STEFANINI PHILIPPINES INC., v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION STEFANINI PHILIPPINES, CTA Case No. 10226 INC., Petitioner, M e m b e rs : - versus - DEL ROSARIO, P.J., Chairperson, MANAHAN, and REYES-FAJARDO, Il COMMISSIONER OF Promulgated: INTERNAL REVENUE, Respondent. X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - DECISION REYES-FAJARDO, L;_ Before the Court is a Petition for Review1 filed by Stefanini Philippines, Inc. (petitioner or Stefanini Philippines) on December 16, 2019 against respondent Commissioner of Internal Revenue (CIR), seeking the refund of or issuance of a tax credit certificate (TCC) am ounting to P9,632,173.66 representing alleged excess and/ or unutilized input value-added tax (VAT) on purchases of goods and services attribu table to zero-rated sales relative to the third and fourth quarters of calendar year (CY) 2017. FACTS Stefanini Philippines is a corporation organized under Philippine law, w ith registered office address at 3, 5 & 6/ F iMET BPO Metrobank Ave., Metropolitan Park, Roxas Blvd., Pasay City 1300. It is en gaged in the business of providing business process outsource solutions and allied contact or call center services2 to clients that 1 Docket- Vol. I, pp. 6-13. Par. 1.1, Stipulation of Facts, Compliance dated October 1, 2020, Docket- Vol. I, p. 298.

DECISION CTA Case No. 10226 Pnge 2 of29 include non-resident foreign entities such as Stefanini, Inc., Stefanini UK Ltd., Stefanini Sart and Stefanini NV/ SA. Respondent is the head of the Bureau of Internal Revenue (BIR) empowered to perform the duties of the office, including acting upon and approving claims for refund or tax credit. Its office address is at the 5th Floor, BIR National Office Building, BIR Road, Diliman, Quezon City.3 Tax Returns 1) Output VAT For the third and fourth quarters of CY 2017, Stefanini Philippines filed4 Quarterly Value-Added Tax Returns (BIR Form No. 2550-Q) and reported total sales of !>359)76,890.35, which included zero-rated sales of !>358,807,912.34 as follows: Period VATable Sales Zero-rated Sales Total Sales T-hird Q uarter-- 20175 f> 221,514.41 f> 122,765,262.34 f> 122,-986,7- 7-6-.-7--5- ----- - �- �---�---------- Fourth Quarter- 20176 147,463.60 236,042,650.00 236,190,113.60 Total P 368,978.01 P358,807,912.34 P359,176,890.35 Correspondingly, Stefanini Philippines reported output VAT from its sales subject to VAT in the third and fourth quarters amounting to P26,581.737 and Pl7,695.63,8 respectively . 2) Input VAT On the other hand, it also declared a total input VAT of P9,676A50.52 from its current domestic purchases of goods and services and input VAT on purchases of capital goods from previous quarters, detailed as follows: 3 Par. 2, Stipulation of Facts, Compliance dated October 1, 2020, Docket- Vol. I, pp. 298 to 299. Petitioner amended its VAT return for the fourth quarter on April14, 2018. s Exhibit "P-80", Lines 115 to 19, Docket- Vol. II, p. 1128. (Note: Zero-rated sales we re reported as Exempt sales.) 6 Exhibit "P-100", Lines 15 to 19, Docket- Vol. I, p. 471. 7 Exhibit "P-80", Line 15B, Docket- Vol. II, p. 1128. s Exhibit "P-81", Line 15B, Docket- Vol. II, p. 1130.

t DECISION CTA Case No. 10226 Pnge 3 of29 3rd Qtr 2017 4th Qtr 2017 Total "P-80" (Amended) P1,582,446.18 "P-100" P1,582,446. 18 Input Tax Due on Capital P1,498,163.00 P3,080,609.18 Goods exceeding P1M 1,498,163.36 1,195,413.26 1,195,413.26 ?84,282 .82 Deferred from previous P2,693,576.26 P4,276,022.44 quarter P141,177.60 Purchase of Capital Goods 2,602,771.62 4,100,934.98 Exceeding P1M 101,759.75 ?90,804.64 ?175,087.46 To ta l ?242,937.35 Less: Deferred for the P100,028.89 P241,206.49 succeeding period P3,027,767.46 Amortized input tax on capital ?3,027,767.46 312,164.12 413,923.87 goods exceeding ?1M P3,354,987.63 ?412,1 93.01 ?655,130.36 Input Tax Due on Current Purchases of Goods other than P5,818,465.24 P8,846,232.70 Capital Goods ?5,818,465 .24 ?8,846,232.70 Input tax on purchase of P6,321,462.89 P9,676,450.52 capital goods not exceeding P1M Input tax on domestic purchases of goods other than capital goods Sub-total Input Tax Paid on: Input tax on domestic purchases of services Sub-total Total input tax during the p erio d 3) VAT Payable On account of the excess of input over output VAT, Stefanini Philippines reported net VAT overpayment for the third and fourth quarters am ounting to P54,951,712.8Q9 and P61,255A80.42,10 resp ec tiv ely. Proceedings before the BIR On September 26, 2019, Stefanini Ph ilippines filed before the BIR an Application for Tax Credits/ Refunds (BIR Form No. 1914),11 9 Exhibit "P-80", Line 29- Vol. II, p. 1129. 10 Exhibit "P-81", Line 29- Vol. II, p. 1131. 11 Exhibit "P-89", Docket- Vol. II, p. 1156.

DECISION CTA Case N o. 10226 Pnge 4 of29 accon1panied by a letter12 of even date (administrative claim). In the main, it averred as follows: First, it incurred excess and/ or u nutilized inpu t VAT attribu table to its zero-rated sales. Second, it is entitled to the refund or credit of excess input VAT arising fro m the third and fourth quarters of CY 2017 in the aggregate am oun t of P9,632,173.66.13 The CIR14 den ied Stefanin i Philippines's administrative claim. The latter received a copy of this denial on November 18,2019. H ence, it filed the present Petition for Review on December 16, 2019 (judicial claim) .15 Proceedings before the Court The CIR filed an Answer16 an d subm itted17 the BIR Recor ds of the case on March 2, 2020 and July 28, 2020, respectively. After the parties' submission of their respective pre-trial briefs18 and the con duct of a pre-trial conference,19 the Court resolved20 to approve the parties' Joint Stipulation of Facts and Issues21 and issued a Pre-Trial Order dated February 3, 2021.22 During trial, the following persons testified for Stefanini Philippines: (1) Ms. Jeanina B. Pepito/3 petitioner's Finance Manager, 12 Exhibit "P-88", Docket - Vol. II, pp. 1153 to 1155. 13 With P0.50 discre pancy against the total per VAT Returns. 14 Th rough a letter da ted October 29, 2019 issued by the BIR, through Ms. Maria Luisa I. Belen, OIC-Assis tant Commissioner (ACIR) - Assessment Service. Exhibit " P-118" to "P-118-A-1", Docket - Vol. II, pp. 658 to 668. ts Docket- Vol. I, pp. 6 to 16. 16 Docket- Vol. I, pp. 62 to 71. 17 Compliance da ted July 27, 2020, Docket - Vo l. I, pp. 79 to 80. 18 For the CIR, see Docket- Vol. I, pp. 88 to 92; For Stefan ini Philippines, see Docket - Vol. I, pp. 103 to 117. 19 Notice of Rese tting da ted June 30, 2020, Docket - Vol. I, p. 77; Minutes of the hearing held on, and Order da ted, Septe m ber 24, 2020, Docke t - Vol. I, pp. 287 to 290, and 292 to 293, respective ly. 2o In a Resolution d ated October 19,2020. Docket- Vol. I, p. 332. 21 Docket - Vol. I, p p. 298 to 309. 22 Docket - Vo l. II, pp. 952 to 973. 23 Exhibit "P-90", Doc ket - Vol. I, pp. 118 to 138; Exhi bit "P-119", Docket - Vol. II, pp . 646 to 651; Minutes of the hea ring he ld on Janua ry 21, 2021, Docket- Vol. II [last fo ur (4) pages thereof]; O rder dated January 21, 2021, Docket - Vol. II, pp. 944 to 945.

DECISION CTACase No. 10226 Page 5 of29 and (2) Mr. Joseph Cedric V. Calica,24 the Court-commissioned Independ ent Certified Public Accountant (ICPA).25 The Report of the ICPA was submitted on December 4, 2020.26 Stefanini Philippines filed its Formal Offer of Evidence27 on February 10, 2021. While the CIR filed a Comment2B thereto, the Court expunged 29 the same for bein g filed out of time. Consequently, the Court resolved30 to admit all exhibits offered by Stefanini Philippines. For its part, the CIR presented the testimony of Revenue Officer Dexter C. Bustillos.31 Subsequently, the Court also admitted32 all exhibits offered33 by the CIR. After the parties filed their respective Memoranda,34 the case was submitted for decision on August 23, 2022.35 ISSUE The Court is tasked to ascertain Stefanini Philippines's entitlement to a refund or credit of alleged unutilized input VAT attributable to zero-rated sales relative to the third and fourth qu arters of CY 2017. 24 Exhibit "P-120", Docket- Vol. II, pp. 671 to 704; Minutes of the hearing held on January 21, 2021, Docket- Vol. II [last four (4) pages thereof);Order dated Ja nuary 21, 2021, Docket- Vol. II, pp. 944 to 945. 25 Oath of Commission dated October 22, 2020, Docket- Vol. I, p. 337; Minutes of the hearing held on, and Order dated, October 22, 2020, Docket - Vol. I, pp. 334 to 336 and 338 to 339, respectively. 26 Exhibits "P-114" and"P-114-A", Docket- Vol. I, pp. 377 to 395. 27 Docket- Vol. II, pp. 978-1011. 2s Docket- Vol. III, pp. 1480-1483. 29 In a Resolution dated May 23, 2021, Docket - Vol. III, p. 1485. 30 In a Resolution dated June 21,2021, Docket- Vol. III, pp.1488 to 1491. 31 Exhibit "R-4", Docket- Vol. I, pp.97 to102; Minutes of the hearing held on, and Orderdated, November4, 2021, Docket- Vol. III, pp.1505 to1508-a. 32 In a Resolution dated March 21, 2022, Docket - Vol. III, pp. 1539 to1540. 33 Docket - Vol. III, pp.1515to1518. 3-1 For theCIR, see Docket- Vol. III, pp. 1566 to1578. ForStefanini Philippines, see Docket - Vol. III, pp.1580 to 1622. 35 Ina Minute Resolution dated August 23, 2022, Docket - Vol. III, p. 1623.

� DECISION CTA Case No. 10226 Pnge 6 of29 Petitioner's Arguments Stefanini Philippines anchors its claim for refund or credit on Sections 108(B)(2) and 112(A), in relation to Section 110(B), of the National Internal Revenue Code (Tax Code).36 It avers as follows: First, it is a VAT-registered taxpayer.37 Second, the inp ut VAT subject of the present claim was derived from purchases of goods and services attributable to zero-rated sales of services.38 Third, said inpu t VAT has remained unu tilized and/ or unapplied against its outp ut VAT liability.39 Fourth, it filed administrative and jud icial claims w ithin reglementary period prescribed by the Tax Code.4o Respondent's Argum.ents On the other hand, the CIR insists that Stefan ini Philip pines failed to substantiate its claim for refund at the administrative level.41 In particular, the CIR denied Stefanini Philippines's administrative claim because it did n ot comply w ith the man datory invoicing requirem ents pursuant to Section 113 in relation to Section 110 of the Tax Code.42 OUR RULING Stefanini Philippines's Petition for Review is partly meritorious. The Court n1ay consider evidence not presented at the administrative level. The basic rule in tax refund cases requires the claimant to establish its entitlem ent to the refu nd or credit sought by sh owin g that it has strictly complied w ith the con ditions for its grant.43 The 36 Doc ket - Vo l. I, p . 9. 37 Docket- Vol. I, p . 10. 38 Docket - Vol. I, p. 10. 39 Docke t- Vol. I, p. 10. 40 Docke t - Vol. I, p. 11. 41 Docke t - Vol. I, p. 63. 42 Docke t - Vo l. I, p. 65. 43 Silico11 Phils. In c. v. Conn11issioHer of llltemnl Revenue, G .R. Nos. 184360, 184361 & 184384, Februa ry 19, 2014, 727 Ph il. 487-506; Silicon Pliils., l11c. v. Commissioner of lntemnl Revenue, G.R. No. 173241, March 25, 2015.

DECISION CTA Case No. 10226 Pnge 7 of29 claimant's burden consists of proving not only that it is entitled to a refund, but also that it observed the reglementary periods within which the administrative and judicial claims for refund must be filed.44 Verily, the law authorizes the CIR to issue a TCC relative to or refund creditable input VAT due or paid attributable to zero-rated sales.45 Thus, the CIR is given sufficient discretion to grant or deny the claim for refund or credit, after evaluating the claimant's submissions in support of its request. The CIR's d enial is appealable to this Court.46 On appeal, the claimant must convince the Court that the CIR's denial was not justified. It may re-submit the documents already presented to the CIR, as well as additional documents which may further bolster its entitlement to a refund or credit. Put in another way, "part of the evidence to be submitted to the CTA must necessarily include whatever is required for the successful prosecution of an administrative claim."47 Significantly, cases filed before this Court are litigated de novo. Thus, Our review shall not be "limited to w hether or not the Commissioner committed gross abuse of discretion, fraud, or error of law, as contended by the Commissioner" and shall cover even the CIR's factual findings.48 Accordingly, We are not foreclosed from considering the totality of the evidence offered by the claimant, whether or not submitted previously at the adn1inistrative level. 44 Co111 missio11er of Internnl Reve/lue v. United Cndiz Sugnr Fnr111ers Associntiou Multi-Purpose Cooperative, G.R. No. 209776, December 7, 2016, 802 Phil. 636-659. 45 Section 112(C), Tax Code. 46 Section 112(C), Tax Code . ~7 See Atlns C01zsolidnterl Milling nnrl Develop111e11t Corp. v. C0111111issioner of Jnterunl Revenue, G.R. No. 145526, Ma rch 16, 2007, 547 Phil. 332-340. 48 Philippine Airlines, Inc. v. Co111missioner of Tnternnl Revenue, G.R. Nos. 206079-80 & 206309, January 17, 2018.

DECISION CTA Case No. 10226 Pnge 8 of29 Stefanini Philippines is entitled to a partial refund or credit. After a careful evaluation of the evidence offered in support of the instant judicial claim, We find in favor of granting Stefanini Philippines a refund or credit to the extent of P5,588,956.13. The recent case of Chevron Holdings, Inc. v. Commissioner of Internal Revenue49 set out the requisites for a grant of refund or credit of unutilized input VAT attributable to zero-rated sales, viz.: Under Section 112 (A) of the Tax Code, the taxpayer may claim for refund or issuance of tax credit cer tificate of unutilized input VAT attributable to zero-rated sales subject to the following conditions: (1) the taxpayer is VAT-registered; (2) the taxpayer is engaged in zero-ra ted or effectively zero-rated sales; (3) the claim must be filed within two (2) years after the close of the taxable quarter when such sales were made; and (4) the creditable input tax due or paid must be attributable to such sales, except the transitional input tax, to the ex tent that such input tax has not been applied against the output tax. The concurrence of the above-enumerated conditions In the present case is discussed below. 1) VAT Registration Stefanini Philippines's VAT registration is established by its Certificate of Registrationso with TIN 006-960-314-00000. 2) VAT Zero-rating Stefanini Philippines avers that the input VAT it seeks to refund is attributable to sales of services to its non-resident foreign clients, which they regard as subject to zero percent (0 %) VAT, pursuant to Section 108(B)(2) of the Tax Code, viz .: 49 G.R. No. 215159, July 5, 2022. so Exhibits " P-4" and " P-4-A, Docket- Vol. II, p. 1023.

DECISION CTA Case No. 10226 Pnge 9 of29 Sec. 108. Value-Added Tax on Sale of Services and Use or Lease of Properties. - XXX XXX XXX (B) Transac tions Subject to Zero Perce nt (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 o ther persons doing business outside the Philippines which goods are subsequently exported, w here 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);" (Emphases supplied) The preliminary consideration for VAT zero-rating of a sale or supply of service is that it must have been performed in the Philippines. In this regard, it is already stipulated that Stefanini Philippines is engaged in the enterprise of providing business process outsource solutions and allied contact or call center services.51 That these services were performed in the Philippines is supported by its Amended Articles of Incorporation,52 BIR Certificates of Registration dated December 17, 201353 and January 18, 2018,54 and Agreements for Services55 w ith its respective clients, amon g others. In particular, these documents show that its registered address and principal place of business is in the Philippines. In Our view, that a corporation was incorporated in the Philippines and is registered herein are prima facie proofs that, necessarily, it conducts its business in the Philippines, 51 Par. 1.1, Stipulation of Facts, Compliance dated October 1, 2020, Docket- Vol. I, p. 298. 52 Exhibit "P-3" , Docket- Vo l. I, pp. 142-146. 53 Exhibit "P-4", Docket- Vol. I, p. 150. S-1 Exhibit "P-4", Docket- Vol. I, p. 151 . 55 Exhibits "P-6", "P-7" , "P-8", a nd "P-9", Docket- Vol. I., pp. 1025-1030, 1031-1036, 1037-1042, and 1043-1048, respectively.

DECISION CTA Case No. 10226 Pnge 10 of29 where it resides and is registered.56 Significantly, Stefanini Philippines' s domestic regis tered address is no longer disputed, as this fact has been settled and accepted between the parties.57 Sales or supplies of services performed in the Philippines may fall into two categories for purposes of zero-rating: export services under sub-paragraph (B)(1) (e.g., processing, manufacturing or repacking of goods intended for consumption outside the Philippines) and other services under sub-paragraph (B)(2) (e.g., sale or supply of services other than those referred to in sub-paragraph (B)(1)). In line with this, Stefanini Philippines s ubmitted the following agreements indicating therein that the services to b e provided, i.e., " outsourced processing serv ices to support [its clients' ] internal operations and external customer contracts," viz.: 1. Agreement for Services be tween Stefanini, Inc. and petitioner m ad e on Ja nuary 1, 2015 and shall re m ain in force until April30, 2018;58 2. Agreement for Services between Stefanini UK Ltd. and petitioner m ad e on September 1, 2017 and shall remain in force until August 31, 2019;59 3. Agreement for Services be tween Stefanini Sarl a nd petitioner made on January 1, 2016 and shall remain in force until April30, 2018;60 and 4. Agreement for Services between Stefanini NV/SA and petitioner m ade on January 1, 2016 and shall remain in force until April30, 2018.61 Th ese establish that Stefanini Philippines's services (i.e ., outsourced business process services) are zero-rated sales or supplies of other services. Consequently, its services must meet the criteria set out in Section 108 sub-paragraph (B)(2). 56 Stefnllini Pl7ilippines, l11.c. v. Com111issioner of lnternnl Revwue, C.T.A. Case No. 10188, November 23, 2022. 57 Par. 1,Stipulation of Facts, Compliance dated October1, 2020, Docket - Vol. I, p. 298. ss Exhibit "P-6", Docket - Vo l. II, pp. 1025 to1030. 59 Exhibit "P-7", Docket - Vol. II, pp. 1031 to1036. 60 Exhibit "P-8", Docket - Vol. II, pp. 1037 to1042. 61 Exhibit "P-9", Docket- Vol. II, pp.1043 to1048.

DECISION CTA Case No. 10226 Pnge 11 of29 In Comm.issioner of Internal Revenue v . Deutsche Knmuledge Services Pte. Ltd.,62 the Supreme Court enumerated the con ditions un der Section 108(B)(l), viz.: Sales of "other services," such as those qualifying services rendered by DKS to its foreign affilia tes-clients, shall be zero-ra ted pursuant to Section 108 (B) (2) of the Tax Code if the following conditions are met: First, the seller is VAT-registered. Second, the services are 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." Third, the services are "paid for in acceptable foreign currency and accounted for in accordance with [BSP] ru les and regula tions." Proof of NRFC Status For purposes of zero-rating under Section 108 (B) (2) of the Tax Code, the claimant must establish the two components of a client's NRFC status, viz.: (1) that their client was established under the laws of a country not the Philippines or, simply, is not a domestic corporation; and (2) that it is not engaged in trade or business in the Philippines. To be sure, there must be sufficient proof of both of these components: showing not only that the clients are foreign corporations, but also are not doing business in the Philippines. We find that Stefanini Philippines established its compliance with the aforementioned requisites. First, as d iscussed above, its VAT-regish�ation is shown by its BIR Certificate of Registration. Second, to prove that the remittances it received as payments for the services ren dered were in acceptable foreign currency an d accoun ted for as required by applicable BSP rules, petitioner presented Certificates of Inward Remittance issued by the Bank of America, N.A.63 and Metropolitan Bank & Trust Company.64 62 G.R. No. 234445, July 15, 2020. 63 Exhibits "P-75" and "P-76", Docket - Vol. II, pp. 1121 to 1124. IH Exhibit "P-77", Docket - Vol. II, p. 11 25.

DECISION CTA Case No. 10226 Pnge 12 of29 In the issuance of invoices and receipts evidencing the subject sales and collections of remittances, Stefanini Philippines must also comply with the mandatory invoicing requirements laid out in Section 113(A) and (B) of the Tax Code,65 as further implemented by Section 4.113-1(A) and (B) of Revenue Regulations (RR) No. 16-05. In this regard, Stefanini Philippines submitted the following official receipts to support its reported zero-rated sales for the third and fourth quarters of CY 2017, to wit: 65 SEC. 113. Invo icing and Accounting Requirements for VAT- registered Pe rsons. - (A) Invoicing Requireme nts. - A VAT-registered pe rson s hall issue: (1) A VAT invoice for every sale, barter or exchange of goods or properties; and (2) A VAT official receipt for every lease of goods or properties, a nd for every sale, barter or exchange of services. (B) Information Contained in the VAT Invoice or VAT Official Receipt. - T he 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 N umber (TIN); (2) The total amou nt which the purchaser pays or is obligated to pay to the se ller with the indication that s uch amount includes the valu e-added ta x: Provided, That: (a) The amount of the tax shall be shown as a separate item in the invoice or receipt; (b) If the sale is exempt from value-add ed tax, the term 'VAT-exempt sale' shall be written or printed prominently on the invoice or receipt; (c) If the sale is subject to zero percent (0%) value-added tax, the te rm 'zero-rated sale' shall be writte n or printed prominently on the invoice or receipt; (d) If the sale involves goods, properties or services some of which are subject to and some of which are VAT zero-rated or VAT-exempt, the invoice or receipt shall clearly indicate the break-down of the sale price between its taxable, exempt and zero-rated components, and the calculation of the value-added tax on each portion of the sale shall be shown on the invoice o r receipt: Provided, That the seller may issue sepa rate invoices or receipts for the taxa ble, exempt, a nd zero-rated components of the sa le; (3) The date of transaction, quantity, unit cost and description of the goods or properties or nature of the service; and (4) In the case of sales in the a mount of One thousand pesos (1'>1,000) or mo re w here the sale or tra nsfe r is made to a VAT-regis te red person, the na me, bus iness style, if any, address and Taxpayer Identification Number (TIN) of the purchaser, customer or client.

DECISION CTA Case No. 10226 Pnge 13 of29 Amount OR Foreign Exh.66 No. 3rd Quarter Date Client Currency PhP "P-10" 117 "P-11" 118 07/ 12/2017 Stefanini, Inc. $200,000.00 P10,092,000.00 "P-12" 119 07/18/2017 Stefanini, Inc. $125,000.00 6,341,250.00 "P-13" 121 07/24/2017 Stefanini, Inc. $200,000.00 "P-14" 122 07/31/2017 Stefanini, Inc. $281,107.85 10,127,000.00 "P-15" 123 08/08/2017 Stefanini, Inc. $500,000.00 14,174,863.34 "P-16" 124 08/25/2017 Stefanini, Inc. $300,000.00 25,282,500.00 "P-17'' 125 09/ 05/ 2017 Stefanini, Inc. $200,000.00 15,340,500.00 "P-18" 126 09/ 21/ 2017 Stefanini, Inc. $260,000.00 10,212,000.00 "P-19" 127 09/ 15/ 2017 Stefanini, Inc. 13,234,000.00 "P-20" 128 09/ 19/ 2017 Stefanini, Inc. $30,000.00 1,530,000.00 "P-21 " 129 09/20/ 2017 Stefanini, Inc. $300,000.00 15,239,539.50 09/ 2 8 / 2017 Stefanini, Inc. $10,000.00 4th Quarter Subtotal 505,134.50 "P-22" 130 10/03/2017 $13,500.00 686,475.00 "P-23" 131 10/ 10/ 2017 Stefanini, Inc. P122, 765,262.34 "P-24" 132 10/ 19/ 2017 Stefanini, Inc. "P-25" 133 11/ 08/ 2017 Stefanini, Inc. $500,000.00 P25,450,000.00 "P-26" 134 11/ 17/2017 Stefanini, Inc. $30,000.00 1,539,000.00 "P-27" 135 11/ 17/2017 Stefanini, Inc. "P-28" 136 11/20/2017 Stefanini UK Ltd. $320,000.00 16,483,200.00 "P-29" 138 12/ 04/ 2017 Stefanini NV/ SA $400,000.00 20,542,000.00 "P-30" 139 12/ 06/ 2017 Stefa nini, Inc. $365,000.00 18,512,800.00 "P-31" 140 12/07/2017 Stefanini, Inc. 3,414,115.63 "P-32" 141 12/28/2017 Stefanini Sarl �50,987.39 15,475, 200.00 "P-33" 142 12/ 20/ 2017 Stefanini, Inc. 260,000.00 8,064,800.00 $160,000.00 25,315,000.00 S tefa nini, Inc. $500,000.00 Fr61,000.00 3,113,440.00 Subtotal $250,000.00 12,457,500.00 TOTAL $200,000.00 10,046,000.00 P160,413,055.63 P283,178,317.97 Upon examination, We observe that each inward r e mittance is duly supported by VAT official receipts, all of which bear the information in accordance with the applicable invoicing requirements. To be sure, the amount collected was written and declared as "zero rated sales" in the breakdown portion (left side) on the face of each official receipt. All collections are reflected clearly as zero-rated sales on the official receipts, in compliance with the applicable invoicing requirements and pursuant to applicable jurisprudence directing that the term "zero-rated sale" be written or printed prominently on the face thereof. 66 Docket- Vol. II, pp. 1049 to 1072.

DECISION CTA Case No. 10226 Pnge 14 of29 We do note two (2) third quarter transactions where the amount of remittance received differed from the amount billed. Significantly, Stefanini Philippines submitted a reconciliation67 where it was able to explain the nature of these discrepancies.6s Third, that Stefanini Philippines's clients for whom it rendered the subject services are (a) non-resident foreign corporations (NRFC) (b) not en gaged in trade or business in the Philippines are established by the SEC Certifications of Non-Registration and Proofs of Foreign Incorporation/Registration relative to each of its foreign clients, viz: SEC Certification of Proof of foreign Non-Registration of incorporation/ Company Company (Exhibit Rej) registration Name (Exhibit Rej) " P-57"69 Stefanini, Inc. " P-61" to "P-61-A";7o "P- " P -58" 74 Stefanini UK 62" to " P-62-B";71 "P-66";72 " P-59"79 " P - 67" 73 Ltd. " P-60"86 " P-63" to " P-63-A",75 " P- Stefanini Sarl 116";76 "P-68"77; " P-69"7s Stefanini NV/SA "P-65" to "P-65-A",so "P- 65-l";s1 " P-65-A-1";82 "P- 72";83 "P-73";84" P-74"85 �--ri --�-� �� - � ~w - " P-64" to "P-64-A";87 "P- 1 1 7" 88 67 Exhibits " P-78" and " P-79", Docket- Vo l. II, pp. 1126 to 11 27. 68 Exhibit " P-78", Docket- Vol. II, p. 1126. 69 D oc ke t- V o l. II, p . 1096. 70 Docket - Vol. II, pp. 1100 to 11 01. 71 Docket - Vol. II, pp. 1102 to 1105. n Docket - Vol. II, p. 1114. 73 Docket- Vol. II, p . 1115. 74 Docket - Vo l. II, p. 1097. 75 BIR Records, p. 78. 76 Docket- Vol. II, pp. 652 to 653. 77 Docke t- Vol. II, p. 1116. 78 Docket- Vol. II, p. 1117. 79 Docket- Vol. II, p. 1098. 80 BIR Records, pp. 82 to 83. 81 Docket- Vol. II, p. 1111. 82 Docket- Vol. II, pp. 1112 to 1113. 83 Docket-Vol. - II, p. 1118. 84 Docke t-Vo l. - II, p. 1119. 85 Docket-Vol. - II, p. 1120. 86 Docket- Vol. II, p. 1099. 87 BIR Records, pp. 80 to 81. ss BIR Records, pp. 80 to 81.

DECISION CTA Case No. 10226 Pnge 15 of29 3) Timeliness of Administrative and Judicial Claims The present claim covers the third and fourth quarters of CY 2017. Counting two (2) years from the close of each of these quarters, respectively, the following table indicates the last day for filing of the administrative claim, viz.: VAT Close of the Quarter Last Day to File Return Administrative Claim __ .?.~E!~r.n~er }_~_?017 -~rd q~~rt~~- ~~r_teil_l~-~! 3 0_L2019____ December 13, 2017 December 31,2019 4th quarter It is clear from the foregoing that Stefanini Philippines's September 26, 2019 filing of its administrative claim was within the two (2)-year prescriptive period set out in Section 112(A) of the Tax Code. Subsequently, however, the CIR denied the administrative claim. It is stipulated that Stefanini Philippines received a copy of the CIR's denial on Noven1ber 18, 2019.89 It then proceeded to this Court and filed the present judicial claim on December 16, 2019.90 Likewise, the judicial claim was timely as it was filed within the thirty (30)-day reglementary period counted from receipt of the CIR's decision. 4) Validityofunutilizedinput VAT Certainly, the input VAT subject of the claim must a lso b e validi that is, eligible for refund or credit in accordance w ith relevant Tax Code provisions and regulations. To be valid, the input VAT: (a) must not be transitional input taxes,91 (b) must be due or paid92 and substantiated by supporting documents that, in turn, meet the applicable VAT invoicing requirements,93 (c) must be attributable to 89 Ex hibit "P-118" to "P-118-A-1", Docke t - Vo l. II, pp. 658 to 668. 90 In tel Tecluwlogy Philippines, Inc. v. Com111issioner of lntemnl Revenue, G.R. No. 166732, April 27, 2007; Snn Roque Power Corporation v. Co111111issioner of illtemnl Revenue, G.R. No . 180345, N ovember 25, 2009; and AT&T Comn1unicntio/ls Services Philippines, Inc., G.R. No. 182364, Au gust 3, 2010. 91 Ibid . 92 Ibid . 93 Ten111 Energy Corporntio11 v. Conunissioner of Intem nl Revenue, et seq., G. R. Nos. 197663 and 197770, Ma rch 14, 2018.

DECISION CTA Case No. 10226 Pnge 16 of 29 zero-rated or effectively zero-rated sales or supplies of service,94 and (d) must not have been applied against output taxes during and in the succeeding quarters.95 In the subject VAT returns, Stefanini Philippines declared input taxes in the aggregate amount of P9,676A50.52. Subject of the present claim is a total of !>9,632)73.6696 of the aforementioned amount. Stefanini Philippines's compliance with the above-enumerated requisites is discussed in detail below. � Not transitional input VAT There is no showing that input VAT credits subject of the instant claim are transitional input VAT within the meaning of Section 111(A) of the Tax Code. To be sure, the input VAT's non-transitional nature has not been put in issue nor questioned by the CIR. � Actually due and paid; supported by VAT invoices and official receipts Only 57.84%97 of the total input VAT reported in the returns was established to h ave been actually due or paid. Whether input VAT was due or paid is conditioned upon the presentation of documents that (a) substantiate the amount of input tax cre dits, as prescribed under Section 4.110-8 of RR No. 16-2005, and (b) comply with the invoicing requirements under Sections 113(A) and (B), 237 and 238 of the Tax Code, and implemented by Section 4.113- 1(A) and (B) of RR No. 16-2005. Here, Stefanini Philippines submitted VAT invoices and official receipts to support its input taxes from domestic purchases of goods and services for the third and fourth quarters of CY 2017. A careful 9~ Intel Teclmology Philippilles, lr1 c. v . Co111missioner of Internal Revwue, supra; and Snn Roque Power Corporntio11 vs. Co111111issioner of Internal Revenue, supra. 95 Intel Teclnwlogy PhilippiHes, Inc. v. Co111111issioner of Intemnl Reve11ue, supra; Snn Roque Power Corporation vs. Commissioner of Internal Revenue, supra; a nd AT&T C01111111111icntions Services Philippines, THe. , supra. 96 With f>0.50 discrepancy against the total per VAT Returns. 97 Va lid input VAT+ Total claim= 1'>5,596,590.06 + P9,676,450.52 = 0.5783722 "' 57.84 %

DECISION CTA Case No. 10226 Pnge 17 of29 examination of these documents reveals that input taxes amounting to .P4,079,860.46 are not supported properly and, thus, should be disallowed, viz.: Third Quarter SuEElier" Exh. No. Date Invoice/OR In12utTax Amount Purchase of goods other than ca:Qital goods Address, business style ancVor TIN ofpetitioner not indicated in invoice Brother's Ventme P-91-A-23 07/26/2017 f> 56,760.00 f> 6,081.43 Brother's Ventme P-91-A-25 07/28/ 2017 22,500.00 2,410.71 Brother's Ventme P-91-A-27 08/23/2017 75,000.00 8,035.71 Pacs12ortsa P-91-A-247 08/ 18/ 2017 11,970.00 1,282.50 Subtotal p 166,230.00 p 17,810.35 Invoice dated outside period ofclaim Synergenius Inc. P-91-A-341 06/ 08/ 2017 f>41,810.72 f>4,479.72 Unisonb P-91-A-347 05/ 17/2017 3,311.41 354.79 Unison P-91-A-349 05/ 19/2017 29,926.40 3,206.40 Unison P-91-A-351 05/ 19/ 2017 7,481.60 801.6 Unison P-91-A-353 06/ 19/2017 5,465.60 585.6 Unison P-91-A-355 05/ 19/2017 2,744.00 294 Unison P-91-A-357 06/01/2017 29,926.40 4,382.40 Unison P-91-A-362 06/ 01/ 2017 7,481.60 801.6 Unison P-91-A-364 06/ 01/2017 10,931 .20 1,171.20 Unison P-91-A-366 06/06/2017 2,240.00 240 Unison P-91-A-368 06/13/2017 5,376.00 576 Unison P-91-A-370 06/13/2017 4,760.00 510 Unison P-91-A-372 06/23/2017 5,465.60 585.6 Unison P-91-A-374 06/29/2017 5,488.00 588 294 Unison P-91-A-376 06/ 29/ 2017 2,744.00 18,870.91 36,681.26 Subtotal p 165,152.53 p Disallowed input taxes from purchase of goods other than capital goods p Purchase of caQitaJ goods not exceeding PlMillion Undated invoice I-Ii-End Office Designc P-91-B-2 f> 574,560.00 f> 61,560.00 Disallowed input taxes from purchase of capital goods not exceeding p 61~60.00 PlMillion Purchase of services OR dated outside period ofclaim Pacita R. Salceda P-91-A-21 03/09/ 2017 p 6,000.00 f> 642.86 p 642.86 Subtotal VAT notseparately indicated in the supporting OR Corpnet Globald P-91-A-106 08/30/ 2017 f> 31,350.00 f> 3,420.00 Corpnet Global P-91-A-108 09/ 18/2017 49,500.00 5,400.00 Extra Ordinai.ree P-91-A-131 07/ 24/2017 112,450.46 11,482.17 Exh�a Ordinaire P-91-A-133 07/24/2017 85,517.99 8,544.08 Exh�a Ordinaire P-91-A-135 09/ 11/ 2017 84,417.72 8,424.05 Extra Ordinaire P-91-A-137 09/ 11/ 2017 105,835.84 10,760.57 ~

DECISION CTA Case No. 10226 Pnge 18 of29 Kalibn Technologyf P-91-A-236 07/ 12/2017 28,325.00 3,090.00 Kalibn Technology P-91-A-240 09/22/2017 28,325.00 3,090.00 Phil. Vending Corp.g P-91-A-298 08/04/2017 18,177.50 1,983.00 Phil. Vending Corp. P-91-A-300 08/04/2017 61,769.91 6,738.54 Phil. Vending Corp. P-91-A-302 09/08/2017 8,672.32 946.07 Ricoh (Phil.) Inc. P-91-A-314 08/17/2017 11,894.20 Ricoh (Phil.) Inc. P-91-A-316 08/17/2017 11,894.20 1,333.93 1,333.93 Ricoh (Phil.) Inc. P-91-A-318 08/ 17/2017 11,894.20 1,333.93 Ricoh (Phil.) Inc. P-91-A-320 08/17/2017 11,894.20 1,333.93 Ricoh (Phil.) Inc. P-91-A-322 08/17/2017 11,894.20 1,333.93 Ricoh (Phil.) Inc. P-91-A-324 08/ 17/ 2017 8,894.33 970.29 Ricoh (Phil.) Inc. P-91-A-326 08/ 17/2017 11,989.72 1,344.64 Ricoh (Phil.) Inc. P-91-A-328 08/17/2017 47,926.82 5,228.38 Ricoh (Phil.) Inc. P-91-A-330 08/ 17/2017 40,014.63 4,365.23 Ricoh (Phil.) Inc. P-91-A-332 08/17/2017 35,143.17 3,833.80 Ricoh (Phil.} Inc. P-91-A-334 08/17/2017 44,021.80 4,802.38 Subtotal p 861,803.21 p 91,092.85 Input VAT on purchases ofservices not supported by 0 R B&T Law Offices P-91-A-76 09/05/2017 p 19,734.50 p 1,800.00 Hi-End Office Design P-91-A-205 07/24/2017 933,336.25 101,818.50 Hi-End Office Design P-91-A-207 08/11/ 2017 933,336.25 101,818.50 PLDTh P-91-A-249 08/ 16/2017 175,558.20 19,151.80 PLDT P-91-A-252 08/ 16/2017 216,805.89 23,651.55 PLDT P-91-A-254 08/16/2017 99,933.04 10,901.79 PLDT P-91-A-257 09/04/2017 143,000.00 15,600.00 PLDT P-91-A-259 09/ 04/ 2017 99,933.04 10,901.79 PLDT P-91-A-261 09/04/2017 4,483.77 489.03 PLDT P-91-A-263 09/04/2017 4,483.77 489.03 PLDT P-91-A-265 10/ 12/2017 165,548.06 18,059.79 Wellthy Solutions Inc. P-91-A-405 07/21/2017 9,630.00 1,080.00 Wellthy Solutions Inc. P-91-A-407 09/25/2017 9,630.00 1,080.00 Wellthy Solutions Inc. P-91-A-409 08/22/2017 9,630.00 1,080.00 Subtotal p 2,825,042. 77 p 307,921.78 No supporting documents Intellicare P48,563.50 :P5,827.62 Ricoh (Phil.) Inc. 11,205.33 1,344.64 Ricoh (Phil.) Inc. 7,664.33 919.72 Ricoh (Phil.) Inc. 45,477.00 5,457.24 Subtotal p 112,910.16 p 13,549.22 With discrepancy in amount ofinput tax claim against OR amount Claim Should be Difference Federal Landi P-91-A-143 P 83,783.70 P 82,287.56 f> 1,496.14 Federal Land P-91-A-145 361,067.71 344,948.62 16,119.09 Subtotal P444,851.41 P 427,236.18 p 17,615.23 Disallowed input taxes from purchase of services p 430~21.94

DECISION CTA Case No. 10226 Page 19 of29 Purchase of capital goods with amortized input tax Recognized Amortized Input Tax Invoice has no BIR Authority to Print Input Tax Life (in fortheQtr. p 647.66 months) p 647.66 Westcon Solutionsi P-91-C-10 p 12,953.16 60 Disallowed input taxes from purchase ofcapital goods with amortized input tax Total disallowed input taxes for the Third Quarter Fourth Quarter Invoice/OR SU��lier Exh.No. Date Amount In�utTax p 35,418.00 Purchase of goods other than capital goods Address, business style and/or TIN ofpetitioner not indicated in invoice Beyond The Grow1dk P-91-A-443 11/23/2017 p 330,568.00 Brother Venture! P-91-A445 11/06/2017 29,248.00 3,133.71 Brother Venture P-91-A-447 11/ 10/2017 35,700.00 3,825.00 Brother Venture P-91-A-449 11/23/ 2017 50,220.00 5,380.71 Brother Ventme P-91-A-451 11/23/2017 58,720.00 6,291.43 Brother Ventme P-91-A-453 09/18/2017 92,000.00 9,857.14 Brother Ventme P-91-A-455 10/04/2017 37,800.00 4,050.00 Brother Venture P-91-A-457 10/25/2017 43,660.03 4,677.86 GNS inc.111 P-91-A-547 10/12/2017 1,680.00 180 Gem Stationary Inc P-91-A-557 09/07/2017 27,089.06 2,902.40 Gem Stationary Inc P-91-A-559 09/08/2017 34,655.00 3,713.04 Gem Stationary Inc P-91-A-561 0 9 / 18 / 2 0 1 7 8,000.00 857.14 Gem Stationary Inc P-91-A-563 09/25/2017 36,230.00 3,881.79 Gem Stationary Inc P-91-A-565 09/30/2017 4,981.00 Gem Stationary Inc P-91-A-569 1 0/ 0 4 / 201 7 40,550.00 533.68 Gem Stationary Inc P -91 -A-571 10/ 05/2017 4,344.64 Gem Stationary Inc P-91-A-573 11/04/2017 2,500.00 Gem Stationary Inc P-91-A-575 11/27/2017 25,455.00 267.86 Gem Stationary Inc P-91-A-577 12/27/2017 39,629.99 2,727.32 Gem Stationary Inc P-91-A-579 11/27/2017 30,647.00 4,246.07 Promocentra.I, Inc. P-91-A-697 12/15/2017 29,237.00 3,283.61 509,091.52 3,186.11 Subtotal p 1,467,661.60 54,545.52 p 157,303.03 No supportingdocuments p 10,114.29 Star AJ2�lia.nce Cn�. p 10,114.29 Subtotal With discrepancy in amount of input Claim Should be Ditfpence tax claim and invoice amount p 2,205.54 Mercmy Drug Corr. P-91-A-669 p 7,897.18 p 5,691.64 p 2,205.54 p 169,622.86 Subtotal Disallowed input taxes from purchase of goods other than capital goods Purchase of services OR dated outside period ofclaim AGL Phils., Inc.n P-91-A-411 03/09/2018 p 79,284.16 p 300.00 03/09/2018 11,000.00 1,200.00 AGL Phi.ls., Inc. P-91-A-412 01 / 2 3 / 2 0 1 8 220,442.44 1,200.00 01/23/2018 30,543.23 AGL Phi.ls., Inc. P-91-A-413 300 AGL Phi.ls., Inc. P-91-A-414 ~

DECISION CTA Case No. 10226 .. Page 20 of29 ANSI Services, lnc.0 P-91-A-429 01/09/2018 480,716.24 9,456.73 ANSI Services, In.c P-91-A-431 01/09/2018 483,438.52 9,510.27 ADI, Inc.P P-91-A-433 01/08/2018 127,742.41 13,935.54 B&T Law Offices<l P-91-A-458 01/ 16/2018 1,344.00 144 B&T Law Offices P-91-A-459 01/ 10/ 2018 1,344.00 144 1,680.00 180 B&T Law Offices P-91-A-460 01/16/2018 1,344.00 144 B&T Law Offices P-91-A-461 01/10/2018 4,256.00 456 B&T Law Offices P-91-A-462 01/10/2018 11,200.00 1,200.00 B&T Law Offices P-91-A-484 01/10/2018 231,168.00 24,768.00 30,250.00 3,300.00 B&T Law Offices P-91-A-486 01/30/2018 44,000.00 4,800.00 Corpnet GlobaJr P-91-A-493 01/09/2018 107,449.72 10,936.63 Corpnet Global P-91-A-495 02/07/2018 273,647.76 27,176.97 Extra Ordinaire P-91-A-505 01/ 10/ 2018 2,732.42 298.1 Extra Ordinaire P-91-A-506 01/10/2018 3,264.79 356.15 Fedex Pacific, LLCS P-91-A-508 01/08/2018 810,759.85 88,446.53 10,747,022.22 1,205,273.52 Fedex Pacific, LLC P-91-A-510 01/08/ 2018 74,637.56 8,142.28 Federal Land P-91-A-534 01 / 0 9 / 2018 19,699.04 2,198.05 Federal Land P-91-A-536 01 / 0 9 / 2 018 52,635.76 5,808.47 FP Philippines, Inc. P-91-A-538 01/12/2018 55,325.63 5,837.99 105,971.92 11,573.85 Globe Telecom P-91-A-580 02/14/2018 165,000.00 18,000.00 17,936.60 1,956.72 Glocal Manpowert P-91-A-609 01/ 17/2018 19,566.40 2,134.52 15,597.06 1,701.50 Glocal Manpower P-91-A-611 01/09/2018 18,667.72 2,036.47 82,685.33 9,020.22 Glocal Manpower P-91-A-613 02/01/2018 93,303.57 10,178.57 10,890.00 1,188.00 HTECHCorp. P-91-A-623 01/ 10/2018 183,788.00 20,049.60 127,530.98 13,912.47 Intellicare P-91-A-629 02/01/2018 10,890.00 1,188.00 Intellicare P-91-A-630 02/01/2018 1,144.00 124.8 Intellicare P-91-A-633 01/16/2018 443,288.03 48,358.69 33,994.40 3,708.48 Intellicare P-91-A-634 01/ 16/2018 37,818.00 4,125.60 84,921.10 9,264.12 Intellicare P-91-A-635 01/ 16/2018 4,673.07 509.79 63,765.31 7,151.25 JaiN Jio Canteen P-91-A-642 01/ 19/2018 304,858.01 298.1 9,630.00 1,080.00 Jones Lang LaSalleu P-91-A-647 01/ 12/2018 9,630.00 1,080.00 P15,752,477.25 P1,594,153.98 Jones Lang LaSalle P-91-A-649 01/ 12/2018 Jones Lang LaSalle P-91-A-651 01/12/2018 Jones Lang LaSalle P-91-A-653 01 / 12/ 2018 Lane Archive Tech. P-91-A-664 01 / 2 3 / 2018 PLDT P-91-A-670 01 / 3 0 / 2018 RCW Constructionv 05/02/2017 P-91-A-700 RCW Construction P-91-A-712 02/ 14/2018 RCW Constmction P-91-A-714 02/14/2018 Ricoh (Phils.) Inc. P-91-A-724 01/15/2018 Ricoh (Ph.ils.) Inc. P-91-A-726 01/15/2018 SGV&CO P-91-A-729 01/30/2018 Wellthy Solutions P-91-A-857 01/19/2018 Wellthy Solutions P-91-A-863 01/19/2018 Subtotal VAT not separately indicated in the supporting OR BDD Inc."' P-91-A-487 12/11/2017 f>275,000.00 f>21,428.57 196,428.57 30,000.00 BDD Inc. P-91-A-488 10/20/2017 40,490.65 4,417.16 Corpnet Global P-91-A-491 11/22/ 2017 11,000.00 1,200.00 116,875.00 12,750.00 JaiN Jio Canteen P-91-A-636 10/26/2017 ~ Jai N Jio Canteen P-91-A-638 10/26/2017

DECISION CTA Case No. 10226 Pnge 21 of 29 JaiN Jio Canteen P-91-A-640 11/ 23/ 2017 38,696.43 4,221.43 2,040.00 Kristina Po P-91-A-657 11/23/ 2017 18,190.00 1,013,735.21 P1,089,792.37 RCW Construction P-91-A-716 12/ 28/2018 9,292,572.78 p 49,559.09 Subtotal P 9,989,253.43 58,677.82 1,080.00 Input VAT on purchases ofservices not supported by OR p 109,316.91 PLDT P-91-A-690 11/29/2017 P 454,291.65 p 360.00 PLDT P-91-A-693 11/ 29/ 2017 537,880.00 288.00 Wellthy Solutions P-91-A-861 01/10/2017 9,630.00 18,516.66 328,710.96 Subtotal p 1,001,801.65 93,016.32 14,372.31 No supporting documents p 3,000.00 Adventure Int'l.x 3,175.73 1,330.19 B&T Law Offices 2,400.00 p 459,770.17 Diversfy 154,305.50 Ditf_eren.ce p 20,843.37 Federal Land 2,739,258.00 21,023.46 Federal Land 775,136.00 21,522.62 Globe Telecom 119,769.25 11.07 0.94 Ricoh (Phils.) Inc. 26,464.42 1.91 68.47 Ricoh (Phils.) Inc. 11,084.92 15,271.43 48,102.38 Subtotal p 3,831,418.09 p 126,845.65 P3,379,879.08 With discrepanet; in amount ofinput tax claim and OR amount Claim Should be Extra Ordinaire P-91-A-499 p 25,501.63 p 4,658.26 Extra Ordinaire P-91-A-501 25,753.75 4,730.29 Extra Ordinaire P-91-A-503 26,331.11 4,808.49 Federal Land P-91-A-516 123,808.80 123,797.73 Federal Land P-91-A-518 1,680.00 1,679.06 Federal Land P-91-A-520 3,600.00 3,598.09 Federal Land P-91-A-524 85,719.00 85,650.53 Seafood Ventures P-91-A-728 20,271.43 5,000.00 W&I Ins. Brokers, Inc.Y P-91-A-865 57,722.85 9,620.47 Subtotal P370,388.57 p 243,542.92 Disallowed in_eut taxes from _eurchase of services Purchase of capital goods with amortized input tax Recognized Amortized Invoice has no BIR Authoritr.J to Print Input Tax Input Tax for Life the Qtr. Westcon Solutionsz P-91-C-10 P12,953.16 60 months P647.66 Disallowed input taxes from purchase ofcapital goods with amortized input tax P647.66 Total disallowed in_eut taxes for the Fourth Quarter P3,550,149.60 TOTAL DISALLOWED INPUT TAXES P4,079,860.46 "Supplier names that have been abbreviated in the table above are shown in full below. a PACSPORTS PHILS., INC. b Unison Computer Systems Inc. c Hi-End Office Design Corpora tion d Corpnet Global Corporation e Extra Ordinaire & Manpower Services Inc. I Kalibrr Technology Ventures, Inc. g Philippine Vending Corporation h Philippine Long Distance Telephone Company i Federal Land Inc (formerly Philippine Securities Corpora tion)

DECISION CTA Case No. 10226 Pnge 22 of29 Westcon Solutions Philippines, Inc. k Beyond The Ground Commodities Inc ' Brother Venture Trading Corp m Gateway Network Solutions (GNS) Inc. n Able Global Logistics Philippines, Inc. 0 All Nation Security & Investigation Services, Inc. P Analytics and Data Integrity, Inc. q Buan & Temprosa Law Offices r Corpnet Global Corporation s Federal Express Pacific, LLC t Glocal Manpower Supply & Services u Jones Lang LaSalle (Philippines), Inc. v RCW Consh�uction Development Corporation "" Buffet Dining Destination Inc. x Adventure International Tours, Inc. Y Winebrenner & Inigo Insurance Brokers, Inc. z Westcon Solutions Philippines, Inc. Resultantly, only input VAT amounting to P5,596,590.06 out of the P9,676,450.52 declared in the return shall be considered valid, viz.: Third Qtr. Fourth Qtr. Total Input taxes f> 3,354,987.63 f> 6,321,462.89 f> 9,676,450.52 Per VAT Returns 529,710.86 3,550,149.60 4,079,860.46 Less: Disallowed p 2,825,276.77 p 2,771,313.29 p 5,596,590.06 Valid input taxes � Attributable to zero-rated sales Only 99.86%98 of the valid input VAT cmnputed above IS attributable to zero-rated sales and, thus, eligible for refund. When the clai1nant was engaged in both VAT-able or zero-rated sales and input taxes due or paid cannot be attributed directly and entirely to either type of activity, it shall be allocated proportionately based on sales volume.99 In the subject taxable quarters, Stefanini Philippines was engaged in both VAT-able and zero-rated sales. Furthermore, its input taxes were not shown to be attributable exclusively to either activity. Thus, the amount of P5,596,590.06 of valid input VAT computed above shall be apportioned between the two activities per quarter, viz.: 98 Input VAT attributable to zero rated sales+ Valid input taxes= r5,589,771.14 + F>5,596,590.06 "'99.86% 99 Section 112(A), Tax Code.

DECISION ' CTA Case No. 10226 Pnge 23 of29 Third Quarter Fourth Quarter Total P221,514.41 P147,463.62 VAT-able Sales add Zero-rated Sales 122,765,262.34 236,042,650.00 Total Sales 122,986,776.75 236,190,113.62 Zero-rated Sales P122,765,262.34 P236,042,650.00 P283,178,31 7.97 Divided by Total Sales 122,986,776.75 236,190,113 .6 2 P5,596,590.06 Percentage 99.82% 99.94 % Valid In12ut VAT P2,825,276.77 P2,771,313.29 Attributable to: P2,820,188.10 P2,769,583.03 P5,589,771.14 Zero-rated sales* p 6,818.92 VAT-able sales * Eligible for refund Based on the foregoing, Stefanini Philippines' total valid input taxes attributable to zero-rated sales amounts to P5,589,771.14. Not applied against output tax during the third and fourth quarters of CY 2017 To recall, in the present case, Stefanini Philippines' claim for refund amounted to P9,632)73.16 resulted from offsetting the output tax on VAT-able sales against available input taxes for the third and fourth quarters of CY 2017, respectively, computed100 as follows: Third Fourth Total Quarter Quarter P9,676,450.52 Input tax on: f>84, 282.82 f>90,804.64 44,277.36 Capital Goods exceeding f>lM (amortized portion)101 242,937.35 412,193.01 P9,632,173.16 Current Purchases of Goods other than Capital Goods102 3,027,767.46 5,818,465.24 Domestic purchases of services103 P3,354,987.63 ?6,321,462.89 Input tax attributable to zero- 26,58 1.73 1 7, 695.63 rated sales, per VAT returns Less Output tnx still due104 P3,328,405.90 P6,303,767.26 InEut tax sought to be refunded 1oo Based on Stefanini' s Q uarterly VAT Returns. See Exhibits " P-80" and " P-81," Docket- Vol. II, p. 1128-1131. 101 Excess of amount in Line 20B over amount in Line 23A in the Q uarterly VAT Return. 102 Sum of Lines 21B and 21F in the Quarterly VAT Return. 103 Line 21J in the Quarterly VAT Return. 1().1 Line 15B in the Quarterly VAT Return.

DECISION ' CTA Case No. 10226 Pnge 24 of29 Significantly, the amount claimed consists only of (a) the amortized portion of input tax on capital goods exceeding Pl million, (b) input tax on current purchases of goods other than capital goods, and (c) input tax on domestic purchases of services. Stefanini Philippines does not seek to refund the amount of input taxes carried over from previous periods.1os It is clear from the foregoing that the amount herein claimed is already net of the output tax reported during the subject quarters. Not applied against output tnx in any subsequent period Further, based on the observations detailed below, We also find that the subject claim was not applied against any ou tput taxes in succeeding periods. First, the balance of input taxes carried over from previous periods as of January 1, 20181 06 amounted to P61,255,480.06, computed as follows: Input taxes carried over from previous periods, beginning Balance, June 30, 2017 P51,623,306 .90 Third Quarter 2017 P3,328,405.90 Fourth Quarter 2017 6,303,767.26 Balance, December 31, 2017 P61,255 ,480. 06 Second, from the first quarter of CY 2018 (i.e., beginning January 1, 2018) to the second quarter of CY 2019 (i. e., ending June 30, 2019), Stefanini Philippines accumulated input taxes from domestic purchases amounting to P21,311,658.19, computed as follows: 105 Line 20A in the Quarterly VAT Return. 106 Corres ponds to the balance as of December 31, 2017.

DECISION ' CTA Case No. 10226 " Pnge 25 of29 In12ut taxes from domestic 12urchases Goods Serv ices Gross Unamortized Amortized Total A B A+B+E c D E=C-D 2018 P113,977.00 P2.954,9�144 r2,8)2.771.56 P2.425,659.57 P177,111.9} P3,246,ffi3.43 Q1107 5ED,283.43 1,991,569.64 2,425,659.93 2248,548.29 177,111.64 2,728,%4.71 Q2108 SUl,93254 3;:J:b;373.69 2248,548.29 (342,102.19) 3,8&1,153.44 Q3109 Pi!Bf]2D.67 2,473,431.57 2,5~,651.07 2,5~,651.00 225,8E8.86 3,587,327.10 Q4110 2,364,782.21 2019 Q1111 1,530,94032 4)JJ3p9}.57 2,364,78?_21 3,244,443.72 (8/9,661.51) 4,659/!lS::B Q2112 358;397fJ.j 2,532,918.72 3,244,443.73 2,910,:ug37 333,&35.36 3,225A)l.l3 P21,311,658.19 Third, having regard to the first and second observations detailed above, the balance of input taxes carried over from previous periods as of June 30, 2019 amounted to !>82,567,138.25, computed as follows: Input taxes carried over from previous periods, ending Balance, January 1, 2018 !>61,255,480.06 add Input taxes from current transactions 21,311,658.19 Balance, June 30, 2019 P82,567,138.25 Fourth, from the first quarter of CY 2018 (i. e., beginning January 1, 2018) to the second quarter of CY 2019 (i. e., ending June 30, 2019), Stefanini Philippines incurred output taxes amounting to f>l,567,724.08, computed as follows : Output taxes113 2018 First quarter !>88,627.92 Second quarter 22,646.06 Third quarter 79,547.60 Fourth quarter 107,124.89 2019 First quarter 340,528.32 Second quarter 929,249.29 Total P1,567,724.08 107 Ex hibit " P-101", Docket- Vol. I, pp 473-474. 1os Exhibi t "P-102", Docket - Vol. I, pp. 475-477. 109 Exhibit " P-103", Docket - Vol. I, pp. 478-480. no Exhibit "P-105", Docket - Vol. I, pp. 484-485. 111 Ex hibit "P-106", Docket- Vol. I, pp. 486-487. m Ex hibit "P-113", Docket - Vol. I, pp. 526-527. 113 Line 15B in the Qua rte rly VAT Return. See notes 107 to 112.

DECISION "- CTA Case No. 10226 Pnge 26 of29 Fifth, in the quarterly VAT returns from the first quarter of CY 2018 (i.e., beginning January 1,2018) to the second quarter of CY 2019 (i.e., ending June 30, 2019), Stefanini Philippines applied the aforementioned output taxes against the outstanding balance of input taxes carried over from previous periods. Thus, after application, the net balance of input taxes amounted to P80,999,414.17, computed as follows: Input taxes carried over from previous periods, net a,[ output Balance, June 30, 2019 P82,567,138.25 less Output taxes incurred 1,567,724.08 Balance, net of output taxes P80,999,414.17 Sixth, in its fourth quarterly VAT return for CY 2018 and second quarterly VAT return for CY 2019, Stefanini Philippines carved out from the balance of its input taxes the amounts of P11,857,373.50114 and P15,210,089.68,ns respectively. According to the testimony116 of Jeanina B. Pepita, Finance Manager, Stefanini Philippines, the amount of P15,210,089.68 pertained to the aggregate amount of input taxes relative to the second, third, and fourth quarters of CY 2017,117 for which Stefanini Philippines has sought a refund, viz: Claim for refund, input taxes pertaining to CY 2017 Second quarter- CTA Case No. 10188118 P5,577,917.98 Third quarter- Present claim 3,328,405.90 Fourth quarter - Present claim 6,303,767.26 Per verification P15,210,091.14 Per VAT return, Q2 CY 2019 15,210,089.68 Variance P1.46 Seventh, after removing the amounts that Stefanini Philippines claimed as refunds, the balance of allowable input taxes as of June 30, 2019 amounted to P53,931,950.99, computed as follows : 114 Exhibit "P-105," Line 23D, Docket- Vol. I, p. 484. 115 Exhibit " P-113," Line 23D, Docket - Vol. I, p. 526. 116 Exhi bit "P-90," Docket - Vol. I, pp . 118-138. m Exhi bit " P-90," Docket - Vol. I, pp. 133-134. 118 Stefmzini Philippines, Inc. v. Coml/lissioner of In ternnl Revenue, C.T.A. Case No. 10188, November 23, 2022.

' D ECIS I O N CTA Case No. 10226 � Pnge 27 of29 Allowable input taxes, as of June 30, 2019 Balance, net of output taxes P80,999A14.17 less Amounts carved out Per Q4 CY 2018 VAT return P11,857,373.50 Per Q2 CY 2019 VAT return 15,210,089.68 27,067A63.18 Allowable input taxes P53,931,950.99 Based on the foregoing, Stefanini Philippines's balance of input taxes available for utilization was more than sufficient to cover all of the output taxes it incurred from January 1, 2018 to June 30, 2019 (i.e., third and fifth observations). Further, as of June 30, 2019, it already carved out/removed frmn the balance of input taxes available for utilization the amount claimed as refund in the instant case (i.e., sixth and seventh observations). These observations are consistent with the !CPA's findings.119 Thus, We are convinced that the input taxes sought to be refunded in the present case were not utilized or applied against output taxes in any given taxable period. Computation of refundable unutilized or excess input taxes We proceed to the determination of the refundable amount of unutilized or excess input taxes attributable to petitioner's zero-rated sales. To recall, petitioner declared total zero-rated sales in its Quarterly VAT Returns in the aggregate amount of P358,807,912.34. However, only the zero-rated sales in the amount of P283,178,317.97 is properly supported by official receipts and proof of inward remittances. In short, only a portion of petitioner's d eclared zero-rated sales qualifies as valid zero-rated sales: Valid zero-rated sales 3rd Quarter 4th Quarter Total Divided by P122 ,765,262. 34 P160 ,41 3 , 055.63 P283,178,317.97 Declared zero-rated sales P122,765,262.34 P236,042,650.00 Percentage 100.0000% 67.9594% P358,807,912.34 Consequently, out of the valid input taxes of P5,552,312.70, only the remaining valid input VAT of P4,670,035.76 is attributable to 119 Exhibit "P-114", pp. 15-16, Docket - Vo l. I, pp. 391-392.

I DECISION CTA Case No. 10226 Pnge 28 of29 p etitioner's valid zero-rated sales for the 3rd and 4th quarters of CY 2017, as computed below, and thus, must b e refunded in favor of petitioner: Excess/ unutilized input 3rct Quarter 4th Quarter Total tax a th�ibutable to decla red p 2,798,695.04 p 2,753,617.66 p 5,552,31 2.70 zero-rated sales 100.0000% Multiplied by Percentage 67.9594 % P 4, 6 70, 035. 76 of valid zero-rated sales P2,798,695.04 P1,871,340.72 Refundable input taxes attributable to valid zero- rated sales In sum, w hile Stefanini Philippines ably den1onstrated that the amount claimed had not been utilized prev iously, We grant the claim only to the extent that it represents inp ut taxes eligible for refund (i.e., deinonsh�ated to be actually due and paid, properly substantia ted, and attributable to zero-rated sales). Thus, We d etermine that Stefanini Philippines shall be entitled to a refund of P4,670,035.76. WHEREFORE, the instant Petition for Review is PARTIALLY GRANTED. Accordingly, respondent is DIRECTED TO REFUND OR ISSUE TAX CREDIT CERTIFICATE in favor of petitioner in the a1nount !>4,670,035.76. representing its unutilized input VAT attrib utable to its zero-rated sales for the third and fourth quarters of CY 2017. SO ORDERED. ~bf."~-F~ WE CONCUR: MARIAN I-1Y F. RE~ES-FAJARDO Associate Justice (with due re pect, C~Et(� MANA~ HAN~ please see Dissen ting Opinion) Associate Justice ROMAN G. D EL ROSARIO Presiding Justice

DECISION CTA Case No . 10226 '� Page 29 of 29 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. Presiding Justice

, REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION STEFANINI PHILIPPINES, INC., . CTA CASE NO. 10226 Petitioner, Members: -versus- DEL ROSARIO, P.J. , Chairperson, MANAHAN , and REYES-FAJARDO, JJ. COMMISSIONER OF INTERNAL Promulgated: REVENUE , Respondent. X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - DISSENTING OPINION DEL ROSARIO, P.J.: With utmost respect, I am constrained to withhold my assent on the ponencia which partially grants the Petition for Review and orders the refund or issuance of tax credit certificate in petitioner's favor in the amount of P4,670,035.76. I submit that petitioner's refund claim should be denied for its failure to comply with the invoicing requirements under the law. Section 113(8)(2)(c) and (d) of the National Internal Revenue Code (NIRC) of 1997, as amended , reads: "SEC . 113. Invoicing and Accounting Requirements for VAT- Registered Persons. - XXX (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: XXX ~

DISSENTING OPINION Stefanini Philippines, Inc. vs. Commissioner of Internal Revenue I CTA Case No. 10226 (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 (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. (d ) If the sale involved goods, properties or services some of which are subject to and some of which are VAT zero-rated or VAT exempt, the invoice or receipt shall clearly indicate the break-d own of the sale price between its taxable, exempt and zero-rated components, and the calculation of the value-added tax on each portion of the sale shall be known on the invoice or receipt: Provided, That the seller may issue separate invoices or receipts for the taxable, exempt, and zero-rated components of the sale. x x x" (Boldfacing supplied) The above provision is implemented by Section 4.113-1 of Revenue Regulations (RR) No. 16-2005, as amended , which reads: "SEC. 4.113-1 . Invoicing Requirements. -- XXX (B) Information contained in VAT invoice or VAT official receipt.- The following information shall be ind icated in VAT invoice or VAT official receipt: XXX (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 (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; (d) If the sale involves goods, properties or services some of which are subject to and some of which are VAT ze ro-rated or VAT- exempt, the invoice or receipt shall clearly indicate the break-down of the sale price between its taxable, exempt and zero-rated components , and the calculation of the VAT on each portion of the sale shall be shown on the invoice or rece ipt. The seller has the option to issue separate invoices or receipts for the taxable, exempt, and zero-rated components of the sale." (Boldfacing supplied) ~

DISSENTING OPINION Stefanini Philippines, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10226 Verily, it is a requirement that for any VAT invoice or official receipt evidencing a zero-rated transaction , the term "zero-rated sale" shou ld be written or printed prominently thereon . Failure to comply with the invoicing requirements is sufficient ground to deny the claim for refund or tax credit. 1 The Supreme Court has settled , in a number of cases,2 that the writing or imprinting of the term "zero-rated sale" on the VAT invoice or official receipt is indispensable for a valid claim of refund of unutilized input tax. Such requirement was traced by the Supreme Court from Section 4.108-1 of RR No. 7-95 , which has been incorporated in Section 113(8)(2)(c) of the NIRC of 1997, as amended , by virtue of the amendments introduced by Republic Act No. 9337 , which confirms the validity of the imprinting requirement on VAT invoices or official receipts .3 Revenue Memorandum Circular No. 42-2003 provides that if the refund claim is based on the existence of zero-rated sales but the taxpayer fails to comply with the invoicing requirements, such claim should be denied, viz. : "Q-13: Should penalty be imposed on TCC application for failure of cla imant to comply with certain invoicing requirements , (e.g ., sales invoices must bear the TIN of the seller)? A-13: Failure by the supplier to comply with the invo1c1ng requirements on the documents supporting the sale of goods and services will result to the disallowance of the cla im for input tax by the purchaser-claimant. If the claim for refund/TCC is based on the existence of zero-rated sales by the taxpayer but it fails to comply with the invoicing requirements in the issuance of sales invoices (e.g. failure to indicate the TIN), its claim for tax credit/refund of VAT on its purchases shall be denied considering that the invoice it is issuing to its customers does not depict its being a VAT- registered taxpayer whose sales are classified as zero-rated sales. Nonetheless, this treatment is without prejudice to the right of 1 Commissioner of Internal Revenue vs. Phi/ex Mining Corporation , G.R. No. 2300 16, November 23, 2020. 2 Panasonic Communications Imaging Corporation of the Philippines vs. Commissioner of Internal Revenue, G.R. No. 178090, February 8, 2010; J.R.A. Philippines, Inc. vs. Commissioner oflnternal Revenue, G.R. No. 177127, October 11, 201 0; Hitachi Global Storage Technologies Philippines Corp. vs. Commissioner of Internal Revenue, G.R. No. 174212, October 20, 2010; Kepco Philippines Corporation vs. Commissioner of Internal Revenue, G.R. No. 181858, November 24, 2010; Silicon Philippines, Inc. vs. Commissioner of Internal Revenue , G.R. No. 172378, January 17, 2011 ; Western Mindanao Power Corporation vs. Commissioner of Internal Revenue , G. R. No. 181136, June 13. 2012; Eastern Telecommunications Philippines. Inc. vs. Commissioner oflnternal Revenue, G.R. No. 183531 , March 25, 2015 . 3 Mirant [Navotas II] Corporation [Formerly Southern Energy Navotas II Power, Inc.] vs. Commissioner of Internal Revenue, G.R. No. 180526, September 23, 2015. ~

DISSENTING OPINION Stefanini Philippines, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10226 the taxpayer to charge the input taxes to the appropriate expense account or asset account subject to depreciation, whichever is applicable. Moreover, the case shall be referred by the processing office to the concerned BIR office for verification of other tax liabilities of the taxpayer." (Boldfacing and underscoring supplied) There is no reason to depart from the consistent ruling of the Supreme Court that a refund claimant's alleged zero-rated sales must also comply with the invoicing requirements under Section 113 of the NIRC of 1997, as amended. In th is case, all of petitioner's alleged zero-rated sales, evidenced by VAT official receipts,4 do not bear the term "zero-rated sale" written or printed prominently on such receipts. The ponencia reasons that the amount collected by petitioner from its alleged VAT zero-rated sales was written and declared as "zero-rated sales" in the breakdown portion on the left side of each face of the VAT official receipts , as shown in the following sample exhib its : i IN SETTLEMENT OF TliE FOUOWINO: ( STEFe~~~t!:~!h~~_!.,~~~.' INC. INVOICE AMOUNT er., v. H. Oela Cooltl. Salc:i!iCo ~ M.>l<all VAT REG TIN 0()6..960-31.\-000 ~~\:'RECEIPT NO.: ,.....-_,_:-:-Solos...,._f.,',I.A,T:'-:I-n-<:.t..--:-:1----~-:f:':-;\-:,~l 'l \"t Dato: - - - - n'" VAT � I ~ ,;' Rucolved ftom � .. Due - - ., with TIN� and Address at: ., . Bus. Style. - tho sum of: pesos~~ ) 4 Exhibits "P-1 0" to "P-33", Docket, Vol. II , pp . 1049 - 1072.~

DISSENTING OPINION Stefanini Philippines, Inc. vs. Commissioner of Internal Re venue CTA Case No. 10226 .- . rt ~NENT OF TliE fOUOWING: r.1 srEF~~~~~!~!~!fr~~2, INc. H. V. D.i;J eo.ta, Salcedo w.g.., Makr.l O!y 1' '.VOICE AMOUNT l'r ll VAT REG TlN 0011-!MI0-314-000 It~:;;:::;-;',"::"-:.,~~ .:,:A:;T::-I:-n:-O.:I:.-o.-.-., +----, .-. v ~~~~H~IlU: CEIPT NO. : _ \ ,.--.l.r-1'.\ � D:mr _ __ t!':"i': -~"�7.~==t---, --1.'m'C~~ Rucelved from. - -- - - - -- - -- - :::S _ __ _ _ __ _ _ v.11h TIN. _ _ __ ��:sr ��~ r.. andAddrcssot - -- - -- - - -- - Bus Style. - - - - -- -- - - - -- the sum or. _ _ _ __ _ _ _ _ _ __ 0 (CHEO< 0 -~� The ponencia's proposition is flawed. The information necessary to be indicated in the "breakdown" and the writing or imprinting of "zero rated sales" on the VAT official receipts are requirements governed by separate provisions of the NIRC of 1997, as amended-- that is, Section 113(B)(2)(c), which provides for the imprinting requirement, and Section 113(B)(2)(d), which requires the breakdown of sales as VATable, VAT-exempt or VAT zero-rated in case of mixed transactions. In other words , notwithstanding that petitioner indicated in the breakdown of the VAT official receipts the amount pertaining to "zero-rated sales", such however is not tantamount to compliance with the imprinting requirement. The samples above show that petitioner failed to comply with the mandatory requirement of imprinting the term "zero-rated sales". Tax refunds are in the nature of a claim for exemption and the law is construed in strictissimi juris against the taxpayer. The pieces of evidence presented entitling a taxpayer to exemption are also strictissimi scrutinized and must be duly proven .5 Thus, for failure of 5 Kepco Philippines Corporation vs. Commissioner of Internal Revenue, G.R. No. 179961 , January 31,2011 . 011

DISSENTING OPINION Stefanini Philippines, Inc. vs. Commissioner of Internal Revenue ,. CTA Case No. 10226 petitioner to comply with the invoicing requirements for its alleged zero- rated sale of services , the refund claim should be denied. ALL TOLD , I VOTE to DENY the Petition for Review for lack of merit. Presiding Justice