Visayas Geothermal Power Company vs. Commissioner of Internal Revenue

AMENDED DECISION

Fabon- Victorino, J.:

This case has been remanded by the Supreme Court per its Resolution 1 dated April 26, 2017 in G.R. No. 205279 entitled

Visayas

Geothermal

Power

Company

vs.

Commissioner of Internal Revenue, for this Court to determine petitioner Visayas Geothermal Power Company's entitlement to the tax refund sought. First, a brief narration of the factual antecedents. Petitioner is a special purpose limited partnership established primarily to "invest in, acquire, finance, complete, construct, develop, improve, operate, maintain and hold that certain partially constructed power production geothermal electrical generating facility in Malitbog, Leyte Province, Philippines (the ~~Project"), and other property incidental thereto, for the production and sale of electricity from geothermal resources, to sell or otherwise dispose of 1 Docket, pp. 1477-1481.

v the Project and such other property."2 It is registered with the Bureau of Internal Revenue (BIR) as a Value-Added Tax (VAT) taxpayer with Taxpayer Identification No. 003-832- 538-000. 3 On February 13, 2009, petitioner filed with the BIR an administrative claim for refund of unutilized input VAT covering the taxable year 2007 in the amount of P11,902,576.07. 4 Claiming inaction, petitioner then proceeded to file its Petition for Review before this Court on March 30, 2009. In his Answer5 filed on April 14, 2009, respondent mainly assailed the Court's jurisdiction, claiming that the petition was prematurely filed. During the trial only petitioner presented evidence in support of its claim.

In its Decision67 promulgated on October 19, 2011, the Court sustained respondent's position and denied the Petition for Review for being prematurely filed. The Court explained that under Section 112(C) of the 1997 NIRC, the Commissioner of Internal Revenue (CIR) has 120 days from submission of complete supporting documents, within which to act on the application for refund or tax credit. Since the administrative claim for refund was filed on February 13, 2009, the CIR had until June 13, 2009 to decide on the claim. However, the Petition for Review was filed on March 30, 2009, or merely 45 days from the filing of the administrative claim with the Bureau of Internal Revenue, hence, prematurely filed.

Petitioner moved for reconsideration but the same was denied in the Resolution8 dated January 16, 2012, prompting 2 Exhibit A.

3 Exhibit C.

4 Exhibit M.

s Docket, pp. 147-152.

6 Docket, pp. 629-648.

7 Docket, pp. 629-648.

8 Docket, pp. 722-729.

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petitioner to appeal its case to the Court En Bane. The appeal was docketed as CTA EB Case No. 864. The CTA En Bane affirmed the ruling of this Court in its Decision9 dated October 8, 2012. Petitioner moved for reconsideration, but it was denied in the Resolution 10 dated January 7, 2013.

Petitioner elevated its case to the Supreme Court via a

Petition

for

Review

on

CertiorarP 1

entitled

Visayas

Geothermal Power Company vs. Commissioner of Internal Revenue, docketed as No. G.R. No. 205279. In its Resolution 12 dated April 26, 2017, the Supreme Court partly granted petitioner's Petition for Review on Certiorari.

The Supreme Court ruled that the Tax Court erred in ruling that petitioner's judicial claim was prematurely filed considering that the 120+30-day mandatory periods admit of an exception. Citing its previous ruling in the case of CIR vs. San Roque Power Corporation 13 , the

Final

Arbiter

declared that "strict compliance with the 120+30-day periods is necessary for such a claim to prosper, whether before, during, or after the effectivity of the Atlas doctrine, except for the period from the issuance of BIR Ruling No. DA-489-03 on 10 December 2003 to 6 October 2010 when the Aichi doctrine was adopted, which again reinstated the 120+30-day periods as mandatory and jurisdictional". In other words, petitioner seasonably filed its claim for refund/tax credit, hence, this Court has the competence to determine its case. Considering however that no ruling was made on the merits of petitioner's claim for tax refund, the case was remanded to this Court for disposition on the matter. The decretal portion of the Resolution dated April 26, 2017 reads:

WHEREFORE, the petition is PARTLY GRANTED. The Decision dated October 8, 2012 and Resolution dated January 7, 2013 9 Docket, pp. 919-942.

10 Docket, pp. 978-981.

11 Docket, pp. 983-1015.

"Docket, pp.1477-1481.

" 703 Phil.310 (2013).

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of the Court of Tax Appeals en bane in CTA EB Case No. 864 are REVERSED and SET ASIDE. The case is REMANDED to the Court of Tax Appeals, which is DIRECTED to determine petitioner Visayas Geothermal Power Company's entitlement to a tax refund.

WHEREFORE, premises considered, in compliance with the above Supreme Court Resolution dated April 26, 2017, CTA Case No. 7889 entitled Visayas Geothermal

Power

Company

vs.

Commissioner

of Internal Revenue is hereby REMANDED to the

CTA-Former

First

Division

for determination of petitioner's entitlement to a tax refund.

THE ISSUES

Per stipulation, the following issues were submitted by the parties for the resolution of the Court, to wit:

1. Whether or not petitioner's unutilized input VAT for the period from the 1st quarter to the 4th quarter of

CY

2007 amounting to Pl1,902,576.07 is substantiated by ,. Docket, pp.l484.

"Docket, pp. 1497-1499.

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documentary evidence in the form of invoices and official receipts;

2. Whether or not petitioner's unutilized input VAT for the period from the pt quarter to the 4th quarter of

CY

2007 amounting to P11,902,576.07 was applied or credited against any output VAT of the petitioner in the subsequent quarter or quarters;

3. Whether or not petitioner is entitled to a refund of and/or issuance of a tax credit certificate (TCC) for its unutilized input VAT amounting to P11,902,576.07, which input VAT: (i) arose from petitioner's domestic purchases of non- capital goods and services, services rendered by non-residents and importation on non- capital goods; and (ii) are all attributable to petitioner's zero-rated sales of generated power to

Energy Development Corporation

(EDC)

[formerly Philippine National

Oil

Company-

Energy Development Corporation]; and

4. Whether or not this Honorable Court has jurisdiction to act on the instant Petition for Review.

THE COURT'S RULING

Petitioner anchors its claim for tax refund/tax credit under Section 112(A) and (C) of the National Internal Revenue Code (NIRC) of 1997, as amended, which reads: SEC. 112. Refunds or Tax Credits of Input Tax.-

(A) Zero-rated or Effectively Zero-

rated Sales. - Any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of .,/ creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales under Section 106(A)(2)(a)(1), (2) and (b) and Section 108(8)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the 8angko

Sentral

ng

Pilipinas (8SP):

Provided, further, That where the taxpayer is engaged in zero- rated or effectively zero-rated sales and also in taxable or exempt sale of goods or properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales: Provided, finally, That for a person making sales that are zero-rated under Section 108(8)(6), the input taxes shall be allocated ratably between his zero-rated and nonzero-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 the tax credit certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in accordance with Subsection (A) hereof. 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.

~

Thus, to be entitled to a refund/tax credit of excess input VAT attributable to zero-rated or effectively zero-rated sales, the following requisites must be satisfied: 1) the taxpayer is VAT-registered; 2) there must be zero-rated or effectively zero- rated sales;

3) input taxes were incurred or paid; 4) such input taxes are attributable to zero-rated or effectively zero-rated sales; 5) the said input taxes were not applied against any output VAT liability; and 6) the claim was filed within the prescribed periods both in the administrative and judicial levels.

The Court shall determine first the last requisite which is the timeliness of filing of the administrative and judicial claims.

Petitioner's administrative and judicial claims were timely filed In accordance with Section 112(A) of the NIRC of 1997, as amended, the administrative claim for the issuance of a tax credit certificate or refund of input VAT must be filed with BIR within two (2) years after the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made.

Considering that the subject claim is for the first, second, third and fourth quarters of CY 2007, the administrative claim must be filed on or before March 31, 2009, June 30, 2009, September 30, 2009 and December 31, 2009, respectively.

Thus, petitioner timely filed its ,;

administrative claim for the subject periods on February 13, 2009. 16 Anent the timeliness of petitioner's judicial claim, the same has been put to rest when the Final Arbiter declared in its Resolution dated April 26, 2017 that petitioner's case falls under the exception in the observance of the 120+30-day periods under Section 112 of the NIRC of 1997, as amended, hence, the Court has jurisdiction over the case.

Petitioner

is a

VAT

taxpayer and had zero- rated sales/receipts during the subject periods It has been established that petitioner is a VAT- registered taxpayer as evidenced by its BIR Certificate of Registration No. 9RC0000232420 dated January 1, 1996.17 On the second requisite, i.e., the existence of zero- rated sales/receipts, Section 108(8)(7) of the NIRC of 1997, as amended by Republic Act (R.A.) No. 9337, provides that sale of power generated through renewable sources of energy is among the transactions subject to zero percent (0%) VAT rate, to wit:

(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.

Further,

Section

4.108-5 (b) (7) of

Revenue

Regulations (RR) No. 16-05, which implements the foregoing provision, qualified the applicability of such zero-rating as follows:

16 Par. 3, Admitted Facts, JSFI , Docket, p. 184; Exhibit M, Docket, pp. 387-388. " Exhibit C, Docket, p. 357. 4/ (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

XXX

(7) Sale of power or fuel generated through renewable sources of energy such as, but not limited to, biomass, solar, wind, hydropower, 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.

Corollarily, Section 4.108-3(f) of the RR No. 16-05 provides:

SEC. 4.108-3. Definitions and Specific Rates on Selected Services.-

XXX

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 energy 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

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electricity refers to the production of electricity by a generation company or a co- generation facility pursuant to the provisions of the R.A. No. 9136 (EPIRA). They shall include all Independent Power

Producers (IPPs) and NPC/Power Sector

Assets

and

Liabilities

Management

Corporation

(PSALM)-owned generation facilities.

Thus, to qualify for VAT zero-rating, petitioner must prove by sufficient evidence that its sales/receipts were derived from the sale of power or fuel generated through renewable sources of energy. Per its Amended Articles of Partnership 18, petitioner's business purpose is "to invest in, acquire, finance, complete, construct, develop, improve, operate, maintain and hold that certain partially constructed power production geothermal electrical generating facility in Malitbog, Leyte Province, Philippines (the "Project"), and other property incidental thereto, for the production and sale of electricity from geothermal resources, to sell or otherwise dispose of the Project and such other property, and to engage in any other activities related or incidental hereto". Petitioner's 216-megawatt geothermal power plant located in Malitbog, Leyte Province has been accredited by the Department of Energy as a Block Power Production Facility under the Implementing Rules and Regulations of Executive Order No. 215, as amended. 19 The said power plant was likewise issued with Certificate of Compliance20 by the Energy Regulatory Commission. By virtue of the

Energy

Conversion

Agreement

("ECA") 21

entered into between

Energy

Development

Corporation

("EDC")

[formerly

Philippine

National

Oil

Company

-

Energy

Development

Corporation]

and petitioner's predecessor-in-interest, Magma Power Company, 1" Exhibit A, Docket, pp. 350-355. 19 Exhibit B, Docket, p. 356. 2o Exhibit Z, Docket, p. 476. 21 Exhibit D.

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petitioner generates power and subsequently sells it only to EDC.

For the period covering January 1, 2007 to December 31, 2007, petitioner’s gross receipts from sales of power generation services to EDC amounted to P1,981,657,214.27, as evidenced by VAT zero-rated official receipts** and invoices?? issued by petitioner to EDC for the same period. Such sales of electricity generated through a renewable source of energy, particularly, geothermal energy, qualify for VAT zero-rating pursuant to Section 108(B)(7) of the NIRC of 1997, as amended by R.A. No. 9337, and as implemented by Section 4.108-5 (b) (7) of RR No. 16-05. The table below shows the breakdown of the zero-rated sales/receipts of P1,981,657,214.27:

a ——

Paid in Pesos Peso Equivalent Tax Total

02-Jan-07 | _ 34,812,502.59 [amon frowe| oaetmamiee | “re | tm | 1-4.2_| 534 | 02-Jan-07 7556740801 | | | __—tsa,219.20| _7,710,960.00 | 1-43 | 535 tafe... ——[aaraos | sass] zones 23840 _a tsa} _202855,20882 1-44 | 536 | o2-Feb-07 | 34,741,00233/ | | | 709,001.88 | ——_35,450,094.21 | o2-Feb-o7 | 755674080; | | || ——__ts4,219.20| —_7,710,960.00 | | 46 |538| o2mar-o7 | 2,23440000| | | | 45,600.00, —_—_—-2, 280,000.00 | | 1-47 | 530 | o2-maro7 | _goo3e20g0| | | ——*i(|__163,339.20| 8,166, 960.00 | 48 | s40 | o2maro7| 34eoz30867/ | | | =| —_34,602,308.67_ | t-49 [541 o2Maro7| | 4, 186,973.04 48.45 | —202,858,843.79 | __4,139,976.43 | __206,998,820.22 | 03-Apr-07 | 34375giasi] ss | | 701,547.23 35,077,361.74 03-Apr-07 8,003,620.801 | Po 163,339.20 8, 166,960,00 T-4.12 03-Apr-07 ; 4,187,499.65 201,418,733.17 4,110,586.56 205,529,319.72 74.13 | 545 | 03-May-07 | __ 33,975,542.78| J 163,339.20 | _8,166,960.00 | 14.15 | 547 | o3-may-o7| | 4,187,499.65 | 47.40 | 198,487,483.41 | _4,050,765.13 |__202,538,248.54 | _1-4.16 | 548 | or-tun-o7 | _32,803,53194| fC | 7-4.17 [549 | ot-tun-07 | 8,003,620.80| P| 63,339.20 | __8,166,960.00 | oi-uno7 | 4, 187,499.65 | 45.90 #88350, 330767500] 076,675.00 | 56,263.00 7,813,150.17 T-4.20 02-Jul-07 7,656,887.17| | o2-su-o7 | «i474, 297.40 189,930,531.70 3,876,133.17 193,806,664.87 | Po 7882,948.37 T-4.22 | 554 | 02-Aug-07 7,882,948.37 T-4.23 | 555 | 02-Aug-07 32,292,050.44 pe ein oo 32,292,050.44 T-4.24 02-Aug-07 4,176,805.77 | 45.30 189,209,301.38 3,861,414.13 193,070,715.51 57 .

22 Exhibits T-4.1 to T-4.27. 23 Exhibits T-2.1 to T-2.8.

T-4.25 04-Sep-07 7,931,845.72| «|| | 7,831,845.72 558 | 04-Sep 3263731100] | | 32,637,311.00 5 115,315,200.00

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Total per Official

ReceiDts

115,315,200.00 375 289 341.82 1 453 724 457.33 152 643 200.00 !.!111!,657,214.27 However, a comparison of the substantiated zero-rated· sales/receipts of P1,981,657,214.27 with that reflected in petitioner's Quarterly VAT Returns for the four quarters of

CY

2007 disclosed a discrepancy in the amount of P2,338,260.67, computed as follows:

PerCY 2007 Quarter VAT Returns

1st Quarter (Exh. ''E-2") p 546 988,419.76 2nd Quarter (Exh. "F-1"} 731,814,492.47 3rd Quarter (Exh. "G-1") 705 192 562.71 4th Quarter (Exh. ''H-1") - Pl 983,995,474.94

Per Supporting Official Receipts

1 981,657,214.27

Discrepancy

p 2,338,260.67 For being unsupported by VAT zero-rated official receipts, the amount of P2,338,260.67 shall be denied VAT zero-rating.

With the finding that petitioner has VAT zero-rated sales/receipts for the subject periods in the total amount of P1,981,657,214.27, the Court shall now determine whether petitioner incurred input taxes in connection therewith and whether the said input taxes were not applied against any output VAT liability of petitioner.

Petitioner

incurred/paid input taxes attributable to zero-rated sales/receipts which were not applied against any output VAT liability In its Quarterly VAT Returns for CY 2007, petitioner reported the following input taxes in the total amount of P11,902,576.07 arising from its domestic purchases and importation of goods other than capital goods, domestic purchases of services, and services rendered by non- residents, broken down as follows:

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1st

Quarter

(Exh. "E-2")

Domestic Purchases of

Goods other than capital

Goods

p 680 514.19

Importation of Goods

other than caoital Goods 497 875.15

Domestic Purchases of

Services

2 869 268.38

Services Rendered by

Non-Residents

77 537.69

Total

P4 125 195.41 2nd

Quarter

(Exh. "F-1") p 1 034 965.28 169 177.56 2 654 665.21 388 342.52 P4 247 150.57 3rd 4th

Quarter

Quarter

(Exh. "G-1") (Exh. "H-1")

CY 2007

p 592 237.04 p 113 437.87 p 2 421154.38 279 294.92 114 999.00 1,061,346.63 2 098 020.51 272 555.86 7 894 509.96 59 684.89 - 525 565.10 P3 029 237.36 p 500 992.73 Pll 902 576.07 In support of these input taxes, petitioner presented its Schedule of Input VAT for CY 200724 and the corresponding suppliers' invoices, official receipts, Bureau of Customs

("BOC") Import Entry and Internal Revenue Declarations

(IEIRDs) and BIR Form Nos. 160025, which were all examined by the Court-commissioned Independent Certified Public Accountant (!CPA), Katherine 0. Constantino. In her report, the total input tax of Pll,902,576.07 was accounted as follows: 26

Reference to

ICPA Report

Amount of

Findings

(Exh. "T")

Input VAT

Input VAT Prop_erly Substantiated Annex 2-1Q-1, Annex 2-2Q-1,

1. Domestic purchase of goods and services properly Annex 2-3Q-1, supported by VAT invoices and OR

Annex 2-4Q-1

p 8 607,072.90 Annex 2-1Q-2, Annex 2-2Q-2,

2. Importation of goods and services properly Annex 2-3Q-2, supported by IEIRDs/BOC O.R. Form 1600

Annex 2-40-2

1 534 755.46

3. Domestic purchase of goods properly supported by a VAT invoice not dated within the VAT-taxable quarter but within the VAT-taxable year. (The ICPA ascertained that the input VAT on the purchase of Annex 2-2Q-3, goods were not claimed twice during the taxable Annex 2-3Q-3, year.)

Annex 2-4Q-3

494,801.50

4. Domestic purchase of services properly supported by a VAT OR not dated within the taxable quarter but within the VAT-taxable year. (The !CPA ascertained Annex 2-2Q-4, that the input VAT on the purchase of qoods were

Annex 2-3Q-4

42,022.90 24 Exhibits T-5-1Q.1 to T-5-1Q.3, T-5-2Q.1 to T-5-2Q.3, T-5-3Q.1 to T-5-3Q.3, and T-5-4Q.1 to T-5-4Q.2.

25 Exhibits T -6-V-1Q-00001 to T -6-V-1Q-00461, T -6-V-1Q-00462 to T -6-V-1Q-00994, T -6-V- 2Q-00001 to T-6-V-2Q-00530, T-6-V-2Q-00534 to T-6-V-2Q-01148, T-6-V-3Q-000001 toT- 6-V-3Q-000603, and T-6-V-4Q-1 to T-6-V-4Q-148 (With excluded Exhibits as indicated in

Petitioner's Formal Offer of Evidence)

- 26 Exhibit T, pp. 9-13.

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not claimed twice during the taxable year.)

5. Importation of goods supported by original BOC OR and/or LBP OR only

Subtotal

Other Findings

1. Domestic purchase of goods/services supported by VAT invoice/OR with countersigned changes by supplier, as represented by the Petitioner. (The ICPA ascertained from the additional supporting documentation (i.e. VAT invoice for services/OR for goods) that input VAT was passed on to the Petitioner.

2. Domestic purchase of goods/services supported by a VAT invoice/OR with countersigned changes in the Company's name and or TIN by the supplier as represented by the Petitioner.

Subtotal

Other Findings

1. Domestic purchase of goods supported by a VAT Invoice issued in the Company's name but without or with wrong Company's TIN and/or address

2. Domestic purchase of services supported by a VAT OR issued in the Company's name but without or with wronq Company's TIN

3. Domestic purchase of goods/service supported by a VAT Invoice/OR wherein VAT was not shown separately

4. Domestic purchase of goods supported by documents other than a VAT invoice

5. Domestic purchase of goods supported by a VAT invoice but not an oriqinal copy

6. Domestic purchase of goods supported by a VAT invoice not issued in the name of the Company

7. Domestic purchase of services supported by a VAT OR not issued in the name of Company

8. Domestic purchase of goods supported by TIN-V invoice

9. Domestic purchase of goods supported by a VAT invoice not dated within the VAT-taxable year

10. Domestic purchase of goods supported by a VAT invoice with changes in the name and TIN of the Company without countersiqn Annex 2-1Q-3, Annex 2-2Q-5,

Annex 2-3Q-5

8,696.00 1'10,687,348.76 Annex 2-1Q-4, Annex 2-2Q-6,

Annex 2-3Q-6

p 290 778.85 Annex 2-1Q-5, Annex 2-2Q-7,

Annex 2-3Q-7

230,520.81 p S21,299.66 Annex 2-1Q-6,

Annex 2-4Q-4

p 27,600.66 Annex 2-1Q-7,

Annex 2-4Q-5

23,179.09 Annex 2-1Q-8, Annex 2-2Q-10,

Annex 2-4Q-6

50,738.83 Annex 2-1Q-9, Annex 2-2Q-11,

Annex 2-4Q-7

7,709.95 Annex 2-1Q-10,

Annex 2-20-12

11,127.69 Annex 2-1Q-11, Annex 2-2Q-13,

Annex 2-3Q-10

4,909.03

Annex 2-4Q-12

7,869.43 Annex 2-1Q-12,

Annex 2-2Q-17

8,601.43 Annex 2-1Q-13,

Annex 2-2Q-18

111,860.28 Annex 2-1Q-14, Annex 2-2Q-19, Annex 2-3Q-12,

Annex 2-40-9

7,124.76

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11. Domestic purchase of goods supported by a VAT OR with changes in the name and TIN of the Com_pany_ without countersigned

12. Domestic purchase of goods supported by TIN # only; TAN V; TAN-VAT; TIN NV/NON VAT OR; stamped/handwritten TIN-V/VAT Tape Receipt

13. Domestic purchase of services supported by TIN # only; TAN V; TAN-vAT'TIN NV/NON VAT OR; stamped/handwritten TIN-vjVAT Tape Receipt

14. Domestic purchase of services supported by documents other than a VAT OR

15. Domestic purchase of services supported by a VAT OR but not an original copy

16. Domestic purchase of services supported by a VAT OR not issued in the name of the Company

17. Domestic purchase of services supported by TIN # only; TAN-V; TAN-VAT; TIN-NV/NON VAT OR; stamped/handwritten TIN-V/VAT OR

18. Domestic purchase of services supported by a

Zero-rated VAT OR

19. Domestic purchase of services supported by a VAT OR not dated within the VAT-taxable _year

20. Domestic purchase of goods supported by a Zero- rated VAT invoice

21. Importation of goods supported by documents other than an original copy of the IEIRD

22. Domestic purchase of goods supported by a VAT invoice issued in the Company's name but without the Company's TIN and/or address or with TIN and/or address changed/added on the support but without countersign

23. Domestic purchase of services supported by a VAT OR issued in the Company's name but without the Company's TIN and/or address or TIN and/or address changed/added on the support but without countersign

24. Domestic purchase of goods supported by TIN # only; TAN-V; TAN-VAT; TIN-NV/NON VAT OR; stamped/handwritten TIN-V/VAT invoice

25. Domestic purchase of goods supported by tape receipt without the Corl}Qany's name and/or TIN

26. Domestic purchase of goods supported by a VAT invoice but without invoice date

27. Domestic purchase of services supported by a TIN-

VOR

28. Domestic purchase of services supported by a VAT OR but is not SIR-registered

Annex 2-4Q-10

1,458.70

Annex 2-1Q-15

790.09

Annex 2-4Q-12

110.14 Annex 2-1Q-16, Annex 2-2Q-20, Annex 2-3Q-13,

Annex 2-4Q-11

157,801.40 Annex 2-1Q-17,

Annex 2-30-14

1L896.86

Annex 2-3Q-15

32,103.20 Annex 2-1Q-18, Annex 2-2Q-21,

Annex 2-3Q-16

37,315.23

Annex 2-30-17

415.74 Annex 2-1Q-19, Annex 2-2Q-23,

Annex 2-3Q-18

36L523.44

Annex 2-4Q-8

840.00

Annex 2-3Q-19

27,991.92 Annex 2-2Q-8,

Annex 2-30-8

6L492.77 Annex 2-2Q-9,

Annex 2-3Q-9

56,197.42 Annex 2-2Q-14,

Annex 2-3Q-11

3,295.93

Annex 2-2Q-15

321.15

Annex 2-2Q-16

237.88

Annex 2-20-22

1L620.00

Annex 2-2Q-24

12,387.02

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29. Over-claimed input tax on domestic/importation purchases of goods/services due to erroneous Annex 2-1Q-20, Annex 2-2Q-25, Annex 2-3Q-20, computation (i.e.,arithmetical error)

Annex 2-4_Q-114

3,819.12 Annex 2-1Q-21, Annex 2-2Q-26,

30. Effect of forex on foreign currency denominated Annex 2-3Q-21, purchases of qoods and services - overstatement

Annex 2-40-15

29 654.66 Annex 2-1Q-22, Annex 2-2Q-27, Annex 2-3Q-22,

31. Supporting documents not available

Annex 2-4Q-16

21,934.12

32. Rounding difference (0.29)

Subtotal

p 693,927.65 Total Input VAT accounted for by the ICPA I P11,902,576.07 The Court finds the !CPA report in order. The input VAT in the total amount of P693,927.65 under the second "Other Findings" must be disallowed from petitioner's claim as it was not properly substantiated by VAT invoices or official receipts as prescribed under Sections 110 (A) and (B), 237, and 238 of the NIRC of 1997, as amended, in relation to Sections 4.110-1, 4.110-8, and 4.113-1 of RR No. 16-05, as amended.

In addition, the following input VAT in the total amount of P116,232.98 shall likewise be disallowed for the following reasons:

Reference to

Exhibit

ICPA R~ort

Vendor Name

Date

Amount

Importation of Goods supported by IEIRD but without machine validation For payment of duties and taxes (including VAT) or corresponding SOC official receipt or any other proof of VAT payment in violation of Section 4.110-8 of RR No. 16-05, as amended ABB Automation,

T-6-V-10-00979

Annex 2-lQ-2 Inc.

16-Feb-17

p 13,503.75

T-6-V-3Q-

000506

Annex 2-3Q-2

Siemens L TDA

12-Jul-07

100,974.50

Subtotal

, 114_478.25 Supported by documents which were denied admission by the Court for lack of authentication27

Reference to

Exhibit

ICPA Report

Vendor Name

Amount

27 Resolution dated September 9, 2010, Docket, p. 498. /

T-6-V-2Q-00206

T-6-V-2Q-00207

T-6-V-2Q-00208

T-6-V-20-00210

T-6-V-2Q-00213

T-6-V-2Q-00214

T-6-V-2Q-00598

T-6-V-20-00599

T-6-V-1Q-000067

Annex 2-2Q-3

Codillas Petron Super Service Station

Annex 2-2Q-3

Codillas Petron Super Service Station

Annex 2-2Q-3

Codillas Petron Super Service Station

Annex 2-2Q_-3

Codillas Petron Super Service Station

Annex 2-2Q-3

Codillas Petron Super Service Station

Annex 2-2Q-3

Codillas Petron Super Service Station

Annex 2-2Q-1

Mercury Druq Corporation

Annex 2-20-1

Mercury Dri.J9 Corporation

Annex 2-3Q-3

Codillas Petron Super Service Station

p 230.33 319.01 146.67 408.26 14.04 150.56 202.86 52.43 230.57

Subtotal

p 1JS4.73

Total

P116,232.98 Thus, out of the Pl1,902,576.07 input VAT claim for the four quarters of CY 2007, only the amount of Pl1,092,415.44 represents petitioner's valid input VAT, as computed below:

Total I11Q_ut VAT claim p 11~02,576.07

Less: Disallowances

Per ICPA Report

p 693,927.65 Per this Court's further verification 116 232.98 810 160.63

Valid Input VAT

P11,092,415.44 Petitioner had no output tax liability against which the input VAT of Pll,092,415.44 may be applied or credited, since it had no other sales/receipts but zero-rated sales/receipts for the four quarters of CY 2007. Moreover, the input VAT of Pl1,092,415.44 is attributable to the entire declared zero-rated sales/receipts of P1,983,995,474.94. However, only the input VAT of Pll,079,342.33 is attributable to the properly substantiated zero-rated sales/receipts of P1,981,657,214.27, computed as follows:

Valid Input VAT

p 11,092,415.44 Less: Output tax due - Excess Inl'_ut VAT p 11,092,415.44

Divided by Total Declared Zero-Rated Sales

71,983,995,474.94

Multiply by Valid Zero-Rated Sales

x1,981,657 214.27 Excess Input VAT attributable to Valid Zero-Rated p 11,079,342.33

Sales[Receipts

Although the claimed input VAT was carried-over by petitioner in its succeeding Quarterly VAT Returns28, the 28 Exhibits I, J, K, and L (1'' to 4th Quarters of CY 2008), Docket, pp. 382-386; and Exhibit R / (1" Quarter of CY 2009), Docket, pp. 421-422.

W

same remained unutilized until it was deducted as "VAT Refund/TCC Claimed"29 in its Quarterly VAT Return for the first quarter of CY 2009.

Therefore, the subject claim no longer formed part of the excess input

VAT

of P2,659,463.3930 as of the end of the first quarter of CY 2009 that was to be carried over/applied to the succeeding taxable quarters rendering the possibility of the present claim being applied to future output VAT liability nil. In fine, petitioner was able to sufficiently establish its entitlement to the refund/tax credit in the amount of P11,079,342.33, representing its unutilized excess input VAT for the four taxable quarters of CY 2007 which is attributable to its zero-rated sales/receipts for the same period.

WHEREFORE, 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 Visayas Geothermal

Power Company in

the amount of P11,079,342.33, representing petitioner's unutilized input VAT for the four quarters of CY 2007 attributable to its zero-rated sales for the same taxable period.

I CONCUR:

..

R. FASON-VICTORINO

Associate Justice

ER~P.UY

Associate Justice

ATTESTATION

I attest that the conclusions in the above Amended 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

Acting Chairperson

CERTIFICATION

Pursuant

to

Section

13

of Article

VIII

of the Constitution, and the

Acting

Division

Chairperson's

Attestation, it is hereby certified that the conclusions in the above Amended Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

ROMAN G. DEL ROSARIO

Presiding Justice