Kepco Philippines Corporation vs. The Commissioner of Internal Revenue

DECISION

This is a consolidated case seeking the refund of alleged unutilized input value- added tax VAT paid on domestic purchases of goods and services (including capital goods) that are attributable to effectively zero-rated sales and creditable VAT withheld for the third and fourth quarters of 1996 in the aggregate sum of P22, 172,003 .26, broken down as follows:

Period

Creditable

CTA Case No.

Covered

lnQut VAT

VAT Withheld

Total Claim

5675 3rd qtr 1996 p 4,895,858.01 p 4,084,867.25 p 8,980,725.26 5704 4th qtr 1996 13,191,278.00 13,191,278.00 ~ :18 081 :136 0:¹ ~ 4 084 86125 ~ 22112 003 26 Petitioner is a domestic corporation duly organized and existing under the laws of the Republic of the Philippines, with its principal place of business located at Suite 2501- A, 25th Floor, Tektite Tower I, Exchange Road, Ortigas Centre, City of Pasig. It is a Value-Added Tax (VAT) registered taxpayer engaged in the production and sale of

CTA CASE NOS. 5675 & 5704 electricity (as an independent power producer), and sells electricity to the National Power Corporation (pars. 1 & 2, Facts Admitted). For the third and fourth quarters of 1996, petitioner alleged that it incurred input VAT in the amounts ofP4,895,858.01 and P13,191 ,278.00, respectively, on its domestic purchases of goods and services (including capital goods) that were used in its production and sale of electricity to National Power Corporation (NPC) for the same period. Likewise, petitioner averred that for the income payments it received from NPC for the months of April and June, 1996, the latter withheld creditable VAT in the amounts ofP1,971, 178.86 and P2, 113,688.39, respectively, or in the sum ofP4,084,867.25. On September 16, 1998, petitioner simultaneously filed its quarterly VAT returns for the third and fourth quarters of 1996, declaring the following:

INPUT VAT

Excess VAT

Zero-rated

Carried-over

Creditable

Credits carried-

Exh

1996

Sales

from prev gtr this quarter

Total

VATW!held over to subs gtr

M

3rd qtr p 83,538,812.32 p 9,550,968.83 p 4,895,858.01 p 14,446,826.84 p 4,084,867.25 p 18,531 ,694.09

N

4th qtr 91 ,541 ,490.43 18,531 ,694.09 13 191 278.00 31 ,722,972.90 31 ,722,972.90 E H! oaz 136 Q1

E 4Q8486Z25

On September 18, 1998, petitioner filed with the Bureau of Internal Revenue an application for the effective zero-rating of its sales of electricity to NPC (Annex "F, " Petitionfor Review, page 15, CTA Case No. 5765 docket). On September 30, 1998, petitioner filed an administrative claim for refund in the amount of P8,980,725.26 representing the sum of the alleged input VAT payment of P4,895,858.01 directly attributable to its sale of electricity to NPC for the third quarter of 1996 and the creditable VAT of P4,084,867.25 allegedly withheld from the payments it received from NPC for the months of April and June, 1996. Also, on the same date,

DECISION-

CTA CASE NOS. 5675 & 5704

PAGEJ

petitioner filed with this court a claim for the aforesaid amount of P8,980, 725.26 docketed as CTA Case No. 5765. On December 28, 1998, petitioner filed with the BIR another letter-claim for refund in the amount of Pl3,191,278.00 corresponding to its alleged unutilized input VAT attributable to its effectively zero-rated sales to NPC for the fourth quarter of 1996 (Annex "E, " Petition for Review, page 13, CTA Case No. 5704 docket). On the following day, or on December 29, 1998, petitioner elevated its claim before this court via a Petition for Review, which was docketed as CTA Case No. 5704. On May 12, 1999, the parties filed a Joint Motion to Consolidate CTA Cases Nos. 5675 and 5704 since these cases involve the same parties and the same cause of action. The said motion was granted in open court on the same date (pp. 56-58, CTA Case No. 5675 docket).

Respondent, m his Answer, raised the following Special and Affirmative

Defenses:

"6. That the herein petitioner is not entitled to the refund of the amounts prayed for in the instant petition for review;

7. That the instant petition for review was prematurely filed as petitioner has not exhausted the administrative remedies required by law and jurisprudence on the actions of this nature as no decision has as yet been rendered by the respondent;

8. Such being the case this Honorable Court has no jurisprudence (sic) over the Petition for Review." On June 8, 1999, the parties submitted their revised Joint Stipulation of Facts and Issues which was approved by this court on June 11, 1999, limiting the issues to be resolved as follows:

CTA CASE NOS. 5675 & 5704

1. That through the proper and correct appreciation and application of the existing laws, regulations, and jurisprudence, and further in conjunction with the proper appreciation of the facts admitted to and to be proven herein, it be resolved whether or not the sale of electricity by a VAT -registered entity to the National Power Corporation (NPC) qualifies as a sale of services subject to a VAT rate of zero percent (0%) or otherwise called a zero-rated VAT transaction;

2. That through the proper and correct appreciation and application ofthe existing laws, regulations and jurisprudence, and further in conjunction with the proper appreciation of the facts admitted to and to be proven herein, it be resolved whether herein petitioner qualifies as a VAT- registered entity, whereby its sales of electricity to the NPC qualify as a zero-rated VAT transaction;

3. That through the proper and correct appreciation and application of the existing laws, regulations, and jurisprudence, and further in conjunction with the proper appreciation of the facts admitted to and to be proven herein, it be resolved whether herein petitioner qualifies as a VAT -registered entity entitled to claim the refund of the unutilized input VAT incurred in connection with petitioner's purchases of supplies, goods, and equipment which were directly used to produce the electricity sold to NPC;

4. That through the proper and correct appreciation and application ofthe existing laws, regulations, and jurisprudence, and further in conjunction with the proper appreciation of the facts admitted to and to be proven herein, it be resolved whether creditable VAT withheld by government agencies from payments made to VAT -registered entities may be the subject of a claim for refund, considering that no VAT output tax exists on the part of the VAT -registered entity for which the creditable VAT withheld may be offset against; and

5. That through the proper and correct appreciation and application of the existing laws, regulations, and jurisprudence, and further in conjunction with the proper appreciation of the facts admitted to and to be proven herein, it be resolved whether herein petitioner qualifies as a VAT -registered entity entitled to claim the refund of the creditable VAT withheld by government agencies from said government agencies' payments to petitioner.

DECISION-

CT A CASE NOS. 5675 & 5704

PAGES

In its Petitions for Review for both CTA Cases Nos. 5675 and 5704, petitioner cited Section 106(a) of the 1995 Tax Code as basis of its claimed input VAT, asserting that its sales of electricity to NPC are effectively zero-rated. However, on September 26, 2001, petitioner filed a Motion for Leave of Court to Admit Attached Amended Consolidated Petition for Review in order to include also Section 1 06(b) of the 1995 Tax Code as basis of the claimed input VAT (pages 145-149, CTA Case No. 5675 docket). The latter provision allows the refund of unutilized input VAT directly attributable to capital goods. On December 4, 2001, this court granted petitioner's motion. To support its claim, petitioner presented testimonial and documentary evidence. Respondent, on the other hand, did not present any controverting evidence and submitted this case for decision based on the pleadings (page 118, CTA Case No. 5675 docket). Anent the issue of whether or not the sale of electricity by a VAT registered entity to NPC is effectively zero-rated for VAT purposes, the same had already been resolved by this court in the affirmative in a number of similar cases where the controlling law is Section 102(b)(3) [now 108(B)(3)] ofthe Tax Code in relation to Section 13 ofRepublic Act No. 6395 (NPC Charter), as amended, to wit: "Sec. 102. Value-added tax on sale of services and use or lease of properties. ~ (a) Rate and base of tax. - xxx "(b) Transactions subject to zero-rate. - The following services performed in the Philippines by VAT-registered persons shall be subject to 0%:

"(1) "(2) "(3) Services rendered to persons or entities whose exemption under special laws or international agreements to which the Philippines IS a signatory effectively subjects the supply of such services to zero rate."

CTA CASE NOS. 5675 & 5704

"Section 13.

Non-profit Character of the Corporation:

R'Cemptionfrom All Taxes, Duties, Fees, Imposts and Other Charges by the Government and Government Instrumentalities. -

The Corporation

shall be non-profit and shall devote all its returns from its capital investment as well as excess revenues from its operation, for expansion. To enable the Corporation to pay its indebtedness and obligations and in furtherance of effective implementation of the policy enunciated in Section One of this Act, the Corporation, including its subsidiaries. is hereby declared exempt from the payment of all forms of taxes. duties. fees. imposts as well as costs and service fees including filing fees. appeal bonds. supersedeas bonds. in any court or administrative proceedings." (Underscoring supplied).

Clearly from the foregoing, NPC is an entity with a special charter, which categorically makes it exempt from payment of all taxes, whether direct or indirect, including VAT. Hence, by virtue of the said charter, services rendered by a VAT registered entity to NPC are effectively subject to zero percent (0%) VAT (Mirant Navotas Corporation vs. Commissioner of Internal Re~,enue, CTA Case No. 6044, October 16, 2002).

Moreover, no less than the Supreme Court affirmed NPC's tax exemption in the case of Maceda vs. Macaraig, Jr., 197 SCRA 771 where the Supreme Court in its Resolution dated June 8, 1993 held that: "A chronological review of the NPC laws will show that it has been the lawmaker's intention that the NPC was to be completely tax- exempt from all forms of taxes - direct or indirect.

XXX

XXX

XXX

One common theme in all these laws is that the NPC must be enable to pay its indebtedness which, as of P.D. No. 938 was P12 Billion in total domestic indebtedness, at any one time, and US$4 Billion in total foreign loans at any one time. The NPC must be and has to be exempt from all forms of taxes if this goal is to be achieved."

DECISION-

CTA CASE NOS. 5675 & 5704 PAGE?

We now proceed to the second issue of whether or not petitioner's reported sales for the third and fourth quarters of 1996 ofP83,538,812.32 and P91,541,490.43 qualify as effectively zero-rated sales. In order to qualify for effective zero-rating under Section 102(b)(3), petitioner must prove: a) that it is a VAT registered entity and (b) that it actually derived sales from services rendered to NPC, an entity exempt from VAT by virtue of Republic Act No. 6395, as amended.

The fact that petitioner is a VAT registered entity is admitted. (par. 1, Joint Stipulation of Facts). However, while petitioner reported the amounts ofP83,538,812.32 and P91 ,541,490.43 in its 1996 third and fourth quarterly VAT returns (Exhibits M & N), respectively, as zero-rated sales, it failed to substantiate the same. Petitioner did not submit the corresponding invoices and/or official receipts showing its sales of electricity to NPC for the subject period. Since petitioner failed to submit documents evidencing its reported effectively zero-rated sales for the third and fourth quarters of 1996, it follows that the input VAT payments allegedly attributable thereto cannot be refunded. It is quite clear from the provisions of Section 106(a) [now 112(A)] of the Tax Code that there must be zero-rated or effectively zero-rated sales in order that a refund of input VAT could prosper, to wit:

"Sec. 106. Refunds or tax credits of creditable input tax. - (a) 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-

DECISION-

CTA CASE NOS. 5675 & 5704

PAGES

rated sales under Section 100(a)(2)(A)(i), (ii) and (b) and Section

CTA CASE NOS. 5675 & 5704

From the aforequoted provisions of Section llO(c) [now 114(C)] ofthe Tax Code, the creditable VAT withheld shall be creditable or applied against the taxpayer's output VAT liability. However, in case the taxpayer has no output VAT liability against which the creditable VAT withheld may be applied/credited, then such creditable VAT withheld constitutes excessively or erroneously paid tax which is refundable under Section 204(3) [now 204(C)] ofthe Tax Code. Nonetheless, a scrutiny of the certificates supporting the claimed creditable VAT withheld of P4,084,867.25 shows that the same was withheld in April and June 1996 or during the second quarter of 1996 (Exhibits G-112 & G-212). Inasmuch as the claimed amount of P4,084,867.25 is outside of the period covered by the instant Petition for Review, the same shall be denied outright. The only issue left for our determination is whether or not petitioner is entitled to the claimed input VAT payments on capital goods purchased for the third and fourth quarters of 1996.

Section 106(b) [now 112(B)] ofthe Tax Code, provides: "Sec. 106. Refunds or tax credits of creditable input tax.- (a) x

XX

"(b) Capital goods. - A VAT -registered person may apply for the issuance of a tax credit certificate or refund of input taxes paid on capital goods imported or locally purchased, to the extent that such input taxes have not been applied against output taxes. The application may be made only within two (2) years, after the close of the taxable quarter when the importation or purchase was made. Relative thereto, Sections 4.104-5 and 4.106-1 ofRevenue Regulations No. 7-95 state, thus:

"SEC. 4.106-1. Refunds or tax credits of input tax.- (a) x x x CTA CASE NOS. 5675 & 5704 (b) X X X "Capital goods or properties" refer to goods or properties with estimated useful l{fe greater than one year and which are treated as depreciable assets under Section 29 (f), used directly or indirectly in the production or sale of taxable goods or services. " "SEC. 4.104-5. Substantiation of claims for input tax credit. -

(a) Input taxes shall be allowed only if the domestic purchase of goods, properties or services is made in the course of trade or business. The input tax should be supported by an invoice or receipt showing the information as required under Section 108 (a) and 238 ofthe Code. x x x" Plainly, from the above provisions, in order to be entitled to a refund/tax credit of input VAT paid on capital goods purchased, petitioner must prove that: 1) it is a VAT registered entity; 2) it paid input VAT on capital goods purchased; 3) its input VAT payments on capital goods are duly supported by VAT invoices or official receipts;

4) it did not offset or apply the claimed input VAT payments on capital goods against any output VAT liability; and 5) the administrative and judicial claims for refund were filed within the two- year prescriptive period.

Records reveal that petitioner substantially complied with all the aforementioned requirements. It is undisputed that petitioner is a VAT registered entity. Likewise, it paid input VAT on capital goods purchased. But from among the valid VAT invoices/official receipts submitted, only the following purchases with the corresponding input taxes of P8,325,350.35 can be classified as capital goods:

Exhibit

Particulars

Total Amount

Input VAT

A-24/340, A-25/340 dormitory construction p 1,909,400.00 p 173,581 .82 A-29/340 to A-31/340 G-1 gravel 205,767.35 18,706.12 A-32/340 to A-33/340 Air-conditioning unit 651 ,320.00 59,210.91

CTA CASE NOS. 5675 & 5704

A-66/340 to A-67/340 A-71/340 to A-76/340 A-86/340 to A-89/340 A-105/340 to A-108/340 A-129/340 to A-131/340 A-156/340 to A-158/340 A-199/340 to A-201/340 A-209/340 to A-212/340 A-227/340 to A-229/340 A-259/340 to A-260/340 A-272/340 to A-274/340 A-275/340 to A-277/340 A-289/340 to A-291/340 A-323/340 to A-326/340 A-339/340 to A-340/340

B-15/380 to B-17/380

B-18/380 to B-20/380

B-24/380 to B-26/380

B-41/380 to B-43/380

B-44/380 to B-46/380

B-53/380 to B-55/380

B-71/380 to B-73/380

B-108/380 to B-110/380

B-167/380 to B-169/380

B-170/380 to B-171/380

B-175/380 to B-177/380

B-186/380 to B-189/380

B-190/380 to B-192/380

B-203/380 to B-205/380

B-226/380 to B-228/380

B-232/380 to B-234/380

B-264/380 to B-266/380

B-267/380 to B-269/380

B-270/380 to B-272/380

B-273/380 to B-275/380

B-285/390 to B-287/380

B-288/380 to B-270/380

B-291/380 to B-293/380

B-294/380 to B-296/380

B-297/380 to B-299/380

B-313/380 to B-315/380

B-329/380 to B-331/380

B-338/380 to B-341/380

B-356/380 to B-358/380

C-10/244 to C-11/244

C-36/244 to C-38/244

C-52/244 to C-54/244

C-58/244 to C-60/244

C-87/244 to C-89/244

C-123/244 to C-125/244

C-128/244 to C-131/244

C-136/244 to C-138/244

centrifugal pump filter gauge

Forklift

electric motor degreaser analytical balance mach lift hand pallet truck

Screwdriver

board magnetic/stand drafting

Beaker

office building construction

Refrigerator

Motorcycle

generator exciter lifter tools for K-1 overhauling waterproofing completion works Of chemical office building boiler & turbine sump pump electronic scriber tinted cover of new building

Computers

Computers

rehab of K1 gas duct Air-conditioning units

Computers

rehab of MFOT !,2 &3 road improvement-infront of office bidg K-1 overhauling tools centrifugal pump sounding tape overhead travelling crane desk shell adjustable wrench allen wrench printer cable and automatic data switch chest type freezer File set drafting chair executive table and side cabinets

Furniture

computer printer computer printer canteen supplies improvement of kitchen grease gun torque wrench rubber mallet rehab of K-1 gas duct contract hand tools tools at materials section camera for mechanical dept

Screwdriver

electric drill combination wrench 296,508.30 250,198.51 1,843,000.00 131,320.00 75,000.00 16,000.00 12,371.40 6,500.00 2,916.30 1,076,600.00 16,888.00 31,850.00 44,096.00 4,214.90 1,367,718.55 470,400.00 25,000.00 55,590.00 216,050.00 291,000.00 2,224,596.00 651,320.00 96,000.00 1,189,352.44 40,872.00 22,833.00 101,103.75 24,300.00 449,262.67 198,000.00 1,748.00 14,009.00 1,770.00 72,077.50 11,165.00 4,000.00 373,362.00 566,002.40 66,000.00 66,000.00 44,700.00 359,857.00 15,010.00 11,632.00 5,840.00 2,992,294.50 7,125.00 2,251.00 23,960.00 1,240.00 31,702.77 9,520.00 26,955.30 22,745.32 167,545.45 11,938.18 6,818.18 1,454.55 1,124.67 590.91 265.12 97,872.73 1,535.27 2,895.45 4,008.73 383.17 124,338.05 42,763.64 2,272.73 5,053.64 19,640.91 26,454.55 202,236.00 59,210.91 8,727.27 108,122.95 3,715.64 2,075.73 9,191.25 2,209.09 40,842.06 18,000.00 158.91 1,273.55 160.91 6,552.50 1,015.00 363.64 33,942.00 51,454.76 6,000.00 6,000.00 4,063.64 32,714.27 1,364.55 1,057.45 530.91 272,026.77 647.73 204.64 2,178.18 112.73 2,882.07 865.45

CTA CASE NOS. 5675 & 5704

C-139/244 to C-141/244

C-145/244 to C-147/244

C-148/244 to C-150/244

C-161/244 to C-162/244

C-163/244 to C-165/244

C-176/244 to C-178/244

D-3/568 to D-4/568

D-5/568 to D-7/568

D-15/568 to D-18/568

D-29/568 to D-30/568

D-42/568 to D-44/568

D-45/568 to D-47/568

D-48/568 to D-50/568

D-54/568 to D-56/568

D-66/568 to D-68/568

D-80/568 to D-82/568

D-97/568 to D-99/568

D-113/568 to D-115/568

D-125/568 to D-127/568

D-137/568 to D-139/568

D-140/568 to D-142/568

D-143/568 to D-145/568

D-164/568 to D-166/568

D-224/568 to D-226/568

D-245/568 to D-247/568

D-253/568 to D-254/568

D-255/568 to D-257/568

D-270/568 to D-272/568

D-287/568 to D-289/568

D-290/568 to D-292/568

D-293/568 to D-295/568

D-334/568 to D-336/568

D-413/568 to D-417/568

D-447/568 to D-419/568

D-461/568 to D-463/568

D-476/568 to D-478/568

D-479/568 to D-481/568

D-541/568 to D-543/568

D-550/568 to D-551/568

E-4/351 to E-6/351

E-19/351 to E-21/351

E-57/351 to E-59/351

E-204/351 to E-206/351

E-224/351 to E-226/351

E-251/351 to E-253/351

E-257/351 to E-258/351

E-298/351 to E-300/351

E-320/351 to E-321/351

E-339/351 to E-341/351

E-348/351 to E-349/351

F-4/1023 to F-6/1023

F-7/1023 to F-9/1023

triangular file hydraulic jack pipe wrench rehab of chemicai tank contract rehab of K-1 gas duct contract portable handheid transceiver renovation work at warehouses 1 & 3 rehab of K-1 smokestack contract handle nail hammer renovation work-warehouses 2 & 3 machine room roof construction civil works for elevator Air duct repair hydraulic jack torque multiplier

Computer

office renovation/construction rehabilitation of gas duct rehabilitation of MFOT #1, 2 & 3

Motorcycle

expenses for vehicle importation rehabilitation of K-1 smokestack fiberglass stepladders camera mezzanine const at warehouse 2 elevator construction mini files hand tools improvement of switchgear generating room improvement of emergency diesel gen room improvement of battery storage room HP vectra computer furniture for dormitory canteen equipment Allen wrench rehabilitation of K-1 gas duct Fuji xerox machine Air-conditioning unit dormitory construction chain hoist Air duct repair circular saw transfer pump punch and chisel bearing scriper K-2 gas duct & smokestack rehabilitation chest type freezer for canteen dormitory construction telephone handsets telephone system micron millennia HP 4V laserjet printer and cable 86,599.50 63,908.84 12,310.00 1,378,807.30 4,280,218.50 96,000.00 336,310.80 2,629,730.75 35,220.00 73,165.40 117,500.00 76,500.00 392,000.00 56,780.00 187,723.90 82,900.00 510,131.00 58,482.00 3,148,511.30 31,850.00 5,964,321.00 5,259,461.51 108,051.00 11,980.00 192,351.09 217,800.00 184,946.00 47,190.00 203,076.72 592,370.62 773,863.94 93,500.00 251,864.00 371,047.75 48,175.20 4,027 ,404.40 118,000.00 44,800.00 642,060.00 109,725.00 588,000.00 8,900.00 23,440.00 76,500.00 18,974.00 25, 122,240.00 25,500.00 642,060.00 50,000.00 198,225.89 398,000.00 70,000.00 7,872.68 5,809.89 1,119.09 125,346.12 389,110.77 8,727.27 30,573.71 239,066.43 3,201.82 6,651.40 10,681.82 6,954.55 35,636.36 5,161.82 17,065.81 7,536.36 46,375.55 5,316.55 286,228.30 2,895.45 542,211.00 478,132.86 9,822.82 4,089.09 17,486.46 19,800.00 16,813.27 4,290.00 18,461.52 53,851.87 70,351.27 8,500.00 22,896.73 33,731.61 4,379.56 366,127.67 10,727.27 4,072.73 58,369.09 9,975.00 53,454.55 809.09 2,130.91 6,954.55 1,724.91 2,283,840.00 2,318.18 58,369.09 4,545.45 18,020.54 36,181.82 6,363.64

CTA CASE NOS. 5675 & 5704

F-1 0/1023 to F-12/1 023

Uratex foam for double deck beds

F-24/1 023 to F-25/1 023

dormitory construction

F-87/1 023 to F-89/1 023

installation of open shelves F-133/1 023 to F-135/1 023 floor crane F-158/1 023 to F-160/1 023 office renovation/construction F-165/1023 to F-167/1023 rehabilitation of chemical tank F-179/1023 to F-181/1023 office furniture F-182/1 023 to F-184/1 023 rehabilitation of K 1 smokestack F-213/1023 to F-215/1023 rehabilitation of K-1 gas duct F-216/1023 to F-218/1023 additional works for stiffeners & hanger support F-219/1 023 to F-221/1 023 fabrication/installation of hopper access door F-277/1 023 to F-279/1 023 Air-conditioning unit F-280/1 023 to F-282/1 023 Air-cons for dormitory F-304/1 023 to F-306/1 023 rehab cost of warehouses 1, 2 & 3 F-307/1023 to F-309/1023 construction of AVR room F-327/1 023 to F-329/1 023 rehab of fuel oil storage tank F-330/1 023 to F-332/1 023 HP computer F-333/1 023 to F-335/1 023 chairs/tables for dormitory F-336/1 023 to F-338/1 023 rehabilitation of well F-354/1 023 to F-356/1 023 rehabilitation of MFOT #1 , 2 & 3 F-360/1 023 to F-362/1 023 renovation of road/dormitory site 74,160.00 947,500.00 44,854.50 66,550.00 2,356,972.63 1,246,062.20 593,779.85 737,355.55 2,013,046.50 345,459.11 7,259.50 99,000.00 437,720.00 1 '169,711 .07 377,229.24 584,856.00 47,000.00 311 ,865.00 250,000.00 148,500.00 902,880.00 6,741 .82 86,136.36 4,077.68 6,050.00 214,270.24 113,278.38 53,979.99 67,032.32 183,004.23 31 ,405.37 659.95 9,000.00 39,792.73 106,337.37 34,293.57 53,168.73 4,272.73 28,351 .36 22,727.27 13,500.00 82,080.00 p 91 578 853 90 p 8 325 350 35 Also, petitioner was able to establish that the input taxes of P8,325,350.35 were not applied against any output VAT liability during and in the subsequent period of the claim for refund (Exhibits K, 0 to DD). Finally, the administrative claims filed on September 30, 1998 and December 28, 1998 as well as the judicial claims filed on September 30, 1998 and December 29, 1998, fell within the two-year prescriptive period counted from September 16, 1998, the date when petitioner filed its 1996 third and fourth quarterly VAT returns.

In fine, the court finds petitioner to have sufficiently proven its claim only insofar as the amount of P8,325,350.35 representing input VAT payment on capital goods purchased for the third and fourth quarters of 1996.

WHEREFORE, in the light ofthe foregoing, the instant petition is PARTIALLY GRANTED. Accordingly, respondent is hereby ORDERED TO REFUND to petitioner

CTA CASE NOS. 5675 & 5704 the amount of P8,325,350.35 representing input VAT payment on capital goods purchased for the third and fourth quarters of 1996.

WE CONCUR:

~t;-CZ.~~ ~.

JUANITO C. CASTANED~ JR.

Associate Judge

Associate Judge

Q__,~- c~ ERNESTO D. ACOSTA

Presiding Judge

CERTIFICATION

I hereby certify that the above decision was reached after due consultation with the members of the Court of Tax Appeals in accordance with Section 13, Article VIII of the Constitution.

L-~. 0 '"-"Y'\- ERNESTO D. ACOSTA

Presiding Judge