9/2012 11.79 sub-total 3/15/2012 64.29 1,660.72 P3,032,339.28 2. Input VAT amount were not separately indicated in the supporting invoices/DRs; without petitioner's address and/or TIN anddated outside the periodofclaim 14B.13 Wide Area Network Transport Services 1030 1/21/2011 p 5,094.21 12/15/2011 14B.26 3 Kids Enterprises 267 10/16/2011 15,266.54 12/27/2012 14B.200 New Jamaica Security Agency 7811 7/2/2012 5,041.07 7/6/2012 14B.242 Vigan Printing Press 5192 7/2/2012 112.50 7/2/2012 14B.247 Hizon Transport Services and Trading Inc. 5131 7/3/2012 70,397.12 7/6/2012 14B.253 Rapid Movers & Forwarders Co., Inc. 5958 7/9/2012 4,996.16 7/2/2012 14B.263 C. Gubatan Enterprises 853 7/2/2012 11,926.48 4/13/2013 14B.265 Hizon Transport Services and Trading Inc. 5133 7/3/2012 59,731.05 7/7/2012 14B.268 E. M. Mendoza Trucking 371 5,521.71 1/7/2012 14B.269 D' Bar Logistics 276 1/10/2012 2,166.11 1/12/2012 14B.271 C. Gubatan Enterprises 858 1/14/2012 5,096.79 1/11/2012 14B.272 Renz Trucking 639 1/21/2012 8,547.32 1/26/2012 14B.273 Renz Trucking 636 1/31/2012 10,468.29 14B.119 Begits Trucking Services 67 1/30/2012 4,946.57 14B.259 Marissa's Trucking & Hauling Services 363 1/24/2012 102,014.77 1/26/2012 14B.260 Allroad Trucking 0009 1/25/2012 2,430.43 1/20/2012 p 313,757.12 sub-total 1/23/2012 2/3/2012 3. Supporting VAT invoices/DRs do not indicate petitioner's TIN and/or address various 14A.2 Choy's Householdwares 1081 2/8/2012 p 81.00 14A.7 New Pacific Auto Supply 194180 66.96 14A.8 Nina Marc General Merchandising 110438 19.29 14A.9 Sky I Auto Parts Center 70424 26.79 14A.10 The New Laoag Auto Supply 100103 12.86 14A.14 New Jom Auto Parts 110129 19.29 14A.16 Nina Marc General Merchandising 111486 40.71 14A.20 A.B. Casiano Gravel & Sand various 139.28 14A.23 Lernel Auto Supply, Furniture & General 11210 15.00 Merchandising 14A.25 New Jom Auto Parts & General Merchandise 35432 37.50 10.71 14A.26 New Lorna's Trading 54509 35.36 4.29 14A.27 New Pacific Auto Supply 194647 26.79 127.50 14A.28 R. Fragante Hardware 57321 32.14 38.04 14A.29 Sky-1 Auto Parts Center 70483 14A.32 A.B. Casiano Gravel & Sand various 14A.33 Farmland Hardware & Gen. Merchandise various 14A.34 Jojin Trading 11476

DECISION CTA CASE NO. 9086 14A.35 Laoag Centerpoint General Merchandise 6258 2/7/2012 10.71 14A.36 Laoag Kambal Corporation 47750 2/6/2012 21.43 14A.37 Laoag Pacific Hardware various various 126.42 14A.39 New JOM Auto Parts & Gen. Mdse. various various 352.39 14A.40 New Pacific Auto Supply various various 46.08 14A.41 Petron Bantay Service Station 169087 2/8/2012 24.66 14A.42 Silicon Valley 21527 2/6/2012 160.71 14A.43 Solid North Marketing Corp. 8754 2/5/2012 14A.44 The New Laoag Auto Supply 99655 2/7/2012 7.50 14A.47 A.B. Casiano Gravel & Sand 6497 2/17/2012 224.46 14A.48 D. U. Machine Shop 19528 2/8/2012 14A.50 Farmland Hardware & Gen. Merchandise 14981 2/16/2012 9.11 14A.51 Jojin Trading 11503 2/13/2012 482.14 14A.52 Nina Marc Gen. Mdse 112862 2/8/2012 14A.53 Stargate Caltex Service Station 358072 2/12/2012 2.14 14A.55 New Jom Auto Parts & General Merchandise various various 16.61 14A.57 The New Laoag Auto Supply 101179 2/21/2012 107.14 14A.60 New Jom Auto Parts & General Merchandise 111905 2/26/2012 5.36 14A.66 Ettah Lihl Enterprises 44228 3/1/2012 50.90 14A.67 1297 Motor Parts & General Services 345 3/9/2012 186.43 14A.68 Jojin Trading 11701 3/25/2012 26.79 14A.70 Nina Marc General Merchandising 114070 3/12/2012 33.21 14A.73 Farmland Hardware & Gen. Merchandise various various 6.43 14A.74 Laoag Far Eastern Lumber & Hardware 515 3/17/2012 10.18 14A.75 Laoag Kambal Corporation 75717 3/16/2012 53.57 14A.77 New Jom Auto Parts & General Merchandise various various 32.46 14A.78 Nina Marc General Merchandising 114210 3/12/2012 75.54 14A.79 Farmland Hardware & Gen. Merchandise various various 174.43 14A.81 Jojin Trading various various 83.57 14A.84.1 New Jom Auto Parts & General Merchandise 37262 3/22/2012 4.29 14A.84.2 The New Laoag Auto Supply 393707 3/20/2012 73.66 14A.85 New Pacific Auto Supply 196350 3/18/2012 72.42 14A.86 Nina Marc General Merchandising 114677 3/21/2012 3.21 14A.87 The New Laoag Auto Supply 14951 3/19/2012 10.71 14A.89 Vigan Goldlabel Gen. Merchandise 96936 3/24/2012 19.82 148.2 Marissa's Trucking & Hauling Services 0291 1/24/2012 32.14 148.3 Marissa's Trucking & Hauling Services 0293 1/24/2012 43.93 148.6 Good Deal Hauling Services - Branch I 1309 1/16/2012 16.07 148.11 Rapid Movers & Forwarders Co., Inc. 5680 2/10/2012 22,725.19 148.19 LFH Venture Merchandising Corp. 192 2/13/2012 12,666.00 148.20 LFH Venture Merchandising Corp. 192 2/13/2012 3,615.70 148.43 Marissa's Trucking & Hauling Services 307 2/23/2012 7,356.35 148.79 Marissa's Trucking & Hauling Services 314 5/3/2012 49,937.25 148.100 Marissa's Trucking & Hauling Services 326 3/19/2012 36,772.93 148.102 Marissa's Trucking & Hauling Services 316 3/19/2012 28,560.29 148.133 Marissa's Trucking & Hauling Services 332 4/2/2012 54,291.30 148.140 Marissa's Trucking & Hauling Services 330 4/2/2012 15,754.96 148.174 Marissa's Trucking & Hauling Services 341 4/30/2012 38,872.72 148.187 Marissa's Trucking & Hauling Services 344 5/12/2012 30,479.36 148.222 Marissa's Trucking & Hauling Services 351 5/22/2012 47,721.05 148.233 Marissa's Trucking & Hauling Services 356 6/4/2012 53,788.03 148.195 Farmside Hotel various various 39,066.01 148.197 Farmside Hotel various various 27,324.29 148.240 Farmside Hotel various various 61,715.36 148.241 Laoag Renzo Hotel various various 163.93 148.275 Laoag Renzo Hotel various various 163.93 148.281 Universal Storefront Services Corp. various 2/16/2012 573.74 148.282 Vigan Printing Press 5273 2/14/2012 648.21 148.287 CF Real Estate Lessor 1789 2/3/2012 346.08 148.289 Ilocos Sur Electric Cooperative, Inc. various 8.76 148.291 Laoag Renzo Hotel various various 85.71 148.292 Kingscourt Hotel 9990 2/12/2015 8,400.00 148.293 Tracy-Macy's Diner 34922 2/20/2012 1,219.21 1,039.02 75.00 22.29

DECISION CfA CASE NO. 9086 146.298 I Universal Storefront Services Corp. I various I various I 5.40 sub-total p 546,738.20 4. Purchases ofSe!Vices supported by documents other than VAT OR, dated outside the period ofclaim and the amount ofinput VAT was not separately indicated therein 146.9 Robien Trucking 115 12/18/2011 p 7,537.61 146.18 Allroad Trucking 0006 12/30/2011 146.89 San Joseph Seaoil Gasoline Station 17284 4,303.93 sub-total 15-02-12 2,876.14 p 14,717.68 S. Purchases ofSe!Vices supported by documents other than VAT OR and the amount ofinput VAT was not separately indicated therein 146.112 Grandios Enterprise 259 1/31/2012 p 24,379.53 5,143.82 146.139 Leavil Trucking Services 2157 4/2/2012 17,507.46 146.146 Grandios Enterprise 280 2/23/2012 2,166.11 146.163 CMT Hauling Services 659 2/29/2012 17,087.77 146.216 Grandios Enterprise 307 3/30/2012 , 13,506.48 79.791.17 146.262 Grandios Enterprise 326 4/30/2012 p 20,450.91 sub-total 2,065.71 680.22 6. Supported by documents issued not in the name ofpetitioner p 23L196.84 146.245 3 Kids Enterprises 358 6/18/2012 146.279 D. U. Machine Shop 19528 2/8/2012 146.283 !locos Norte Electric Cooperative Inc. 78067 2/28/2012 sub-total 7. Purchase ofgoods supported by invoices dated outside the period ofclaim 14A.1 Nina Marc General Merchandising 103569 103671 10/5/2011 p 514.29 10L�j2011 sub-total p 514.29 8. Purchases ofgoods supported by VAT invoices which indicate wrong address ofpetitioner 14A.17 Pilipinas Shell Corp various 2/29/2012 p 13,424.11 60,074.20 14A.18 Pilipinas Shell Corp various 3/31/2012 12,251.08 54,477.48 14A.19 Pilipinas Shell Corp various 3/31/2012 p 140.226.87 14A.56 Petron Fleet Card various 1/28/2012 sub-total 9. Purchase ofgoods supported by tape receipts 14A.30 St. Joseph Drugstore 1/27/2012 p 156.64 sub-total p 156.64 10. Purchases ofgoods supported by VAT ORs imprinted with the phrase "Not valid as source ofinput tax" 14A.46 Western Commercial Corp various various p 3,995.36 23246 1/31/2012 14A.54 Western Commercial Corp 23239 1/20/2012 5,014.29 23299 2/28/2012 14A.62 Western Commercial Corp 948.21 387093 14A.72 Western Commercial Corp 2,089.29 sub-total p 12,047.15 11. VAT invoice unreadable 14A.64 The New Laoag Auto Supply ,p 12.86 12.86 sub-total GRAND TOTAL P4,163,498.10 In sum, the Court partially upholds respondent's assessment on unsupported input tax to the extent of P16,028,352.13, as determined below: Exceptions per ICPA Report p 10,098,022.73 p 1,766,831.30 Additional Disallowances by the Court: 4,163,498.10 14,261,520.83 Domestic purchases of goods from ABI and IPI p 16,028,352.13 Other domestic purchases of goods and services Total unsupported input tax

DECISION CTA CASE NO. 9086 Likewise, the creditable VAT withheld claimed by petitioner amounting to P2,996.57 was found to be unsupported, thus, it must be disallowed. Excess Input Tax Carried Over to Succeeding Quarter- P259,034.46 As stated in the Details of Discrepancies, the excess input tax amounting to P259,034.46 was not applied against the allowable input tax in computing deficiency VAT since this shall be carried over to the next succeeding quarter(s) as provided under Section 110(8) of the NIRC of 1997, as amended. However, the Court finds it improper for respondent to disallow the said excess input tax because any tax benefit derived by petitioner from the carry-over of the said amount redounds to the succeeding quarter(s). Since the tax benefit will be in the succeeding quarter(s), at most, petitioner may only be assessed in the said succeeding quarter(s). Considering all the foregoing, petitioner is liable to pay the basic deficiency VAT in the amount of P16,028,352.12, computed as follows: Gross receipts subject to VAT p 2,996.57 p 49,131,702.18 p 422,462,011.11 2,996.57 16,028 352.13 p 50,695,441.33 Output tax due Less: Input tax claimed per return 1,563,739.16 33 103 350.05 p 17,592,091.28 Less: Unsupported input tax - VAT payable 1,563,739.16 Less: Tax payments p 16,028,352.12 Creditable VAT withheld per return Less: Unsupported creditable VAT withheld Basic deficiency VAT WHEREFORE, premises considered, the instant Petition for Review is DENIED. Accordingly, the Court finds petitioner liable to pay the basic deficiency VAT but in the reduced amount of P20,035,440.15, inclusive of twenty-five percent (25�/o) surcharge imposed under Section 248(A)(3) of the NIRC of 1997, as amended, as computed below: ?-

DECISION P16,028,352.12 CTA CASE NO. 9086 4,007,088.03 P20,035,440.15 Basic deficiency VAT Add: 25% Surcharge Total VAT due In addition, petitioner is liable to pay: a) Deficiency interest at the rate of twenty percent (20�/o) per annum on the basic deficiency VAT of P16,028,352.12 computed from July 25, 2012, until full payment thereof pursuant to Section 249(8) of the NIRC of 1997, as amended; and b) Delinquency interest at the rate of 20�/o per annum on the total amount of P20,035,440.15 and on the 20�/o deficiency interest which have accrued as aforestated in (a), computed from December 11, 2014,46 until full payment thereof pursuant to Section 249(C) of the 1997 NIRC, as amended. SO ORDERED. ~~~c.~/St .fUANITO C. CASTANEf>A~ JR. Associate Justice WE CONCUR: ~(lv#~ CAESAR A. CASANOVA CATHERINET.MANAHAN Associate Justice Associate Justice 46 Exhibit "P-3", Docket, Vol. II, p.1115.

DECISION CTA CASE NO. 9086 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. ~~~ c .aY-~;~- 1UANITO C. CASTANEDA, JR. Associate Justice Chairperson CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, and the Division Chairperson'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. Presiding Justice