MACQUARIE OFFSHORE SERVICES PTY LTD.- PHILIPPINE BRANCH v. COMMISSIONER OF INTERNAL REVENUE (consolidated with CTA Case Nos. 8994 & 9040)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SECOND DIVISION MACQUARIE OFFSHORE CTA Case Nos. 8936,8994 SERVICES PTY. LTD.- &9040 PHILIPPINE BRANCH, Members: Petitioner, CASTANEDA, JR. , -versus- Chairperson COMMISSIONER OF INTERNAL REVENUE, CASANOVA, and MANAHAN, JJ. Respondent. Promulgated: MAR Z71018 ?J.'?d k1 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x DECISION MANAHAN, J.: This is a consolidation of three (3) Petitions for Review filed by Macquarie Offshore Services Pty Ltd. - Philippine Branch, praying for the refund of or the issuance of a tax credit certificate (TCC) in the total amount of THIRTY-SIX MILLION SEVEN HUNDRED THIRTY THOUSAND SEVEN HUNDRED EIGHTY PESOS AND SIXTY CENTAVOS (P36,730,780.60), allegedly representing excess and unutilized input value-added tax (VAT) directly attributable to its zero-rated sales for the four quarters of fiscal year (FY) ended March 31, 2013. THE FACTS Petitioner Macquarie Offshore Services Pty Ltd. - Philippine Branch is a foreign corporation organized and existing under and by virtue of the laws of Australia. It is duly licensed to do business in the Philippines thru its Regional Operating Headquarters (ROHQ) in the~

DECISION CTA Case Nos. 8936, 8994 and 9040 Philippines by virtue of a License to Do Business issued by the Securities and Exchange Commission (SEC) on April 10, 2008. As a licensed ROHQ, it is authorized to engage in general administration and planning; business planning and coordination; sourcing/procurement of raw materials and components; corporate finance advisory services; marketing control and sales promotion; training and personnel management; logistic services, research and development services and product development; technical support and maintenance; data processing and communication; and business development. 1 The office of the petitioner is located at the 29th Floor, Tower 1, The Enterprise Center, Ayala Avenue, Makati City. Petitioner is also a VAT-registered entity as evidenced by its Bureau of Internal Revenue (BIR) Certificate of Registration No. OCN 9RC0000330527. 2 On the other hand, respondent is the Commissioner of the Bureau of Internal Revenue duly appointed and empowered to perform the duties of his office, including, among others, the duty to act on and approve claims for refund or tax credit as provided by law. He holds office at the 5th Floor, BIR National Office Building, Agham Road, Diliman, Quezon City. For fiscal year 2013, petitioner allegedly generated VAT zero- rated sales in the total amount of P2,170,342,876.99 from its sole foreign non-resident client, Macquarie Financial Holdings Limited (MFHL), as indicated in its Quarterly VAT Returns for the following periods: PERIOD ZERO-RATED SALES (FY 2013} p 612,279 246.59 549,754,294.35 1st Quarter 550,935 948.89 2nd Quarter 457,373/387.16 3rd Quarter 4th Quarter P2,170,342,876. 99 TOTAL 1 Exhibit "P-1", Docket, val. III, p. 899. 2 Exhibit "P-2", Docket, val. III, p. 918.

DECISION CTA Case Nos. 8936, 8994 and 9040 Petitioner claims that its sales of services were rendered exclusively to MFHL during FY 2013 pursuant to a Service Agreement3 executed on April 1, 2009. MFHL is an Australian company registered under the laws of Australia.4 Its business address is located at Level 7, 1 Martin Place, Sydney, New South Wales, Australia. It is not registered with the SEC as evidenced by the Certificate of Non- Registration issued by the SEC. 5 Petitioner filed three administrative claims for refund or issuance of tax credit certificate with the BIR Revenue District Office (RDO) No. 47 on the following dates: Taxable Close of the Last Day to File Date of Filing of Quarter of Taxable Quarter Administrative Administrative FY 2013 June 30 2012 Claim Claim 1st Quarter September 30 2012 June 30 2014 June 30, 2014 2nd Quarter September 30 2014 September 26 2014 December 31, 2012 3rd Quarter March 31, 2013 December 31 2014 December 12, 2014 4th Quarter March 31, 2015 1 Alleging inaction on the part of respondent on its administrative application for refund or tax credit, petitioner filed several Petitions for Review with this Court on the following dates with the corresponding amounts of the input VAT claimed: CTA DATE OF FILING PERIOD COVERED INPUT VAT CASE NO. November 25 2014 April 1 to June 30 2012 CLAIM February 23 2015 July 1 to September 30, 2012 8936 October 1 to December 31, 2012 p 5 425 861.12 8994 May 8, 2015 January 1 to March 31 2013 6 995 075.09 9040 24,309,844.41 TOTAL P36,730,780.62 In his Answers6 to the above petitions, respondent mainly avers that the claim for refund or issuance of TCC is still subject to administrative routinary investigation/examination and taxes paid and collected are presumed to have been made in accordance with law, hence, not refundable. Respondent further argues that petitioner's..w- 3 Exhibit "P-36", Docket, vol. III, pp. 1332-1348. 4 Exhibits "P-37" and "P-38", Docket, vol. III, pp. 1349-1350. 5 Exhibit "P-35", Docket, vol. III, p. 1331. 6 CTA Case No. 8936, Docket, vol. I, pp. 47-50; CTA Case No. 8994, Docket, pp. 87-89; CTA Case No. 9040, Docket, pp. 77-80.

DECISION CTA case Nos. 8936, 8994 and 9040 sales of goods and services to its alleged client do not qualify as effectively zero-rated VAT transactions. Respondent further asserts that in an action for refund/tax credit, the burden of proof is on the taxpayer to establish its right to claim for refund and petitioner failed to comply with the conditions/requirements under Section 112 of the National Internal Revenue Code (NIRC) of 1997, as amended. Moreover, respondent contends that it is incumbent upon petitioner to show that it has complied with Section 204(c) in relation to Section 229 of the NIRC of 1997; as amended. Its failure to prove the same is fatal to its claim. Lastly, respondent points out that claims for refund are construed strictly against the taxpayer since the same partake the nature of exemption from taxation and as such, they are looked upon with disfavor. Petitioner filed Motions for Consolidation in each of the three cases. On June 26, 2015, the Court issued a Resolution granting the Motions for Consolidation. Accordingly, CTA Case Nos. 8936 and 9040 were consolidated by the Court's Second Division.7 On July 24, 2015, the Second Division issued a Resolution which acknowledged the Resolution8 issued by the Court's Third Division, consolidating CTA Case No. 8994 with CTA Case Nos. 8936 and 9040. In the same Resolution dated July 24, 2015, the case was scheduled for pre-trial on September 3, 2015. The parties filed their Consolidated Joint Stipulation of Facts and Issues9 on September 22, 2015. On October 2, 2015, the Pre-Trial Order10 for the consolidated cases was issued, approving and adopting the Consolidated Joint Stipulation of Facts and Issues and terminating the pre-trial proceedings. On October 14, 2015, the Court granted the commissioning of Ms. Katherine 0. Constantino, partner at Constantino Guadalquiver &..n.-- 7 Docket, vol. I, pp. 185-186. 8 Docket, vol. I, pp. 191-192. 9 Docket, vol. I, pp. 236-247. 10 Docket, vol. I, pp. 250-261.

DECISION CTA Case Nos. 8936, 8994 and 9040 Co., as the Independent Certified Public Accountant (CPA) for the case. 11 Ms. Constantino submitted her Independent CPA Report on November 13, 2015. 12 Petitioner presented Mr. Tim Mulvihill, Ms. Ailyn Perocho, and Ms. Katherine 0. Constantino as its witnesses. 13 Subsequently, petitioner filed its Formal Offer of Evidence14 on February 3, 2016, consisting of Exhibits "P-1" to "P-3973", inclusive of sub-markings. On March 29, 2016, the Court issued a Resolution15 admitting all the formally offered exhibits of petitioner, except for Exhibits "P-2-a", "P-2-b", "P-17-b"I "P-17-c"I "P-24-c through P-24-v"I "P-25-s"I "P-25- t"I "P-53"I "P-149"I "P-1740"I "P-1800"I "P-2003"I "P-2424"I "P-2759"I "P-2760", "P-3860", and "P-3972". As a result, petitioner filed a Motion (Re: 1. Reconsideration of Resolution dated 29 March 2016; 2. Recall of witnesses)16 on April 11, 2016 praying that the Court set aside its Resolution dated March 29, 2016 and allowing it to recall its witness and the Court-commissioned Independent CPA. Meanwhile, respondent filed a Very Urgent Manifestation through registered mail on March 30, 2016 and received by this Court on April 8, 2016, stating that he will no longer present evidence for the instant case. The same was duly noted by the Court in an Order17 dated April 12, 2016. On October 10, 2016, Ms. Ailyn Perocho and Independent CPA Ms. Katherine 0. Constantino were recalled as petitioner's witnesses. Thereafter, on November 11, 2016, petitioner filed its Supplemental Formal Offer of Evidence18 .~ 11 Docket, vol. I, p. 327. 12 Docket, vol. I, p. 358 13 Minutes of the January 20, 2016 hearing, Docket, vol. II, p. 876. 14 Docket, vol. III, pp. 877-898. 15 Docket, vol. IV, pp. 1388-1390. 16 Docket, vol. IV, pp. 1398-1402. 17 Docket, vol. IV, p. 1403. 18 Docket, vol. IV, pp. 1482-1489.

DECISION CTA Case Nos. 8936, 8994 and 9040 In a Resolution19 dated February 17, 2017, the Court granted petitioner's Motion for Reconsideration, admitting Exhibits "P-2-a", "P- 2-b"I "P-17-b"I "P-17-c"I "P-24-c through P-24-v"I "P-25-s"I "P-25-t"I "P-53", "P-55-b", "P-55-c", "P-56-b", "P-56-c", "P-149", "P-1740", "P- 1800", "P-2003", "P-2424", "P-2759", "P-2760", "P-3860", and "P- 3972", all offered by petitioner in its Supplemental Formal Offer of Evidence. The Court declared the case submitted for decision via Resolution20 issued on April 3, 2017 noting that petitioner already filed its Memorandum21 on March 23, 2017, while respondent failed to file his Memorandum as per Records Verification22 issued by the Court's Judicial Records Division. THE ISSUE The parties submitted the following issue for this Court's resolution: Whether petitioner is entitled to the refund/issuance of a tax credit certificate for its input VAT payments for the whole period of FY 2013 in the amount of THIRTY-SIX MILLION SEVEN HUNDRED THIRTY THOUSAND SEVEN HUNDRED EIGHTY PESOS AND SIXTY CENTAVOS (P36,730,780.60). Petitioner's Arguments Petitioner first addressed the timeliness of the filing of its judicial claim for refund via a Petition for Review by a narrative specifying the dates of filing of its administrative claims for refund; submission of supporting documents and the eventual inaction of the respondent. Petitioner submits that on June 30, 2014, it filed its application for refund/tax credit of excess and unutilized input VAT together with supporting documents pursuant to Revenue Memorandum Circular~ 19 Docket, vol. IV, pp. 1528-1530. 20 Docket, vol. IV, p. 1554. 21 Docket, vol. IV, pp. 1531-1552. 22 Docket, vol. IV, p. 1553.

DECISION CTA Case Nos. 8936, 8994 and 9040 (RMC) No. 54-2014. It proposes that under Section 112 ( C) of the NIRC of 1997, respondent is given a period of one hundred twenty (120) days from date of submission of complete documents, to act on the application. Counting 120 days from the date of its submission of complete documents on June 30, 2014, petitioner avers that respondent had until October 28, 2014 to act on the application. However, due to the inaction of respondent, petitioner submits that it had thirty (30) days from October 28, 2014 or until November 27, 2014 to file a Petition for Review with this Court. The instant Petition being filed on November 13, 2014, petitioner confidently asserts that this was seasonably filed giving the Court the requisite jurisdiction to take cognizance of the claim for refund. On the substantive aspect of its claim for refund, petitioner anchors its main argument on the provisions of Section 112 (A) and 108 (B (2) of the NIRC of 1997 which will be discussed in detail in another portion of this decision. As an ROHQ, petitioner claims that it renders qualifying services to its affiliates in the Asia-Pacific region and other foreign markets but insofar as the period covering the instant claims for refund are concerned, it rendered said services to only one of its affiliates, MFHL, a foreign entity based in Australia. Petitioner firmly asserts that its sales of services to its single client MFHL are VAT zero-rated and that it did not generate output tax during the period covered by the claims for refund. The excess input tax was allegedly incurred from its domestic purchases of goods and services and are directly attributable to its VAT zero-rated sales. Respondent's Counter-Arguments Respondent dismisses the arguments of petitioner by simply stating that the alleged claims for refund are still undergoing routinary investigation/examination by their office and that the claims for refund of alleged excess and unutilized input VAT have not been fully substantiated by petitioner. Respondent refers to the requisite documents pursuant to RR 7-95 in relation to Sections 113 and 237 of the NIRC of 1997. Respondent also contravenes the basis of the claim of petitioner and asserts that its sales of goods and services to its alleged client do not qualify as effectively zero-rated VAT transactions.~

DECISION CTA Case Nos. 8936, 8994 and 9040 Respondent opted not to submit a Memorandum in the instant consolidated case. RULING OF THE COURT In claims for refund, the timeliness of the filing of the Petition for Review is vital to determine this Court's jurisdiction hence a discussion on this matter is primordial and necessary before the other issues are delved upon. Section 112(A) and (C) of the NIRC of 1997, as amended, provides: "SEC. 112. Refunds or Tax Credits ofInput Tax.- (A) Zero-Rated or Effectively Zero-Rated Sales. -Any VAT- registered person, whose sales are zero-rated or effectively zero- rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales under Section 106(A)(2)(a)(1), (2) and (b) and Section 108(8)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the 8angko Sentral ng Pilipinas (8SP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods of properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales: Provided, finally, That for a person making sales that are zero-rated under Section 108(8)(6), the input taxes shall be allocated ratably between his zero-rated and non-zero-rated sales. XXX XXX XXX (C) Period within which Refund or Tax Credit ofInput Taxes shall be Made. - In proper cases, the Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in accordance with Subsection (A) hereof.~

DECISION CTA Case Nos. 8936, 8994 and 9040 In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty day-period, appeal the decision or the unacted claim with the Court of Tax Appeals." Petitioner's administrative and judicial claims were timely filed Pursuant to the aforequoted Section 112(A) of NIRC of 1997, as amended, the administrative claim for the issuance of a TCC or refund of input VAT must be filed with the BIR within two (2) years after the close of the taxable quarter when the zero-rated or effectively zero- rated sales were made. Since the present claim covers the four quarters of FY ended March 31, 2013, the two-year prescriptive period started to run on June 30, 2012, on September 30, 2012, on December 31, 2012, and on March 31, 2013, and ended on June 30, 2014, on September 30, 2014, on December 31, 2014, and on March 31, 2015, respectively. Thus, petitioner's administrative claims for the said quarters were seasonably filed on June 30, 201423, on September 26, 201424, and on December 12, 201425, as shown below: CTA Taxable Close of the Last Day to File Date of Filing of Case Quarter of Taxable Quarter Administrative Administrative No. 8936 FY 2013 June 30, 2012 Claim Claim 8994 1st Quarter September 30 2012 June 30, 2014 2nd Quarter September 30, 2014 June 30, 2014 9040 December 31 2012 September 26, 2014 3rd Quarter _March 31, 2Q!~ December 31, 2014 - 4ti1___Ql.J_a r t e r March 31, 201_~_ December 12, 2014 -- --- Anent the timeliness of petitioner's judicial appeal, Section 112(C) of the NIRC of 1997, as amended, states the prescriptive period for filing a judicial claim for the refund or tax credit of input VAT. The legal provision speaks of two periods: the period of 120 days, which serves as a waiting period to give time for the BIR Commissioner to act on the administrative claim for a refund or credit; and the period~c.. - 23 Exhibit "P-17-a", Docket, vol. III, pp. 954-960. 24 Exhibits "P-18" to "P-18-a", Docket, vol. III, pp. 965-977. 25 Exhibits "P-19" to "P-19-a", Docket, vol. III, pp. 978-993.

DECISION CTA Case Nos. 8936, 8994 and 9040 of 30 days, which refers to the period for filing a judicial claim with the Court of Tax Appeals (CTA).26 As to the reckoning of the 120-day period for respondent to act on the claim, the pronouncement of the Supreme Court in the case of Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenuf#-7 is instructive, thus: "To summarize, for the just disposition of the subject controversy, the rule is that from the date an administrative claim for excess unutilized VAT is filed, a taxpayer has thirty (30) days within which to submit the documentary requirements sufficient to support his claim, unless given further extension by the CIR. Then, upon filing by the taxpayer of his complete documents to support his application, or expiration of the period given, the CIR has 120 days within which to decide the claim for tax credit or refund. Should the taxpayer, on the date of his filing, manifest that he no longer wishes to submit any other addition documents to complete his administrative claim, the 120 day period allowed to the CIR begins to run from the date of filing. In all cases, whatever documents a taxpayer intends to file to support his claim must be completed within the two-year period under Section 112(A} of the NIRC. The 30- day period from denial of the claim or from the expiration of the 120-day period within which to appeal the denial or inaction of the CIR to the CTA must also be respected. (Emphasis supplied) Records show that upon the filing of its administrative claims, petitioner submitted its supporting documents, including the Notarized Sworn Certifications28 attesting to the completeness of the documents submitted. Consequently, respondent had 120 days from June 30, 2014, September 26, 2014 and December 12, 2014 or until October 28, 2014, January 24, 2015 and April11, 2015 to decide on the subject claims covering the first, second, and third to fourth quarters, respectively, of FY ended March 31, 2013.~ 26 Rohm Apollo Semiconductor Philippines vs. Commissioner oflnternal Revenue, G.R. No. 168950, January 14, 2015. 27 G.R. No. 207112, December 8, 2015. 28 Exhibits "P-17'', p. 4; "P-18", p. 4, and "P-19", p. 5, Docket, vol. III, pp. 957, 968, and 982, respectively.

DECISION crA Case Nos. 8936, 8994 and 9040 In Rohm Apollo Semiconductor Philippines vs. Commissioner of Internal Revenufl-9, citing the landmark case of Commissioner of Internal Revenue vs. San Roque Power Corporatiofi3�, the Supreme Court held that the taxpayer can file an appeal in one of two ways: (1) file the judicial claim within 30 days after the BIR Commissioner denies the claim within the 120-day waiting period, or (2) file the judicial claim within 30 days from the expiration of the 120-day period if the BIR Commissioner does not act within that period. Since respondent failed to act on the subject claims, the 30-day period to appeal before this Court shall be counted from the lapse of the 120-day period on October 28, 2014, January 24, 2015, and April 11, 2015. Hence, petitioner had until November 27, 2014, February 23, 2015, and May 11, 2015 within which to file its appeal before this Court covering the first, second, and third to fourth quarters, respectively, of FY ended March 31, 2013. Accordingly, the instant Petitions for Review were timely filed on November 25, 2014, on February 23, 2015, and on May 8, 2015, as shown below: CTA Taxable Date of Filing of End of 120 days End of 30 days Date of Filing of Case Quarter of Administrative for the from the Petition for No. FY 2013 Review Claim Commissioner expiration of 120 to decide on the days November 25 2014 February 23, 2015 claim November 27-'-2014 February 23 2015 May 8, 2015 8936 1st Quarter June 30 2014 October 28 2014 8994 2nd Quarter September 26 2014 January 24 2015 May 11, 2015 3rd Quarter 9040 4th Quarter December 12, 2014 April 11, 2015 The Court will now proceed to determine petitioner's compliance with the remaining requisites to be entitled to a refund or issuance of the tax credit certificate. Petitioner is a VAT- registered entity and had zero-rated sales for the periods covered by the claim~ 29 G.R. No. 168950, January 14, 2015. 30 G.R. Nos. 187485, 196113, and 197156, February 12, 2013.

DECISION CTA Case Nos. 8936, 8994 and 9040 Based on the foregoing provision of Section 112 of the NIRC of 1997, in order to be entitled to a refund or tax credit of input tax due or paid attributable to zero-rated or effectively zero-rated sales, the following requisites must be satisfied:31 1. that the taxpayer is VAT-registered; 2. that there must be zero-rated or effectively zero-rated sales; 3. that input taxes were incurred or paid; 4. that input taxes claimed are attributable to zero-rated or effectively zero-rated sales; 5. that input taxes have not been applied against any output VAT liability; and 6. that the claim was filed within the prescribed periods both in the administrative and judicial levels. Petitioner complied with the first requisite considering that it is registered with the BIR as a VAT entity under BIR Certificate of Registration No. OCN 9RC0000330527 dated June 2, 2008 with Tax Identification No. 261-474-856-000 and registered office address of 29F Tower I, The Enterprise Center, Ayala Avenue, Makati City. 32 On the second requisite, petitioner avers that during FY 2013, its sales of services were rendered exclusively to Macquarie Financial Holdings Limited (MFHI), an entity duly organized, registered and doing business in Australia. Petitioner posits that such sales of services which were paid for in Australian Dollars (AUD) inwardly remitted and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Ptlipinas (BSP) are entitled to the benefit of VAT zero-rating under Section 108(8)(2) of the NIRC of 1997, as amended, which states: "SEC. 108. Value-added Tax on Sale of Services and Use or Lease ofProperties. - XXX XXX XXX~ 31 San Roque Power Corporation vs. Commissioner of Internal Revenue, G.R. No. 180345, November 25, 2009. 32 Exhibit "P-2", Docket, vol. III, p. 918.

DECISION CTA Case Nos. 8936, 8994 and 9040 (B) Transactions Subject to Zero Percent (0%) Rate. - The following services performed in the Philippines by VAT-registered persons shall be subject to zero percent (0%) rate: (1) Processing, manufacturing or repacking goods for other persons doing business outside the Philippines which goods are subsequently exported, where the services are paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP); (2) Services other than those mentioned in the preceding paragraph rendered to a person engaged in business conducted outside the Philippines or to a nonresident person not engaged in business who is outside the Philippines when the services are performed, the consideration for which is paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP)" In the case of Commissioner ofInternal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Jnc.33, the Supreme Court held that in order for the supply of services to be VAT zero-rated under Section 108(8)(2) of the NIRC of 1997, as amended, the following requisites must be met: 1. the services must be other than processing, manufacturing or repacking of goods; 2. the recipient of such services is doing business outside the Philippines; and 3. the payment for such services must be in acceptable foreign currency accounted for in accordance with the BSP rules and regulations. Records show that petitioner complied with the first requisite. Petitioner is licensed by the Securities and Exchange Commission per Company Reg. No. FS200805155 dated April 10, 200834, to transact business in the Philippines as a regional operating headquarters (ROHQ) authorized to engage in general administration and planning; business planning and coordination; sourcing/procurement of raw materials and components; corporate finance advisory services; marketing control and sales promotion;~ 33 G.R. No. 153205, January 22, 2007. 34 Exhibit "P-1", Docket, vol. III, p. 899.

DECISION CTA Case Nos. 8936, 8994 and 9040 training and personnel management; logistic services; research and development services and product development; technical support and maintenance; data processing and communication; and business development. Further, pursuant to the Service Agreement35 between petitioner and MFHL dated April 1, 2009, the former will provide the services set out in Schedule 1 of the agreement such as: (a) Application testing; (b) Application monitoring; (c) Technology infrastructure support; (d) Application development; (e) Application support; (f) Financial administration; and (g) Such other services as MFHL may require from time to time and which petitioner is willing and able to provide. These services clearly fall within the scope of "services other than processing, manufacturing or repacking of goods" contemplated by the afore- mentioned provision of law. In compliance with the second requisite, petitioner presented the following documents proving that MFHL is a non-resident foreign corporation doing business outside the Philippines: 1. Certification of Non-Registration of Company issued by the 2. SSEeCrv�'i3c6es Agreement; 37 3. Certificate of Registration on Change of Name in the name of 4. CMeFrHtiLfi�'c3a8 te of Registration in the name of MFHL;39 5. Constitution of MFHL;40 6. Australian Securities and Investments Commission (ASIC) Company Extract in the name MFHL;41 and 7. ASIC's online database for MFHL.42 As to the third requisite, Sections 113(A)(2), (8)(1), (2)(c) and (3) of the NIRC of 1997, as amended, and as implemented by Sections 4.113-1(A)(2), (8)(1) and (2)(c) of Revenue Regulations (RR) No. 16- 05, provide that a VAT taxpayer, like herein petitioner, shall for every~ 35 Exhibit "P-36", Docket, vol. III, pp. 1332-1345. 36 Exhibit "P-35", Docket, vol. III, p. 1331. 37 Exhibit "P-36", Docket, vol. III, pp. 1332-1345. 38 Exhibit "P-37", Docket, vol. III, p. 1349. 39 Exhibit "P-38", Docket, vol. III, p. 1350. 40 Exhibit "P-39", Docket, vol. III, pp. 1351-1366. 41 Exhibit "P-40", Docket, vol. III, pp. 1367-1371. 42 Exhibits "P-41" and "P-42", Docket, vol. III, pp. 1373-1374.

DECISION CTA Case Nos. 8936, 8994 and 9040 lease of goods or properties and for every sale, barter or exchange of services issue a VAT official receipt which must contain the required information detailed as follows: "SEC. 113. Invoicing and Accounting Requirements for VAT- Registered Persons. - (A) Invoicing Requirements. -A VAT-registered person shall issue: XXX XXX XXX (2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services. (B) Information Contained in the VAT Invoice or VAT Official Receipt -The following information shall be indicated in the VAT invoice or VAT official receipt: (1) A statement that the seller is a VAT-registered person, followed by his Taxpayer's Identification Number (TIN); (2) The total amount which the purchaser pays or is obligated to pay to the seller with the indication that such amount includes the value-added tax: Provided, That: XXX XXX XXX (c) If the sale is subject to zero percent (0%) value-added tax, the term "zero-rated sale" shall be written or printed prominently on the invoice or receipt; XXX XXX XXX (3) The date of transaction, quantity, unit cost and description of the goods or properties or nature of the service '(Emphasis supplied) Section 4.113-1 of RR No. 16-05 provides as follows: "SEcriON 4.113-1. Invoicing Requirements. ~

DECISION CTA Case Nos. 8936, 8994 and 9040 {A) A VAT-registered person shall issue:- XXX XXX XXX (2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services. Only VAT-registered persons are required to print their TIN followed by the word "VAT" in their invoice or official receipts. Said documents shall be considered as a "VAT Invoice" or VAT official receipt. All purchases covered by invoices/receipts other than VAT Invoice/VAT Official Receipt shall not give rise to any input tax. VAT invoice/official receipt shall be prepared at least in duplicate, the original to be given to the buyer and the duplicate to be retained by the seller as part of his accounting records. {B) Information contained in VAT invoice or VAT official receipt -The following information shall be indicated in VAT invoice or VAT official receipt: (1) A statement that the seller is a VAT-registered person, followed by his TIN; (2) The total amount which the purchaser pays or is obligated to pay to the seller with the indication that such amount includes the VAT; Provided, That: XXX XXX XXX (c) If the sale is subject to zero percent (0%) VAT, the term "zero-rated sale" shall be written or printed prominently on the invoice or receipt"(Emphasis supplied) Pursuant to the foregoing provisions, the foreign currency remittances referred to under Section 108(8)(2) of the NIRC of 1997, as amended, must likewise be supported by VAT zero-rated official receipts. In its Quarterly VAT Returns for the four quarters of FY 2013, petitioner declared a total amount of P2,170,342,876.99 zero-rated sales, broken down as follows: ~

DECISION CTA Case Nos. 8936, 8994 and 9040 FY 2013 Zero-Rated Sales Exhibit 1st Quarter p 612 279 246.59 "P-3" 2nd Quarter "P-4" 3rd Quarter 549,754 294.35 "P-5" 4th Quarter 550_1935 948.89 "P-6" 457,373 387.16 Total p 2,170,342,876.99 In support thereof, petitioner submitted various documents such as (1) schedule of zero-rated sales,43 (2) service invoices, (3) official receipts, and (4) certificates of inward remittance issued by Hongkong and Shanghai Banking Corporation (HSBC), which are summarized below: Service Invoice S.I. Amount in Amount per Amount Difference PhP Official Receipt Reflected in the (Invoice- No. Exhibit Amount in AUD inAUD Certificate of O.R.) Inward Remittance FIRST QUARTER OF FY 2013 89 "P-24-b" 77 491.37 3 498 668.11 123 864 288.41 90 "P-24-c" 2 741132.95 12 016 030.80 91 "P-24-d" 265 929.41 9 438 722.94 4 105 114.96 92 "P-24-e" 209 056.58 692 998.57 93 "P-24-f' 91746.12 133 567 196.68 94 "P-24-q" 15 487.98 3 803 598.08 19 821 645.61 95 "P-24-h" 2 985 122.66 13 137 014.94 14 316 198.57 96 "P-24-i" 85 007.45 94 560 683.74 4 155 251.83 97 "P-24-i" 441 278.79 9 300 642.35 3 226 089.15 98 "P-24-k" 293 602.04 5 310 203.42 O.R. No. 28; May 94 134 034.35 16, 2012; 99 "P-24-1" 318 713.94 4 187 627.84 Exhibit "P-51" 14 756 685.70 Exhibit ''P-24-a" 10,752,118.42 2,858,213.41 100 "P-24-m" 2 105 154.38 43 566 280.29 10,752,118.42 101 "P-24-n" 92 506.17 820 270.26 612279246.59 102 "P-24-o" 207 055.27 103 "P-24-p" 70 904.25 104 "P-24-q" 116 709.72 105 "P-24-r" 2 086 504.24 106 "P-24-s" 92 037.32 107 "P-24-t" 324 328.19 113 "P-24-u" 972 380.46 114 "P-24-v" 18 182.54 subtotal 11610 331.83 SECOND QUARTER OF FY 2013 ------------------------------ Ill.. 43 Exhibits "P-24", "P-25", "P-26", and "P-27", Docket, vol. III, pp. 1148, 1171-1172, 1207-1208, and 1238-1239, respectively.

DECISION CTA Case Nos. 8936, 8994 and 9040 108 "P-25-b" 223 274.15 10 287 908.25 10 638 570.32 109 "P-25-c" 230 884.42 110 397 190.40 110 "P-25-d" 2 395 903.88 1 296 820.34 111 "P-25-e" 28 029.75 12 596 224.30 112 "P-25-f' 273 370.57 352 583.00 18 337 141.31 115 "P-25-g" 7 621.60 3 882 636.77 116 "P-25-h" 412 127.98 3 473 530.43 52 588 675.29 117 "P-25-i" 86 872.02 3 640 507.90 13 270 706.53 118 "P-25-i" 62 445.24 15 907 610.13 119 "P-25-k" 1181 766.46 1451 663.73 80 783.41 5 009 932.73 120 "P-25-1" 49 378.92 121 "P-25-m" 298 259.65 105 376 428.89 122 "P-25-n" 357 524.20 2 101648.65 15 903 176.30 123 "P-25-o" 32 481.08 12 201 753.04 O.R. No. 30; Sep. Exhibit "P-52" 124 "P-25-p" 114 030.68 27, 2012; 12,540,133.10 254 772.97 125 "P-25-q" 1123.96 2 711466.90 Exhibit "P-25-a" 4 644 880.17 126 "P-25-r" 2 407 494.45 104 920 204.57 1,Z540,133.10 3 027 747.21 127 "P-25-s" 47 679.90 15 274 212.80 15 381 016.11 128 "P-25-t" 363 060.64 363 534.78 129 "P-25-u" 277 723.13 1 574 794.28 2 837 577.34 130 "P-25-v" 5 767.66 549. 754 294.36 131 "P-25-w" 61 583.08 132 "P-25-x" 109 719.13 133 "P-25-y" 2 478 374.73 134 "P-25-z" 71 041.25 135 "P-25-aa" 358 384.99 136 "P-25-bb" 363 323.11 137 "P-25-cc" 8 593.70 138 "P-25-dd" 36 925.13 157 "P-25-ee" 63 774.67 subtotal 12 439.944.62 (100,188.48) THIRD QUARTER OF FY 2013 139 "P-26-b" 369 553.06 15 866 597.93 140 "P-26-c" 117 219.28 5 032 758.07 141 "P-26-d" 481 814.89 20 686 510.57 142 "P-26-e" 2 530 842.18 108 660 596.23 143 "P-26-f' 95 390.42 4 075 222.18 144 "P-26-q" 371943.01 15 969 209.30 145 "P-26-h" 341 297.49 14 653 457.56 146 "P-26-i" 12 379.48 528 870.16 O.R. No. 31; Dec. Exhibit ''P-53" 27, 2012; 148 "P-26-i" 121 383.71 5 326 036.04 Exhibit ''P-26-a" 149 "P-26-k" 1 896 033.60 83 193 558.72 150 "P-26-1" 104 073.61 4 572 495.98 368 744.27 151 "P-26-m" 16 167 960.60 152 "P-26-n" 469 526.87 20 601 75Q.43 153 "P-26-o" 8 990.37 395 026.65 155 "P-26-p" 110 405.32 4 806127.91 156 "P-26-q" 45 383.51 1970 846.78 ~

DECISION CTA Case Nos. 8936, 8994 and 9040 158 "P-26-r" 967 295.79 41 967 805.32 4 051 060.71 159 "P-26-s" 92 402.00 15 831 446.40 24 282 131.52 160 "P-26-t" 363 676.50 289 890.24 4 780 977.93 161 "P-26-u" 557 802.44 2 016 355.11 162 "P-26-v" 6 654.49 84 500 005.15 2 251156.39 164 "P-26-w" 110 506.43 15 209 202.80 165 "P-26-x" 46 605.57 32 905 567.11 166 "P-26-y" 1 953 455.71 343 325.09 550. 935. 948.88 167 "P-26-z" 51 799.79 168 "P-26-aa" 351 542.02 169 "P-26-bb" 760 299.46 170 "P-26-cc" 7 900.01 Subtotal 12 714 921.28 12,769,491.60 12,769,491.60 (54,570.32) FOURTH QUARTER OF FY 2013 172 "P-27-b" 104 997.46 4 483 442.04 15 944.50 680 034.34 173 "P-27-c" 1 285 659.10 54 922 122.25 174 "P-27-d" 73 976.46 3 155 975.39 15 302 342.00 175 "P-27-e" 358 788.04 716 987.74 30 586 217.82 176 "P-27-f' 337 883.44 7 913.72 177 "P-27-g" 111148.35 4 735 361.00 2 539 328.30 108 069 653.07 178 "P-27-h" 71 245.75 364 121.51 3 051 503.71 180 "P-27-i" 656 428.58 15 496 415.00 27 937 052.55 182 "P-27-j" 9 051.36 119 028.69 387 675.81 183 "P-27-k" 5 093 027.65 27 171.67 1159 729.13 184 "P-27-1" 2 284 261.05 97 754 967.80 3 087 747.66 185 "P-27-m" 72 368.15 15 549 120.40 363 339.74 32 990 248.84 186 "P-27-n" 770 823.94 O.R. No. 32; Mar. 190 465.45 08, 2013; 188 "P-27-o" 4 463.98 7 069 341.32 Exhibit ''P-53" 164 854.31 2 371 501.58 Exhibit ''P-27-a" 189 "P-27-p" 4 404 429.21 I 54 381.49 4 165 479.41 5,234,027.35 ! 190 "P-27-q" 101 522.53 4 818 448.16 96 274.77 4 481 344.04 5,234,027.35 5,477,450.40 191 "P-27-r" 113 032.43 5 091858.07 41 295 770.47 8 180 905.01 105 279.54 457.373387.15 192 "P-27-s" 119 084.59 10711477.75 193 "P-27-t" 194 "P-27-u" 198 "P-27-v" 199 "P-27-w" 200 "P-27-x" 201 "P-27-y" 202 "P-27-z" 203 "P-27-aa" 204 "P-27-bb" subtotal TOTAL 49 476 675.48 2 170 342.876.98 41 295.770.47 While there is a difference amounting to AUD8,180,905.01 between the zero-rated sales reflected per petitioner's Quarterly VAT Returns/service invoices and that shown in petitioner's VAT zero-rated ORs, the Court-commissioned Independent CPA was able to account~

DECISION CfA Case Nos. 8936, 8994 and 9040 for such discrepancy pertaining to the following: (1) debit notes, which represent billings by MFHL for the recoveries of lSD, human resources, business services, insurance, financial operations and other recoveries to petitioner, including cross border interest relative to advances made by petitioner to MFHL, and reimbursement of expenses paid by MFHL on behalf of petitioner; (2) revaluation of intercompany balances, which pertains to foreign currency differential from the invoice date and estimated settlement date based on the internal rate being used by the group and the petitioner; and (3) bank charges, to wit: 44 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total 8 413 231.45 Particulars 2 916 607.93 - Amounts in AUD 5 496 623.52 Debit Notes - Revaluation Intercompany (58 404.56) (100 198.16) (54 579.96) (19/181.50) (232 364.18_) Balances 10.04 9.63 9.64 9.75 39.06 Bank Charges 2,858,213.41 ( 100,188.53} (54,570.32} 5,477,451.77 8,180 906.3345 Total In fine, petitioner proved that it had zero-rated sales for the four quarters of FY ended March 31, 2013 in the total amount of P2, 170,342,876.98. Petitioner incurred or paid input taxes Having resolved that petitioner's sales to MFHL qualify for VAT zero-rating, the Court will now proceed in the determination of whether petitioner incurred input taxes in connection thereto and if said input taxes have not been applied against any output VAT liability of the petitioner. In its Quarterly VAT Returns for FY 2013, petitioner reflected a total amount of P36,730,780.52 allowable input VAT arising from its amortization of input VAT on purchases of capital goods exceeding P1 million, domestic purchases of capital goods not exceeding P1 million, domestic purchases of goods other than capital goods, domestic~ 44 See Annex 2 of the ICPA Report (Exhibit "P-56 11 , in relation to Exhibits "P-70-a// to "P-70-c//, "P- ) 71-a// to "P-71-e//, and "P- 58 11 � 45 The difference of AUD1.32 is due to rounding off.

DECISION CTA Case Nos. 8936, 8994 and 9040 purchases of services and services rendered by non-residents, detailed as follows: 1stQuarter 2nd Quarter 3rd_Quarter 4th Quarter Total Input Tax Deferred on p 12 696 537.21 p 10 963 132.91 p 9 033 038.15 p 9 713 535.37 p 12 696 537.21 Capital Goods exceeding P1 Million from Previous 382 896.71 204 421.82 2 358 892.14 8 571 821.86 11 518 032.53 Quarter Add: Input Tax on Capital 13 079 433.92 11167 554.73 11 391 930.29 18 285 357.23 24 214 569.74 Goods exceeding P1 Million Purchased this _Quarter 10 963 132.89 9 033 038.16 9 713 535.37 16 219 315.06 16 219 315.06 Total: Unamortized Input 2 116 301.03 2 134 516.57 1 678 394.92 2 066 042.17 7 995 254.68 Tax on Capital Goods exceeding P1 Million 72 167.72 122 631.27 - - 194 798.99 Less: Input Tax on Purchases of Capital Goods 425 895.57 583 547.02 2 708 029.59 968 281.30 4 685 753.48 exceeding P1 Million 8 176 337.56 deferred for the succeeding 2 780 440.34 4 078 684.75 8 410 864.83 23 446 327.48 period 182 346.73 Amortization of Input Tax 31 056.48 75 695.46 P12 745 108.80 119 547.22 408 645.89 on Capital Goods exceeding P1 Million P5,425,861.14 P6 995 075.07 P11,564 735.52 P36 730 780.52 Add: Input Tax on: Domestic Purchase of Capital Goods not exceedi11g_ P1M Domestic Purchases of Goods Other than Capital Goods Domestic Purchase of Services Services Rendered by Non- Residents Total Allowable Input Tax Save for a minimal difference of P.lO, the total allowable input tax of P36,730,780.52 is the subject of petitioner's claim. In support thereto, petitioner presented various documents such as summary lists46 and schedules47 and the corresponding invoices, official receipts, and BIR Forms No. 160048, which were all examined by the Independent CPA. A review of the Independent CPA Report49 together with the documents supporting the P28,735,525.8450 input VAT claim on 46 Exhibits "P-20", "P-21", P-22", and "P-23", Docket, vol. III, pp. 994, 1031, 1067, and 1105, respectively. 47 Exhibits "P-20-a" to "P-20-c", "P-21-a" to "P-21-c", P-22-a" to "P-22-c", and "P-23-a" to "P-23- c", Docket, vol. III, pp. 995-1030, 1032-1066, 1068-1104, and 1106-1147, respectively. 48 Exhibits "P-72" to "P-3532", "P-3533" to "P-3538", "P-3539" to "P-3545", "P-3547" to "P-3715", and "P-3719" to "P-3817". 49 Exhibit "P-56". 50 Domestic Purchases of Goods Other than Capital Goods p 194 798.99 Importation of Goods other than Capital Goods 4 685 753.48 Domestic Purchase of Services 23 446 327.48 Services Rendered by Non-Residents 408 645.89 Total Allowable Input Tax ---- P28 735 525.84 ~~-

DECISION CTA Case Nos. 8936, 8994 and 9040 domestic purchases of capital goods not exceeding P1M, domestic purchases of goods other than capital goods, domestic purchases of services and purchases of services rendered by non-residents show that input taxes amounting to P1,910,759.89 should be disallowed for not being properly substantiated by VAT invoices or official receipts as prescribed under Sections 110(A) and 113(A) and (B), 237, and 238 of the NIRC of 1997, as amended, in relation to Sections 4.110-1, 4.110- 8, and 4.113-1 of RR No. 16-05, as amended. The amount of P1,910,759.89 is detailed as follows: Findings Reference 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter TOTAL p- p- p 1,683.22 PURCHASES OF GOODS - - 808.39 Domestic - - 548.22 - 808.39 purchase of 450.00 548.22 goods other than 450.00 1 capital goods Annex 6-3Q-aa p 783.22 p 900.00 ~ supported by TIN Annex 6-4Q-r VAT Invoices with notation as not a valid source of input VAT Domestic purchase of goods other than capital goods supported by Reg TIN VAT Invoices 2 with Petitioner's Annex 6-3Q-w 808.39 - TIN written on a computer printed Invoice without countersign and Petitioner's address with countersign Domestic purchase of goods other than capital goods supported by Reg TIN VAT Invoices with Petitioner's - 3 TIN written on a Annex 6-3Q-x 808.39 computer printed Invoice without countersign and Petitioner's address and VAT amount with countersign Domestic purchase of goods other than 4 capital goods Annex 6-1Q-u - - supported by VAT Reg. Invoice not dated within the period of claim Domestic Annex 6-2Q-I 5 purchase of goods other than

DECISION CTA Case Nos. 8936, 8994 and 9040 capital goods supported by VAT Reg. TIN Invoices but the date is unclear Domestic purchase of services supported by VAT Reg. TIN Invoices not dated within the quarter but 6 within the period Annex 6-3Q-y - - 1,071.43 - 1,071.43 of claim with alteration on the Petitioner's name with countersign included as domestic purchase of qoods Domestic purchase of goods other than capital goods supported by VAT 7 Reg. TIN Invoices Annex 6-4Q-s - - - 117.29 117.29 not dated within the quarter but within the period of claim with incomplete Petitioner's name Domestic purchase of goods other than capital goods supported by photocopied VAT Reg. TIN Invoices not dated within - - 8 the quarter but Annex 6-3Q-z 2,073.22 - 2,073.22 within the period of claim with inserted Petitioner's name without countersign and Petitioner's TIN with countersiGn Domestic purchase of goods other than capital goods - 9 supported by VAT Annex 6-1Q-v 38,146.83 - - 38,146.83 Reg. TIN Invoice not dated within the period of claim Domestic purchase of goods other than capital goods supported by VAT 10 Reg. TIN Invoice Annex 6-1Q-w 7,035.01 - - - 7,035.01 not dated within the period of claim with alteration on the Petitioner's name with countersion l w.

DECISION erA case Nos. 8936, 8994 and 9040 Domestic purchase of goods other than capital goods supported by photocopied VAT Reg. TIN Invoice not dated within the period of claim with Annex 6-1Q-x 107.06 - - - 107.06 11 alteration on the Petitioner's name with countersign and Petitioner's TIN is written in a computer printed Invoice with countersign and Petitioner's address without countersign Domestic purchase of goods other than capital goods supported by VAT Reg. TIN Invoice 12 not dated within Annex 6-1Q-y 365.68 - - - 365.68 the period of claim with incomplete Petitioner's name (i.e. Macquarie Offshore Services pty, Ltd. Phil.) Domestic purchase of goods other than capital goods supported by VAT Reg. TIN Invoice - 13 not dated within Annex 6-1Q-z 40,666.82 - - 40,666.82 the period of claim with written Petitioner's name in a computer printed Invoice with countersiqn Domestic purchase of capital goods not exceeding 1 million erroneously classified as domestic purchase of goods other that capital goods in 14 the schedule Annex 6-1Q-aa 2,352.00 - - - 2,352.00 supported by certified true copy VAT Reg. TIN Invoice not dated within period of claim with written Petitioner's TIN on a computer printed Invoice without A .... countersiqn

DECISION CTA Case Nos. 8936, 8994 and 9040 Domestic purchase of goods other than capital goods supported by VAT Reg. TIN Invoice 15 with alteration on Annex 6-2Q-m - 68.50 - - 68.50 the date with countersign but with overclaimed input VAT amount as independently computed Domestic purchase of goods other than capital goods supported by VAT Reg. TIN Invoice with inserted - - 16 Petitioner's name Annex 6-2Q-n 385.71 - 385.71 and TIN with countersign and Petitioner's address is written on a computer generated Invoice with countersign Domestic purchase of goods other than capital goods supported by VAT Reg. TIN Invoice with inserted Petitioner's name 17 with countersign Annex 6-1Q-ab 17,217.64 1,791.45 - - 19,009.09 and with Annex 6-2Q-o alteration on the Petitioner's TIN with countersign but Petitioner's address is written on a computer generated Invoice with countersign Domestic purchase of goods other than capital goods supported by VAT Reg. TIN Invoice with inserted - - 18 Petitioner's name Annex 6-2Q-p 3,021.43 - 3,021.43 and address with countersign and Petitioner's TIN is written on computer printed Invoice with countersign Domestic purchase of goods other than capital goods supported by VAT Reg. TIN Invoice - 19 with inserted Annex 6-4Q-t - - 912.03 912.03 Petitioner's name with countersign and with incomplete Petitioner's ~r-- address

DECISION CTA Case Nos. 8936, 8994 and 9040 Domestic purchase of goods other than capital goods supported by VAT - - 20 Reg. TIN Invoice Annex 6-4Q-u - 1,605.00 781.10 781.10 Annex 6-2Q-q - with inserted Annex 6-3Q-ab - Annex 6-1Q-ac - Petitioner's name Annex 6-1Q-ad - Annex 6-1Q-ae 556.34 - with countersign 534.64 3,468.00 - but without BIR R_ermit to print Domestic purchase of goods other than capital goods supported by VAT 21 Reg. TIN Invoice - - 1,605.00 with alteration on the Petitioner's name with countersign and with wrong Petitioner's TIN Domestic purchase of goods other than capital goods supported by VAT Reg. TIN Invoices with incomplete Petitioner's name 22 (e.i Macquarie 1,682.14 - 1,682.14 Offshore Services) with Petitioner's address is written on a computer generated invoice with countersign and without BIR permit to print Domestic purchase of goods other than capital goods supported by 23 photocopied VAT - - 556.34 Reg. TIN Invoice with incomplete Petitioner's name and VAT amount is not shown separately Domestic purchase of goods other than capital goods supported by VAT 24 Reg. TIN Invoice - - 534.64 with Petitioner's name, TIN and address written on a computer generated invoice with countersign Domestic purchase of goods other than capital goods 25 supported by VAT - - 3,468.00 Reg. TIN Invoice with Petitioner's name written on a computer &: .... aenerated invoice

DECISION CTA Case Nos. 8936, 8994 and 9040 with countersign but with underclaimed input VAT amount as independently computed. Domestic purchase of goods other than capital goods supported by VAT Reg. TIN Invoice with inserted 26 Petitioner's name Annex 6-2Q-r - 535.71 - - 535.71 without countersign and Petitioner's TIN is written on a computer printed Invoice without countersion Domestic purchase of goods other than capital goods - 27 supported by VAT Annex 6-3Q-ac - 8,672.47 - 8,672.47 Reg. TIN Invoice with inserted Petitioner's TIN with countersign Domestic purchase of goods other than capital goods supported by VAT 28 Reg. TIN Invoice Annex 6-3Q-ad - - 3,409.28 - 3,409.28 with written Petitioner's TIN on a computer generated Invoice with countersion Domestic purchase of goods other than capital goods supported by VAT Reg. TIN Invoice with alteration on - 29 the Petitioner's Annex 6-4Q-v - - 18,771.43 18,771.43 address with countersign but with overclaimed input VAT amount independently computed Domestic purchase of goods other than 30 capital goods Annex 6-4Q-w - - - 10,261.61 10,261.61 supported by VAT Reg. TIN Invoice without BIR permit to print Domestic purchase of goods other than capital goods - 31 supported by VAT Annex 6-3Q-ae - - 6,252.47 6,252.47 Reg. TIN Invoice with overclaimed input VAT ~ amount as

DECISION CTA Case Nos. 8936, 8994 and 9040 independently computed Domestic purchase of goods other than capital goods supported by VAT Reg TIN Invoices - - 32 wherein a potion Annex 6-3Q-v - 3,632.14 34,398.23 34,398.23 Annex 6-2Q-k 107.14 - pertains to Annex 6-1Q-af Annex 6-4Q-x - 4,562.38 domestic Annex 6-3Q-af - Annex 6-2Q-s - purchase of - Annex 6-3Q-ag services supported by VAT Req TIN OR. Domestic purchase of goods other than - - 33 capital goods 3,632.14 supported by photocopied VAT Reg. TIN Invoices Domestic purchase of 34 goods other than - - 107.14 capital goods supported by TIN V Invoice Domestic purchase of goods other than capital goods 35 supported by TIN - 2,558.58 2,558.58 Invoice not dated within the quarter but within the period of claim Domestic purchase of 36 goods other than 1,864.57 1,864.57 capital goods supported by TIN Invoice Domestic purchase of goods other than capital goods supported by TIN VAT Invoice not dated within the quarter but within - 37 the period of - 4,562.38 claim with alteration on the Petitioner's name and address without countersign and without Petitioner's TIN Domestic purchase of goods other than capital goods supported by TIN 38 VAT Invoice not 160.71 - 160.71 dated within the c:::::i quarter but within the period of claim with inserted Petitioner's name

DECISION CTA Case Nos. 8936, 8994 and 9040 without countersign and with underclaimed input VAT amount as independently computed wherein a portion pertains to domestic purchase of services supported by TIN VAT OR Domestic purchase of goods other than capital goods supported by TIN VAT Invoice not 39 dated within the Annex 6-2Q-t - 773.04 - - 773.04 quarter but within Annex 6-3Q-ah - 117,532.65 Annex 6-1Q-ag - - the period of 2,102.49 2,102.49 Annex 6-1Q-ah - claim and with Annex 6-1Q-ai 107.14 - 107.14 272.81 272.81 overclaimed input Gi ~ VAT amount as independently computed Domestic purchase of goods other than 40 capital goods 117,532.65 supported by TIN VAT Invoice not dated within the period of claim Domestic - - purchase of goods other than capital goods supported by TIN VAT Invoice but not dated within 41 the period of claim with inserted Petitioner's name, TIN and VAT amount in different writing with countersign. Domestic purchase of goods other than capital goods supported by TIN VAT Invoice but not dated within the period of - - 42 claim with inserted Petitioner's name with countersign and with alteration on Petitioner's address with countersign. Domestic purchase of 43 goods other than - - capital goods supported by TIN VAT Invoice but

DECISION CfA Case Nos. 8936, 8994 and 9040 not dated within the period of claim with inserted Petitioner's TIN with countersign and VAT amount in different writing with countersign Domestic purchase of goods other than capital goods supported by TIN 44 VAT Invoice not Annex 6-3Q-ai - - 20,255.14 - 20,255.14 dated within the Annex 6-1Q-aj period of claim Annex 6-3Q-aj Annex 6-1Q-ak and no indicated Annex 6-3Q-ak BIR permit to print and printing date Domestic purchase of goods other than capital goods supported by TIN 45 VAT Invoice but 5,881.07 - - - 5,881.07 not dated within the period of claim and VAT amount in different writing with countersign Domestic purchase of goods other than capital goods supported by TIN VAT Invoice with alteration on the date without countersign and underclaimed - - - 46 input VAT 160.71 160.71 amount independently computed wherein a portion pertains to domestic purchase of services supported by TIN VAT OR Domestic purchase of goods other than 47 capital goods 992.96 - - - 992.96 supported by TIN VAT Invoice with incomplete Petitioner's name Domestic purchase of goods other than capital goods supported by TIN 48 VAT Invoice but - - 482.13 - 482.13 with 0 je,_.... underclaimed input VAT amount independently computed L_

DECISION CTA Case Nos. 8936, 8994 and 9040 Domestic purchase of services supported by TIN - 49 VAT Invoices Annex 6-3Q-u - - 642.86 642.86 2,214.64 9,750.49 included as 3,456.16 - - 5,847.31 purchase of 126,132.67 32,423.16 goods other than - - capital goods - 97.50 Domestic - 1,338.64 purchase of goods other than Annex 6-lQ-am 551.54 19.29 12,535.96 capital goods Annex 6-2Q-v 50 without Annex 6-3Q-am supporting Annex 6-4Q-ab documents at the time of verification. Domestic purchase of 51 goods other than Annex 6-lQ-al - 2,055.58 5,511.74 capital goods Annex 6-4Q-y supported by VAT OR Domestic purchase of Annex 6-2Q-uv Annex 6-3Q-al 52 goods other than Annex 6-4Q-z 7,012.98 19,009.96 31,870.25 capital goods with supports other than VAT invoice. Subtotal 208,622.52 55,386.87 422,565.21 PURCHASES OF SERVICES Domestic purchase of goods supported by TIN VAT Invoice not dated within the quarter 1 but within the Annex 6-3Q-bp 333.99 - 333.99 period of claim erroneously classified as domestic purchase of services Domestic purchase of services supported by VAT Reg. TIN OR not - 2 dated within the Annex 6-2Q-ax - 97.50 quarter but within the period of claim with incomplete Petitioner's name Domestic purchase of services supported by VAT Reg. TIN OR not dated within the 3 quarter but within Annex 6-2Q-ay - - 1,338.64 the period of claim with incomplete Petitioner's name and writing is different on the Petitioner's TIN 4 ilo......

DECISION CTA Case Nos. 8936, 8994 and 9040 Domestic purchase of services supported by VAT 4 Reg. TIN OR not Annex 6-4Q-bi - - - 14,399.98 14,399.98 dated within the - - Annex 6-4Q-bj quarter but within - - Annex 6-4Q-bk 7,278.25 693.20 the period of Annex 6-1Q-bh Annex 6-2Q-az - - claim without Annex 6-3Q-bq Annex 6-3Q-br 321.43 - Petitioner's TIN 88.93 Annex 6-1Q-bi - Domestic Annex 6-1Q-bj purchase of goods supported by VAT Reg. TIN OR erroneously classified as domestic 5 purchase of - 83.57 83.57 services not dated within the quarter with alteration on the Petitioner's TIN and address without countersiqn Domestic purchase of services supported by VAT Reg. TIN OR not dated within the - 6 quarter but within 1,863.74 1,863.74 the period of claim but with overclaimed input VAT as amount independently computed Domestic purchase of services 7 supported by VAT 2,400.00 - 10,371.45 Reg. TIN OR not dated within the period of claim Domestic purchase of services supported by VAT Reg. TIN OR not dated within the - 8 period of claim 374.79 374.79 with stamped Petitioner's name, TIN and address and with different writing on the VAT amount Domestic purchase of services supported by VAT Reg. TIN OR not 9 dated within the - - 321.43 period of claim but with alteration on the Petitioner's address without countersign Domestic 10 purchase of - - 88.93 services _a~oo< supported by VAT

DECISION CTA Case Nos. 8936, 8994 and 9040 Reg. TIN OR not dated within the period of claim but different writing on the VAT amount Domestic purchase of 11 services Annex 6-4Q-bl - 417.64 417.64 supported by VAT - 486.09 Reg. TIN OR not - dated - Domestic - purchase of - services supported by VAT Reg. TIN OR but 12 no date indicated, Annex 6-2Q-ba 5,039.97 - - 5,039.97 with stamped 21,947.65 Petitioner's name, - TIN and address - and VAT amount 5,536.54 535.50 is not shown separately Domestic purchase of services supported by VAT Annex 6-1Q-bk - - 22,433.74 13 Reg. TIN OR but Annex 6-2Q-bb no date indicated, with stamped Petitioner's name, TIN and address Domestic purchase of services supported by VAT Reg. TIN OR with alteration on the 14 date without Annex 6-3Q-bs 9,027.75 - 9,027.75 countersign with stamped Petitioner's name, TIN and address and with different writing on the VAT amount Domestic purchase of services supported by VAT Reg. TIN OR no year indicated on - 15 the date with Annex 6-3Q-bt 245.89 245.89 stamped Petitioner's name, TIN and address and with different writing on the VAT amount Domestic purchase of services supported by VAT 16 Reg. TIN OR but Annex 6-2Q-bc - - 5,536.54 no year indicated on the date with stamped Petitioner's name, TIN and address Domestic purchase of Annex 6-2Q-bd 17 services Annex 6-3Q-bu 9,103.16 5,040.01 14,678.67 supported by VAT Annex 6-4Q-bm a Req. TIN OR with

DECISION CTA Case Nos. 8936, 8994 and 9040 stamped Petitioner's name, TIN and address and VAT amount was not shown separately Domestic purchase of services supported by VAT Reg. TIN OR with stamped 18 Petitioner's name, Annex 6-4Q-bn - - - 838.84 838.84 TIN and address - Annex 6-1Q-bl 1,441.61 - and overclaimed Annex 6-4Q-bc - 417.93 input VAT as Annex 6-4Q-bo - - amount Annex 6-1Q-bg - Annex 6-2Q-be independently Annex 6-3Q-bv computed on different writino Domestic purchase of services supported by VAT Reg. TIN OR with stamped 19 Petitioner's name, - 1,441.61 TIN and address but with overclaimed input VAT amount independently computed Domestic purchase of services supported by VAT Reg. TIN OR with stamped 20 Petitioner's name, - 267.75 267.75 TIN and address but with overclaimed input VAT as amount independently computed Domestic purchase of services supported by VAT Reg. TIN OR with stamped 21 Petitioner's name, - - 417.93 TIN and address but with underclaimed input VAT amount independently computed Domestic purchase of services supported by VAT Reg. TIN OR with 22 wrong Petitioner's 267.75 - 267.75 name and without Petitioner's TIN, -dll address and VAT amount - -- - - -L__

DECISION CTA Case Nos. 8936, 8994 and 9040 Domestic purchase of services supported by VAT Reg. TIN OR not in the Petitioner's - - 23 name with wrong Annex 6-4Q-bp - 1,296.43 1,296.43 Petitioner's TIN and overclaimed input VAT amount as independently computed Domestic purchase of services supported by VAT Reg. TIN OR with alteration on the - - 24 Petitioner's name Annex 6-4Q-bq - 31,253.15 31,253.15 and TIN with countersign and with stamped Petitioner's address and VAT amount Domestic purchase of services supported by VAT Reg. TIN OR with alteration on the - - 25 Petitioner's name Annex 6-3Q-bw 76,872.00 - 76,872.00 with countersign and underclaimed input VAT amount as independently computed Domestic purchase of services supported by VAT Reg. TIN OR with incomplete - - 26 Petitioner's name Annex 6-3Q-bx 13,203.92 - 13,203.92 (i.e. Macquarie Offshore Services pty. Ltd. Branch, Macquarie Offshore Svcs pty) Domestic purchase of services supported by VAT Reg. TIN OR with incomplete 27 Petitioner's name Annex 6-3Q-by - - 57,805.97 - 57,805.97 (i.e. Macquarie Offshore) and without Petitioner's TIN, address and VAT amount not shown seoaratelv Domestic purchase of services 28 supported by VAT Annex 6-4Q-br - - - 74.36 74.36 Reg. TIN OR with incomplete Petitioner's name ~ .......... and address

DECISION CTA Case Nos. 8936, 8994 and 9040 without Petitioner's TIN Domestic purchase of services supported by VAT 29 Reg. TIN OR with Annex 6-4Q-bs - - - 2,904.41 2,904.41 incomplete 851.68 Annex 6-2Q-bf - Petitioner's name 1,255.99 1,255.99 Annex 6-1Q-bm - 4,298.04 and VAT amount Annex 6-2Q-bg Annex 6-3Q-bz - 773.18 was not shown Annex 6-4Q-bt - Annex 6-4Q-bu 375.38 separately - 7,200.00 Annex 6-4Q-bv Domestic Annex 6-4Q-bw ~lc purchase of services supported by VAT Reg TIN OR with 30 incomplete 851.68 - - Petitioner's name with overclaimed input VAT as amount independently computed Domestic purchase of services supported by VAT Reg. TIN OR with 31 incomplete - - - Petitioner's name and with alteration on the VAT amount without countersion Domestic purchase of services 32 supported by VAT 1,952.68 1,320.00 1,025.36 Reg TIN OR without Petitioner's TIN Domestic purchase of services supported by VAT Reg. TIN OR without - - 33 Petitioner's TIN 773.18 but with underclaimed input VAT as amount independently computed Domestic purchase of services supported by VAT Reg. TIN OR 34 without - - 375.38 Petitioner's TIN but with overclaimed input VAT amount as independently computed Domestic purchase of 35 services - - 7,200.00 supported by VAT Reg. TIN OR and VAT amount was _L_

DECISION CTA Case Nos. 8936, 8994 and 9040 not shown separately Domestic purchase of services supported by VAT Annex 6-2Q-bh Annex 6-4Q-bx 36 Reg. TIN OR with - 288.22 8,736.00 9,024.22 Annex 6-3Q-ca - overclaimed input - - Annex 6-1Q-bn 7,826.76 VAT amount Annex 6-1Q-bo 2,014.28 Annex 6-2Q-bi 6,311.93 - independently Annex 6-3Q-cb 7,826.76 Annex 6-4Q-bz - computed Annex 6-1Q-bp - - Domestic Annex 6-4Q-ca - - - - purchase of Annex 6-4Q-cb - Annex 6-3Q-cc services Annex 6-3Q-cd supported by VAT 37 Reg. TIN OR with 1,030.39 - 1,030.39 overclaimed input VAT amount independently computed Domestic purchase of services 38 supported by TIN - - 2,014.28 VAT Registered OR but no date indicated on SIR permit to print Domestic purchase of 39 services 7,826.77 7,826.83 29,792.29 supported by TIN OR Domestic purchase of services supported by TIN 40 OR with inserted - - 7,826.76 Petitioner's name with countersign and Petitioner's address in different writinq Domestic purchase of services supported by VAT TIN OR not dated within the quarter 41 but within the - 147.86 147.86 period of claim with inserted Petitioner's name, TIN and address without countersign Domestic purchase of 42 services - 180,914.98 180,914.98 supported by TIN Non-VAT/Non- VAT Req. TIN OR Domestic purchase of 43 services 8,769.60 - 8,769.60 supported by 322.81 Non-VAT Reg. ~ TIN OR Domestic purchase of - 44 services 322.81 supported by TIN VAT OR not dated

DECISION CTA case Nos. 8936, 8994 and 9040 within the period of claim Domestic purchase of services supported by TIN VAT OR not dated 45 within the period Annex 6-3Q-ce - - 262.50 - 262.50 of claim with Annex 6-3Q-cf - - underclaimed Annex 6-4Q-cc - - input VAT Annex 6-3Q-cg - 7,333.20 amount Annex 6-2Q-bj - Annex 6-4Q-cd 6,710.42 - independently 17,928.00 Annex 6-4Q-ce 45,957.71 com outed - Annex 6-lQ-bs - Domestic Annex 6-2Q-bl 15,048.21 - Annex 6-3Q-cj purchase of Annex 6-4Q-ci 80,280.74 Annex 6-lQ-bq services Annex 6-3Q-ch Annex 6-4Q-cf supported by TIN Annex 6-4Q-cg 46 VAT OR not dated 10,120.10 33,304.46 43,424.56 Annex 6-lQ-br within the period Annex 6-2Q-bk Annex 6-3Q-ci of claim with Annex 6-4Q-ch incomplete Petitioner's name Domestic purchase of services supported by TIN - 47 VAT OR not dated 20,190.66 20,190.66 within the period of claim and without Petitioner's TIN Domestic purchase of services 48 supported by TIN - 642.86 7,976.06 VAT OR with wrong Petitioner's TIN Domestic purchase of services supported by TIN 49 VAT OR with - 1,596.45 1,596.45 underclaimed input VAT amount independently computed Domestic purchase of services without 50 supporting 275,636.34 26,620.60 354,925.07 documents at the time of verification. Domestic purchase of 51 services with 112,515.59 30,088.75 160,532.34 scanned VAT OR support only Domestic purchase of goods supported by scanned VAT - 52 OR erroneously 1,457.14 1,457.14 classified as domestic purchase of services Domestic purchase of 53 services with 117,562.06 44,396.72 257,287.74 supports other ._ ~ .... than VAT OR.

DECISION CTA Case Nos. 8936, 8994 and 9040 I Subtotal I I I I 66,711.90 I I 725,192.04 403,546.45 1,375,548.31 180,097.92 PURCHASES OF CAPITAL GOODS NOT EXCEEDING P1 MILLION Domestic Annex 6-2Q-bo - 946.33 - - 946.33 purchase of 9,933.35 capital goods not Annex 6-2Q-bp - 89,310.53 - - 9,933.35 exceeding P1 1 million supported Annex 6-1Q-bu 12,456.16 - - 101,766.69 by TIN VAT OR Annex 6-2Q-bq but not dated within the period of claim Domestic purchase of capital goods not exceeding P1 million supported 2 by VAT REG TIN OR with underclaimed input vat independently computed Domestic purchase of capital goods not exceeding P1 3 million without supporting documents at the time of verification Subtotal 12,456.16 100,190.21 - - 112,646.37 TOTAL P205,300.71 P312,711.30 P933,814.57 P458,933.32 P1,910,759.89 In addition, the Court finds that the following input VAT in the total amount of P25,580.55 should likewise be disallowed for failure to meet the substantiation requirements under the afore-mentioned VAT law and regulations: Exhibit Registered Name Invoice No. Date of O.R.No. Date of Amount of Input Tax Supported with VAT Official Invoice O.R. Purchase Receipt but without Petitioner's 7893 TIN 8955 12/10/2012 458 2/8/2013 P-2102 ASIA SELECT, INC. 16723 10/31/2012 459 3/27/2013 p 30,860.83 p 3,703.30 178 1/22/2013 3/27/2013 BERNARDO 1101 2/28/2013 23588 1106 2/28/2013 PBMOROO 9/28/2012 P-2887 MAINTENANCE 1115306 20,251.08 2,430.13 2/15/2013 SERVICES P-3253 ASIA PEOPLEWORKS 20,377.33 2,445.28 INC. 20,387.50 2,446.50 P-3258 ASIA PEOPLEWORKS INC. Supported with VAT Official Receipt but with incorred Petitioner's TIN P-1718 NEW BEST None None 1,294.64 155.36 Not Supported with Proper VAT Official Receiot P-3181 PLOT 55190287 1/17/2013 119,999.83 14,399.98 Total ,.. P213,171.21 P25,580.55

DECISION erA Case Nos. 8936, 8994 and 9040 Hence, out of the P28,735,525.84 input VAT claim on domestic purchases of capital goods not exceeding PlM, domestic purchases of goods other than capital goods, domestic purchases of services and services rendered by non-residents, only the amount of P26,799,185.40 represents petitioner's valid input VAT, computed as follows: Domestic Purchase of Capital Goods not exceeding P1M p 194,798.99 Domestic Purchases of Goods Other than Capital Goods Domestic Purchase of Services ~685 753.48 Services Rendered by Non-Residents 23 446 327.48 Total 408 645.89 Less: Disallowances Per !CPA Report p 28 735.525.84 Per this Court's further verification Total 1 910 759.89 Properly Substantiated Input VAT on Domestic Purchases of 25 580.55 Capital Goods not exceeding PlM, Domestic Purchases of Goods other than Capital Goods, Domestic Purchases of Services and p 1/936340.44 Services Rendered by Non-residents p 26,799,185.40 The Court shall now proceed to review the substantiation made by petitioner of the P7,995,254.68 amortization of input VAT on capital goods purchases exceeding PlMillion which originated from the P12,696,537.21 input tax deferred on capital goods exceeding PlMillion from previous quarter and P11,518,032.53 input VAT from purchases during the four quarters of FY 2013, as shown below: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Input Tax Deferred on p 12 696 537.21 p 10 963 132.91 p 9 033 038.15 p 9 713 535.37 p 12 696 537.21 Capital Goods exceeding P1 Million from Previous 382 896.71 204 421.82 2 358 892.14 8 571 821.86 11 518 032.53 Quarter Add: Input Tax on Capital 13 079 433.92 11167 554.73 11 391 930.29 18 285 357.23 24 214 569.74 Goods exceeding P1 Million Purchased this Quarter 10 963 132.89 9 033 038.16 9 713 535.37 16 219 315.06 16 219 315.061 Total: Unamortized Input Tax on Capital Goods P2,116 301.03 P2 134,516.57 Pl 678,394.92 P2 066,042.17 P7,995 254.68 I exceeding P1 Million Less: Input Tax on Purchases of Capital Goods exceeding P1 Million deferred for the succeeding period Amortization of Input Tax on Capital Goods exceeding P1 Million Upon perusal of the supporting documents and the Independent CPA Report, the Court finds that the total amount of P1,972,976.92 ~

DECISION CTA Case Nos. 8936, 8994 and 9040 should likewise be disallowed for not being properly substantiated by VAT invoices, to wit: Findings Reference to I'!J)ut VAT Allowable ICPA Report Input VAT INPUT TAX DEFERRED ON CAPITAL GOODS EXCEEDING P1M FROM PREVIOUS QUARTER Domestic purchase of capital goods exceeding P1 million 1 supported by VAT REG TIN Invoices but not dated within Annex 8-w p 193 947.01 p 56 406.82 the period of claim 2 698.97 Domestic purchase of capital goods exceeding P1 million 18 757.64 987.43 2 supported by VAT REG TIN Invoices with alteration on the 204 907.02 date without countersign Annex 8-x 7 872.00 496.43 Domestic purchase of capital goods exceeding P1 million 22 181.23 supported by computer printed VAT REG TIN invoice with 7 085.51 3 altered date without countersign, incomplete Petitioner's 1 992.26 129 075.26 name, inserted TIN without countersign and with altered 1 440.21 address of the Petitioner with countersign Annex 8-y 87 535.71 1 080.00 Domestic purchase of capital goods exceeding P1 million 511.31 946.32 4 supported by VAT REG TIN Invoice with inserted 230 047.43 Petitioner's name without countersign Annex 8-z 4 937.14 23 016.44 26 880.00 5 Domestic purchase of capital goods exceeding P1 million Annex 8-aa 462 494.77 18 920.59 supported by photocopied VAT REG TIN Invoices 901 066.07 Domestic purchase of capital goods exceeding P1 million P1 648,496.94 6 supported by TIN VAT photocopied invoice not dated within the quarter but within the year of claim Annex 8-ab 1489.29 Domestic purchase of capital goods exceeding P1 million 7 supported by TIN VAT invoice not dated within the period of claim Annex 8-ac 72 914.00 Domestic purchase of capital goods exceeding P1 million 8 supported by VAT REG TIN Invoices but not dated within the period of claim with alteration on the Petitioner's name and with inserted Petitioner's TIN without countersign Annex 8-ad 20 666.07 Domestic purchase of capital goods exceeding P1 million 9 supported by VAT REG TIN Invoices but not dated within the period of claim with inserted Petitioner's name without countersign Annex 8-ae 9 961.33 Domestic purchase of capital goods exceeding P1 million 10 supported by TIN VAT invoice with incomplete Petitioner's name (Macquarie Offshore Services pty Ltd) Annex 8-af 387 225.79 Domestic purchase of capital goods exceeding P1 million 11 supported by TIN VAT invoice with inserted Petitioner's name without countersign Annex 8-ag 7 201.06 Domestic purchase of capital goods exceeding P1 million supported by computer printed TIN VAT invoice with 12 inserted name and TIN of the Petitioner without countersign and alteration on the Petitioner's address without countersign Annex 8-ah 5 400.00 Domestic purchase of capital goods exceeding P1 million 13 supported by photocopied TIN VAT invoice without Petitioner's TIN Annex 8-ai 2 556.53 Domestic purchase of capital goods exceeding P1 million 14 supported by photocopied TIN VAT invoice with inserted Petitioner's TIN with countersign Annex 8-ai 4 731.63 15 Domestic purchase of capital goods exceeding P1 million Annex 8-ak 671 762.10 supported by photocopied TIN VAT invoice 16 Domestic purchase of capital goods exceeding P1 million Annex 8-al 115 082.14 supported by Invoices not registered with the BIR 17 Domestic purchase of capital goods (services) exceeding Annex 8-am 134 400.00 P1 million supported by photocopied VAT REG TIN Invoices Domestic purchase of capital goods exceeding P1 million 18 supported by VAT REG TIN Invoices with inserted Petitioner's name without countersign Annex 8-an 94 602.91 19 The supporting documents not available at the time of Annex 8-ao 3 698 342.92 verifications subtotal PS 983,122.40 INPUT TAX ON PURCHASES OF CAPITAL GOODS EXCEEDING P1M DURING THE FOUR QUARTERS OF FY 2013 Domestic purchase of capital goods exceeding P1 million Annex 7-1Q-b p 560 154.87 p 95 356.06 ..,_ - 1 supported by TIN VAT Invoices but not dated within the Annex 7-4Q-m period of claim

DECISION CTA Case Nos. 8936, 8994 and 9040 Domestic purchase of capital goods exceeding P1 million 2 supported by TIN VAT Invoice with alteration on the Annex 7-3Q-f Petitioner's name and TIN without countersian Annex 7-4Q-k 289 640.68 33 101.79 685.71 41.56 Domestic purchase of capital goods exceeding P1 million Annex 7-2Q-c 165.56 1103.71 3 supported by TIN VAT Invoice with alteration on the VAT Annex 7-4Q-n 397.06 4 500.00 1 268.12 amount with countersian Annex 7-1Q-c 2 766.80 7 484.99 18 296.64 62 394.96 I Domestic purchase of capital goods exceeding P1 million Annex 7-2Q-d 707 142.86 124 269.89 4 supported by TIN VAT Invoices but not dated within the Annex 7-4Q-I 886 458.58 p 324479.99 Annex 7-1Q-d P2.470 749.85 P1,972 976.93 period of claim Annex 7-2Q-e P8,453L872.25 Annex 7-3Q-g Domestic purchase of capital goods exceeding P1 million Annex 7-40-o 5 supported by VAT REG TIN Invoice dated not within the - period of claim with alteration on the VAT amount with ----- counters ian Domestic purchase of capital goods exceeding P1 million 6 supported by photocopied VAT REG TIN Invoices but not dated within the period of claim Domestic purchase of capital goods exceeding P1 million 7 supported by photocopied VAT REG TIN Invoices but not dated within the period of claim Domestic purchase of capital goods (services) exceeding 8 P1 million supported by photocopied VAT REG TIN Invoice not dated within the quarter but within the period of claim 9 Domestic purchase of capital goods exceeding P1 million without supportinq documents at the time of verification. subtotal TOTAL Hence, out of the P7,995,254.68 reported amortization of input VAT on purchase of capital goods exceeding PlMillion, only the amount of P6,022,277.75 (P7,995,254.68 - P1,972,976.93) represents petitioner's valid claim. In sum, petitioner's total allowable input VAT amounted only to P32,821,463.15, as computed below: Input VAT on Domestic Purchases of Capital Goods not exceeding p 26 799 185.40 PlM, Domestic Purchases of Goods other than Capital Goods, Domestic Purchases of Services and Services Rendered by Non- 6 022 277.75 residents p 32,821,463.15 Amortization of Input VAT on Purchases of Capital Goods exceedinq PlMillion Total Allowabl~ InQut VAT Petitioner's input taxes were entirely attributable to zero- rated sales and were not applied against any output VAT liability Since petitioner's reported sales for FY 2013 were all zero-rated, the substantiated input VAT in the amount of P32,821,463.15 i~

DECISION CTA Case Nos. 8936, 8994 and 9040 entirely attributable thereto and was not applied against any output tax. Even though the claimed input VAT was carried over by petitioner in its succeeding Quarterly VAT Returns51, the same remained unutilized until it was deducted as "VAT Refund/TCC Claimed" in the amounts of P5,425,861.12 and P31,304,919.48 in its Quarterly VAT Returns52 for the first and second quarters of FY 2015, respectively, thus, preventing the carry over or application of the claimed input VAT in the next taxable periods. In view of the foregoing, petitioner has sufficiently proven its entitlement to a refund or issuance of a tax credit certificate in the reduced amount of P32,821,463.15, representing unutilized input VAT attributable to its zero-rated sales to MFHL for the four quarters of FY ended March 31, 2013. WHEREFORE, premises considered, the instant consolidated Petitions for Review are hereby PARTIALLY GRANTED. Accordingly, respondent is ORDERED TO REFUND or TO ISSUE A TAX CREDIT CERTIFICATE in the amount of THIRTY-TWO MILLION EIGHT HUNDRED TWENTY-ONE THOUSAND FOUR HUNDRED SIXTY- THREE AND 15/100 PESOS (P32,821,463.15), representing petitioner's unutilized input VAT attributable to its zero-rated sales for FY ended March 31, 2013. SO ORDERED. WE CONCUR: ~�/;~-- t. �~~c. Q..sra.-:;-d../ CATHERINE T. MANAHAN Associate Justice JliaNITO C. CASTANED~ JR. ~ Associate Justice CAESAR A.CASANOVA Associate Justice 51 Exhibits "P-67-a" to "P-67-d", "P-68-a", and "P-68-b". 52 Exhibits "P-68-a" and "P-68-b", line 23D.

DECISION CTA Case Nos. 8936, 8994 and 9040 CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. ~h c:..G.X-~;.S. . ~ANITO C. CASTANe'DA, JR. Acting Presiding Justice