PNOC Energy Development Corporation vs. Commissioner of Internal Revenue

DECISION

PALANCA-ENRIQUEZ, J.:

THE CASE

This is a Petition for Review filed by Energy Development Corporation (hereafter "petitioner EDC") praying for the issuance of a tax credit certificate (TCC) or refund of the total amount of P293,058,460.62~

2 representing petitioner's excess and unutilized creditable income taxes attributable to its zero-rated sales of steam and electricity for the year 2006.

THE PARTIES

Petitioner EDC is a corporation duly organized and existing under the laws of the Republic of the Philippines under Securities and Exchange Commission Registration No. 66381, with principal office at Building V, Energy Center, Merritt Road, Fort Bonifacio, Taguig City. On the other hand, respondent is the duly appointed CIR who is mandated by law to enforce and implement the National Internal Revenue Code of 1997, as amended (hereafter the "NIRC of 1997, as amended"), and related statutes, including, among others and in proper cases, the issuance of a tax credit certificate, with office address at the BIR National Office Building, Diliman, Quezon City.

THE FACTS

The facts, as stipulated by the parties in their Joint Stipulation of Facts and Issues, are, as follows: "3.

Petitioner is a domestic corporation primarily engaged in the business of exploration, development and utilization of renewable energy resources, including selling of electricity and geothermal steam.

It is duly registered with the Bureau of Internal Revenue (BIR) as a VAT taxpayer. (9»

4.

On April 26, 2006, July 26, 2006, October 25, 2006 and January 29, 2007, petitioner filed its quarterly VAT returns for the 1st to 4th quarters of 2006. Subsequently, petitioner filed an amended VAT return on December 28, 2007 for the quarter ending December 31, 2006, declaring among others the amount of Php 293,058,460.62 as creditable VAT input attributable to its zero-rated electricity and steam sales. 5.

On January 7, 2008, which is within the two-year period under Section 112(A) of the NIRC, PNOC-EDC duly filed with the large Taxpayer's District Office (LTDO) of Makati City a claim for tax credit/refund, with complete attachment of documentary support, of PNOC-EDC's input VAT attributable to its zero-rated sale of steam and electricity amounting to Php293,058,460.62 for the year 2006." 3 Due to respondent's failure to act on said claim, on June 5, 2008, petitioner EDC filed the present Petition for Review. In her Answer, respondent by way of special and affirmative defenses alleged the following: "3.

Petitioner's claim for refund/tax credit of its alleged unutilized input taxes for the 1st quarter of 2006 has already prescribed.

4.

Petitioner failed to demonstrate that the tax subject of the case at bar was erroneously or illegally collected. 5.

Taxes paid and collected are presumed to have been made in accordance with law and regulations, hence not refundable.

6.

In an action for tax refund/credit, the burden of proof is on the taxpayer to establish its right to refund and failure to adduce sufficient proof is fatal to the action for tax refund/credit.

7.

It is incumbent upon the petitioner to show that it has complied with the provisions of Section 204 in relation to Section 229 of the 1997 Tax Code including Revenue Regulations No. 5-87 as amended by Revenue Regulations Nos. 3-88 and 7-95, as amended, as well as the requirements imposed under Republic Act No. 9337. 8.

Claims for refund are construed strictly against the claimant for the same partakes the nature of exemption from taxation (Commissioner of Internal Revenue vs. Ledesma, G.R. No. L-13509, January 30, 1970, 31 SCRA 95) and as such, they are looked upon with disfavor (Western Minolco Corp. vs. Commissioner of Internal Revenue, 124 SCRA 121)." 4 Petitioner EDC presented Jose C. Catequista, Felicito A. Gesite, and Romeo T. Lupac, as witnesses, and formally offered documentary evidence, marked as Exhibits "A" to "JJJJ", inclusive of their submarkings, which were admitted by the Court, except for Exhibits "A" to "J" for petitioner's failure to have the same identified, and Exhibit "W-23" for petitioner's failure to submit the duly marked document, in the Resolutions dated September 13, 2010 and December 13, 2010, after petitioner filed a "Motion for Reconsideration". On the other hand, respondent, thru counsel, manifested that she will not present any evidence and submitted the case for decision.

5 Both parties were granted thirty (30) days from March 7, 2011 to file their simultaneous memoranda afterwhich, the case shall be deemed submitted for decision. Both parties having filed their respective memorandum, the case was deemed submitted for decision.

ISSUES

As stipulated upon by the parties, the following are the issues for the Court's consideration: I

WHETHER OR NOT PETITIONER HAS UNUTILIZED

INPUT VAT IN THE AMOUNT OF P293,058,460.62 FOR

THE FOUR (4) QUARTERS OF 2006 ATTRIBUTABLE TO

THE PETITIONER'S ZERO-RATED SALE OF STEAM AND

ELECTRICITY.

II WHETHER OR NOT PETITIONER'S ALLEGED

UNUTILIZED INPUT VAT FOR THE FOUR (4) QUARTERS

OF 2006 HAVE BEEN APPLIED AGAINST ITS OUTPUT

TAXES FOR THE SUCCEEDING TAXABLE QUARTER/YEARS.

III

WHETHER OR NOT PETITIONER'S SALE OF STEAM

AND ELECTRICITY QUALIFIES AS ZERO-RATED SALES. IV WHETHER OR NOT PETITIONER'S CLAIM FOR REFUND/TAX CREDIT OF ALLEGED INPUT VAT

ALLEGEDLY ATTRIBUTABLE TO ITS ZERO-RATED

SALES OF STEAM AND ELECTRICITY FOR THE (J»

6 ( 4) QUARTERS OF 2006 IN THE TOTAL AMOUNT OF PHP293,058,460.62 IS SUBSTANTIATED BY DOCUMENTARY EVIDENCE. Principal Issue The foregoing issues boil down to the principal issue of whether or not petitioner is entitled to a claim for refund of its alleged unutilized input VAT for the four ( 4) quarters of 2006, allegedly attributable to its zero-rated sales of steam and electricity.

THE COURT'S RULING

The petition is partly meritorious. In its original Quarterly VAT Returns for taxable year 2006, petitioner declared, as follows: First Quarter Output Tax Second Quarter Output Tax Vatable Sales/Receipt PI ,093,645.98 p 13 1,237.52 Pl ,ll7,587.80 P134,110.54 Sale to Government 0.00 0.00 00.00 00.00 Zero Rated Sales/Receipts P4,525,402,553.64 P5,328,461 , 769.38 Exempt Sales/Receipts 0.00 00.00 00.00 00.00 Total Sales/Receipts and Output Tax Due P4,526,496, 199.62 Pll4, 113.17 P5,329,579,357.18 P134,110.54 Purchases Input Tax Purchases Input Tax Input tax carried over from previous quarter P20,092,465 .36 p 19,981 ,978.37

Current Transactions Purchase of Capital Goods not exceeding PlMillion 00.00 Purchase of Capital Goods exceeding PlM illion 00.00 Domestic Purchases of Goods Other than Capital Goods 00.00 Importation of Goods other than Capital Goods 00.00 Domestic Purchases of Services 00.00 Total Current Purchases 00.00 Total Available Input Tax T hird Quarter Vatable Sales/Receipt PI ,392,394. 14 Sale to Government 356,142.75 Zero Rated Sales/Receipts ?5,434,636,648.88 Exempt Sales/Receipts 00.00 Total Sales/Receipts and Output Tax Due P5,436,385, 185.77 Purchases 7 00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00 P20,092,465.36 p 19,981 ,978.37 (Exhibits "E" and "F") Output Tax Fourth Quarter Output Tax p 167,087.30 P2,80 I ,670.82 P336,200.50 42,737.13 356,142.75 42,737.1 3 P5,561 ,386,464.80 00.00 00.00 00.00 P209,824.43 ?5,564,544,278.37 P378,937.63 Input Tax Purchases Input Tax

Input tax carried over from 8 previous quarter p 19,847,867.83 p 19,664,635.40 Current Transactions Purchase of Capital Goods not exceeding PI Million 00.00 00.00 00.00 00.00 Purchase of Capital Goods exceeding PI Million 00.00 00.00 00.00 00.00 Domestic Purchases of Goods Other than Capital Goods 00.00 00.00 208,824,709.45 21,390,163.78 Importation of Goods other than Capital Goods 00.00 00.00 00.00 00.00 Domestic Purchases of Services 00.00 00.00 77 1,250,483.4 7 80,696,423.84 Total Current Purchases 00.00 00.00 00.00 80,696,423.84 Total Available Input Tax P20,092,465.36 p 12 1,751 ,223.30 (Exhibits "G" and "H '') While in its amended Quarterly VAT Returns for the fourth quarter of 2006, petitioner declared, as follows: Fourth Quarter Output Tax Vatable Sales/Receipt P2,80 I ,670.82 P336,200.50 Sale to Government 356,142.75 42,737.1 3 Zero Rated Sales/Receipts P5,561,386,464.80 Exemp_t Sales/Receipts 00.00 00.00 Total Sales/Receipts and Output Tax Due P5,564,544,278 .3 7 P378,937.63 Purchases Input Tax Input tax carried quarter Current Transactions over from previous Purchase of Capital Goods not exceeding PI Million Purchase of Capital Goods exceeding PlMillion Domestic Purchases of Goods Other than Capital Goods Importation of Goods other than Capital Goods Domestic Purchases of Services Total Current Purchases Total Available Input Tax 9 p 19,664,635.40 00.00 00.00 1,361,479,053.87 163,377,579.66 103,3 11 ,959.19 10,751 , 143.16 00.00 00.00 1, I 04,207,320.46 118,929,737.80 ?2,568,998,333.52 P293 058_,460.62 P312,723,096.02 (Exhibit "!")

Based on the foregoing, the input VAT for the 4th quarter of taxable year 2006 in the amount of P293,058,460.62, the subject of the claim for refund or issuance of TCC in the instant case, is attributable to petitioner's total sales of P5,564,544,278.37 for the 4th quarter of 2006 composed of a) vatable sales in the amount ofP2,801 ,670.82; b) sale to the government in the amount of P356,142.75; and c) zero-rated sales in the amount of P5,561,386,464.80.

Considering that petitioner is claiming for refund or issuance of TCC based on its zero-rated sales, then only the portion of the input VAT of P293,058,460.62 that is attributable to zero-rated sales will be considered by the Court, computed, as follows: Zero rated sale P5,561,386,464.80 Divided by total sales for the fourth quarter 5,564,544,278.37 Ratio of zero-rated sale over total sales 99.94% Multiplied by total input VAT for the 4th quarter P293,058,460.62 &ffiJ

I 0

Input VAT attributable to zero-rated sales that may be the subject of claim for refund or issuance of TCC P292,882,625.54 Having determined the input VAT attributable to zero-rated sales that may be the subject of the claim for refund or issuance of TCC, we now proceed to determine whether or not petitioner is entitled to the claim for refund in view of the requirements prescribed by law and jurisprudence. In the case of San Roque Power Corporation vs. Commissioner of Internal Revenue, 605 SCRA 55, the Supreme Court ruled that to claim for refund or tax credit under Section I 12(A), petitioner must comply with the following requisites: 1) The taxpayer is VAT-registered; 2) The taxpayer is engaged in zero-rated or effectively zero- rated sales;

3) The input taxes are due or paid; 4) The input taxes are not transitional input taxes; 5) The input taxes have not been applied against output taxes during and in the succeeding quarters; 6) The input taxes claimed are attributable to zero-rated or effectively zero-rated sales; 7) For zero-rated sales under Section 106(A)(2)(1) and (2); 1 06(B ); and 1 08(B )( 1) and (2 ), the acceptable foreign ~ currency exchange proceeds have been duly accounted for in accordance with BSP rules and regulations; 8) 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; and 9) The claim is filed within two years after the close of the taxable quarter when such sales were made. First Requisite Taxpaver is VAT Registered II As regards the first requisite, records show that petitioner is a VAT registered taxpayer, as shown by its BIR Certificate of Registration No. OCN8RC0000018374 (Exhibit "C ''), wherein it has been issued a Taxpayer Identification No. 000-169-125 (Exhibit "D '') . Second Requisite - Taxpaver is Engaged in Zero-Rated or E((ectivelv Zero-Rated Sales As regards the second requisite, petitioner claims that under Section 108 (7) of the NIRC of 1997, as amended by RA 9337, the sale of power or fuel generated through renewable sources of energy such as, but not limited to biomass, solar, wind, hydropower, geothermal, ocean energy, and other emerging energy sources using technologies such as fuel cells and hydrogen fuels is zero-rated.

In this regard, Section 6 of RA 9337 provides: "SEC. 6. Section 108 of the same Code, as amended, is hereby further amended to read, as follows: 'SEC. 108. Value-Added Tax on Sale of Service and Use or Lease of Properties. - (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: XXX XXX

(7) Sale of power or fuel generated through renewable sources of energy such as, but not limited to, biomass, solar, wind, hydropower, geothermal, ocean energy, and other emerging energy sources using technologies such as fuel cells and hydrogen fuels."

12 Corollary thereto, Revenue Regulations No. 16-2005, implementing RA 9337, provides:

"SEC. 4.108-3. Definitions and Specific Rules on Selected Services. - XXX XXX

(f) Sale of electricity by generation, transmission, and distribution companies shall be subject to 10% VAT on their gross receipts; Provided, That sale of power or fuel generated through renewable sources of energy such, as but not limited to, biomass, solar, wind, hydropower, geothermal, ocean energy, and other emerging sources using technologies such as fuel cells and hydrogen fuels shall be subject to 0% VAT. ~

'Generation companies' refers to persons or entities authorized by the Energy Regulatory Commission (ERC) to operate facilities used in the generation of electricity. For this purpose, generation of electricity refers to the production of electricity by a generation company or a co-generation facility pursuant to the provisions of the RA 9136 (EPIRA). They shall include all Independent Power Producers (IPPs) and NPC/Power Sector Assets and Liabilities Management Corporation (PSALM)-owned generation facilities. 'Transmission companies' refers to any person or entity that owns and conveys electricity through the high voltage backbone system and/or subtransmission assets, e.g. NPC or TRANSCO. 'Subtransmission assets' shall refer to the facilities related to the power delivery service below the transmission voltages and based on the functional assignment of asset including, but not limited to step-down transformers used solely by load customers, associated switchyard/substation, control and protective equipment, reactive compensation equipment to improve factor, overhead lines, and the land where such facilities/equipments are located. These include NPC assets linking the transmission system and the distribution system which are neither classified as generation or transmission. 'Distribution companies' refer to persons or entities which operate a distribution system in accordance with the provisions of the EPIRA. They shall include any distribution utility such as an electric cooperative organized pursuant to Presidential Decree No. 269, as amended, and/or under RA No. 6938, or as otherwise provided in the EPIRA, a private corporation, or a government-owned utility or existing local government unit which has an exclusive franchise to operate a distribution system in accordance with the EPIRA. For this purpose, a distribution system refers to the system of wires and associated facilities belonging to a franchised distribution utility extending between the delivery points on the transmission or subtransmission system or generator connection and the point of connection to the premises of the end-users. 0» 13

XXX xxx."

"SEC. 4.108-5. Zero-Rated Sale of Services. - XXX XXX

(b) Transactions Subject to Zero Percent (0%) VAT Rate. The following services performed in the Philippines by a VAT -registered person shall be subject to zero percent (0%) VAT rate:

XXX XXX

(7) Sale of power or fuel generated through renewable sources of energy such as, but not limited to, biomass, solar, wind, hydrogen, geothermal and steam, ocean energy, and other emerging sources using technologies such as fuel cells and hydrogen fuels; Provided, however, that zero-rating shall apply strictly to the sale of power or fuel generated through renewable sources of energy, and shall not extend to the sale of services related to the maintenance or operation of plants generating said power." 14 From the above provisions, it 1s clear that the 1) sale of power generated through renewable sources of energy; and the 2) sale of fuel generated through renewable sources of energy are subject to zero percent (0%) VAT rate provided that such zero-rating shall not extend to the sale of services related to the maintenance or operation of plants generating said power.

The Webster New Collegiate Dictionary defines "power" as a source or means of supplying energy, especially: ELECTRICITY (5.a., p. 902 thereof) w C.T.A. CAS E NO. 7792 DECISION 15 and the time rate at which work is done or energy is emitted or transferred (6.c., p. 902 thereof). On the other hand, "fuel" is defined as a) a material used to produce heat or power by burning, b) a nutritive material; and c) a material upon which atomic energy can be liberated especially in a reactor [Webster New Collegiate Dictionary (1977}, p. 463) . The sale of "power" therefore may refer to the sale of electricity itself, while the sale of "fuel" may refer to the material used to produce such power. The fact that the sale of power or electricity and the sale of fuel are two distinct items in this provision was clarified during the deliberation as shown in Conference Committee Report on SN 1950/ HN 3555 & 3705 (Amending the NIRC for Value Added Tax) dated May 10, 2005, pertinent portion of which reads, as follows: "Senator Osmefia. Thank you for that clarification. Now, Section 7, line 7, the provision reads: 'SALE OF

POWER OR FUEL-GENERATED THROUGH RENEWABLE

SOURCES OF ENERGY SUCH AS, BUT NOT LIMITED TO, ... ' and we go on. What about the importation of power or fuel-generated?

Senator Recto. As I understand it, it is zero-rated, Mr. President.

Senator Osmefia. There may be something in the future ... In other words, everything has to originate locally - the source of energy must be domestic. I am just anticipating because the ~

16 word 'biomass' appears here. Baka may mag-import ng 'biomass'. Kasama po ba iyon? Senator Recto. Well, if they import it, the way I read it, they are subject to VAT. But it is zero-rated and they can get their refund.

Senator Osmefia. So, it will be a VAT zero-rated? Senator Recto. That is right. xxx xxx."

The criteria required in order that the sale of power or the sale of fuel will be subject to zero percent (0%) VAT is that said power or fuel is generated or produced from renewable sources of energy. Section 4 (mm) of RA 9136 defines "Renewable Energy Resources" as energy resources that do not have an upper limit on the total quantity to be used. Such resources are renewable on a regular basis and the renewable rate is rapid enough to consider availability over an indefinite time. These include, among others, biomass, solar, wind, hydro and ocean energy. In addition to the above enumeration by example, RA 9337 also mentioned geothermal and other emerging energy sources using technologies, such as fuel cells and hydrogen fuels, as renewable sources of energy. Unlike in RA 9136, which subjects to zero percent VAT the sales of generated power by generation companies, to wit:

"Pursuant to the objective of lowering electricity rates to end-users, sales of generated power by generation companies shall be value added tax zero-rated." (Section 6, 5th paragraph thereof).

17 RA 9337, which repealed the above Section 6, 5th paragraph of RA 9136, subjects to zero percent (0%) VAT the sale of power or fuel generated through renewable sources of energy, without qualifying that said zero rating must pertain only to the sale of power by generation companies or to the sale of power or electricity. Instead, RA 9337 subjects to zero percent rate (0%) all sales of power, or all sales of fuel, as long as said power/electricity and fuel are generated or produced from renewable sources of energy. Thus, in RA 933 7, the seller of power/electricity or the seller of fuel must not only be limited to generation companies, unlike in RA 913 6. In fact, RA 9513, an "Act Promoting the Development, Utilization and Commercialization of Renewable Energy Resources and for Other Purposes" provides that the provision subjecting to zero percent VAT rate the sale of fuel or power generated from renewable sources of energy pursuant to the NIRC of 1997, as amended by RA 9337, shall also apply to the whole process of exploring and developing renewable energy sources up to its conversion into power, including but not limited to the services performed by subcontractors and/or contractors (Section 15 (g), Chapter VII thereof) .

18 A perusal of petitioner's Amended Articles of Incorporation shows that petitioner is engaged in the exploration, discovery, development, extraction, digging and drilling for, production, utilization, refinement, treating, processing, transporting, marketing, using, experimenting with, distributing, manufacturing, smelting or otherwise dealing in, any substance, mineral or otherwise, which by itself or in combination with other substance, or after processing or refining, or the application to it of technology emanates, gives off, generates or causes the emanation of generation of heat or power or energy such as, but not limited to geothermal sources of heat and power (Exhibits "FFF" to " FFF-18'). Petitioner presented the following documentary evidence:

POWER PURCHASE AGREEMENTS

Exhibit Name of Contract Date of Terminati Relevant Provisions of the Effectivity on Date Agreement (emphasis supplied) yyy Leyte A Geothermal March 15, July 24, "WHEREAS, PNOC-EDC wishes Power Plant Purchase 1994 (Annex 2021 to sell electrical energy from the Agreement El, thereof) CsuQ.ra2 geothermal power plants to NPC and the latter agrees to purchase said electrical energy under the terms and conditions hereunder" (p. 1 thereof).

"This Agreement shall refer to the sale of electrical energy by PNOC-EDC to NPC xxx" (Article 2, p. 2 thereof) zzz Mindanao I May 15, February "WHEREAS, PNOC-EDC wishes Geothermal Power 1995 (Annex 15, 2022 to sell electrical energy from the Plant Purchase Dl thereof) CsuQ.ra2 geothermal power plants to NPC Agreement and the latter agrees to purchase 19 BBBB ecce DODD said electrical energy under the terms and conditions hereunder" (p. I thereof) "This Agreement shall refer to the sale of electrical energy by PNOC-EDC to NPC xxx" (Article 3, p. 4) Mindanao II June I, 1998 June 17, "WHEREAS, PNOC-EDC wishes to sell electrical energy from the geothermal power plants to NPC and the latter agrees to purchase said electrical energy under the terms and conditions hereunder" (p. I thereof) Geothermal Power (Title page 2024(Annex Plant Power Purchase thereof) DI thereof) Agreement "This Agreement shall refer to the sale by PNOC-EDC to NPC of the electricity xxx" (A rticle 2, p. 5) GEOTHERMALSTEAMSALESAGREEMENTS Bacon-Manito Sales November November "WHEREAS, the CONTRACTOR Contract for 18, 1988 18, 201 3 wishes to sell the Geothermal Geothermal Resources (Title page (Section Resources produced pursuant to Bacon-Manito Geothermal Power Plant II Geothermal Resources Sales Contract thereof) 3.I, p.

4 such Service Contract to NPC; and Mach 15, I 994(Section

2. II, p.

3 thereof) thereof) xxx NPC desires to purchase such Geothermal Resources produced for purposes of generating electrical energy" (p. I thereof) March 201 9 (Section 3.I, p.

thereof) 15, 6 "WHEREAS, the CONTRACTOR has developed Geothermal Resources m Commercial Quantity and Quality form its Contract Area, has sold to NPC such Geothermal Resource produced from said area and has committed to continue selling to NPC such Geothermal Resource; XXX WHEREAS, NPC has accepted the CONTRACTOR'S offer, and has committed to purchase and utilize the Geothermal Resources for the generation of electric power for transmission and distribution to 20 EEEE FFFF AAAA Palinpinon I Sales December December Contract for 25,

1988 25,

2008 Geothermal Resources (Section 3.1 (supra) Geothermal Resources Sales Contract (Palin pinon Geothermal Plant II) Power thereof) December 13, 1993 (Section 2.11,

p. 3 thereof) December 13, 2018 (Section 3.1, p.

5 thereof) the customers" (p. 1 thereof) "WHEREAS, the CONTRACTOR has developed Geothermal Resources m Commercial Quantity and Quality from its Contract Area and has sold to NPC such Geothermal Resources produced from said area at guaranteed steam specifications as stated Annex I and has committed to continue selling to NPC such Geothermal Resource; xxx WHEREAS, NPC has accepted CONTRACTOR'S offer, and has committed to purchase and utilize the Geothermal Resources for the generation of electric power for transmission and distribution to its customers" (p. 1 thereof) "WHEREAS, the CONTRACTOR has developed Geothermal Resources in Commercial Quantity and Quality form its Contract Area, has sold to NPC such Geothermal Resource produced from said area and has committed to continue selling to NPC such Geothermal Resource; and XXX WHEREAS, NPC has accepted the CONTRACTOR'S offer, and has committed to purchase and utilize the Geothermal Resources for the generation of electric power for transmission and distribution to its customers" (p.l thereof) Tongonan I Sales June 29, June Contract for 1984 (p. 21 2009 Geothermal Resource thereof) (Section 3.1, p.

thereof) 29, "WHEREAS, the CONTRACTOR wishes to sell Geothermal Resources produced pursuant to 5 such Service Contract to NPC xxx. WHEREAS, NPC desires to 21 purchase such Geothermal Resources produced for purposes of generating electrical energy (p.l thereof) On direct examination, petitioner's witness, Romeo T. Lupac, testified that by reason of said contracts, petitioner generated sales of geothermal steam and electricity (Exhibit "JJJJ" and TSN dated May 27, 2010, pp. 7-10). A perusal of said Power Purchase Agreements and Geothermal Steam Sales Agreements shows that petitioner is engaged in selling of geothermal steam and electrical energy generated through geothermal power plants. Accordingly, said sale of services falls within the ambit of Section 108 (B)

(7) of the NIRC of 1997, as amended by RA 933 7. The Court Commissioned Independent CPA, Jose C. Catequista, in his report found that for the 4th quarter of taxable year 2006 petitioner has a total zero-rated sales with VAT OR and stamped with "Zero-rated Sale" of P5, 794,222, 162.36 and petitioner has zero-rated sales adjustments supported by journal vouchers in the amount of P284,716,252.76 (Exhibit "NNN'') . Hence, after considering the adjustments, the total zero-rated sales with valid support for the fourth quarter of 2006 as found by the Court Commissioned ICPA, amounts to P5,509,505,709.00. Also, the Court Commissioned ICPA 22 noted certain exceptions in the total amount ofP51,880,755.20. Verification of the records, however, shows that the noted exception of P51 ,880,755.20 does not form part of the P5,509,505,709.00 validly supported zero-rated sales.

After a careful examination of the supporting documents submitted by petitioner, the Court finds that out of the P5,509,505,709.00 allegedly validly supported zero-rated sales: 1) P3,161 ,713,051.01 are with Official Receipts, dated beyond 2006, the period of claim (Annex "1" of this Dedsion) ; and 2) P338,368,432.83 are without supporting documents (Annex "2" of this Decision).

Accordingly, the Court hereby excludes the amount of P3,500,081,483.84 (P3, 161,713,051.01 + P338,368,432.83) from petitioner's validly supported zero-rated sales. Thus, the substantiated zero-rated sales of petitioner for the 4th quarter of taxable year 2006 amounts to P2,009,424,225.76, computed, as follows: Total zero-rated sales with valid support as found by the Court-Commissioned !CPA after considering adjustments P5,509,505,709.60 Less: Court's Findings I) Zero-rated sales with OR dated outside the period of claim 2) Zero-rated sales documents without supporting Total zero-rated sales that should be excluded P3, 16 1,713,05 1.01 P338,368,432.83 Valid zero-rated sales for the 4" quarter of taxable year 2006 Allocation Factor for Zero-rated Sates Valid zero-rated sales for the 4 111 qua1ier of taxable year 2006 Di vided by the total zero-rated sales per VAT returns for the 4th quarter of2006 Allocation Factor for Zero-rated Sales Third, Fourth, Fifth and Sixth Requisites 23 P3,500,081 ,483.84 P2,009,424,225. 76 2,009,424,225. 76 5,56 1,386,464.80 36.13% As regards the requisites that input taxes, which are not transitional input taxes, must be attributable to zero-rated sales, and must not have been applied to any output tax liability during and in the succeeding quarters, petitioner's Amended Quarterly VAT Returns for the 4th quarter of 2006 (Exhibit "!'') shows that it incurred input taxes in the amount of P293,058,460.62, broken down, as follows: Purchases Input Tax Purchases of Capital Goods exceeding PI Million PI ,36 1,479,053.87 p 163,3 77,579.66 Domestic Purchases of Goods Other than Capital Goods I 03,3 II ,959.19 10,75 1,143.16 Domestic Purchases of Services I, I 04,207,320.46 118,929,737.80 Total P293,058,460.62 Out of the P293,058,460.62 input VAT for the 4th quarter of taxable year 2006 claimed by petitioner, the Court-Commissioned ICPA found that only the amount of P271 ,553,316.29 are validly substantiated input VAT consisting of the following: Particul ars Amount Annex a.

Domestic purchases of goods supported by valid invoices P5,379,262.19 "NN" to "NN-20" b.

Domestic purchases of goods supported by valid VAT invoices dated not in the quarter of claim but within the calendar year 2006 c.

Domestic purchases of services supported by valid VAT official receipts

d. Domestic purchases of services supported by official receipt dated not in the quarter of claim but within calendar year 2006 e.

Imported capital goods supported by certified true copy IEDs and valid official recei pts Total valid input taxes for the t•t, 2"d, 3rd and 4 1h quarter of 2006 24 13,686,394.51 "00" to "00-75" 41 ,877,451.97 "PP" to "PP-11 0" 47,232,627.96 "QQ" to "QQ-155" 163,377,579.66 "RR" to "RR-38" P271,553,316.29 (Exhibit "NNN", pp. 6- 7) The Court-Commissioned ICPA excluded the amount of P21,505,144.33 for the following reasons, to which the Court agrees: Domestic Purchases of Goods Amount Annex

a. Domestic purchases of goods with invoice in the name of PNOC instead of PNOC-EDC P362,483.01 "SS" to "SS-2"

b. Domestic purchases of goods supported by OR dated out of the fisca l year 468,696.97 "TT" to "TT-l "

c. Domestic purchases of goods supported by invoices not registered with the BIR I 08,000.00 "UU" to "UU- 1" Sub-total P939,179.98 Domestic Purchases of Services a.

Domestic purchases of services supported by invoices on ly PI ,423,008.77 "VV" to "VY-8" b.

Domestic purchase of services with official receipts(OR) named to PNOC and/or PNOC-EDC's division (e.g. PNOC BGPF, PNOC LPF, etc.) instead ofPNOC-EDC 9,460,579.21 "WW" to "WW-41 "

c. Domestic purchases of services with official receipts named to PNOC/PNOC Energy instead of PNOC-EDC and dated out of the calendar year 2006 71 ,872.68 "XX" to "XX-2"

d. Purchase of service supported by OR stamped TIN- VAT and undated support 106,076.26 "YY" to "YY -I "

e. Domestic purchase of service supported by OR different from invoice supporting the input VAT 37,984.11 "ZZ" to "ZZ-1 "

f. Input taxes claimed with photocopied supporting documents 150,035.87 "AAA" to "AAA-2"

g. Domestic purchases with no TIN VAT in the OR I ,853,885.99 "BBB" to "BBB-3"

h. Domestic purchases of services supported by OR without the Company's TIN and dated out of the calendar year 2006

i. Domestic purchases of services supported by OR dated out of the calendar year 2006 J.

Domestic purchases of services supported by Acknowledgment Receipts only Sub-total Total 25 "CCC" to "CCC-4" I ,673,347.74 I ,471 ,329.27 "ODD" to "DDD-8" 4,31 7,844.45 "EEE" to "EEE-5" P20,565,964.35 P21,505,144.33 Considering that the creditable input tax claimed by petitioner rs attributable only to its input VAT declared in the 4th quarter of 2006 (Exhibit "!'') and petitioner was able to substantiate only its zero-rated sales for the 4th quarter of 2006, the Court will consider only the input VAT for the 4th quarter of 2006. Thus, out of the P271 ,553,316.29 substantiated input VAT as found by the Court-Commissioned ICP A, the Court will consider only the following:

a) Domestic purchases of goods supported by valid "NN" to VAT invoices P5,379,262.1 9 "NN-20" b) Domestic purchases of services supported by "00" to valid VAT official receipts 41,877,45 1.97 "00-75" c) Imported capital goods supported by certified true "RR" to copy lEOs and valid offi cial receipts 163,377,579.66 "RR-38" Total P210,634,293.83 Input VAT pertaining to 1) domestic purchases of goods supported by valid VAT invoices dated not in the quarter of claim, but within calendar year 2006 in the amount of P13,686,394.51 (Annexes "00 " to "0 0 -75 '') and 2) domestic purchases of services supported by official receipts dated not in the quarter of claim but within calendar year 2006 in the amount of 26 P47,232,627.96 (Annexes "QQ " to "QQ-155 '') are hereby excluded for the above reasons.

a) Domestic Purchases of Goods in the Amount of P5,379,262.19 Verification of the invoices submitted by petitioner (Annexes "NN" to "NN-20 ''), however, shows that out of the domestic purchases of goods in the amount of P5,379,262.19, the amount of P4,354,158.21 (Annex "3 "of this Decision) should be excluded from the foregoing substantiated input VAT by the Court-Commissioned ICP A for failure to comply with the provision of Section 113 (B) (2) (a) ofthe NIRC of 1997, as amended by RA 9337, which provides that the amount of the tax shall be shown as a separate item in the invoice or receipt. However, the input VAT for Invoice No. 13183, dated November 4, 2006, should be P78,21 1.07, and not only P43,332.06 (Annex "NN-18 '') . Hence, the duly substantiated input VAT incurred from domestic purchases of goods amounts to P1 ,059,982.99, computed, as follows: Domestic purchases of goods supported by valid VAT invoices as found by the Court-Commissioned !CPA P5,379,262. 19 Less: Excluded input VAT for failure to comply with Section 11 3 (B) (2) (a) of the NIRC of 1997, as amended by RA 9337 4,354, 158.21 Difference PI ,025, I 03.98 Add: Error in the input VAT recognized in Invoice No. 13183 dated November 4, 2006 Recognized Input VAT P43,332.06 Should be 78,2 11.07 P34,879.01 Total Duly Substantiated Input VAT from domestic purchases of goods Pl,059,982.99

27 b) Domestic Purchases of Services in the Amount ofP41,877,451.97 Verification of the Official Receipts submitted by petitioner (A nnexes "PP " to "PP-110 "), however, shows that out of the domestic purchases of services in the amount of P41 ,877,451.97, the amount of P24,550,810.64 (Annex "4 "of this Decision) should be excluded from the foregoing substantiated input VAT by the Court-Commissioned ICP A for failure to comply with the provision of Section 113 (B) (2) (a) of the NIRC of 1997, as amended by RA 9337. Thus, the duly substantiated input VAT incurred from domestic purchases of services amounts to Pl7,326,641.33, computed, as follows: Domestic purchases of services supported by valid VAT invoices as P41 ,877,45 1.97 found by the Court-Commissioned !CPA Less: Excluded input VAT for failure to comply with Section 11 3 (B) 24,550,810.64

(2) (a) of the NIRC of 1997, as amended by RA 9337 Total Validly Substantiated Input VAT from domestic purchases of service P17,326,641.33 c) Imported Capital Goods in the Amount of P163,377,579.66 Verification of the documentary evidence submitted by petitioner (Annexes "RR " to "RR-38", "QQQ-1 " to "QQQ-11 ", "RRR-1 " to "RRR-21", "TTT-1" to "TTT-1. 3 " and "UUU-1 " to "UUU-5 '') shows that the input taxes on said importation of capital goods were not incurred during the 4th quarter of 2006. Since the creditable input taxes claimed by petitioner are attributable only to its input VAT for the 4th quarter of 2006 and petitioner was able to substantiate only its zero-rated sales for the 4th quarter of 2006, then we (])J 28 cannot consider the input VAT of P163,377,579.66 from said importation of capital goods.

From the foregoing, the Court finds that the total duly substantiated input VAT amounts only to P18,386,624.32 (total duly substantiated input VAT from domestic purchases of goods of Pl,059,982.99 and total duly substantiated input VAT from domestic purchases of services of P17,326,641 .33).

Seventh and Eight Requisites Considering that petitioner's sales of steam and electricity were made within the Philippines, the seventh requisite is not applicable to the instant case.

As regards the eight requisite, considering that petitioner declared in its Quarterly VAT Returns both sales subject to VAT and zero-rated sales, We hereby proportionately apportion the substantiated input VAT attributable to petitioner's zero-rated sales, as follows: Duly substantiated input VAT for the 4th quarter of2006 Multiplied by the percentage of declared zero- rated sales to total sales Substantiated input VAT attributable to declared zero rated sales Pl8,386,624.32 99.94% 18,375,592.35

Multiplied by the percentage of total substantiated zero-rated sales to declared zero- rated sales for the 4th quarter of 2006 Refundable Input VAT for the 4th quarter of 2006 attributable to substantiated zero-rated sales Ninth Requisite 29 36.13% P6,639,101.52 Finally, the last requisite, whether petitioner's claim for refund was timely filed within the period prescribed by law, specifically, Section 112 (A) of the NIRC of 1997, as amended, as regards the period to file the administrative claim for refund, which is within two (2) years after the close of the taxable quarter when the sales were made, and Section 112 (D) of the same Code, as regards the period to file the judicial claim for refund, which is within 30 days from receipt of the decision of the CIR, or from the lapse of the 120-day period when no decision is made by the CIR within the 120-day period; records show that petitioner is claiming for refund of its unutilized input VAT for the 4th quarter of 2006. Hence, petitioner had until December 31, 2008 within which to file its administrative claim for refund. Considering that petitioner filed its administrative claim for refund on January 7, 2008, then said administrative claim for refund was filed within the two-year prescriptive period.

30 Considering that petitioner filed its administrative claim for refund on January 7, 2008, the CIR had 120 days from January, 8, 2008, or until May 6, 2008, within which to grant or deny petitioner's claim. Considering that respondent CIR did not act on petitioner's administrative claim for refund, petitioner had thirty (30) days from May 7, 2008, or until June 5, 2008, within which to file its judicial claim for refund with the CTA. Since petitioner filed its Petition for Review on June 5, 2008, then, petitioner's judicial claim for refund was timely filed. Accordingly, petitioner complied with the ninth requisite. In sum, the Court finds petitioner to have sufficiently established its entitlement for refund or issuance of a TCC for the 4th quarter of 2006 in the reduced amount ofP6,639,101.52. Since the excess input VAT from the succeeding quarter plus the creditable VAT withheld for the first, second, third and fourth quarters of 2006 are sufficient to cover the output VAT for 2006, then the output VAT for 2006 will no longer be deducted from the substantiated input VAT of P6,639, 101.52.

WHEREFORE, premises considered, the present Petition for Review is hereby PARTLY GRANTED. Accordingly, respondent Commissioner of

31 Internal Revenue is hereby ORDERED TO REFUND OR TO ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner Energy Development Corporation the reduced amount of

SIX MILLION SIX HUNDRED

THIRTY NINE THOUSAND ONE HUNDRED ONE AND 521100

PESOS (P6,639,101.52), representing unutilized input VAT for the 4th quarter of 2006.

L0008 1

December January 3 I, 1,114,647, 161.02 000055 16 27, 2006 2007 111-24 VM- 1-02-07 96,086,2 10.04 XXX-

MOO 158

November December 94,889,502. 11 000075 26 27, 2006 3 1, 2006 111-26 VM- 1-31-07 95,629,743.48 XXX-

MOO I 59

December January 3 1, 97,58 1,370.90 000077 27 27, 2006 2007 111-27 VM- 1-31-07 92,558,442.63 XXX-

MOO I60

December January 3 1, 94,447,390.44 000078 28 27, 2006 2007 111-28 VM- 1-31-07 9,916,033 .35 XXX-

M00 161

December Jan uary 3 1, I 0, I 18,40 1.38 000079 29 27, 2006 2007 111-29 VM- 1-31-07 6,685,063 .75 XXX-

MOOI 62

December January 3 1, 6,82 1,493.62 000080 30 28, 2006 2007 111-36 VS- 1-02-07 I 05,856,635.04 XXX-

S001 19

November December I 05,856,635.04 000030 51 29, 2006 3 1, 2006 111-37 VS- 1-10-07 6 1,784,687.31 XXX-

S00 120

November December 15,639,713.28 00003 1 52 29,2006 3 1, 2006 " " " " XXX-

SOO I2 1

November December 14,865,547.47 53 29,2006 3 1, 2006 " " " " XXX-

S00 122

November December 15,639,713.28 54 29, 2006 3 1, 2006 " " " " XXX-

S00 123

November December 15,639,713.28 55 29, 2006 3 1, 2006 Total P3, 161,7 13,051.01

34 Annex "2" Zero Rated Sales Recognized by the ICPA Without Official Receipts Reference Date Alleged OR Alleged Sales Amount Number Invoice Number

I 23 000 1

Dec - 06

VB00002 1

8 00086 P3,027,04 1.28

I 23 000 1

Dec - 06

V8 000023

8 00084 20,889,03 1.68

I 23 000 1

Dec- 06 VL000050 L00078 46,53 I ,760.04

I 23 000 1

Dec - 06 VL000050 L00078 176,397,672.16

I 23 000 1

Dec - 06

VL00005 1

T00024 20,720,467.84

I 23 000 1

Dec- 06 VM00075

M00 156

5,4 12,139.20

I 23 000 1

Dec- 06 VM00075

M00 156

14, I 04,134.98

I 23 000 1

Dec - 06 VM00076

MOO I 58

5,264,680.35

I 23 000 1

Dec- 06 VM00076

MOO I 58

13,624,797.74

I 23 000 1

Dec- 06 YS000030

SOO I 19

20,438,380.98

I 23 000 1

Dec - 06

VS00003 I

SOO I20-

I I ,958,326.58 S00123 Total Zero-Rated Sales of Services Without Official Receipts P338,368,432.83

Annex "3" Invoices that do not show segregation/computation of Input VAT on Sales of Goods Exhibit/ Invoice Invoice Date Name of Supplier Invoice Annex Number Amount in Peso 4t" Avenue Industrial & Military Supply

"NN- 1"

0 160 Oct. 3, 2006 P699,000.00 "NN-2" 0354 Oct. 24, 2006 Euro Products, Inc.

3,4 16,000.0 0 "NN-2.4" 0355 Oct. 30, 2006 Euro Products, Inc.

2,732,800.0 0 "NN-3" 2997 Oct. 3 I , 2006 BJ Service International Inc. 2,076,434.7 0 "NN-3.6" 2998 Oct. 3 I , 2006 BJ Service International Inc. 3, 796,808.4 8 "NN-3.8" 3000 Oct. 3 I , 2006 BJ Service International Inc. 3,752,188. 1 8 "NN-3.10" 3010 Nov. 8, 2006 BJ Service International Inc. 6,168,53 1.0 0 "NN-4.1" 3014 Nov. 29, 2006 BJ Service International Inc. 2,5 10,039.9 4 "NN-4.6" 301 5 Nov. 29, 2006 BJ Service International Inc. 4,097,707.7 4 "NN-5" 67382 1 Oct. 14, 2006 Up-Town Industrial Sales, Inc. 923 ,900.00 "NN-6" 0660 Oct. 13, 2006 Heidelberg Motors Corporation 792,000.00 "NN-7" 12 12 Nov. 2, 2006 FFC Equipment Parts Supply, Inc. 290,000.00 "NN-9" 0357 Nov. I 0, 2006 Euro Products, Inc.

4, 782,400.0 0

"NN- 10"

0358 Nov. 23, 2006 Euro Products, Inc.

389,400.00

"NN- 1 I"

0 131 Nov. 13, 2006 Drilling Advisory & Logistics Corp. I ,783,600.0 0

"NN-1 4"

7588 Nov. 27, 2006 Hidromac-Dura Asia, Inc. I ,498,000.0 0

"NN-1 7"

8978l l Nov. 30. 2006 Harnwell Chemicals Corporation 930,000.00 Total Input VAT of Invoices that do not show segregation/computation of InputV AT on Sales of Goods 1 Invoice No. 67382 is non existent. The invoice submitted is different, it is invoice No. 7 1455, with different date and invoice amount. 2 Invoice No. 8978 1 is non existent. The invoice submitted is different, it is invoice No. 89508, with different date and invoice amount. 35 Input VAT in Peso P74,892.86 366,000.00 292,800.00 222,475.15 406,800.9 1 402,020. 16 660,9 14.04 268,932.85 439,040.12 98,989.29 84,857.14 3 1,071.43 51 2,400.00 4 1,72 1.43 19 1,100.00 160,500.00 99,642.86 P4,354,067.24

36 Annex "4" Official Receipts that do not show segregation/computation of Input VAT on Sales of Services Exhibit/ Official OR Date Name of Supplier Invoice Amount in Peso Input VAT in Annex Receipt No.

Peso No.

"PP- 1"

0005 Sept. I , 2006 EPI-COSL Consortium 0030 P949,023.24 PIOI ,681.06 0032 834,653.25 89,427. 13 0033 949,023.24 I 0 I ,681.06 0035 399,196.7 1 42,77 1.08 "PP-2" 0004 Sept. I, 2006 EPI-COSL Consortium 0036 949,023.24 I 0 I ,68 1.06 0038 399,196.7 1 42,77 1.08 0040 292,744.57 3 1,365.49 "PP-3" 0003 Sept. I, 2006 EPI-COSL Consortium 0052 I ,424,975.20 152,675.9 1 0053 36 1,232.24 38,703.45 0054 I, 155,062.37 123,756.68 0055 I ,207,784.82 129,405.52 0057 I, 155,062.37 123,756.68 "PP-4" 0002 Sept. I , 2006 EPI-COSL Consortium 0063 796,326.40 85,320.69 0064 I, 189,534.95 127,450. 17 0066 1,06 1,768.83 11 3,760.95

" PP-6"

05 14 Oct. 3, 2006 Dynamic Builders & 0484 2,089,749.59 223,90 1.74 Construction Co. (Phil) Inc. "PP-7" 0301 Oct. 6, 2006 Fabmik Construction & 0007 I ,788, 124.69 19 1,584.79 Equipment Co., Inc.

"PP-8" 1236 Oct. 6, 2006 Technology Exports Services 1829 2, I 09,306.08 225,997.08 Corp.

"PP-9" 1237 Oct. 13, 2006 Technology Exports Services Corp.

1826 I ,639,585.48 175,669.87

" PP- 11 "

4 1436 Oct. 30, 2006 Lockheed Detecti ve & Watchman Agency, Inc. 0003 6 11 ' 180.50 65,483.63 0004 54 1 ' 187.66 57,984.39

" PP-12"

4 1435 Oct. 30, 2006 Lockheed Detective & Watchman Agency, Inc. 00 10 718,637.50 76,996.88

"PP-1 3"

0 196 Oct. 6, 2006 Mechanics Construction Corp.

0023 887,726.40 95, 11 3.54

" PP-14"

198389 Oct. 6, 2006 EEl Corporation 16786 3,462,657.04 370,998.97

"PP-1 6"

41 2 Oct. 23, 2006 B. Vicencio Construction 0007 17,945,286.72 I ,922, 709.29 "PP-18" 3850962 Oct. 16, 2006 People's Television Network Inc.

10069 635,000.00 68,035.7 1 10070 I ,000,000.00 107, 142.86

"PP-1 9"

2005 Oct. 13, 2006 BJ Service International Inc. 02965 7 10,57 1.1 5 76, 132.62 02966 508,096.58 54,438.92 "PP-20" 2007 Oct. 20, 2006 BJ Service International Inc. 02974 336,690.03 36,073.93 02975 2,539, 797.66 272, 12 1. 18 02976 4, 146,739.83 444,293.55

" PP-2 1"

0008 Oct. 13, 2006 EPI-COSL Consortium 00072 I, 184,590.64 126,920.43 00074 876,748.98 93,937.39

" PP-2 1"

0008 Oct. 13, 2006 EPI-COSL Consortium 00075 I, 184,590.54 126,920.43

" PP-22"

0590 Sept. 3 I , 2006

" PP-25"

1092 Oct. 3 I , 2006

" PP-26"

202 1043 Dec. 12, 2006 " PP-27'' 11 688 Oct. 27, 2006

" PP-28"

0483 Oct. 27, 2006

" PP-29"

0482 Oct. 27, 2006 "PP-30" 2015 Oct. 27, 2006

" PP-31 "

102248 Nov. 17, 2006 "PP-32" 1240 Nov. 3, 2006

" PP-33"

1244 Nov. I 0, 2006

" PP-34"

1254 Nov. 17, 2006

" PP-35"

0009 Nov. 15, 2006 "PP-36"

00 II

Dec. 4,2006 "PP-37" 0010 Nov. 24, 2006 "PP-38" 4 1447 Nov. 3, 2006 "PP-39" 4 1456 Nov. I 0, 2006 "PP-40" 41468 Nov. 17, 2006

" PP-41"

4 1476 Nov. 24, 2006 37 00076 328,569.21 35,203.84 00077 I, 132,467.43 121,335.80 Sta. Ana Manufacturing & Development Inc.

00093 544,560.00 58,345.71 00094 544,560.00 58,345.7 1 D & G Construction 00944 504,78 1.73 54,083 .76 Globe Telecom 270,428.43 28,974.47 AC Technical Services, Inc. 05671 P2,382,367.25 P255,253.63 San Agustin Electric Co., Inc. 02041 985,296.36 105,567.47 San Agustin Electric Co., Inc. 02044 I ,024,3 16.5 1 I 09,748.20 AT & E Technical Services, Inc.

00584 I ,40 I ,866.78 150,200.0 1 Manila Electric Company 136 101 231003 I ,626, 777.29 174,297.57 Technology Exports Services Corp.

01828 I, I 04,33 1 .20 11 8,321.20 Technology Exports Services Corp.

01840 I ,427,526.24 152,949.24 Technology Exports Services Corp.

01857 420,000.00 45,000.00 EPI-COSL Consortium 00087 656,050.74 70,291. 15 00089 I, 168,826.38 125,231.40 00090 280,423.98 30,045.43 00091 540,675.88 57,929.56 00092 I, 168,826.38 125,23 1.40 00094 1,08 1,351.76 11 5,859.12 EPI-COSL Consortium 00100 I, 11 5,844.37 119,554.75 00102 556, 139.86 59,586.41 EPI-COSL Consortium 00097 I, 11 5,844.37 11 9,554.75 00909 320,023.83 34,288.27 Lockheed Detective & Watchman Agency, Inc. 00006 280,872.4 1 30,093.47 00017 716,275.00 76,743.75 00018 611 ,83 1.50 65,553 .38 00019 538,387.65 57,684.39 Lockheed Detective & Watchman Agency, Inc. 00022 7 16,275.00 76,743 .75 00023 6 11 ,668.75 65,535.94 00024 538,387.65 57,684.39 Lockheed Detective & Watchman Agency, Inc. 00103 628,290.00 67,3 16.79 00104 257,760.00 27,6 17.14 00107 435,330.00 46,642.50 00112 628,290.00 67,316.79 00103 262,080.00 28,080.00 4 1747 628,290.00 67,316.79 4 1748 273,870.00 29,343.2 1 Lockheed Detecti ve & Watchman Agency, Inc. 00028 716,275.00 76,743.75 00029 6 11 ,723.00 65,541.75

" PP-43"

41477 Nov. 24, 2006

" PP-45"

4 1495 Nov. 30, 2006

" PP-50"

201 0 Nov. I 0, 2006

"PP-5 1"

06 11 Nov. 16, 2006 "PP-53" 11 72 1 Nov. 20, 2006

" PP-54"

4 111 Nov. 16, 2006 "PP-55" 4926 Nov. 23, 2006 "PP-57" 201 8 Nov. 17, 2006 "PP-58" 20 19 Nov. 24, 2006

" PP-59"

1042 Nov. 24, 2006

" PP-60"

0054 Dec.4,2006

" PP-6 1"

198538 Nov. 16, 2006 "PP-63" 4202 Nov. 24, 2006 "PP-64" 122487 Dec. 14, 2006 "PP-65" I093 Nov. 29, 2006 "PP-66" 01 24 Dec. 5, 2006 "PP-68 0484 Dec. I I , 2006

" PP-69"

201 4 Dec. 5,2006 "PP-70" 20 17 Dec.22,2006 "PP-72" 1260 Dec. 8,2006 "PP-73" 1263 Dec. 29, 2006

" PP-74"

1264 Dec.29,2006

" PP-75"

0055 Dec. I I , 2006

" PP-78"

4 165 1 Dec. 8,2006 Lockheed Detective & Watchman Agency, Inc. Lockheed Detective & Watchman Agency, Inc. BJ Service International Inc. Asher Builders AC Technical Services, Inc. Yakal Construction MAC Bui lders AC Technical Services, Inc. AT & E Technical Services, Inc.

Silver Hori zon Construction, Inc.

AZ Communications Network, Inc.

EEl Corporation Asian Shipping Corporation Manila Electric Company D & G Construction BM Marketing San Agustin Electric Co., Inc. BJ Service International Inc. BJ Service International Inc. Technology Exports Services Corp.

Technology Exports Services Corp.

Technology Exports Services Corp.

Ace Tubular Services Limited Lockheed Detective & Watchman Agency, Inc. 38 00030 538,387.65 57,684.39 41 9 17 406,802.25 43,585 .96 419 18 408, 155.92 43,730.99 02979 286,4 19.30 30,687.78 02980 3,507,838.98 375,839.89 02981 4,646,977.28 497,890.42 02982 549,975.3 1 58,925.93 02983 678,361 .50 72,68 1.59 02985 678,36 1.50 72,68 1.59

0001 3

573,763.22 6 1,474.63 567 1-2 57 1,6 10.97 6 1,244.03 04633 2,429,6 18.37 260,316.25 03780 I ,36 1,935.06 145,921.6 1 00586 903,368.38 96,789.47 00585 358,266.2 1 38,385.67 00797 3,327,354. 10 356,502.23 036 14 786, 12 1.93 84,227.35 15476 I ,486,559.2 1 159,274.20 00542 820,000.00 87,857.14 136 11 0 602797 I ,900,887.39 203,666.5 1

0094 1

I ,428,276.43 153,029.62 0 1367 5,337,469.68 571 ,871.75 02045 797,24 1.43 85,4 18.72 02859 6,7 16,649.60 719,64 1.03 02863 9,990,02 1.60 I ,070,359.46 02999 506,765.88 54,296.34

0300 1

694,779.75 74,440.69 03002 694,779.75 74,440.69 03003 653,690.63 70,038.28 03011 322,098.05 34,5 10.51 01855 3,222,082. 75 345,223. 15 01865 I ,080,928. 14 11 5,8 13.73 0 1866 I, I 00,453 .93 11 7,905.78

0026 1

271,855. 14 29,127.34 00032 7 18,637.50 76,996.88 00033 6 11 ,994.25 65,570.8 1 00034 54 1,187.66 57,984.39

DEClSTON "PP-80" 41677 Dec. 29, 2006

" PP-81 "

2091 Dec. 15, 2006 "PP-82" 2092 Dec. 15, 2006 "PP-84" 21142 Dec. 18, 2006 "PP-87" 045 Dec. 27,2006 "PP-88" 047 Dec. 27, 2006 "PP-89" 048 Dec. 28, 2006 "PP-92" 7788 Oct. 3, 2006 "PP-93" 8051 Nov. 3, 2006

" PP-94"

8075 Dec. 27, 2006 "PP-95" 4 1418 Oct. 6, 2006 "PP-96" 0302 Oct. 6, 2006

" PP-97"

0007 Oct. 13, 2006

" PP-99"

10661 Oct. 6, 2006

"PP-1 00"

0525 Nov. 3, 2006

"PP-101 "

0463 Nov. 24, 2006

"PP- 1 02"

416 Dec. 15, 2006 "PP-1 03 0806 Dec. 15, 2006

" PP- 1 04"

601 Oct. 6, 2006

" PP-1 06"

8798539 Dec. I I , 2006

" PP-1 08"

0511 Nov. I 0, 2006

"PP-1 09"

4 11 Oct. 6, 2006 "PP-110" 4925 Nov. 23, 2006 Lockheed Detective & Watchman Agency, Inc. AT & E Technical Services, Inc.

AT & E Technical Services, Inc.

P.T. Cerna Corporation Joosung Electrical Construction Corp.

Joosung Electrical Construction Corp.

Joosung Electrical Construction Corp.

Miescor Builders, Inc. Miescor Builders, Inc. Miescor Builders, lnc. Lockheed Detective & Watchman Agency, Inc. Fabmik Construction & Equipment Co., Inc.

EPI-COSL Consortium AZ Communications Network, Inc.

Dynamic Builders & Construction Co. (Phil) Inc. Kestrel IMC Corp B. Vicencio Construction Sil ver Horizon Construction, Inc.

Kanematsu Corporation People's Television Network, Inc.

Lichel Technologies, Inc. B. Yicenciio Construction MAC Bui lders Total Input VAT of Receipts that do not show segregation/computation of Input VAT on Sale of Service 39 00035 297,994.97 3 1,928 .03 00038 716,275.00 76,743.75 00039 6 11 ,0 17.75 65,466.19 00040 538,387.65 57,684.39 00587 588,67 1.53 63,071.95 00589 1 ,661 ,257.00 177,991.82 20749 599,000.00 64,178.57 00036 907,565.67 97,239. 18 00038 652,700.10 69,932. 15 00037 2,4 15,299.03 258,782.04 35042 P3,355,886.43 P359,559.26 35043 3,233,757.21 346,473.99 35045 I ,202,200.76 128,807.22 4 19 13 293,309.61 31,426.03 00008 303,828.63 32,553.07 00049 I ,207,784.83 129,405.52 03520 785,141 .33 84,122.29 00492 2,344,033.0 I 251 ,146.49 00631 430,000.00 46,07 1.43 00009 I ,3 80,300.85 147,889.38 00010 818,276.08 87,672.44 00803 3,005,148.30 32 1,980.18 OOOSA- 007418 5,223,742. 19 879853 9 I ,000,000.00 107,142.86 00158 585,409.65 62,722.46 00004 263,000.00 28,178.57 03791 I, 172,651.18 125,641.20 P24,550,8 1 0.64

REPUBLIC OF THE PHILIPPINES

Court of Tax Appeals

QUEZON CITY

Third Division

ENERGY DEVELOPMENT

CORPORATION, Petitioner, -versus-

COMMISSIONER OF INTERNAL

REVENUE, Respondent.

CTA CASE NO. 7792 Members:

BAUTISTA, Chairperson PALANCA-ENRIQUEZ, and COTANGCO-MANALAST AS, Jl. Promulgated:

JUN 11 2012

X-------------------------------------------------------------------------------------------------------------X

CONCURRING AND DISSENTING OPINION

BAUTISTA,[.:

The factual circumstances present in the case at bench supports the application of the then prevailing jurisprudence at the time the claim was made. With this, I concur with the findings of the Court that petitioner filed its administrative claim for refund within the prescribed period; nonetheless, I must point out that petitioner's judicial claim covering the first quarter of the taxable year 2006 was filed beyond the two (2)-year period, and thus, must be denied accordingly.

When petitioner filed its administrative claim on January 7, 2008, and its subsequent judicial claim before this Court on june 5, 2008, the then contro~ . '

CONCURRING AND DISSENTING OPINION

CfA CASE NO. 7792 Page 2 of 3 doctrine in this forum is that of the case of Atlas Consolidated Mining and Development Corporation v. Commissioner of Internal Revenue .1 The cases of Commissioner of Internal Revenue v. Mirant Pagbilao Corporation [Formerly Southern Energy Quezon, Inc.],2 and Commissioner of Internal Revenue v. Aichi Forging Company of A sia, Inc.,3 have yet to be promulgated on September 12, 2008, and October 6, 2010, respectively. Therefore, petitioner had until two (2) years from the filing of the relevant returns, within which to file both its administrative and judicial claims. Further, the two (2)-year prescriptive period is supported in the pronouncements made in the cases of Commissioner of Internal Revenue v. Toledo Power, Inc.,4 and Commissioner of Internal Revenue v. San Roque Power Corporation.s Thus, it must be borne in mind that no claim can be had, whether in the administrative or judicial fora, beyond the two (2)-year period provided under Section 112 of the 1997 National Internal Revenue Code, as amended. And if the two (2)-year prescriptive period is about to expire, there is no need to wait for the denial of the claim by the Commissioner of Internal Revenue or its inaction after the expiration of the one hundred twenty (120)-day period before the taxpayer can lodge its appeal with this Court.6 1 G.R. Nos. 141104 & 148763, June 8, 2007, 524 SCRA 73. 2 G.R. No. 172129, September 12, 2008, 565 SCRA 154. 3 G.R. No. 184823, October 6, 2010. 4 CfA EB Case No. 321 (CfA Case Nos. 6805 & 6851), May 7, 2008. s Cf A EB Case No. 408 (Cf A Case No. 6647), March 25, 2009. 6 Commissioner of Internal Revenue v. CE Cebu Geothermal Power Company, Inc., CfA EB Case No. 426, May 29, 2009.

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CONCURRING AND DISSENTING OPINION

Cf A CASE NO. 7792 Page 3 of 3 Based on the records of the case, petitioner filed its returns for the taxable year 2006 on the following dates: April 26, 2006, July 26, 2006, October 25, 2006, and January 29, 2007.

Therefore, petitioner had the following dates within which to file both its administrative and judicial claims, viz: April 26, 2008, July 26, 2008, October 25, 2008, and January 29, 2009. Thus, while I find the administrative claim filed within the prescribed period, I, however, must rule that the Petition for Review, insofar as the first (151) quarter of the taxable year 2006 is concerned, was made beyond the above mentioned period. In fine, petitioner's claim insofar as the first quarter is concerned should be denied for being filed out of time. Accordingly, I vote that the Petition for Review be PARTIALLY GRANTED, insofar as the claims for refund/ credit covering the second, third and fourth quarters of the taxable years 2006 is concerned.