TAGANITO MINING CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

Republic of the Philippines COURT OF TAX APPEALS Quezon City SPECIAL SECOND DIVISION TAGANITO MINING CTA Case No. 8680 CORPORATION, Petitioner, Members: -versus- CASTANEDA, JR., Chairperson, and CAS AN OVA, 1J COMMISSIONER OF INTERNAL Promulgated: REVENUE, APR 2 4 Z017 / Respondent. r 7 1!= 1o <�... x------------------------------------------------------------------------------------------x AMENDED DECISION CASANOVA,].: For resolution of this Court are the following: 1. Respondent's Motion for Partial Reconsideration (Re: Decision promulgated 28 March 2016)1 filed, on April 7, 2016, sans petitioner's comment per Records Verification2 dated May 11, 2016; and, 2. Petitioner's Motion for Partial Reconsideration and/or New TriaP filed, via registered mail, on April 13, 2016, with respondent's Comment/Opposition (Re: Motion for Partial Reconsideration and/or New Trial4 filed on May 6, 2016. Both parties pray for reconsideration of the Decisions promulgated by this Court on March 28, 2016, the dispositive portion of which reads: "WHEREFORE, premises considered, the instant Petition for Review is hereby PARTIALLY GRANTED.? 1 Docket (Vol. 1), pp. 447-462. 2 Docket (Vol. II), p. 818. 3 Id., pp. 465-472. 4 ld., pp. 797-817. 5 Docket (Vol. I), pp. 42 I-446.

Amended Decision C.T.A. Case No. 8680 Respondent is hereby ORDERED TO REFUND OR TO ISSUE A TAX CREDIT CERTIFICATE to petitioner in the reduced amount of ONE MILLION NINE HUNDRED NINETY SEVEN THOUSAND THREE HUNDRED EIGHTY ONE AND 93/100 (P1,997,381.93), representing its excess input VAT amortization on capital goods purchases exceeding P1Million in the year 2011. SO ORDERED." In a Resolution6 dated May 24, 2016, the Court granted petitioner's Motion for New Trial and allowed petitioner to present additional evidence. After completion of the testimony of petitioner's recalled witnesses, Ms. Lennie A Terre and Ms. Maria Gracia L. Morfe 7 , petitioner's Supplemental Formal Offer of Evidence (with Motion to Modify the Marking of Exhibit P-31 to P-31.B)S was filed on August 8, 2016, with respondent's Comment (Re: Petitioner's Supplemental Formal Offer of Evidence)9 filed on August 9, 2016. In a Resolution1o promulgated on September 13, 2016, this Court, except for Exhibit "P-32.2", admitted Exhibit "P-31", "P-31-A", "P-31.B", "P- 31.1" to "P-31.402", "P-31.403" to "P-31.416", "P-31.417" to "P-31.420", "P- 32", "P-32-A", "P-32.1", "P-32.3" to "P-32.10", "P-33" and "P-33-A". The Court, likewise, granted petitioner's Motion to Modify the Marking of Exhibit "P-31" to "P-31.B". On October 3, 2016, petitioner filed a Motion for Reconsideration (Re: Supplemental Formal Offer of Evidence) and Extension of Time to File Memorandum11, with respondent's Comment/opposition (Re: Motion for Reconsideration)12 filed on October 5, 2016. However, petitioner's Motion for Reconsideration (Re: Supplemental Formal Offer of Evidence) was denied by the Court in its Resolution13 dated November 28, 2016. In the same Resolution, the Court granted petitioner's Motion for Extension of Time to File Memorandum and gave both parties a period of thirty (30) days to file their memoranda.~ 6 Docket (Vol. II), pp. 820-825. 7 Minutes of the Hearing dated July 27, 2016, Id., p. 864. 8 Ibid., pp. 866-871. 9 Id., pp. 903-908. 10 Id., pp. 910-911. II Id., pp. 912-916. 12 Id., pp. 919-924. 13 Id., pp. 926-930.

Amended Decision C.T.A. Case No. 8680 However, per Records Verification dated January 24, 2017, both parties failed to file their respective memorandum. Hence, this Amended Decision. Respondent moves for the reconsideration of the foregoing Decision on the sole ground that: 11THE HONORABLE COURT ERRED WHEN IT PARTIALLY GRANTED PETITIONER'S CLAIM FOR REFUND IN THE AMOUNT OF P1,997,381.93 ALLEGEDLY REPRESENTING EXCESS INPUT VAT AMORTIZATION ON CAPITAL GOODS PURCHASES EXCEEDING P1MILLION IN THE YEAR 2011." In support of the foregoing issue, respondent argues that petitioner failed to submit complete documents to substantiate its administrative claim for refund as required under Revenue Memorandum Order (RMO) No. 53- 98. Respondent also contends that petitioner failed to show that its purchases of non-capital goods and services were made in the course of its trade and business; that it failed to show that the said purchases were properly supported by VAT invoices and/or official receipts and other documents in accordance with Sections 110 (A)(2) and 113 of the Tax Code, as amended, and in pursuance to Section 4.104-5(a) & (b) of Revenue Regulations No. 7-95 (Re: Substantiation of Claims for Input Tax Credit); and that it also failed to prove that the input taxes of P21,818,041.36 allegedly paid on its purchases of goods and services, were attributable to its zero- rated sales and such have not been applied against any output tax and were not carried over in the succeeding taxable quarterjs. Anent respondent's allegation that petitioner failed to submit complete documents required under RMO No. 53-98, the same has been thoroughly considered and discussed by this Court when it resolved the matter in its assailed Decision dated March 28, 2016. We quote: liThe issue on respondent's reliance on Revenue Memorandum Order (RMO) No. 53-98, as regards the submission of complete documents, has already been settled by the Supreme...,_

Amended Decision C.T.A. Case No. 8680 Court in the case of Commissioner of Internal Revenue vs. Team Sua/ Corporation iformerly Mirant Sua/ Corporation), in this wise: 'The CIR's reliance on RMO 53-98 is misplaced. There is nothing in Section 112 of the NIRC, RR 3- 88 or RMO 53-98 itself that requires submission of the complete documents enumerated in RMO 53- 98 for a grant of a refund or credit of input VAT. The subject of RMO 53-98 states that it is a 'Checklist of Documents to be Submitted by a Taxpayer upon Audit of his Tax Liabilities x x x' In this case, TSC was applying for a grant of refund or credit of its input tax. There was no allegation of an audit being conducted by the CIR. Even assuming that RMO 53-98 applies, it specifically states that some documents are required to be submitted by the taxpayer 'if applicable'.' (Emphasis supplied) It should, likewise, be stressed that the term 'complete documents' should pertain to those documents that are necessary to support the application for refund or tax credit certificate, as determined by the taxpayer. The BIR examiner can require the taxpayer to submit additional documents but the examiner cannot demand what type of supporting documents should be submitted. Otherwise, the taxpayer will be at the mercy of the examiner, who may require the production of documents that the taxpayer cannot submit. In addition, the BIR ought to know the tax records of all taxpayers. Moreover, it is well-settled that in claims for VAT refund, the non-submission of complete supporting documents in the administrative level is not fatal to petitioner's judicial claim. This Court is not barred from receiving, evaluating and appreciating evidence submitted before it. Once the claim for refund has been elevated to the Court, the admissibility, materiality, relevancy, probative value and weight of evidence presented therein become subject to the Rules of Court. The question of whether or not the evidence submitted by a party is sufficient to warrant the granting of a claim for refund lies within the sound discretion and judgment of the Court. Thus, applying Section 112 (C) of the NIRC of 1997, as amended, to the instant petition, respondent should have acted Of\:.

Amended Decision C.T.A. Case No. 8680 petitioner's application for refund/tax credit certificate until June 30, 2013, the end of the 120-day period reckoned from March 2, 2013, the date when petitioner is deemed to have completed the submission of its supporting documents to respondent. Now, counting from June 30, 2013, petitioner had 30 days or until July 30, 2013, within which to appeal its claim for refund before this Court. Thus, the instant Petition was timely filed on July 30, 2013." Being interrelated, the other issues raised by respondent shall be discussed jointly with petitioner's Motion for Partial Reconsideration. In its Motion, petitioner raised the following grounds for the consideration of the Court: 1. The advance deduction of petitioner's input taxes from its 2008 purchases prior to the year of claim does not disqualify the same from being refunded; 2. The evidence it has submitted to this Court are adequate to support its claims; and 3. Failure to exact full payment does not disqualify the sale as a zero-rated sale. After careful scrutiny of the evidence submitted to the Court, the Court resolves to partially grant petitioner's Motion for Reconsideration and deny respondent's Motion for Partial Reconsideration. A Petitioner's Zero-Rated Sales in 2012 Prefatorily, the Court only granted the refund of the amortized input VAT attributable to zero-rated sales in 2011, but not in 2012, on account of petitioner's failure to substantiate its zero-rated sales for the year 2012. Thus, when it was given another opportunity to present additional evidence, petitioner offered the following documents to substantiate its 2012 zero-rated sales: sales invoices, bills of lading, airway bills and proof of receipt of foreign currency payments..e-..

Amended Decision C.T.A. Case No. 8680 For the taxable year 2012, petitioner reported total zero-rated sales of P3,125,030,692.01 in its Quarterly VAT Returns.14 However, as found by the Court-commissioned Independent Certified Public Accountant, only P3,093,865,540.54 was supported by proper documents.15 Thus, the amount ofP31,165,151.47 shall be denied of VAT zero-rating. In addition, the following reported zero-rated sales in 2012 amounting to PS8,053,773.38 shall be disallowed for the reasons stated as follows: Customer Amount per Exhibit Amount per Exhibit Difference Exchange Amount Invoice (in No. Inward No. (in USD) Rate Disallowed in Used USD) Remittance Peso (in USD) P42.655 3 028.51 Sales with valid zero-rated VAT invoice and bill oflading but with insufficient bank credit advice - - Minecore Resources, P-31.393 42.955 42.955 1403 297.75 Inc. 1 262 250.00 P-31.392 1 262 179.00 to 394 71.00 5 154.60 - - Minecore Resources, 43.270 3,019,125.74 Inc. 140 250.00 P-31.395 140 250.0016 P-31.396 - 43.070 2,959,537.82 41.495 9,345,918.85 Minecore Resources, 140 250.00 P-31.366 107 580.9817 P-31.370 32 669.02 Inc. 42.925 1 073.13 43.755 1,093.88 Minecore Resources, P-31.367 1~738. 230.28 Inc. 1 262 250.00 P-31.365 1 262 130.00 to 369 120.00 Mount Eastern Holdings Co. Ltd. 135,408.00 P-31.359 135 408.0018 - Mount Eastern Holdings 274 388.40 P-31.298 204 614.2919 P-31.381 69,774.11 Co. Ltd. Mount Eastern Holdings to 386 68,714.60 Co. Ltd. 68 714.60 P-31.380 Mount Eastern Holdings 225 230.00 P-31.272 225,230.00 Co. Ltd. Baosteel Resources International Co. Ltd. 392 832.00 P-31.323 392 807.00 P-31.324 25.00 Baosteel Resources International Co. Ltd. 427 856.00 P-31-315 427 831.00 P-31.316 25.00 Subtotal $396,628.73 Sales with valid zero-rated VAT invoice and bill oflading but with Inward Remittance Certificate which has no bank logo) DH Kingstone Holding 962 617.50 P-31.304 962 617.50 P-31.305 42.920 41,315,543.10 Co. Ltd. TOTAL 58,053,773.38 In sum, out of the total reported sales in the 2012 Quarterly VAT Returns amounting to P3,125,030,692.01, only the amount of P3,035,811,767.16 represents petitioner's valid zero-rated sales which shall be considered for the claim for refund, computed as follows: .,. 14 Exhibit P-20-D. 15 Exhibit P-31.8. 16 Application of the amount ofUS$247,830.98 per Remittance Advice (Exhibit P-31.370 or P-31.396) was based on the sequence of the serial nos. of the invoices covered by the said remittance. 17 Part of the remittance ofUS$247,830.98. 18 Application of the amount of US$340,022.29 per Remittance Advice (Exhibit P-31.382) was based on the sequence of the serial nos. of the invoices covered by the said remittance. 19 Part of the remittance ofUS$340,022.29.

Amended Decision C.T.A. Case No. 8680 2012 Zero-Rated Sales Per VAT Return P3,125,030,692.01 p 3,125,030,692.01 Less: Unsubstantiated Sales (3,093 865 540.54) P31,165 151.47 89,218 924.85 Zero-Rated Sales Per VAT 58,053,773.38 P3,035,811,767.16 Return Zero-Rated Sales Per Schedule Additional Disallowances Per This Court's Verification 2012 Valid Zero-Rated Sales B. Disallowed Zero-Rated Sales Due to Failure to Exact Full Payment In its Motion, petitioner submits that a reduction in the payment for the goods exported due to charges made against such payment, such as in the case of the sale made to DH Kingstone, does not warrant the disallowance of the entire transaction as a zero-rated transaction; that there is nothing in our Value Added Tax law which says that failure to exact full payment for a zero-rated transaction disqualifies the same from being treated as zero-rated; that there is no benefit to the taxpayer if it reports the sale in its invoice as if full payment was made thereon and be liable to pay corresponding income tax even on the uncollected portion of the sale; and, that there is no indication that petitioner received any other payment other than foreign currency on its export sales.zo We cannot subscribe to petitioner's foregoing contentions. Section 106(A)(2)(a)(1) of the 1997 National Internal Revenue Code, as amended, and implemented by Sec. 4.106-S(a)(1) of Revenue Regulations No. 16-0521, expressly provides that the sale and actual shipment of goods from the Philippines to a foreign country is "paid for" in acceptable foreign currency or its equivalent in goods or services, and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP). The term "paid for" connotes "collection". Thus, there is a necessity to go through the supporting Bank Credit Advice/Inward Remittance Certificates of the alleged export sales to ascertain foreign currency remittances from foreign customers. Further, contrary to petitioner's argument, the Court did not disallow the "entire transaction" with DH Kingstone as a zero-rated sale. The amount disallowed in DH Kingstone transaction was only to the extent which was not properly substantiated with inward remittances.~ 20 Pars. 19 to 21, Motion for Partial Reconsideration and/or New Trial, Docket (Vol. II), pp.469- 470. 21 Consolidated Value-Added Tax Regulations of2005.

Amended Decision C.T.A. Case No. 8680 Nevertheless, even granting that insufficient inward remittances from the DH Kingstone transaction 11Can already constitute full payment", petitioner should still provide evidence that could convince the Court that the unpaid balance pertains to alleged charges made against such payment, or that the same was already waived, or that efforts made to collect the same was indeed unfruitful. As such, the disallowed zero-rated sales from the exportation to DH Kingstone in 2011 amounting to P14,611.333.48 ($336,899.55) must be sustained. The above rationale also served as the basis for the disallowance of zero-rated sales in 2012 amounting to P16,738,230.28 ($396,628.73), as discussed earlier. C. The Advance Deduction of Petitioner's Input Taxes From Its 2008 Purchases Prior to the Year of Claim Should Disqualify the Same From Being Refunded Records show that the claimed input VAT on purchases of capital goods exceeding P1M in the year 2008 amounted to P34,131,592.29. The said amount was already included in the amount of P42,038,669.5422 deducted as VAT Refund/TCC Claimed (Line 23D) in the 2009 4th Quarterly VAT Return of petitioner.23 However, our examination of the documents results to a total disallowance ofP6,097,710.99, which comprised of the following: Exhibit Supplier Invoice Amount of Input No. Date/Period VAT Claimed Importations with IEIRD and proofof VAT payment but OR shows INSUFFICIENT amount P-17-B; P- Volvo Truck Corporation 5/9/2008 p 4,577,952.0024 17-B-1 22 Annex A of Letter Claim for Refund, Exhibit P-1, Docket (Vol. 1), p. 225. p 3 533 066.00 23 Exhibit P-31.403 to 404. 1 580 375.00 1 000.00 24 p 1 951,691.00 Final Duties and Taxes per OR 6,529,643.00 Less: Customs Duties per IEIRD P(4 577.952.00) Import Processing Fees per IEIRD Considered VAT payment per OR Less: VAT due per IEIRD VAT claimed without proof of payment

Amended Decision C.T.A. Case No. 8680 P-17-D to Marubeni Corporation 7/02/2008 806,980.0025 P-17-D-2 Subtotal 5,384,932.00 Local purchases with valid VAT invoice but NOT NAMED under petitioner 133,671.43 P-18-C Union Motor Corporation 2/07/2008 242,142.86 Local purchases with VAT invoice but WITHOUT authority to print 160,714.29 P-18-F-2 Isuzu Philippines Corporation 6/11/2008 175,714.28 Local purchases with VAT invoice but NOT dated 336,428.57 P-18-D-1 Alpha Philmotor Sales 6/11/2008 536.13 Corporation 6/26/2008 p 6,097,710.99 P-18-E-2; Alpha Philmotor Sales Subtotal P-18-E-3 Corporation Discrepancy between input VAT per claim vs input VAT per schedule (P34/131/592.2g26 less P34131 056.1f527 TOTAL DISALLOWED INPUT VAT Thus, only a net total of P28,033,881.30 shall be considered by this Court as valid input VAT incurred by petitioner for the year 2008: Total input VAT claim on purchases of capital goods p 34,131,592.29 exceeding P1M in 2008 6,097 710.99 Less: Disallowances per this Court's verification p 28,033,881.30 Input VAT properly substantiated However, even if petitioner was able to substantiate its domestic purchases of capital goods exceeding P1 Million, the corresponding amortized input VAT ofP147,655.19 and P214,435.54 in 2011 and 2012,28 respectively, should still not be considered as allowable input tax credit for reasons that will be explained below. 25 p 10,835 904.00 Final Duties and Taxes per OR 884 872.00 Less: Customs Duties per IEIRD 1 000.00 Import Processing Fees per IEIRD p 9 950 032.00 Considered VAT payment per OR Less: VAT due per IEIRD 10 757 012.00 VAT claimed without proof of payment p (806 980.00) 26 Annex A of Letter Claim for Refund, Exhibit "P-1". 27 Exhibit "P-26". 28 2008 Amortized Input VAT from Domestic Purchases plus the allowable Amortized Input VAT from Domestic Purchases as laid down in the Decision p. 23 to 24.

Amended Decision C.T.A. Case No. 8680 Monthly No. 2011 No. 2012 of Input VAT Useful Amortization of Amortization Mos. Amortization (in PhP) (in PhP) (in PhP) Supplier Date Life (in PhP) Mos. 2008 Domestic Purchases: Toyota Shaw 1/22/2008 p 210 000.00 60 p 3 500.00 12 p 42 000.00 12 p 42 000.00 Inc. 136 071.43 60 2,267.85 12 27 214.20 12 27 214.20 136 071.43 60 2 267.85 12 27 214.20 12 27 214.20 Honda Cars 2/22/2008 P482,142.86 p 96,428.40 p 96,428.40 Honda Cars 2/22/2008 2011 Domestic Purchases: Diamond Motor Coro. 4/1/11 p 131 250.00 60 2 187.50 9 p 19 687.50 12 p 26 250.00 111,321.43 60 1 855.36 7 12 987.50 12 22,264.29 Car& 17,678.57 60 294.64 7 2 062.48 12 3 535.71 Recreational 6/9/11 146 678.57 60 2 444.64 3 7 333.92 12 29 335.71 Vehicles Inc. 183 107.14 60 3 051.79 3 9 155.37 12 36 621.48 P590,035.71 p 51,_226.79 P118,007.14 Toyota Otis Inc. 10/13/11 Tovota Otis Inc. 10/17/11 Subtotal Total P1,072,178.57 p 147 655.19 P214,435.54 In Section 3 of Revenue Memorandum Order No. 9-0029 (RMO No. 9- 00) dated February 2, 2000, the Bureau of Internal Revenue enumerated the requirements for the zero-rating of sales by a VAT taxpayer to a BOI registered exporter, thus: "SECTION.3. Sales ofgoods, properties or services made by a VAT registered supplier to a BOI registered exporter shall be accorded automatic zero-rating, i.e., without necessity of applying for and securing approval of the application for zero-rating as provided in Revenue Regulations No. 7-95, subject to the following conditions: (1) The supplier must be VAT-registered; (2) The HOI-registered buyer must likewise be VAT- registered; (3) The buyer must be a HOI-registered manufacturer/producer whose products are lOOo/o exported. For this purpose, a Certification to this effect must be issued by the Board of Investments (BOI) and which certification shall be good for one year unless subsequently re-issued by the BOI; ~ 29 Tax Treatment of Sales of Goods, Properties and Services Made by VAT-registered Suppliers to BOT-registered Manufacturers-Exporters With 100% Export Sales

Amended Decision C.T.A. Case No. 8680 (4) The BOI-registered buyer shall furnish each of its suppliers with a copy of the aforementioned BOI Certification which shall serve as authority for the supplier to avail of the benefits of zero-rating for its sales to said BOI-registered buyers; and (5) The VAT-registered supplier shall issue for each sale to BOI-registered manufacturer/exporters a duly registered VAT invoice with the words "zero-rated" stamped thereon in compliance with Sec.4.108-1(5) of Revenue Regulations No.7-95. The supplier must likewise indicate in the VAT-invoice the name and BOI- registry number of the buyer." In the present case, petitioner was able to present two Certifications3� issued by the BOI dated January 21, 2011 and January 20, 2012, respectively' both attesting to the fact that petitioner is a BOI registered entity; and, that the latter "exported 100�/o of its total sales volume/value" in the calendar years 2008 and 2009. The said Certifications, likewise, state that the same are valid only for the periods ofJanuary 1 to December 31, 2011 and January 1 to December 31, 2012. Following Section 3(4) of RMO No. 9-00, the subject BOI Certifications shall serve as authority for the local suppliers of petitioner "to avail of the benefits of zero-rating" on their sales to petitioner covering the years 2011 and 2012. Thus, no output tax should, therefore, be shifted by the local suppliers to petitioner. But in this case, petitioner's supplier shifted the output tax to petitioner. Thus, petitioner may seek reimbursement of the input VAT paid from its seller (who shifted the output VAT), and not from the government, following the ruling of the CTA Court En Bane in Coral Bay Nickel Corp. vs. Commissioner ofInternal Revenue31, to wit: "To allow petitioner a refund or issuance of tax credit certificate of input VAT on its domestic purchases of goods and services, where there is no right to demand it against the government, since its purchases are zero-rated, would unduly enrich petitioner at the expense of the government. Under the law, no one shall unjustly enriched himself at the expense of another. 'Niguno non deue enriquecerse tortizamente~ 30 Exhibits "P-9" to "P-10". 31 CTA EB Case No. 403 (CTA Case No. 7022), May 29,2009.

Amended Decision C.T.A. Case No. 8680 condano de otr' (Ong Yong, et. a/. vs. DavidS. Tiu, et. a/., 375 SCRA 640). Said ruling is equally true in the field of taxation, particularly in cases involving claims for refunds. In instances when petitioner paid input VAT, notwithstanding that under the law it is subject to VAT at zero percent rate, petitioner's recourse is not against the government, but against the seller who shifted to it the output VAT. Revenue Memorandum Circular No. 42-03 is clearly instructive on this matter: 'In the meantime, the claim for input tax credit by the exporter-buyer should be denied without prejudice to the claimant's right to seek reimbursement of the VAT paid, if any, from its supplier.' Pursuant to Revenue Memorandum Circular No. 42-03, petitioner's recourse for those purchases of goods and services where it paid VAT is not a claim for refund against the government, or the issuance of a tax credit certificate; but to seek reimbursement of the input VAT paid from its suppliers of goods and services.'' The afore-quoted ruling was affirmed in the case of Coral Bay Nickel Corp. vs. Commissioner ofInternal Revenue,32 where the Supreme Court ruled that the proper party to seek the tax refund or credit should be the suppliers not the petitioner (Coral Bay). Thus, only the amortized input VAT from importations in the amount of P9,295,167.30 and P10,123,097.32 in 2011 and 2012, respectively, represent petitioner's valid input VAT. 33 A table below is provided for ease of reference: Supplier Date Less: Input VAT Monthly 2011 2012 Input VAT Disallowance Allowed Amort. 2008: 3/1/2008 6/1/2008 P2 264 799.44 p - p 2 264,799.44 P47,183.32 p 566 199.84 p 566 199.84 Marubeni 9/1/2008 6 529 643.40 1 951 691.00 40 660.23 Corporation 9/1/2008 10 75~012.00 4 577 952.00 9 950 032.00 207 292.33 487 922.76 487 922.76 Volvo Truck 6 772 398.00 6 772 398.00 141 091.63 Cor-poration 806 980.00 2 487 508.00 2 487 508.00 Marubeni Corporation - 1 693 099.56 1 693 099.56 Volvo Truck Corporation 32 G.R No. 190506, June 13, 2016. 33 2008 Amortized Input VAT from Importations plus the allowable Amortized Input VAT Amortization from Importations as laid down in the Decision p. 23.

Amended Decision C.T.A. Case No. 8680 Volvo 12/1/2008 2 916 035.00 - 2 916 035.00 60 750.73 729 008.76 729 008.76 Truck 121_1}2008 3 696 783.00 Corporation - 3 696 783.00 77 016.31 924 195.72 924 195.72 Volvo 1'27. SS1. 738.44 Truck Subtotal Corporation 1'6. 887.934.64 , 6. 887.934.64 2011: 4/19/2011 12 021 962.00 - p 12 021 962.00 250 457.54 p 2 254 117.86 p 3 005 490.48 Volvo 5/10/2011 918 689.00 Truck - 918 689.00 19 139.35 153 114.80 229 672.20 Corporation Volvo do Brasi Veiculos Ltda. Subtotal 1'1.2,940. 6S1..00 1'2 407.232.66 , 3,235.1.62.68 Total P40,492 389.44 P9,295 167.30 P10 123,097.32 However, other than its mere allegation that the subject input VAT are all directly attributable to its zero-rated sales, petitioner did not present documentary evidence in order for this Court to ascertain that no part of the claimed input VAT can be attributed to its reported VATable and exempt sales in 2011 and 2012. Thus, the input VAT of P9,295,167.30 and P10,123,097.32 in 2011 and 2012, respectively, shall be proportionately allocated among its reported zero-rated, VATable and exempt sales in 2011 and 2012 in the aggregate amount of P2,888,696,985.55 and P3,261,427,312.19, respectively: 2011 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total (Exh. P-20-C-3) (Exh. P-20-C-6) (Exh. P-20-C-9) (Exh. P-20-C-12) 29 285.71 782 149.66 Vatable Sales 28 571.42 604 186 364.87 1 255 721,066.18 703 928.58 1 543 935.37 Zero Rated Sales 535 757,978.45 30 571,796.61 32 605,821.22 381 442 752.68 2 777 108 162.18 634,787,447.19 1,289,109,037.06 Exempt Sales 14 886 220.00 31 981 050.17 110 044 888.00 Total 550,672,769.87 414,127,731.43 2,888,696,985.55 2012 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total (Exh. P-20-D-3.1) (Exh. P-20-D-6.1) (Exh. P-20-D-9) Vatable Sales (Exh. P-20-D-12) Zero Rated Sales 462 924.75 11 707,585.25 52/857.14 Exempt Sales 452 656 359.97 972,612 866.40 1141,987 611.33 351,804.08 12 575,171.22 Total 31 673,606.88 31 629 893.41 30 949 719.85 557 773,854.31 3 125 030,692.01 484,792,891.60 1,015,950,345.06 1,172,990,188.32 29 568 228.82 123 821 448.96 587,693,887.21 3 261,427,312.19 Allocation Factor Allocated Input VAT 2011 2012 2011 2012 Vatable Sales 0.0534475% 0.3855726% p 4 968.03 p 39 031.89 Zero Rated Sales Exempt Sales 96.1370534% 95.8178856% 8,936 099.95 9 699,737.82 Total 3.8094992% 3.7965417% 354 099.32 384 327.61 100.00000000/o 100.00000000/o P9,295,167.30 P10,123,097.32

Amended Decision C.T.A. Case No. 8680 Since petitioner did not submit VAT invoices/receipts proving the existence of its reported input VAT from Domestic Purchases of Goods not Exceeding P1Million, Purchases of Goods (other than Capital Goods), Importation of Goods (other than Capital Goods) and Domestic Purchases of Services for the first to fourth quarters of 2011 and 2012, its output VAT liability for respective period in the amounts of P185,272.24 and P1,509,020.55 shall be offset against the input VAT amortization allocated to its VATable and zero-rated sales, as shown below: Output VAT Due 2011 2012 Less: Input VAT Amortization Allocated to VATable Sales Net Output VAT Payable p 185 272.24 p 1 509 020.55 Less: Input VAT Amortization Allocated to Zero-Rated Sales 4 968.03 39 031.89 Excess Input VAT Amortization Allocated to Zero-Rated Sales p 180,304.21 p 1 469 988.66 8 936 099.95 9,699,737.82 p 8,755,795.74 p 8,229,749.16 Consequently, only the input VAT of P8,002,592.80 and P7,994,791.66 is attributable to the valid zero-rated sales of P2,538,211,995.9034 and P3,035,811,767.16 in 2011 and 2012, respectively, as computed below: 2011 2012 Excess Input VAT Amortization Allocated to Total p 8 755,795.74 p 8,229 749.16 Declared Zero-Rated Sales Multiply by: P2 538,211 995.90 P3 035,811,767.16 Valid Zero-Rated Sales Divided by: Total Zero-Rated Sales Per Return P2 777,108 162.18 P3,125,030,692.01 Ratio of valid O-rated sales to total O-rated sales 91.3976643% 97.1450224% Excess input VAT for refund p 8,002,592.80 p 7,994,791.66 In sum, petitioner proved that it is entitled to a refund or issuance of tax credit certificate in the modified amount of P15,997,384.46, representing the sum of its excess input VAT amortization on capital goods purchases exceeding P1Million attributable to its zero-rated sales for the years 2011 and 2012 in the amounts ofP8,002,592.80 and P7,994,791.66, respectively. WHEREFORE, in view thereof, respondent's Motion for Partial Reconsideration (Re: Decision promulgated 28 March 2016) is DENIED while petitioner's Motion for Partial Reconsideration is PARTIALLY_ 34 Decision, p. 20, Docket (Vol. 1), p. 440.

Amended Decision C.T.A. Case No. 8680 GRANTED. Accordingly, the dispositive portion of the Decision dated March 28, 2016 is AMENDED, as follows: ~~wHEREFORE, premises considered, the instant Petition for Review is hereby PARTIALLY GRANTED. Respondent is hereby ORDERED TO REFUND OR TO ISSUE A TAX CREDIT CERTIFICATE to petitioner in the increased amount of FIFTEEN MILLION NINE HUNDRED NINETY SEVEN THOUSAND THREE HUNDRED EIGHTY FOUR AND 46/100 (P15,997,384.46), representing the sum of its excess input VAT amortization on capital goods purchases exceeding P1Million attributable to its zero-rated sales for the years 2011 and 2012." SO ORDERED." CAESA~SANOVA Associate Justice I CONCUR: Q�-C{i' c -~~~ Jtfi\NITO C. CASTANEDA,~. Associate Justice ATTESTATION I attest that the conclusions in the above Amended Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. 9-w~'kC-. ~cA, Q.. fuANITO C. CASTANEDA, Jil. Associate Justice Chairperson, Second Division

Amended Decision C.T.A. Case No. 8680 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