AIG SHARED SERVICES CORPORATION (PHILIPPINES) [FORMERLY: CHARTIS TECHNOLOGY AND OPERATIONS MANAGEMENT CORPORATION (PHILIPPINES)] v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY THIRD DIVISION ********* AIG SHARED SERVICES CTA Case No. 8850 CORPORATION (PHILIPPINES) [Formerly: CHARTIS TECHNOLOGY Members: AND OPERATIONS MANAGEMENT CORPORATION (PHILIPPINES)], UY, Chairperson, Petitioner, RINGPIS-LIBAN, and MODESTO-SAN PEDRO, JJ. -versus- COMMISSIONER OF INTERNAL Promulgated: REVENUE, Respondent. J~?02~~ n; I'� -. X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X DECISION UY, J.: This is a Petition for Review1 filed on July 23, 2014 by AIG Shared Services Corporation (Philippines) [Formerly: Chartis Technology and Operations Management Corporation (Philippines)], Petitioner, against the Commissioner of Internal Revenue (CIR), Respondent. Petitioner seeks the refund or issuance of tax credit certificates (TCC) in the total amount of P79,682,086.49 representing excess and unutilized input VAT paid for the first to fourth quarters of fiscal year (FY) 2012. THE FACTS Petitioner is a foreign corporation duly registered and authorized by the Securities and Exchange Commission (SEC) under Amended SEC License No. FM00000152 to operate as Regional Operating Headquarters (ROHQ), with principal office address at 46th Floor, 6795 Ayala Avenue corner Rufino St. , Makati City, and an 1 Docket - Vol. I' pp. 14 to 26. /11

DECISION CTA Case No. 8850 Page 2 of40 extension office at iHub2 Building, North Bridgeway Avenue, Northgate Cyberzone, Filinvest Corporate City, Alabang, Muntinlupa City_2 Petitioner's former corporate names were American International Underwriters Corporation-Regional Operating Headquarters, AIU Technology and Operations Management Corporation, Chartis Technology and Operations Management Corporation (Philippines). 3 Petitioner is duly registered with the Bureau of Internal Revenue as a VAT-registered entity with Certificate of Tax Registration No. OCN8RC0000059749 and Tax Identification Number (TIN) 001-218-732-000. 4 On the other hand, respondent is the Commissioner of Internal Revenue, who holds office at the 5th Floor, Bureau of Internal Revenue (BIR) National Office Building, Agham Road, Diliman, Quezon City. Respondent is represented in this case by the Legal Division of Revenue Region No. 8 which holds office at the 2/F BIR Regional Office Building, 313 Sen. Gil Puyat Avenue, Makati City, where this Honorable Court's legal processes may be served. 5 Respondent is vested with the power to decide tax cases, including claims for refunds and/or tax credits pursuant to Section 4 of the 1997 National Internal Revenue Code, as amended. 6 For FY 2012, petitioner filed its original and amended quarterly VAT returns on the following dates: Period VAT Return Date of Filing 151 Quarter Orig. Quarterly VAT Return March 23, 2012 2012 August 2, 2013 2"0 Quarter Amended Quarterly VAT Return" June 22, 2012 2012 January 13, 2014 3'0 Quarter Orig. Quarterly VAT Return" September 25, 2012 2012 February 12, 2014 Amended Quarterly VAT Return 'v Orig. Quarterly VAT Return 11 Amended Quarterly VAT Return"' 2 Par. I, Joint Stipulation of Facts (JSFI), Docket- Vol. I, p.451. 3 Exhibit "P-1" to "P-3", refer to the CD attached to petitioner's FOE. 4 Exhibit "P-4-a", Certificate of Registration, Docket- Vol. 3, p. 1392; Supplemental Joint Stipulation of Facts, Docket -Vol. 3, p. 1390. 5 Par. 2, JSFI, Docket -Vol. I, pp. 451 to 452. 6 Par. 3, JSFI, Docket- Vol. I, p. 452. 7 Exhibit "P-9", refer to the CD attached to petitioner's Formal Offer of Evidence (FOE). 8 Exhibit "P-10", refer to the CD attached to petitioner's FOE. 9 Exhibit "P-ll", refer to the CD attached to petitioner's FOE. 10 Exhibit "P-12", refer to the CD attached to petitioner's FOE. 11 Exhibit "P-13", refer to the CD attached to petitioner's FOE. 12 Exhibit "P-14", refer to the CD attached to petitioner's FOE.(\

DECISION CTA Case No. 8850 Page 3 of40 41h Quarter/ Orig. Quarterly VAT Return13 December 21 , 2012 Februarv 20, 2014 2012 Amended Quarterly VAT Return1-f On February 27, 2014, petitioner filed with the BIR an administrative claim for refund/tax credit of its excess and unutilized input Value-Added Tax (VAT) for the 1st to 4th quarters of FY ended November 30, 2012 in the amount of P79,682,086.49. 15 It submitted all supporting documents when it filed its administrative claim for refund. There being no action taken by respondent on petitioner's application for VAT refund for its excess/unutilized input VAT for the 1st to 4th quarters of FY 2012, petitioner filed the instant Petition for Review on July 23, 2014. 16 Respondent filed her Answer on September 11, 2014, 17 interposing the following special and affirmative defenses: 1) petitioner's claim for refund is still subject to investigation by the BIR; 2) petitioner failed to demonstrate that the tax was erroneously or illegally collected; 3) taxes paid and collected are presumed to be made in accordance with the laws and regulations, hence, not refundable; 4) it is incumbent upon the petitioner to show that it has complied with Section 204(C) in relation to Section 229 of the 1997 Tax Code, as amended; 5) petitioner's claim for refund or issuance of tax credit certificate in the amount of P79,682,086.49 as alleged excess and unutilized input VAT paid on purchases of ~oods and services attributable to its zero-rated sales for the 1st to 4t quarters of FY 2012 was not fully substantiated by proper documents, such as sales invoices, official receipts and others; 6) in an action for tax credit or refund, the burden is upon the taxpayer to prove that he is entitled thereto, and failure to discharge the said burden is fatal to the claim and that claims for refund are construed strictly against the claimant. After the Pre-Trial Conference held on June 11, 201518, the parties filed their Joint Stipulation of Facts and Issues on June 25, 13 Exhibit "P-15", refer to the CD attached to petitioner's FOE. 14 Exhibit "P-16", refer to the CD attached to petitioner's FOE. 15 Exhibit "P-8"; refer to the CD attached to petitioner's FOE. 16 Docket-Vol. 1, pp. 14 to 26. 17 Docket- Vol. 1, pp. 276 to 277. 18 Minutel of the hearing and Resolution dated June 11, 2015, Docket- Vol. 1, pp. 448 to 450. ~

DECISION CTA Case No. 8850 201519. The same was approved by the Court on July 8, 2015?0 Thereafter, a Pre- Trial Order was issued on August 11, 2015. 21 During trial, petitioner presented Pradeep Bhanotha,22 Mary Cris Barayuga23 and the court commissioned Independent Certified Public Accountant (ICPA) Mary Ann C. Capuchino24 as its witnesses. On February 20, 2017, petitioner filed a Motion [(a) To Admit Supplemental Joint St{P,ulation of Facts and Exhibit "P-4-a':� and (b) To Remark Exhibits]. 2 Petitioner's Motion was granted on March 9, 2017 and the Supplemental Joint Stipulation of Facts was admitted. 26 For his part, respondent manifested that he will no longer present evidence since there was no report of investigation.27 Thereafter, petitioner filed its Memorandum28 on April 12, 2019, without respondent's memorandum despite notice. 29 Hence, the instant case was submitted for Decision on May 9, 2019. 30 Hence, this Decision. THE ISSUE The parties stipulated a sole issue for this Court's resolution, to wit:31 19 Docket- Vol. I, pp. 451 to 472. 20 Resolution dated July 8, 2015, Docket- Vol. I, p. 560. 21 Docket- Vol. 2, pp. 587 to 631. 22 Exhibit "P-248", Docket - Vol.l, pp. 477 to 557; Minutes of the hearing and Resolution dated January 19, 2016, Docket- Vol. 2, pp. 806 to 812. 23 Exhibit "P-241", Docket- Vol. I, pp. 358 to 389; Exhibit "P-244", Docket- Vol. 2, pp. 861 to 877; Exhibit "P-247", Docket- Vol. 3, pp. 1119 to 1129; Minutes of the hearing and Order dated June 7, 2016, Docket- Vol. 3, pp. 841 to 845. 24 Exhibit "P-242", Docket- Vol. 2, pp. 749 to 763; Exhibit "P-243", Docket- Vol. 2, pp. 824 to 829; Minutes of the hearing and Resolution dated July 23, 2015, Docket- Vol. 2, pp. 574 to 578. 25 Docket- Vol. 3, pp. 1386 to 1389. 26 Resolution dated March 9, 2017, Docket- Vol. 3, pp. 1401 to 1402. 27 Minutes of the hearing and Resolution dated June II, 2015, Docket- Vol. I, pp. 441 to 444; Pre-Trial Order dated August 11, 2015, Docket- Vol. 2, p. 630. 28 Docket- Vol. 4, pp. 1739 to 1758. t 29 Records Verification Report dated May 2, 2019, Docket-Vol. 4, p.1760. 30 Resolution dated May 9, 2019, Docket- Vol. 4, p. 1762. 31 Stipulation of Issue, JSFI, Docket- Vol. I, p. 452.

DECISION CTA Case No. 8850 Page 5 of40 "Whether petitioner is entitled to the refund/issuance of a tax credit certificate for its input VAT payments for the 1st to 41h quarters of Fiscal Year 2012 in the amount of Seventy-Nine Million Six Hundred Eighty-Two Thousand Eighty-Six Pesos and 49/100 (P79,682,086.49)." Petitioner's arguments: Petitioner argues that it has the requirements and has discharged its burden of proving its entitlement to refund/tax credit of its unutilized input VAT by providing documentary and testimonial evidence to fully support its claim. Hence, petitioner contends that it is entitled to its claim for refund/issuance of tax credit certificate for its excess and unutilized input VAT for the first to fourth quarters of FY 2012. According to petitioner, its sales of services for FY 2012 were VAT-zero rated. Petitioner rendered services to non-resident foreign affiliate-clients engaged in business outside the Philippines; and its services were paid for in US Dollars inwardly remitted to the Philippines and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP). Furthermore, petitioner contends that its output VAT only comprises 0.85% of its total sales. Allegedly, 99.15% of petitioner's sales of services for FY 2012 were VAT zero-rated from which no output VAT can be generated. Petitioner also contends that it paid input VAT for the first to fourth quarters of FY 2012 resulting from its domestic purchases of goods and services and that petitioner's input VAT is directly attributable to its VAT zero-rated sales for the first to fourth quarters of FY 2012. Lastly, petitioner claims that the amount of input VAT claimed for refund/tax credit remains unutilized. Respondent's counter-arguments: In �his Answer, respondent counter-argues that petitioner's claim for refund is still subject to investigation by the BIR. ai' Allegedly, petitioner failed to demonstrate that the tax was erroneously or illegally collected. Taxes paid and collected

DECISION CTA Case No. 8850 Page 6 of40 presumed to be made in accordance with the laws and regulations, hence, not refundable and that it is incumbent upon the petitioner to show that it has complied with Section 204(C) in relation to Section 229 of the 1997 Tax Code, as amended; Further, respondent contends that petitioner's claim for refund or issuance of tax credit certificate in the amount of P79,682,086.49 as alleged excess and unutilized input VAT paid on purchases of goods and services attributable to its zero-rated sales for the 1st to 4th quarters of FY 2012 was not fully substantiated by proper documents, such as sales invoices, official receipts and others. Finally, respondent stresses that in an action for tax credit or refund, the burden is upon the taxpayer to prove that he is entitled thereto, and failure to discharge the said burden is fatal to the claim. Claims for refund are construed strictly against the claimant, the same partake the nature of exemption from taxation and as such, they are looked upon with disfavor. THE COURT'S RULING After careful and thorough evaluation of the evidence presented by petitioner, the pertinent laws, rules and regulations in the instant case, the Court finds the instant Petition for Review partially meritorious. Requisites for the grant of the refund or issuance of a TCC under the law. Relative to petitioner's claim for refund or tax credit of excess input VAT attributable to zero-rated or effectively zero-rated sales, the provisions of Section 112 of the NIRC of 1997, as amended by RA No. 9337, 32 is instructive, to wit: "SEC. 112. Refunds or Tax Credits of Input Tax.- 32AN ACT AMENDING SECTIONS 27, 28, 34, 106, 107, 108, 109, 110, lll, 112, 113, 114, 116, 117, 119, 121, 148, 151, 236, 237 AND 288 OF THE NATIONAL t't INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES.

DECISION CIA Case No. 8850 Page 7 of40 (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 (B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): 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 (B)(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 of Input Taxes shall be Made. - In proper cases, the Commissioner shall grant a refund or issue a 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. 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.'~

DECISION CTA Case No. 8850 Page 8 of40 Pursuant to the foregoing provisions, jurisprudence established certain requisites which must be complied with by the taxpayer- applicant to successfully obtain a credit/refund of input VAT. These requisites are categorized as follows: Timeliness of the filing of the administrative and judicial claims: 1. the claim is filed with the 81R within two years after the close of the taxable quarter when the sales were made; 33 2. that in case of full or partial denial of the refund claim, or the failure on the part of the Commissioner to act on the said claim within a period of 120 days, the judicial claim must be filed with this Court, within 30 days from receipt of the decision or after the expiration of the said 120-day period; 34 Taxpayer's registration with the 81R: 3. the taxpayer is a VAT registered person;35 Taxpayer's output VAT: 4. the taxpayer is engaged in zero-rated or effectively zero- rated sales�,36 5. for zero-rated sales under Section 106(A)(2)( 1) and (2); 106(8); and 108(8)(1) and (2), the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with 8SP rules and regulations; 37 33 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No. 166732, April 27, 2007; San Roque Power Corporation vs. Commissioner of Internal Revenue, G.R. No. 180345, November 25, 2009; and AT&T Communications Services Philippines, Inc. vs. Commissioner ofInternal Revenue, G.R. No. 182364, August 3, 2010. 34Steag State Power, Inc. (Formerly State Power Development Corporation) vs. Commissioner oj/nternal Revenue, G.R. No. 205282, January 14, 2019; Rohm Apollo Semiconductor Philippines vs. Commissioner of Internal Revenue, G.R. No. 168950, January 14,2015. 35 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, supra; San Roque Power Corporation vs. Commissioner of Internal Revenue, supra; and AT&T Communications Services Philippines, Inc. vs. Commissioner of Internal Revenue, supra. 36 /d. 37 /d. JIIO

DECISION CTA Case No. 8850 Page 9 of40 Taxpayer's input VAT being refunded: 6. the input taxes are not transitional input taxes; 38 7. the input taxes are due or paid; 39 8. the input taxes have not been applied against output taxes during and in the succeeding quarters;40 and 9. the input taxes claimed are attributable to zero-rated or effectively zero-rated sales. However, where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes cannot be directly and entirely attributable to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume. 41 We shall now proceed to determine petitioner's compliance with the foregoing requisites. Petitioner's administrative and judicial claims were timely filed The first requisite pertains to the filing of the refund claim for credit or refund of input VAT before the BIR. Pursuant to Section 112(A) of the NIRC of 1997, as amended, the administrative claim for the issuance of a TCC or refund of input VAT must be filed within two (2) years after the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made. In the instant case, petitioner's claims cover four (4) quarters of FY 2012. Counting two years from the end of each quarter for the same year, petitioner had until February 28, 2014, May 31, 2014, 38 !d. 39 !d. 40 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, supra; and San Roque Power Corporation vs. Commissioner of Internal Revenue, supra; and AT&T Communications Services Philippines, Inc. vs. Commissioner of Internal Revenue, supra. A 41 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, supra; San Roque Power Corporation vs. Commissioner ofInternal Revenue, supra;

DECISION CTA Case No. 8850 August 31, 2014 and November 30, 2014, respectively, within which to file its administrative claims for refund or issuance of tax credit certificate for its input VAT. Thus, petitioner's administrative claims for the said quarters filed on February 27, 2014 were timely filed, as shown below: Taxable Close of the Last Day of Filing of Date of filing of Quarter Taxable Quarter Administrative Claim Administrative Claim 1' Quarter (Dec. 2011 to Feb 29, 2012 February 28, 2014 Feb 27, 2014 Feb 2012) 2"' Quarter May31,2012 May 31, 2014 Feb 27, 2014 (Mar 2012 to May 2012) Aug31,2012 Aug 31,2014 Feb 27, 2014 3"' Quarter Nov 30, 2012 Nov 30, 2014 Feb 27, 2014 (Jun 2012 to Au_g_2012l_ 4"' Quarter (Sep 2012 to Nov 2012) The second requisite pertains to the timeliness of the judicial claim and is taken from Section 112(C) of the NIRC of 1997, as amended. 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 refund or tax credit; and the period of 30 days which refers to the period for filing a judicial claim with this Court. 42 In this case, counting from the filing of petitioner's administrative claim, together with the supporting documents, on February 27, 2014, respondent had 120 days or until June 27, 2014 to act on the said claim. Considering that respondent did not act on petitioner's claim on or before June 27, 2014, petitioner had until July 27, 2014, the last day of the 30-day period, within which to file its appeal before this Court. Here, petitioner's judicial claim filed on July 23, 2014, was well within the period prescribed by law. Thus, petitioner's administrative and judicial claims were timely filed. Petitioner is VAT registered. The third requisite pertains to the taxpayer's VAT registration. 42 Rohm Apollo Semiconductor Philippines vs. Commissioner of Internal Revenue, G.R. No. 168950, January 14, 2015.M

DECISION CTA Case No. 8850 Page II of 40 As stipulated by both parties' counsels, petitioner is a VAT- registered taxpayer.43 Notably, petitioner presented its Certificate of Registration issued by BIR with TIN 001-218-732-000, indicating that it is liable for VAT44 Thus, the third requisite has also been complied with. Petitioner's zero-rated or effectively zero-rated sales receipts for FY 2012 amounts to P69,569,626.68 only The Court shall now proceed to determine compliance with the fourth and fifth requisites in the claim for refund of input VAT. In its Amended Quarterly VAT Returns for the four quarters of FY 2012, petitioner declared total sales/receipts P2,259,718,427.90, which included zero-rated sales/receipts of P2,240,430.657.47, to wit: Vatable 1' Quarter 2nu Quarter 3'u Quarter 4'" Quarter Total Sales/Receipts (Exhibit "P-1 0") (Exhibit "P-12) (Exhibit "P-14) (Exhibit "P-16) 19,287,770.43 Zero-rated receipts 6,025,096.20 3,211,974.79 5,075,328.49 4,975,370.95 Total Sales/ Receipts 417,165,029.78 632,957,904.53 636,141,233.77 554,166,489.39 2,240,430,657.47 423,190,125.98 636,169,879.32 641,216,562.26 559,141,860.34 2,259,718,427.90 Petitioner avers that its sales of services for FY 2012 were VAT-zero rated. Petitioner submits that as a Regional Operating Headquarters (ROHQ) it is only allowed to perform qualifying services to its non-resident foreign affiliates in the Asia-Pacific Region and in other foreign markets. Allegedly, petitioner rendered services to its non-resident foreign affiliate-clients engaged in business outside the Philippines. Section 108(8)(1) and (2) of the NIRC of 1997, as amended by RA 9337, provides as follows: "SEC. 108. Value-added Tax on Sale of Services and Use or Lease of Properties. - XXX XXX XXX 43 Par. I, Supplemental Joint Stipulation of Facts, Docket- Vol. 3, pp. 1390 to 1391. 44 Exhibit "P-4-a". Docket- Vol. 3, p. 1392. h1J

DECISION CIA Case No. 8850 (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 (SSP); (2) Services other than those mentioned in the preceding paragraph rendered to a person engaged in business conducted outside the Philippines or to a non-resident 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) Based on the foregoing provision, in order to subject a sale or supply of services to zero (0%) percent VAT, certain requirements must be met under Section 108(8)(2) of the NIRC of 1997, as amended. First, the recipient of the services must not merely be a foreign corporation, but more importantly, it must be a "nonresident foreign corporation", i.e., a foreign corporation not engaged in trade or business within the Philippines. 45 Second, the payment for such services should be in acceptable foreign currency accounted for in accordance with BSP rules. 46 Third, the services rendered should be other than "processing, manufacturing or repacking goods"47 as mentioned under Section 108(8)(2) of the NIRC of 1997, as amended. 45 Accenture, Inc vs. Commissioner ofinternal Revenue, G.R. No. 190102, July II, 2012. 46 Commissioner of Internal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc.. G.R. No. 153205, January 22,2007. 47 Ibid.~

DECISION CTA Case No. 8850 Lastly, the services must be performed in the Philippines48 by a VAT-registered person. Petitioner failed to prove that all of its clients for FY 2012 are non-resident foreign corporations doing business outside the Philippines. Petitioner alleges that it rendered services to non-resident foreign affiliate-clients engaged in business outside the Philippines. And to prove that petitioner's clients are non-resident foreign corporations doing business outside the Philippines for FY 2012, petitioner presented the related Certifications of Non-Registration of Company issued by the Philippine Securities Exchange Commission (SEC),49 printed screenshot of the Website of U.S. Securities and � Exchange Commission, 5 Certificate of Authentication, 51 Certificate of Business Registration, etc. 52 In Commissioner of Internal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc (Burmeister case), 53 the Supreme Court held that the service-recipient must also be not doing business in the Philippines. Otherwise, the transaction will be subject to the VAT at the then rate of 10%, 54 and not at the 0% VAT rate. Thus, in order to sufficiently prove that the service-recipient is a non-resident foreign corporation doing business outside the Philippines, each service-recipient must be supported, at the very least, by both a certificate of non-registration of corporation/ partnership issued by the Philippine Securities and Exchange Commission (SEC); and a certificate I articles of foreign incorporation/ association. 48 Commissioner ofInternal Revenue vs. American Express International, Inc. (Philippine Branch), supra. 49 Exhibits "P-117'' to "P-182", refer to the CD attached to petitioner's FOE. 50 Exhibits "P-118(a)" to "P-18\(a)", refer to the CD attached to petitioner's FOE. 51 Exhibits "P-118(a)" to "P-181(a)", refer to the CD attached to petitioner's FOE.CD. 52 Exhibits "P-118(a)" to "P-181 (a)", refer to the CD attached to petitioner's FOE.CD. "Commissioner of Internal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., supra. if 54 Now the VAT r~~e 12%. Refer to Revenue Memorandum Circular No. 7-2006 dated January 31, 200~

DECISION CTA Case No. 8850 The said basic documents are necessary. This is so because the Philippine SEC's negative certification establishes that the service-recipient has no registered business in the Philippines and that it is not engaged in trade or business within the Philippines. As for the said certificate/ articles of incorporation/ association, this will prove that the said service-recipient is indeed foreign, and is determinative of whether the same service-recipient is engaged in business at all. Of petitioner's List of Zero Rated Customers, 55 only the following alleged service-recipients complied with the above-stated two (2) basic documents, to wit: Foreign Client Name SEC Certificate of Certificate Registration, Incorporation, of Non- Associations, etc. Registration 1 AIG Employee Services, Inc. "P-46" "P-119(a)" "P-50" "P-122(c)" 2 AIG General Insurance (Vietnam) Co. Ltd. "P-51" (Chartis Vietnam Insurance Co. Ltd.) "P-52" "P-123(b)" IIP-87" "P-124(b)" 3 AIG Global Services (M) SDN BHD "P-56" "P-180(a)" 4 AIG Global Services, Inc. "P-9811 "P-127(b} "P-127(c)" 5 AIG Kenya Insurance Co. Limited "P-60" "P-127(e)" (Chartis Kenya Insurance Co. Ltd.) "P-62" "P-157(c)" 6 AIG Metropolitana CIA De Seguros Y Reaseguros SA "P-129(b)" "P-131 (b)" to 7 Chartis UK Services Ltd. (AIG UK Services Ltd.) "P-131(c)" "P-134(b) to "P- American Home Assurance Company, 134(d)" and "P- 8 Dubai 134(h) "P-147(b)" 9 American Home Assurance Singapore "P-134(e)" (Chartis Singapore Insurance PTE Ltd.) "P-134(e)" 10 Chartis Europe SA "P-65 11 "P-169(d)" "P-84" "P-169(e" 11 Chartis Insurance Limited Sri Lanka 11 P-85" "P-153(b" "P-4 7" "P-154(b " 12 Chartis Insurance UK Limited "P-46" "P-182" 13 AIG Europe Limited- Ireland (Chartis "P-92" Europe SA - Ireland) "P-93" "P-156_@)_(_c)" "P-162(a)" 14 Chartis New Hampshire Insurance Co. "P-96'' (Pakistan Branch) "P-9T' 15 Chartis Sigorta A.S. "P-103" 16 Chartis South Africa Limited AIG Insurance (Thailand) Public Co. Limited 17 (Chartis Thailand & Universal Insurance Broker) 18 Chartis Uqanda Insurance Co. 19 Guam Insurance Adjusters Inc. 55 Exhibit "P-240, Annex I, Supplemental !CPA Report, refer to the CD attached to petitioner's FO~

DECISION CTA Case No. 8850 To Lexington Insurance Co. "P-108" "P-167(b)" "P-114" "P-172(b) to 21 TATA AIG Gen. Insurance Co. Ltd. India "P-79'' "P-95" "P172(d)" 22 Chartis Global Services Co. "P-178" "P-7T' AIG Shared Services SDN BHD "P-94'' "P-155(a)" "P-86" 23 (Chartis Technology & Operations Mgmt "P-42" "P-177" SDN BHD) "P-181(a)" "P-179" 24 AIG Japan Holdings Kabushi Kaisha (Chartis Far East Holdings KK) "P-176 (a)" to "P- 176(f) 25 AIG Southeast Asia Limited _(Chartis Southeast Asia Limited) 26 Chartis International O&S HO 27 Chartis Asia Pacific PTE LTD. Notably, the Court cannot give credence or probative value to the following printed screenshots of foreign government websites database, considering that these can be easily manipulated and that none from the foreign governments attested to the authenticity of the said websites and to the registration of the purported petitioner's foreign clients found therein, to wit: Foreign Client Name SEC Certificate Entry in the of Non- Screenshot of a 1 AIG Caspian Insurance Company Government Website (Chartis Azerbaijan Insurance Registration Company) "P-44" "P-118(a)" 2 AIG Europe SA - Finland (Chartis "P-48" "P-120(a)" Europe SA- Finland) "P-125(a)" "P-54" "P-126(a)" 3 AIG Insurance & Reinsurance Company (CJSC Chartis) "P-55" "P-128(a)" 4 AIG Kazakhstan Insurance "P-58" "P-133(a)" can't locate Company (Chartis Kazakhstan in CD Insurance Co JSC) "P-64" "P-132(a)" 5 AIG Ukraine Insurance Company "P-63" "P-134(r)" (Chartis Ukraine Insurance "P-66" Company CJSC) "P-134(g " "P-68" 6 Chartis Chile Campania Seguros "P-70" "P-134 n" Generales S.A. "P-74" "P-75" "P-134 " 7 Chartis Egypt Insurance Co. S.A.E. "P-83, "P-134 g)" 8 Chartis Europe SA - Czech "P-88" "P-146(a)" can't locate Republic "P-89" 9 Chartis Europe SA - Denmark "P-67" in CD 10 Chartis Europe SA - Italy "P-90" 11 Chartis Europe SA - Netherlands "P-149(a)" 13 Chartis Europe SA - Sweden ' 15 Chartis Insurance Hongkong "P-150(a)" Limited 16 Chartis Seguros Brasil S.A. "P-134(k) 17 Chartis Seguros Colombia S.A. 18 Chartis Europe SA - Belgium "P-151 I 19 Chartis Seguros Mexico SA DE C.V. (AIU Mexico) ,.rl'

DECISION CTA Case No. 8850 Page 16 of40 20 Chartis Seguros, El Salvador S.A. "P~91" "P-152 21 Direct DME, Inc "P-161(a)" 22 Health Direct, Inc "P-102" "P-163(a) can't locate "P-104" 23 La Meridional CIA ARG DE in CD "P-106" "P-165(a) can't locate Seguros SA "P-1 07" in CD 24 La Seguridad De Centro America "P-166(a)" can't locate "P-115" SA AIG/UZBEK American in CD "P-116" "P-173(a)" 25 uz "P-69" "P-61" "P-174(a" Insurance Company (Chartis "P-134(m" "P-130(e" Uzbekistan} "P-145(a)" can't locate 26 Venezuela Casai in CD, "P-145(c), can't locate 27 Chartis Europe SA - France in CD, 28 American Home Assurance Korea "P-145(d)", "P-145(e)", 29 Chartis Insurance Company China "P-134(o)" "P-151 (a)" Limited (Chartis China) "P-173(c)" 30 Chartis Europe SA- Spain "P-72" "P-90" "P-174(a)" 31 Chartis Seguros Mexico SA DE "P-115" C.V. (AIU Mexico) American "P-116" 32 uz AIG/UZBEK Insurance Company (Chartis Uzbekistan) 33 Venezuela Casai The Court did not also consider the following entities as non- resident foreign corporations doing business outside the Philippines for failure of petitioner to submit an English translation of the documents presented before the court. Foreign Client Name SEC Documents offered Certificate of in Petitioner's Amended FOE Non- Registration (Without English Translation) 1 AIG Caspian Insurance Company "P-44u Certification'"' and (Chartis Azerbaijan Insurance Stock certificate57 Company) 2 Chartis Europe SA - Spain "P-72" Company Certification of AIG Europe Limited (Spain Branch)58 and Company Registration of AIG Europe Limited {_Spain Branchl59 Chartis Seguros Mexico SA DE C.V. "P-90" Registration 3 (AIU Mexico) Document60 4 Chartis Seguros, El Salvador S.A. "P-91" Registration 56 Exhibit "P-118(b)", refer to the CD attached to petitioner's FOE. 57 Exhibit "P-118(c)", refer to the CD attached to petitioner's FOE. 58 Exhibit "P-134(f)", refer to the CD attached to petitioner's FOE. 59 Exhibit "P-134(h)", refer to the CD attached to petitioner's FOE. 60 Exhibit "P-151(b)", refer to the CD attached to petitioner's FOE-,.,/

DECISION CTA Case No. 8850 La Meridional CIA ARG De Seguros "P-1 06" Document"' 5 SA "P-107" Tax Authorities "P-115" Registration Form62 6 La Seguridad De Centro America SA "P-116" and Annual Report63 UZ AIG/UZBEK American Insurance Articles of 7 Com_IJ8ny (Chartis Uzbekistan) Incorporation64 Venezuela Casai License65 8 Registration Document66 Section 33, Rule 132 of the Rules of Court reads as follows: "Section 33. Documentary evidence in unofficial language. - Documents written in an unofficial language shall not be admitted as evidence, unless accompanied with a translation into English or Filipino. xxx" In this case, sans any translation in English or Filipino, the same should not have been admitted in evidence; thus their contents could not be given probative value, and deemed to constitute proof of the facts stated therein. 67 Moreover, the following entities cannot be considered as non- resident foreign corporations doing business outside the Philippines, for failure to submit proof of foreign registration and for being supported only by SEC Certification of Non-Registration of Company: Foreign Client Name SEC Certificate of Other Documents Non - Registration 1 AIG Business Partners Kabushi "P-43" - Kaisha (American International Group "P-49" - KK) "P-100" - 2 AIG Europe SA - Poland (Chartis "P-99" - Europe SA- Poland) "P-111" - 3 Chartis US Domestic A&H "P-113" - 4 Chartis us Insurance Company I (Chartis US) 5 Private Client Group 6 Specialty Workers Compensation (SWC) 61 Exhibit, "P-152(b)", refer to the CD attached to petitioner's FOE. 62 Exhibit "P-165(b)", refer to the CD attached to petitioner's FOE. 63 Exhibit "P-165(c)", refer to the CD attached to petitioner's FOE. 64 Exhibit "P-166(b)", refer to the CD attached to petitioner's FOE. 65 Exhibit "P-173(b)", refer to the CD attached to petitioner's FOE. 66 Exhibit "P-174(b)", refer to the CD attached to petitioner's FOE. 67 St. Martin Polyclinic, Inc., vs. LWV Construction Corporation, G.R. No. 217426, n.l ;v-o December4,2017.

DECISION CTA Case No. 8850 7 AIG Corp HRNY (Chartis Corp HRNYl "P-45" - 8 AIG Global Sourcing and E- "P�53" - Procurement Services 9 AIG Shared Services Corporation - "P-57" - Ireland (Chartis Technology & operations MGMT- Ireland) 10 AIGT Finance "P-59" - 11 Chartis Insurance Claims "P-81" - 12 Chartis Insurance - Operations & "P-80" - Systems 13 Sourcing and Procurement NY "P-112" - Similarly, the Court did not consider the following entities as non-resident foreign corporations doing business outside the Philippines for failure to submit SEC Certifications of Non- Registration of Company and were instead, supported solely by other documents as mentioned herein below: Foreign Client Name SEC Documents offered in Certificate of Petitioner's Amended Non- FOE to prove foreign Registration registration 1 Intercompany Clearing House NY - - Master Service Chartis INTL F&A Agreement 68 2 National Union Fire Insurance - Entry in the Screenshot of Company the Website of US SEC69 and Copy of the Tax Residency Certificate"70 3 Chartis Claims, Inc - Entry in the Screenshot of the Website of US SEC71 Furthermore, the following entities cannot be considered as non-resident foreign corporations doing business outside the Philippines because the name of petitioner's foreign client is different from the name indicated in the Philippine SEC Certificates of Non- Registration of Company and the respective document offered by petitioner in its Amended FOE to prove foreign registration: Foreign Client Name SEC Documents offered in Certificate of Petitioner's Amended 1 American Home Assurance Korea FOE to prove foreign Non- Registration registration "P-61" Copy of Certificate of Business Registration72 68 Exhibit "P-164", refer to the CD attached to petitioner's FOE. 69 Exhibit "P-168(a)", refer to the CD attached to petitioner's FOE. 70 Exhibit "P-168(b)", refer to the CD attached to petitioner's FOE. 71 Exhibit "P-160(a)", refer to the CD attached to petitioner's FOE. 72 Exhibit "P-130(a)", refer to the CD attached to petitioner's F~

DECISION CTA Case No. 8850 2 Chartis Insurance Company China "P-82" Copy of Enterprise Limited (Chartis China) Legal Person Business License73 and Consularized Certified True Copy of the Business License74 Lastly, the following entities are not considered by the Court to be non-resident foreign corporations doing business outside the Philippines because petitioner's submitted documents cannot be considered as valid proof of foreign incorporation/ registration as they are merely a request or application form prepared by a client- taxpayer and no issuance has been made as a response by the issuing authority. Foreign Client SEC Certificate of Documents offered in Name Petitioner's Amended FOE to Non -Registration prove foreign registration 1 Direct DME, Inc "P-102" Copy of Form W-9 or Request 2 Health Direct, Inc "P-104" for Taxpayer Identification Number and Certification75 Copy of Form W-9 or Request for Taxpayer Identification Number and Certification76 Pavment for services were in acceptable foreign currency accounted for in accordance with BSP Rules In relation to the second requirement and to the fifth requisite for the granting of input VAT refund, petitioner presented Certificates of Inward Remittances77 issued by East West Banking Corporation for the period December 1, 2011 to November 30, 2012 purportedly showing the remittances of the service-recipients to it. The Court finds that the said certifications of inward remittances attests to the fact of payment "in acceptable foreign currency... and accounted for in accordance with the rules and regulations of the BSP". 78 Thus, 73 Exhibit "P-145(f)", refer to the CD attached to petitioner's FOE. 74 Exhibit "P-145(g)", refer to the CD attached to petitioner's FOE 75 Exhibit "P-161(b)", refer to the CD attached to petitioner's FOE. 76 Exhibit "P-163(b)", refer to the CD attached to petitioner's FOE. 77 Exhibits "P-34" and "P-35", refer to the CD attached to petitioner's FOE. 78 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No. ~ 166732, April27, 2007.

DECISION CTA Case No. 8850 petitioner is considered to have complied with the above-stated the requirement. Corollary thereto, the said foreign currency remittances pursuant to Section 108(8)(2) of the NIRC, as amended, must be duly supported by VAT zero-rated official receipts (ORs) in accordance with Sections 113(A)(2), (8)(1 ), (2)(c) and (3) of the NIRC of 1997, as amended, as implemented by Sections 4.113- 1(A)(2), (8)(1) and (2)(c) of Revenue Regulations ("RR") No. 16-05. The above-mentioned provisions provides that a VAT taxpayer shall for every lease of goods or properties, and for every sale, barter or exchange of services, issue a VAT official receipt which must contain the following information, to wit: "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~

DECISION CTA Case No. 8850 XXX XXX XXX (3) The date of transaction, quantity, unit cost and description of the goods or properties or nature of the service; and" (Emphasis supplied) "SECTION 4.113-1. Invoicing Requirements. - (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 serv1ces. 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 lnvoiceNAT 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--AM' supplied) "P

DECISION CTA Case No. 8850 In the instant case, petitioner submitted in evidence Schedule of Zero-Rated Sales79, the related VAT zero-rated official receipts (0Rs)80 issued to its alleged non-resident foreign clients and Certificate of Inward Remittances81 issued by East West Bank. After careful perusal of the aforesaid documents, the Court finds that out of the total declared zero-rated sales/receipts for FY 2012 in the amount of P2,240,430,657.47 (P417,165,029.7882 + P632,957,904.5383 + P636,141,233.7784 + P554,166,489.3985), only the amount of P616,305,934.70 (USD 17,641,702.32) are duly supported by VAT zero-rated ORs and certification of bank inward remittances, broken down as follows: 1" Quarter of FY 2012 (December 1, 2011 to February 29, 2012) Name of Customer OR No OR Amount Amount in Exhibit Chartis Asia Pacific Date in Pesos USD "P197-001" PTE LTD 0001295 13-Feb-12 20,995.00 "P-197 -026" Chartis Far East 900.270.00 5,195.00 "P-198-004" Holdings 0001267 21-Dec-11 226,928.00 4,800.00 "P-198-005" AIG Employee 09-Dec-11 209,472.00 9,600.00 "P-198-006" Services, Inc SPOOR- 09-Dec-11 418,944.00 7,184.00 "P-198-003" 0000628 09-Dec-11 313,509.76 7,200.00 "P-198-007" AIG Global Services SPOOR- 19-Jan-12 11,984.00 "P-198-008" AIG Metropolitana 00000629 08-Feb-12 315,648.00 190,353.00 "P-198-014" CIA De Seguros Y SPOOR- 10-Feb-12 513,634.24 1,709.69 "P-198-012" Reaseguros SA 00000630 31-Jan-12 875.55 American Home SPOOR- 01-Dec-11 6, 919,003.65 70,164.64 "P-198-016" Assurance Company, 00000670 74,952.81 "P-197 -026" UAE SPOOR- 01-Dec-11 38,209.00 5,195.00 "P-198-062" Chartis Far East 00000708 21-Dec-11 5,026.47 "P-198-047" Holdings KK 0001294 08-Feb-12 3, 061 '984. 89 4,277.88 "P-198-048" Chartis Europe SA 09-Feb-12 226,709.80 4,361.76 "P-198-049" 0001285 09-Feb-12 215,484.77 4,133.08 "P-198-050" 09-Feb-12 187,542.26 4,541.48 0001248 29-Feb-12 191,219.56 0001247 181,194.23 0001267 0001291 SPOOR- 0000715 SPOOR- 0000716 SPOOR- 0000717 SPOOR- 79 Exhibits "P-26", "P-27", "P-28", "P-29", refer to the CD attached to petitioner's FOE. 80 Exhibits "P-197-00 I" to "P-20 1-3", refer to the CD attached to petitioner's FOE. 81 Exhibits "P-34" to "P-35", refer to the CD attached to petitioner's FOE. 82 Exhibit "P-10", Line 17, refer to the CD attached to petitioner's FOE. 83 Exhibit "P-12", Line 17, refer to the CD attached to petitioner's FOE. 84 Exhibit "P-14", Line 17, refer to the CD attached to petitioner's FOE. 85 Exhibit "P-16", Line 17, refer to the CD attached to petitioner's FO~

DECISION CTA Case No. 8850 Page 23 of40 Chartis Global 0000759 28-Feb-12 194,693.25 50,110.00 "P-198-066" Services Company 19-Dec-11 24,101.50 "P-198-067" BPOOR- 19-Dec-11 2,148,215.70 88,795.00 "P-198-068" Chartis Insurance UK 0000756 19-Dec-11 1,051,789.46 50,110.00 "P-198-069 Limited BPOOR- 25-Jan-12 3,875,013.80 25,370.00 "P-198-070" Chartis International 0000642 25-Jan-12 2,186,800.40 88,795.00 "P-198-071" O&S HO BPOOR- 25-Jan-12 1 '112,220.80 50,110.00 "P-198-072" Chartis Sigorta A.S. 0000644 28-Feb-12 3,892,772.80 32,346.75 "P-198-073" Chartis South Africa BPOOR- 28-Feb-12 2,196,822.40 "P-198-07 4" Limited 0000645 06-Dec-11 1,386,705.17 102,748.50 "P-198-075" Chartis UK Services BPOOR- 06-Dec-11 4,404,828.20 2,186,800.40 "P-198-076" Limited 0000702 29-Feb-12 1,171,297.60 "P-198-086" BPOOR- 25-Jan-12 50,110.00 "P-198-088" Chartis Vietnam 0000703 18-Jan-12 26,840.00 105,257.82 "P-198-1 03" Insurance Co. BPOOR- 17-Feb-12 4,512,402.74 428,322.77 "P-198-1 07" Lexington Insurance 0000693 22-Dec-11 18,777,670.24 "P-198-1 08" Company BPOOR- 22-Dec-11 2,895,856.02 66,055.11 "P-198-111" 0000749 31-Jan-12 330,558.57 7,710.72 "P-198-117" BPOOR- 24-Feb-12 2,656,526.52 "P-198-127" 0000750 19-Jan-12 4,335,124.28 60,873.66 "P-198-128" BPOOR- 19-Jan-12 4,392,823.41 99,338.32 "P-198-129" 0000651 19-Jan-12 1 ,740,179.04 102,492.38 "P-198-130" BPOOR- 19-Jan-12 656,739.86 40,592.00 "P-198-131" 0000652 19-Jan-12 1 '133,406.48 14,980.38 "P-198-132" 0001308 19-Jan-12 2,001,997.44 25,853.25 "P-198-133" 24-Feb-12 2,001,997.44 45,666.00 0001275 24-Feb-12 1,999, 104.00 45,666.00 "P-198-134" 24-Feb-12 1,999, 104.00 45,600.00 "P-198-135" 0001280 24-Feb-12 1,954,872.00 45,600.00 "P-198-136" 16-Dec-11 52,740.39 45,600.00 "P-198-137" 0001296 05-Jan-12 62,329.55 "P-198-149" 09-Feb-12 43,663.95 1,230.24 "P-198-152" 0001264 01-Dec-11 1,131,244.81 1,453.92 "P-198-155" 01-Dec-11 1' 187,489.70 1,018.52 "P-198-167" 0001269 21-Dec-11 605,329.12 25,922.20 "P-198-168" 1,019,841.14 27,086.90 "P-198-169" 0001287 1,916,065.93 14,120.11 3,331,286.46 23,920.28 ~ BPOOR- 44,941.15 0000741 76,335.62 BPOOR- 0000671 BPOOR- 0000672 BPOOR- 0000673 BPOOR- 0000674 BPOOR- 0000675 BPOOR- 0000676 BPOOR- 0000740 BPOOR- 0000742 BPOOR- 0000743 BPOOR- 0000744 0001260 0001273 0001293 BPOOR- 0000605 BPOOR- 0000606 BPOOR- 0000650

DECISION CTA Case No. 8850 SPOOR- 29-Dec-11 1,604,664.62 36,770.50 "P-198-170" 0000655 09-Jan-12 221,429.36 5,074.00 "P-198-171" SPOOR- 09-Jan-12 575,018.10 "P-198-172" 0000660 24-Jan-12 13,176.40 "P-198-173" SPOOR- 22-Feb-12 1 ,672,926.07 38,159.81 "P-198-17 4" 0000661 26-Jan-12 1,630,731.93 38,039.00 "P-198-175" SPOOR- 26-Jan-12 15,206.00 "P-198-176" 0000685 666,631.04 81,168.00 SPOOR- 355,805.44 5,851,412.36 0000745 103,987,078.60 SPOOR- 0000689 Amount SPOOR- in Pesos 0000690 1,133,137.35 1,133,077.15 z>" Quarter of FY 2012 (March 1 to May 31, 2012) 1,113,777.30 3,441,768.51 OR No OR Amount In 149,353.47 USD Name of Customer Date 26,384.00 Exhibit 42,823.64 26,395.00 "P-198-178" AIG Employees 0000801 10-Apr-12 1,125,169.98 26,035.00 "P-198-037" Services, Inc. 0000854 14-May-12 1,360,247.25 "P-198-038" 80,171.64 0000766 09-Mar-12 901,315.35 3,479.00 "P-198-199" 216,837.30 "P-198-201" AIG Global Services SPOOR- 202,141.06 220,181.96 0001335 19-Apr-12 1,832,481.13 1,818,514.80 0001342 23-Apr-12 1,627,992.90 9,802,206.90 AIG Metropolitana 0001323 1,633,701.15 1,604,779.35 CIA De Seguros Y 9,628,676.10 10,608,212.20 Reaseguros SA 20-Mar-12 1,221,358.50 1,001.02 "P-198-202" 1,010,025.25 26,209.41 "P-198-205" Chartis Sigorta A.S. 0001328 03-Apr-12 31,692.62 "P-197-303" 98,383.45 20,995.00 "P-198-207" 0001341 23-Apr-12 7,703,805.11 "P-198-228" 11,654,939.30 5,141.98 "P-198-229" Chartis Asia Pacific 0001332 4,708.62 "P-198-246" 18,298.28 5,128.86 "P-198-257" PTE LTD 12-Apr-12 43,835.00 "P-198-258" 42,360.00 "P-198-251" Chartis Europe SA SPOOR- 38,055.00 "P-198-252" 228,330.00 0000850 10-May-12 38,055.00 "P-198-253" 38,055.00 "P-198-254" SPOOR- 228,330.00 "P-198-255" 247,971.30 "P-198-256" 0000800 1 0-Ap_r-12 28,450.00 "P-198-281" 23,530.00 Chartis Far East 0001333 2,333.02 "P-197 -060" 180,121.70 "P-197-285" Holdings KK 16-Apr-12 276,445.43 "P-197-304" "P-197 -307" Chartis Global SPOOR- 434.02 "P-197-316" Services Company 0000784 19-Mar-12 ~ SPOOR- 0000837 25-Apr-12 Chartis Global SPOOR- Services 0000789 19-Mar-12 SPOOR- 0000838 25-Apr-12 SPOOR- 0000839 25-Apr-12 SPOOR- 0000868 16-May-12 SPOOR- 0000869 16-Mal':12 SPOOR- 0000787 19-Mar-12 Chartis Insurance UK 0001345 24-Apr-12 Limited SPOOR- 0000829 24-Apr-12 Chartis Kenya 0001364 Insurance Co. Ltd. 23-Mav-12 Chartis South Africa 0001325 29-Mar-12 Limited 0001350 11-May-12 Chartis UK Services SPOOR- 14-Mav-12

DECISION CTA Case No. 8850 Limited 0000855 14-May-12 1,925,060.50 45,650.00 "P-197-317" 23-Apr-12 37,236.62 867.38 "P-197-318" Chartis Vietnam SPOOR- 23-Apr-12 "P-197-319" Insurance Co. 0000857 23-Apr-12 2,266,704.00 52,800.00 "P-1 97-320" Guam Insurance SPOOR- 24-Apr-12 1,959, 754.50 45,650.00 "P-197-321" Adjusters 0000819 24-Apr-12 "P-1 97-322" Lexington Insurance SPOOR- 24-Apr-12 43,983.99 1,024.79 "P-1 97-323" Company 0000820 14-May-12 1,957 608.00 45,600.00 "P-1 98-324" SPOOR- 14-Mar-12 1,937,971.82 45,142.60 "P-1 98-334" TATA AIG Gen. 0000821 17-May-12 2,226,576.00 52,800.00 "P-1 98-345" Insurance Co. Ltd. SPOOR- 02-Mar-12 "P-1 98-349" India 0000826 07-Mar-12 361,806.40 8,459.35 "P-1 98-350" SPOOR- 27-Mar-12 72,616.74 1,722.00 "P-198-351" 0000827 27-Mar-12 15,206.00 "P-1 98-352" SPOOR- 24-A_pr-12 651,881.22 81,168.00 "P-1 98-353" 0000828 24-Apr-12 3,479,672.16 37,918.19 "P-1 98-354" SPOOR- 25-Apr-12 1,622,140.17 15,206.00 "P-1 98-355" 0000856 16-May-12 12,669 00 "P-1 98-356" 0001314 650 512.68 39,076.86 "P-1 98-357" 23-M~y,12 543,880.17 81,184.00 0001370 1,677 569.60 15,206.00 02-A_l)r-12 3,485 229.12 36,998.83 SPOOR- 641,237.02 0000761 1,560,240 66 SPOOR- 0000762 SPOOR- 0000795 SPOOR- 0000794 BPOOR- 0000822 BPOOR- 0000823 BPOOR- 0000835 BPOOR- 0000860 BPOOR- 0000876 0001327 173,950.64 4,051.96 "P-198-387" 98,578,836.75 2,312,048.58 3rd Quarter of FY 2012 (.June 1 to AUflust 31, 2012 OR No OR Amount Amount in in Pesos USD Name of Customer Date Exhibit AIG Employees BPOOR- Services, Inc. 0000891 6-Jun-12 1,042, 102.85 23,995.00 "P-1 97-064" BPOOR- 0000933 4-Jul-12 905,478.35 21,595.00 "P-197-065" BPOOR- 0000983 7-ALJg-12 600,963.52 14,384.00 "P-1 98-397" 619,478.57 14,263.34 "P-1 98-406" AIG Global Services 0001390 14-Jun-12 1,214,215.94 27,958.00 "P-1 97-066" Malaysia 0001396 25-Jun-12 3,542,097.97 84,476.46 "P-1 98-408" 4,068,257.31 97,373.32 "P-1 97-067" 0001431 27-Jul-12 "P-1 98-412" 73,317,66 1,688.18 "P-1 98-413" 0001456 16-Aug-12 36,194.40 863.21 "P-1 98-415" 54,928.17 "P-198-419" AIG Metropolitana 0001404 14-Jun-12 460 428.30 1,314.70 CIA Seguros 0001432 17-Jul-12 10,980.88 0001441 10-Auq-12 American Home 0001419 19-Jul-12 - 9,99Q,991!l_5 - 239,995.00 "P-197-068" Assurance Company, 0001423 20-Jul-12 --- UAE ~ - .

DECISION CTA Case No. 8850 Page 26 of40 Chartis Europe SA SPOOR- 08-Jun-12 219,219.33 5,048.81 "P-198-463" 0000895 10-Jul-12 203,960.52 4,864.31 "P-198-464" Chartis Global SPOOR- 07-AuQ-12 215,900.66 5,167.56 Services 0000945 20-Jun-12 9,916,371.90 228,330.00 "P-198-465" SPOOR- 20-Jun-12 1,652,728.65 38,055.00 "P-198-474" Chartis Global 0000982 17-Jul-12 1,595,646.15 38,055.00 Services Company SPOOR- 17-Jul-12 9,573,876.90 228,330.00 "P-198-475" 0000921 22-Aug-12 "P-198-476" Chartis Insurance UK SPOOR- 22-AuQ-12 1,589,937.90 38,055.00 "P-198-477" Limited 0000922 20-Jun-12 9,539,627.40 228,330.00 "P-198-478" SPOOR- 17-Jul-12 3,679,389.60 "P-198-4 79" Chartis Insurance Ltd. 0000962 22-Aug:12 17,761,548.00 84,720.00 "P-198-480" Sri Lanka SPOOR- 01-Jun-12 1,769,800.80 42,360.00 "P-198-481" Chartis Europe SA - 0000963 06-Aug-12 42,360.00 "P-198-482" Ireland SPOOR- 18-Jun-12 611,146.96 14,072.00 "P-198-496" 0001005 06-Jul-12 132,766.40 "P-198-497" Chartis Kenya SPOOR- 857,047.62 3,177.75 "P-198-499" Insurance Co. 0001006 27-Jul-12 19,734.00 "P-198-500" SPOOR- 11-Jul-12 201,683.30 4,810.00 "P-198-493" Chartis New 0000923 16-Auq-12 151,868.78 "P-197 -085" Hampshire SPOOR- 27-Jun-12 3,621.96 "P-197-086" Insurance, Pakistan 0000959 06-Jul-12 8,065.65 192.36 "P-198-503" Chartis Sigorta A.S. SPOOR- 13-Aug-12 70,964.16 "P-198-504" 0001013 01-Jun-12 154,630.78 1,698.52 "P-198-505" Chartis Singapore 0001392 28-Aug-12 152,288.08 3,560.46 "P-198-506" Insurance Pte Ltd. 20-Jul-12 139,017.24 3,631.96 "P-198-509" Chartis South Africa 0001446 16-Au9:12 1,860,821.41 3,328.16 "P-198-516" Limited 31-Aug-12 296,648.86 42,856.32 "P-198-517" SPOOR- 02-Jul-12 3,029,555.29 7,100.26 "P-198-519" Chartis Southeast 0000908 09-Aug-12 3,112,114.37 72,252.69 "P-198-535" Asia Limited SPOOR- 14-Aug-12 13,567,795.50 74,505.97 "P-198-541" Chartis Technology & 0000940 29-Jun-12 7,416,102.08 324,743.79 "P-198-548" Operations Mgmt. (M) 0001434 17-Jul-12 8,204,822.83 176,868.64 "P-198-556" SDN SHD 17-Jul-12 11,679,047.90 196,381.59 "P-198-579" SPOOR- 279,536.81 "P-198-580" Chartis Thailand & 0000948 27-Jul-12 28,782,081.20 662,723.49 "P-198-581" Universal Insurance SPOOR- 27-Jul-12 1,536,162.99 36,636.37 "P-198-582" Chartis Uganda 0000998 19-Jul-12 776,244.64 18,512.87 0001398 22-Aua-12 174,428.80 4,160.00 "P-198-583" 545,090.00 13,000.00 "P-198-585" 0001408 3,060.89 7300 ~ 0001442 119,317.68 2,856.54 0001379 0001458 0001424 0001445 0001467 0001405 0001447 0001448 0001401 SPOOR- 0000953 SPOOR- 0000954 SPOOR- 0000977 SPOOR- 0000978 0001422 0001453

DECISION CTA Case No. 8850 Insurance Co 0001429 27 -Jul-12 111,845.76 2,667.44 "P-198-584" Chartis UK Serices 09-Jul-12 1,808,398.97 43,129.99 "P-198-586" Limited LTD SPOOR- 16-Aua-12 "P-198-587" 0000944 18-Jun-12 109 004.02 2,609.00 "P-198-588" Chartis Vietnam SPOOR- 18-Jun-12 22,895.86 527.19 "P-198-589" Insurance Co. 0000999 18-Jun-12 2,293 104.00 "P-198-590" Guam Insurance SPOOR- 06-Jul-12 1,982,579.50 52,800.00 "P-198-591" Adjusters 0000905 06-Jul-12 2,213,904.00 45,650.00 "P-198-592" Lexington Insurance SPOOR- 06-Aua-12 29,841.16 52,800.00 "P-198-593" Company 0000905 06-Aua-12 17 060.54 "P-198-594" SPOOR- 06-Aua-12 2,205,984.00 711.69 "P-198-595" 0000907 27-Jul-12 1,736,485.85 408.44 "P-198-605" SPOOR- 07-Aua-12 2,599,770.28 52,800.00 "P-198-607" 0000938 28-Aua-12 937 701.41 41,562.61 "P-198-608" SPOOR- 11-Jun-12 1,069, 145.76 62,002.63 "P-198-614" 0000939 08-Aua-12 22,449.16 "P-198-616" SPOOR- 13-Jun-12 1,454.91 25,596.02 "P-198-621" 0000992 20-Jun-12 8,940.92 "P-198-622" SPOOR- 21-Jun-12 660 396.58 33.50 "P-198-623" 0000993 12-Jul-12 10, 908,009.1 0 214.00 "P-198-624" SPOOR- 17-Jul-12 1,652,033.77 15,206.00 "P-198-625" 0000994 26-Jul-12 637,587.58 251,163.00 "P-198-626" 0001433 16-Aua-12 3,510,421.53 38,039.00 "P-198-627" 23-Aua-12 1 ,594,975.27 15,206.00 "P-198-628" 0001438 28-Aua-12 3,285 871.66 83,721.00 "P-198-629" 635,306.68 38,039.00 0001459 1 ,589,269.42 78,647.00 205,457,906.98 15,206.00 0001381 38,039.00 4,471 ,825.95 0001439 SPOOR- 0000899 SPOOR- 0000913 SPOOR- 0000925 SPOOR- 0000950 SPOOR- 0000961 SPOOR- 0000974 SPOOR- 0001004 SPOOR- 0001020 SPOOR- 0001022 4th Quarter of FY 2012 (SeDtember 1 to November 30, 2012) OR No OR Amount Amount in Name of Customer Date in Pesos uso Exhibit AIG Employee SPOOR- 13,984.00 "P-198-659" Services, Inc. 0001131 14-Nov-12 574,742.40 13,984.00 "P-198-660" SPOOR- 784.00 "P-198-661" 0001132 14-Nov-12 574,742.40 14,384.00 "P-198-662" 162,237.19 "P-198-663" SPOOR- 546,111.53 "P-198-665" "P-198-686" 0001133 19-Nov-12 32,222.40 83,217.13 "P-198-687" 39,025.10 "P-197-104" SPOOR- 125,321.50 ~ 0001028 06-Seo-12 605,997.92 AIG Global Services 0001478 18-Seo-12 6,835,052 81 0001526 22-0ct-12 22,811,078.60 0001545 19-Nov-12 3,420,224.04 AIG Global Services 0001560 26-Nov-12 1,603,931.61 Malaysia 0001530 30-0ct-12 5,234,679.06

DECISION CTA Case No. 8850 American Home 0001546 19-Nov-12 729,114.00 17,740.00 "P-197-105" Assurance Company, 27-Nov-12 4,108,561.50 99,965.00 "P-197-106" UAE 0001553 28-Nov-12 2,848,714.16 69,311.78 "P-198-691" 11-Sep-12 4,418 323.93 104,873.58 "P-198-693" Chartis Asia Pacific 0001558 11-Sep-12 "P-198-699" Pte. Ltd. 11-Sep-12 60,245.90 1,430.00 "P-198-700" Chartis Europe SA 0001482 11-Sepc:12 317,112.51 7,527.00 "P-198-701" 0001483 11-Sep-12 165,402.38 3,926.00 "P-198-702" Chartis Europe SA - 08-Nov-12 3,852,049.22 91,454.16 "P-198-704" Ireland 0001484 19-Nov-12 11,393,248.80 277,208.00 "P-198-717" Chartis Global 863,100.00 21,000.00 Services 0001485 31-0ct-12 P-197-1 07" 979,183.20 23,442.26 Chartis Global 0001486 19-Nov-12 "P-198-758" Services Company 835,309.41 20,323.83 0001536 07-Sep-12 "P-198-759" Chartis Insurance Ltd. 206,045.19 4,890.70 Sri Lanka 0001548 10-0ct-12 "P-198-760" 209,904.26 5,025.24 Chartis Kenya BPOOR- 15-Nov-12 "P-198-761" Insurance Company 0001112 213,715.07 5,199.88 Limited BPOOR- 12-Nov-12 "P-198-763" Chartis New 0001138 86,485.62 2,070.52 Hampshire Insurance BPOOR- 21-Sefl:: 12 "P-198-773" Co., Pakistan 0001031 1,603,257.15 38,055.00 Chartis Sigorta A.S. BPOOR- 21-Sep-12 "P-198-774" 0001072 9,614,684.89 228,214.69 Chartis Singapore BPOOR- 18-0ct-12 "P-198-775" Insurance 0001126 1,589,557.35 38,055.00 Chartis South Africa BPOOR- 18-0ct-12 "P-198-776" Ltd 0001118 9,537,344.10 228,330.00 Chartis Southeast BPOOR- 29-Nov-12 "P-198-777" Asia Limited 0001049 9,250,739.21 225,793.00 Chartis Technology & BPOOR- 29-Nov-12 "P-198-778" Operations Mgmt. (M) 0001050 1 ,564,060.50 38,055.00 SDN. HBD. BPOOR- 21-Sep,12 "P-198-779" 0001085 1,784,626.80 42,360.00 BPOOR- 18-0ct-12 "P-198-780" 0001086 2,594,334.70 62,110.00 BPOOR- 29-Nov-12 "P-198-781" 0001152 25-Sep-12 2,355,441.00 57,310.00 "P-198-791" BPOOR- 06-Nov-12 326,365.10 7,746.62 "P-198-792" 0001153 27-Nov-12 135,718.78 3,302.16 "P-198-793" BPOOR- 287,017.74 6,983.40 0001053 08-Nov-12 BPOOR- 136,129.78 3,312.16 "P-198-796" 0001087 28-Nov-12 BPOOR- 27-Sep-12 427,315.06 10,396.96 "P-198-797" 0001157 05-Nov-12 3,483,202.23 82,677.48 "P-198-801" 0001494 27-Sep-12 2,666,654.31 64,882.10 "P-198-804" 19-Nov-12 5,466,160.22 129,745.08 "P-198-805" 0001540 3,707,143.14 90,198.13 "P-198-807'' 23-0ct-12 0001551 30-0ct-12 14,858,363.80 355,718.55 "P-198-812" 28-Nov-12 19,093,057.80 457,099.78 "P-198-821" 0001541 13,685,030.70 334,515.54 "P-198-837" 11-Sep-12 0001552 11-Sep-12 125,187.19 2,971.45 "P-198-857" 547,479.35 12,995.00 0001496 ..,- "P-198-858" 0001538 0001495 0001547 0001525 0001531 0001556 BPOOR- 0001034 BPOOR-

DECISION CTA Case No. 8850 Page 29 of40 Charis Uganda 0001035 26-Nov-12 534,094.50 12,995.00 "P-197-134" Insurance Co. 10-0ct-12 543,010.00 13,000.00 "P-198-866" Chartis UK Services BPOOR- 26-Sep-12 129,935.67 "P-198-867" Limited 0001146 08-0ct-12 477,180.48 3,084.16 "P-198-868" BPOOR- 19-Nov-12 470,184.00 11,424.00 "P-198-869" Chartis Vietnam 0001074 03-Sep-12 110,591.25 11,440.00 "P-198-870" Insurance Company 0001503 03-Sep-12 1,923,908.58 "P-198-871" Limited 03-Sep-12 2,227,581.62 2,625.00 "P-198-872" Guam Insurance BPOOR- 08-0ct-12 109,646.25 45,666.00 "P-198-873" Adjusters 0001070 08-0ct-12 1,907,468.82 52,784.00 "P-198-87 4" Lexington Insurance BPOOR- 19-Nov-12 1,876,872.60 "P-198-875" Company 0001134 08-0ct-12 2,205,456.00 2,625.00 "P-198-876" BPOOR- 25-0ct-12 45,666.00 "P-198-877" 0001024 12-Nov-12 22,336.93 45,666.00 "P-198-878" BPOOR- 19-Nov-12 15,301.28 52,800.00 "P-198-879" 0001026 12-0ct-12 2,170,080.00 "P-198-885" BPOOR- 28-Nov-12 1,024,959.36 534.76 "P-198-887" 0001027 12-Sep-12 1'139, 150.62 371.12 "P-198-892" BPOOR- 12-0ct-12 33114.18 52,800.00 "P-198-893" 0001068 27-Nov-12 64,868.81 24,538.17 "P-198-894" BPOOR- 6,925.35 27,716.56 "P-198-898" 0001069 11-Sep~12 1'602, 583.07 786.00 "P-198-899" BPOOR- 640,628.78 1,553.00 "P-198-900" 0001137 24-Sep-12 6,780,440.56 168.50 "P-198-901" BPOOR- 18-0ct-12 635,154.62 38,039.00 "P-198-902" 0001067 18-0ct-12 1,624,212.25 15,206.00 "P-198-903" BPOOR- 18-0ct-12 1,563,402.90 162,328.00 "P-198-904" 0001105 15-Nov-12 624,966.60 15,206.00 BPOOR- 16-Nov-12 208,282,112.37 38,884.66 0001119 38,039.00 BPOOR- 15,206.00 0001135 5,006,415.43 0001519 0001559 0001487 0001515 0001550 BPOOR- 0001039 BPOOR- 0001059 BPOOR- 0001093 BPOOR- 0001095 BPOOR- 0001096 BPOOR- 0001127 BPOOR- 0001130 TOTAL 616,305,934.70 17,641,702.32 ~

DECISION CTA Case No. 8850 Services rendered by petitioner are "other than processing and manufacturing or repacking of goods" as mentioned under Section 108(8)(2) of the NIRC. as amended Anent the third requirement, records show that petitioner is a ROHQ licensed 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.as well as, to the fifth requisite for the grant of the claim of refund.86 Moreover, a perusal of the service agreements87 between petitioner and its non-resident foreign client affiliates doing business outside the Philippines, shows that the services provided by petitioner for the subject period of claim, included among others, information (IT) technology services, administrative and other certain services to assist the AIG group of companies. Clearly, these services fall within the scope of "services other than processing, manufacturing or repacking of goods" pursuant to Section 108(8)(2), in relation to Section 108(8)(1 ), both of the NIRC of 1997, as amended. Not all of the service agreements presented by petitioner indicate that the services were performed in the Philippines A scrutiny of the service agreements and its attachments provided by petitioner, only the following have a provision as to where the services are to be performed by petitioner, to wit: 86 Exhibits "P1"- to "P-3", Docket- Vol. , pp.; refer to the CD attached to petitioner's FOE. 87 Exhibits "P-119", "P-122", "P-123", "P-124", "P-127'', "P-129", "P-131", "P-134", "P- 147", "P-148", "P-153", "P-154", "P-155", "P-156", "P-158", "P-162", "P-167'', "P- 169", "P-172", and "P-182", refer to the CD attached to petitioner's FO~

DECISION CTA Case No. 8850 Client Service ~eement Service Project Location Exhibit Statement of Work Chartis Technology & Operations "P-119" AIG Employee Management Corp. 9F Paragon "P-122" Corporate Centre Industry Services, Inc Avenue, Madrigal Business Park, "P~127" Alabanq, Muntinlupa City, 17ao AIG General Work Order No. 001 - "P-156" Manila Regional Technology Insurance (Vietname) Production Support Center (MRTC) "P-167" Co. Ltd. (Chartis attached to the Vietname Insurance Master Agreement for Co. Ltd.) Professional Services AIG Metropolitana Work Order No. 001 - Makati Office: located at the 46"' Floor, PBCom Tower, 6795 CIA De Seguros Y OPI Project Ayala Avenue cor. Rufino Street, Makati City Reaseguros SA Assignment attached to the Master Agreement for Professional Services Alabang Office: located at the a'" Floor, Paragon Corporate Chartis Uganda Work Order No. 001- Center, Lot 6, Industry St., Madrigal Business Park, Ayala Insurance Co. OPI Project Alabang, Muntilupa Makati Office: located at the 46'" Assignment attached Floor, PBCom Tower, 6795 Ayala Avenue cor. Rufino Street, to the Master Makati City Agreement for Professional Services Alabang Office: located at the a'" Floor, Paragon Corporate Center, Lot 6, Industry St., Madrigal Business Park, Ayala Alabang, Muntilupa Lexington Insurance Statement of Work Chartis Technology and Company Operations Management Corporation (Phili~pines) Ground 61", 7'", and a' Floors, The Paragon Corporate Center, Madrigal Business Park, Alabang, Muntinlupa City, Philippines In sum, out of the P2,240,430,657.47 zero-rated sales/receipts declared in petitioner's 2012 Quarterly VAT Returns, only P72,235,195.06 (US$ 2,080,247.89) qualifies for VAT zero-rating under Section 108(8)(2), in relation to Section 112(A)(2), (8)(1 ), (2)(c) and (3), of the NIRC of 1997, as amended, broken down as follows: Company AIG AIG General AIG Chartis Lexington Aggregate Name Employee Insurance Metropolita Uganda Insurance Co. sales qualified Services, na CIA De Insurance for VAT-zero (Vietnam) Co. Seguros Y Inc. Ltd Reaseguro Co. rating sales qualified for VAT-zero rating in PESO sSA 1st Quarter 1,771,20a.oo 2,924,063.63 113,161.81 - 12,994,400.10 4,80a,433.44 42,823.64 - 14,212,362.80 17,445,103.42 2nd Quarter 3,379,991.aO 36,1806.40 91,122.57 24,473,871.59 31,951,319.77 231,163.44 13,471,388.78 15,364,770.05 3'" Quarter 2,548,544.72 4,606,617.45 - 1"72,235, 195.06 129,935.67 4'" Quarter 1,787,705.12 2,164,109.98 ~ Total

DECISION CTA Case No. 8850 Company AIG AIG General AIG Chartis Lexington Aggregate Uganda Insurance Co. sales qualified Name Employee Insurance Metropolitana Insurance for VAT-zero Services, (Vietnam) ClADe Co. rating Inc. Co. ltd Seguros Y Reaseguros SA sales qualified for VAT-zero rating in US DOLLAR 1st Quarter 40,768.00 67,129.21 2,585.24 - 372,790.76 483,273.21 334,632.88 407,701.25 2nd Quarter 78,814.00 8,459.35 1,001.02 - 752,677.88 573,266 368,138.55 3ru Quarter 59,974.00 110,047.81 3,866.09 5,523.98 322,908.66 3,084.16 $2,080,247.8~ 4'" Quarter 43,136.00 52,254.73 - Total �- - - - . L_ - �- - - _ . . - --- - - - The claimed input VAT are not transitional input taxes The sixth requisite points out that the claimed input taxes should not be transitional input taxes. Pertinent thereto is Section 111 (A) of the NIRC of 1997, as amended, which provides as follows: "SEC. 111. Transitional/Presumptive Input Tax Credits.- (A) Transitional Input Tax Credits. - A person who becomes liable to value-added tax or any person who elects to be a VAT-registered person shall, subject to the filing of an inventory according to the rules and regulations prescribed by the Secretary of Finance, upon recommendation of the Commissioner, be allowed input tax on his beginning inventory of goods, materials and supplies equivalent to two percent (2%) of the value of such inventory or the actual value-added tax paid on such goods, materials and supplies, whichever is higher, which shall be creditable against the output tax." In the case of Fort Bonifacio Development Corporation vs. Commissioner of Internal Revenue, eta/., 88 the Supreme Court ruled that transitional input tax credit operates to benefit newly VAT- registered persons, whether or not they previously paid taxes in the acquisitions of their beginning inventory of goods, materials and supplies. During the period of transition from non-VAT to VAT status, the transitional input tax credit serves to alleviate the impact of the VAT on the taxpayer. A 88 G.R. Nos. 158885 and 170680, October 2, 2009.

DECISION CTA Case No. 8850 In this case, there is no indication that the claimed input VAT are transitional input VAT. Thus, petitioner has complied with this requisite. The input VAT was due or paid up to the extent of P61,841,236.86 In its Quarterly VAT Return for FY 2012, petitioner declared an input VAT of P82,690,900.07 on its current purchases of goods and services, of which the amount of P79,682,086.49 is the subject of the present claim, as shown below: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total "P-10'' ''P�12" ''P�14'' "P-16" Input VAT on Cap Goods 115,407.65 482,200.45 361,207.59 166,461.11 1,125,276.80 not Exceeding 1M 966,463.49 1,401,684.13 1,224.224.92 1,685,851.88 5,278,224.42 Input VAT on Cap Goods 2,408,312.18 1,757.632.90 1,451,393.27 1,401,048.55 7,018,386.90 Exceeding 1M 12,805,227.32 18,192,986.32 19,447,237.88 18,823,560.43 69,269,011.95 16,295,410.64 21,834,503.80 22,484,063.66 22,076,921.97 82,690,900.07 Input VAT on Goods 2,314,532.46 Input VAT on Services 723,011.55 385,436.98 609,039.42 597,044.51 80,376,367.61 Sub-Total 15,572,399.09 21,449,066.82 21,875.024.24 21,479,877.46 Less: Output VAT Total (A) Vatable Sales 6,025,096.20 3,211,974.79 5.075,328.49 4,975,370.95 Zero-Rated Sales 417,165,029.78 632,957,904.53 636,141,233.77 554,166,489.39 Total Sales 423,190,125.98 636,169,879.32 641,216,562.26 559,141,860.34 % of Vatable sales 1.42% 0.50% 0.79% 0.89% to Total Sales 6.025,096.20 3,211,974.79 5,075,328.49 4,975,370.95 423.190,125.98 636,169.879.32 641,216,562.26 559,141,860.34 Input VAT Allocated to (B) 221,709.34 108,294.76 173,144.21 191,132.82 694,281.12 Vatable Sales 15,572,399.09 21,449,066.82 21,875.024.24 21,479,877.46 1.42% 0.50% 0.79% 0.89% Amount Claimed (A-8) 15,350,689.75 21,340.772.06 _ _21.701,880.tJ:l_ 21,288,744.64 _79,682,086~ In support of the foregoing, petitioner presented various official receipts and invoices89 issued by its suppliers, which were all examined by the Court-commissioned !CPA, Mary Ann C. Capuchino. As stated in her report, the Court agrees with the exceptions/findings noted by the !CPA, as follows: 89 Exhibits "P-209" to "P-239", with sub-markings~

DECISION CTA Case No. 8850 Page 34 of40 Findings Amount Reference (ICPA Input VAT claimed on capital goods exceeding Report) 1 million which are supported with VAT documents but the input VAT should be deferred and amortized 872,280.34 Annex X in the subsequent quarters: 1'755,366.85 Annex Y 1. Domestic purchases of capital goods exceeding 595,654.86 Annex Z 1 million supported with original VAT invoices 408,221.73 AnnexAA (amount of deferred input VAT) 3,631,523.78 2. Domestic purchases of capital goods exceeding 1 million supported with VAT invoices (amount of deferred input VAT) (in USD) 3. Domestic purchases of capital goods exceeding 1 million supported with VAT invoices not dated within the quarter but dated within the taxable year (amount of deferred input VAT) 4. Domestic purchases of capital goods exceeding 1 million supported with original VAT invoices dated within the quarter but dated within the taxable year (amount of deferred input VAT) (in USD) Sub-Total Input taxes claimed on purchases which are not 123,399.59 Annex 88 properly supported with the required VAT 299,972.95 Annex CC documents: 2,127.32 Annex DO 1. Domestic purchases of goods supported with 27,928.41 Annex EE original VAT invoices but the amount of input VAT claimed was not separately indicated ~ 2. Domestic purchases of services supported with original VAT ORs but has no authority to print (ATP) 3. Domestic purchases of services supported with original VAT OR but not named after the ROHQ (under employee name) 4. Domestic purchases of goods supported with original VAT invoices but the amount of input VAT claimed was overstated (amount of overstatement) in USD~

DECISION CTA Case No. 8850 5. Domestic purchases of services supported with 33,093.60 Annex FF original VAT ORs but the amount of input VAT 128,405.66 AnnexGG claimed was overstated (amount of overstatement) 5,538.90 Annex HH 6. Domestic purchases of services supported with original VAT ORs but the amount of input VAT 219,505.86 Annex II claimed was overstated (amount of overstatement) (in USD) 6,446,915.68 Annex JJ 7. Domestic purchases of capital goods exceeding 529,814.54 Annex KK 1 million supported with original VAT invoices but 19,636.10 Annex LL the amount of input VAT claimed was overstated 1,764.00 Annex MM (amount of overstatement) (in USD) 188,558.05 Annex NN 8. Domestic purchases of goods supported with 294,102.86 Annex 00 original VAT invoices not dated within the taxable Year 27,447.65 Annex PP 10,331.49 Annex QQ 9. Domestic purchases of services supported with original VAT ORs not dated within the taxable year 4,592.19 Annex RR 11,462.39 Annex SS 10. Domestic purchases of capital goods exceeding 1 million supported with original VAT invoices ~ not dated within the taxable year 11. Domestic purchases of goods supported with billing statement only 12. Domestic purchases of goods supported with jlf'Oforma invoice only 13. Domestic purchases of services supported with provisional/transactional/acknowledgement/service receipts only 14. Domestic purchases of services supported with Statement of Account only 15. Domestic purchases of services supported with VAT ORS imprinted with "Not a valid source of input Tax" 16. Domestic purchases of goods supported with non-VAT invoices 17. Domestic purchases of services supported with non-VAT official receipts 18. Domestic purchases of goods supported with VAT invoice which did not indicate invoice" on the face of the document

DECISION CTA Case No. 8850 Page 36 of40 Input taxes claimed from purchases of goods 933,502.99 Annex TT and services without supJ>Ortin_g_ documents Sub-total 9,308,100.23 Grand Total- - P12,939,624.01_'- - - - - - --- - - - - - - -- The above-noted exceptions/findings found by the ICPA in the amount of P12,939,624.01 should be disallowed for not being properly substantiated by VAT invoices/official receipts for input VAT deferred to the succeeding period for amortization purposes as prescribed under Sections 11 O(A) and 113 (A) and (B) of the NIRC of 1997, as amended, in relation to Sections 4.110-2, 4.110-3, 4.110-8, and 4.113-1 of RR No. 16-05, as amended. Upon further verification by the Court of the supporting documents, as well as the schedules of the ICPA report, the Court finds that the additional input VAT of P4,901 ,225.62 shall likewise be disallowed for the reasons stated therein: Name of Supplier Input VAT Exhibit Reason Abenson 5,977.71 "P-209-047" Invoice Without Signature Integrated Computer System 1,027.20 "P-209-071" Sanitary_Care Products "P-209-117" Invoice not Dated Carlgin Enterprises 803.57 "P-209-126" Integrated Computer System 428.57 "P-209-140" Invoice not Readable Automatic Centre 1,057.32 "P-209-192" Sanitary Care Products 6,771.22 "P-209-237" Invoice Without Signature Sandz Solutions Philippines 10,446.43 "P-210-56" Philhealth Care Inc. 54,583.87 "P-211-140" Invoice not Dated RCG Information Tech. 638,656.54 "P-211-151" 1,471,760.34 VAT not s"''_arate_ly_lndicated RCG Information Tech. "P-211-152" 222.32 Invoice not Readable Alpha Insurance "P-211-185" Jaguar Security 4,068.00 "P-211-219" VAT amount not the same Maj_oliz Beauty & Develo_l)_ment 3,978.31 "P-211-224" Marsman Drydale 530,526.34 "P-211-225" OR not readable Marsman Drydale "P-211-227" Metro Parking Management 216.00 "P-211-230" OR with erasures/alteration without 108.00 Metro Parking_Mana~ment 2,887.50 "P-211-231" authorized counter signature Metro Parking Management "P-211-232" 7,425.00 OR with erasures/alteration without P&A Grant Thornton OutsourcinQ 1,650.00 "P-211-243" Philhealth Care Inc. "P-211-245" authorized counter signature Searchers & Staffers Corp. 331.20 "P-211-263" Spearace Solutions 997.43 "P-211-270" VAT not S"fJaratelyindicated 22,096.80 15,069.60 OR not dated VAT not separately Indicated VAT amount not the same VAT amount not the same OR with erasures/alteration without authorized counter signature VAT not separately Indicated OR with erasures/alteration without authorized counter signature VAT amount not the same Handwritten details in a computerized OR VAT amount not the same VAT not separately Indicated -;A

DECISION CTA Case No. 8850 S~rior Maintenance 37,441.91 "P-211-280" VAT amount not the same Tower Club 294.64 "P-211-295" VAT amount not the same King ofTravel 176.79 "P-211-339" VAT amount not the same Manila Golf and Contry_Club. "P-211-341" VAT amount not the same Manila Golf and Gantry Club. 1,426.29 "P-211-342" VAT amount not the same Philhealth Care Inc. 1,426.29 "P-211-359" VAT not s<>parately_lndicated Ramon V. Ocampo 2,355.63 "P-211-366" VAT not separately Indicated RCG Information Tech. 272,842.10 "P-211-371" VAT amount not the same Marsman Drydale 21 420.00 "P-212-55" VAT amount not the same Sanit�lry Care Products 2,230.55 "P-212-62" VAT amount not the same Tata Consultancy 5,663.25 "P-212-63" VAT amount not the same People4U. Inc. 25,558.85 "P-212-82" VAT amount not the same Icon Interiors 773,569.03 "P-214-06" VAT not separately Indicated leon Interiors 2276.10 "P-214-1 0" VAT not separately Indicated One Opsis 15,735.00 "P-214-11" VAT not s<>parately_lndicated Reynaldo Master Key 6.825.24 "P-216-13" Supported by Billing Invoice Reynaldo Master Key 6,428.57 "P-216-24" Supported by Billing Invoice R"YY'aldo Master K"Y_ 1,182.85 "P-216-25" Supported by BillinQ Invoice Searchers & Staffers Corp. "P-218-66" VAT amount not the same Specialized Cleaning 42.86 "P-218-68" OR with erasures/alteration without 15,141.60 authorized counter signature Marsman Drysdale 16.914.07 "P-219-07" VAT amount not the same Tata Consultancy "P-219-09" VAT amount not the same Gaza General Merchandise 367.78 "P-209-008" Invoice Without Signature Icon Interiors 483 062.23 "P-209-020" Invoice Without Signature Reynaldo Master Key_ "P-209-035" SLJPported by Billin,g_lnvoice Integrated Computer System 1 '148.84 "P-21 0-04" VAT not separately Indicated 8 lnterconnectivities 2.226.00 "P-211-001" OR date not readable Metro Parking Management 6,428.57 "P-211-045" OR with erasures/alteration without 47,893.28 authorized counter signature Phil. American Life 12.857.14 "P-211-047" OR with erasures/alteration without 2,475.00 authorized counter sianature Headstrong Philippines Inc. "P-212-001" VAT amount not the same SMJ Furnishing Phils. 6.750.00 "P-214-001" Invoice Without Signature SMJ Furnishing Phils. "P-214-002" Invoice Without SJg_nature Citimex 6,327.53 "P-214-003" Invoice Without Signature Integrated Computer System 2,332.32 "P-215-004" VAT not separately Indicated lnt<>grated Computer ~stem 19,950.00 "P-215-005" VAT not s<>parately_lndicated Integrated Computer System 32,464.26 "P-215-006" VAT not separately Indicated Philhealth Care Inc. 112,045.47 "P-218-16 Handwritten details in a computerized OR Philhealth Care Inc. 32.954.47 "P-218-17" Handwritten details in a computerized OR 139,688.20 1,446.72 766.92 TOTAL 1'4,901 !225.62 - - - - - -- - - ~- - �- - -- - Therefore, in compliance with the seventh requisite for a claim of refund of input VAT, out of petitioner's input VAT claim for FY 2012 in the amount of P79,682,086.49, only the amount of P61 ,841,236.86 represents valid input tax, computed as follows: Claimed Input VAT P79,682,086.49 Less: Disallowances 1"12,939,624.01 17,840,849.63 Per ICPA 4, 901 ,225.62 P61,841,236.8~ Per Court's Verification Valid Input VAT Due or Paid

DECISION CTA Case No. 8850 The input VAT was not applied against any output taxes during and in the succeeding quarters As to eight requisite on whether or not the said input VAT was applied against any output VAT and/ or carried over to the succeeding taxable quarters, petitioner's Quarterly VAT Returns for the subject period of claim disclose that petitioner had an input tax of P82,690,900.0790 and that petitioner had an output tax liability of P2,314,532.4691 for FY 2012. It is noteworthy to mention that the said amount of P2,314,532.46, was already applied or formed part of the input VAT claim of P79,682,086.49, which was carried-over by petitioner in its succeeding quarters, the same remained unutilized as the said amount was deducted as "VAT Refund!TCC claimed' from the total available input tax in its First Quarterly VAT Return for CY 2014. 92 Consequently, the subject claim no longer form part of the excess input VAT of Php123,003,777.5893 as of the end of the first quarter of CY 2014 that was to be carried over/ applied to the succeeding quarters. This scenario removes the possibility that the present claim would be applied to future output VAT liability. Thus, in effect, petitioner is deemed to have complied with this requisite for the claim of refund/tax credit of input VAT. Petitioner's excess input tax due or paid attributable to valid zero-rated sales/ receipts amount Lastly, the Court shall now proceed to determine the amount of input taxes claimed that are attributable to zero-rated or effectively zero-rated sales. 90 Exhibits "P-10", "P-12'', "P-14", "P-16", Lines 218, 21D, 21F, 21J, refer to the CD attached to petitioner's FOE. 91 Exhibits "P-10", "P-12", "P-14", "P-16", all Line 158, refer to the CD attached to petitioner's FOE. 92 Exhibit "P-21 ",Line 23D, refer to the CD attached to petitioner's FOE. 93 Exhibit "P-21 ",Line 29, refer to the CD attached to petitioner's FOE"ID

DECISION CTA Case No. 8850 Page 39 of40 Pursuant to Section 112(A) of the NIRC, as amended, when the taxpayer is engaged in zero-rated or effectively zero-rated sales and taxable or exempt sales, and the amount of input taxes cannot be directly and entirely attributable to any of one of the transactions, the input taxes shall be proportionately allocated on the basis of sales volume. In the instant case, petitioner's reported total sales/receipts consisted of both zero-rated sales/receipts and Vatable sales/receipts. Hence, in order to identify petitioner's input VAT, the Court shall allocate the excess valid input VAT of P61,841,236.86 proportionately on the basis of the volume of its sales, as follows: Valid Zero-Rated Sales/Receipts per this 1'"72,235, 195.06 Court's Verification /2,240,430,657.47 Divided by the Total Sales/Receipts per X 1'"61 ,841,236.86 2012 Quarterly VAT Return Multiplied by Valid Excess Input VAT Due P1 ,993.863.90 or Paid Excess Valid Input VAT Due or Paid Allocated to Zero-Rated Sales/Receipts Based on the foregoing, petitioner has refundable excess input VAT in the amount of P1 ,993,863.90 which can be attributed to its valid zero-rated sales/receipts amounting to P72,235, 195.06. WHEREFORE, in light of the foregoing circumstances, the instant Petition for Review is hereby PARTIALLY GRANTED. Accordingly, respondent is ORDERED TO REFUND or TO ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner the amount of P1,993,863.90, representing petitioner's unutilized excess input VAT attributable to its zero-rated sales/receipts for four quarters of FY 2012. SO ORDERED. ER~P.UY WE CONCUR: Associate Justice ~-~4�<-_ MA. BELEN M. RINGPIS-LIBAN Associate Justice

DECISION CTA Case No. 8850 Page 40 of40 ATTESTATION I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. ER~.UY Associate Justice Chairperson, 3'd Division CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution and the Division Chairperson's Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. Presiding Justice