CE Casecnan Water and Energy Company, Inc. vs. Commissioner of Internal Revenue

DECISION

COTANGCO-MANALASTAS,J.:

STATEMENT OF THE CASE

This is a Petition for Review filed by CE Casecnan Water and Energy Company, Inc. (petitioner) to appeal the inaction of the Commissioner of Internal Revenue (respondent) over petitioner's administrative claim for refund or issuance of tax credit certificate

(TCC)

in the aggregate amount of P16, 702,501.38, representing alleged unutilized input value- added tax (VAT) attributable to its zero-rated sales of generated power to the National Irrigation Administration (NIA) for taxable year 2009.

STATEMENT OF FACTS

Petitioner is a domestic corporation duly organized and existing under Philippine laws, with principal office at Pantabangan, Nueva Ecija. It was incorporated on September 21, 1994, the primary purpose of which is "to design, develop, construct, erect, assemble, commission, finance, own and J- operate a combined irrigation and hydro-electric power project and related facilities in Central Luzon, Philippines for the conversion into electricity of water provided by and under contract with the National Irrigation Administration and for the supply of water for agricultural purposes to the National Irrigation Administration (the 'Project'); provided that, in no event shall the corporation itself engage in the general supply or distribution of electricity, in retail trade or in the business of a public utility, or furnish electricity to end-users or consumers, or provide a public service or engage in industries or activities reserved by the Constitution or by law to corporations wholly or partially owned by Filipino citizens" .¹ Petitioner's multi-purpose irrigation and power plant project with the power plant component, consisting of a hydro- electric powerhouse with an installed capacity of 140 MW, has been duly accredited and certified as a

Private Sector

Generation Facility (PSGF) by the Department of Energy (DOE) as evidenced by its DOE Certificate of Accreditation No. 95-07- 12 issued by the DOE on July 20, 1995.² On July 27, 2005, petitioner was granted by the Energy Regulatory Commission (ERC) a Certificate of Compliance (COC) No. 05-07-GNS-10701. This COC is valid for a period of five years from the date of issuance, or until July 27, 2010.³ It is likewise registered with the Bureau of Internal Revenue (BIR) as a VAT taxpayer in accordance with Section 236 of the National Internal Revenue Code (NIRC) of 1997, with Taxpayer Identification Number 004-500-931-000. 4 Respondent, on the other hand, is the duly appointed Commissioner of the Bureau of Internal Revenue, vested with authority to act as such, including, among others, the power to decide, approve and grant refunds or tax credits of erroneously or excessively paid taxes. She holds office at the BIR National Office Building, BIR Road, Diliman, Quezon City. Petitioner filed its Original Quarterly VAT Returns for taxable year 2009, as well as their amendments through the/

BIR's Electronic Filing and Payment System (EFPS) on the following dates:

EXHIBIT

PERIOD COVERED

DATE OF FILING

F

Original Quarterly VAT Return for January to March 2009 April 27, 2009

G

Original Quarterly VAT Return for April to June 2009 July 27, 2009

H

Original Quarterly VAT Return for July to September 2009 October 26, 2009

I

Original Quarterly VAT Return for October to December 2009 January 25, 2010

J

Amended Quarterly VAT Return for January to March 2009 October 18, 2010

K

Amended Quarterly VAT Return for April to June 2009 October 18, 2010

L

Amended Quarterly VAT Return for July to September 2009 October 18, 2010

M

Amended Quarterly VAT Return for October to December 2009 October 27, 2010 On November 10, 2010, petitioner filed an administrative claim with the BIR Large Taxpayers Regular Audit Division I for the refund or issuance of TCC for its alleged unutilized input VAT in the amount of P16,702,501.38, attributable to its zero-rated sales of power to NIA, covering the first quarter to the fourth quarter of 2009.5 However, due to the inaction of respondent Commissioner on petitioner's administrative claim, petitioner filed the instant Petition for Review on March 30, 20 11. In her Answer6 filed on May 19, 20 11, respondent interposed the following Special and Affirmative Defenses: "⁴. Respondent hereby reiterates and repleads the preceding paragraphs of this answer as part of her Special and Affirmative Defenses.

5. Taxes collected are presumed to be in accordance with laws and regulations.

6. Petitioner's alleged claim for refund is subject to administrative routinary investigation/ examination by the Bureau of Internal Revenue. A claim for refund is not ipso facto granted because respondent CIR still has to investigate and ascertain the validity of the claim. j

7. Taxes are essential to government's very existence; (CIR v. Solidbank Corporation, G.R. No. 148191, November 25, 2003) hence, the dictum that 'taxes are the lifeblood of the government.' For this reason, the right of taxation cannot easily be surrendered; statutes granting tax exemptions are considered as a derogation of the sovereign authority. (CIR v.

Fortune

Tobacco

Corporation, G.R.

Nos.

167274-75, July 21, 2008) Tax refunds are regarded as tax exemptions and these are to be construed strictissimi juris against the person or entity claiming the exemption. (Philippine

Phosphate

Fertilizer

Corporation

vs.

Commissioner of Internal

Revenue

G.R.

141973, June 28, 2005)

8. In an action for refund, the burden of proof is on the taxpayer who claims the exemption and he must justify his claim by the clearest grant under the Constitutional or statutory law and cannot be permitted by vague implications (BPI Leasing Corporation vs. Honorable Court of Appeals, G.R.

127624, November 18, 2003). The taxpayer is charged with the heavy burden of proving that he has complied with and satisfied all the statutory and administrative requirements to be entitled to the tax refund. (Commissioner of

Internal

Revenue

vs.

Eastern

Telecommunications Philippines, Inc. G.R. 163835 July 7, 2010)

9. To support its claim, it is imperative for petitioner to prove the following, viz:

a. The registration requirements of a value-added taxpayer in compliance with Section 6 (a) and

(b) of Revenue Regulations No. 6-97 in relation to Section 4. 107-1 (a) of Revenue Regulations No. 7-95, and Section 236 of the Tax Code, as amended;

b. The invoicing and accounting requirements for VAT-registered persons, as well as the filingj and payment of VAT in compliance with the provisions of Section 113 and 114 of the Tax Code, as amended;

c. Proof of compliance with the prescribed checklist of requirements to be submitted involving claim for VAT refund pursuant to

Revenue

Memorandum Order No.

53-98, otherwise there would be no sufficient compliance with the filing of an administrative application for refund which is a condition sine qua non prior to the filing of a judicial claim in accordance with Section 112 of the Tax Code, as amended. This requires the submission of complete documents in support of the application filed with the Bureau of Internal Revenue before the 120-day audit period shall apply, and before the taxpayer could avail of the judicial remedies as provided for in the law. Hence, petitioner's failure to submit proof of compliance with the above-stated requirements warrants immediate dismissal of the petition for review;

d. That the input taxes of P16,702,501.38 allegedly incurred by petitioner for the first to fourth quarter of taxable year 2009 were attributable to its zero-rated sales and such have not been applied against any output tax and were not carried over to the succeeding taxable quarter or quarters;

e. That petitioner's administrative and judicial claims for tax credit or refund of the unutilized input tax (VAT) was filed in accordance with Sections 112 (A) and (D) and 229 of the Tax Code, as amended;

f. That petitioner's domestic purchases of goods and services were made in the course of its trade or business, properly supported by VAT invoices and/ or official receipts and other documents, such as subsidiary purchase{-

Journal showing that it actually paid VAT in accordance with Sections 110 (A) (2) and 113 of the Tax Code, as amended, and pursuant to Section 4.104-5 (a) and (b)

of Revenue

Regulations No. 7-95 (Re: Substantiation of Claims for Input Tax Credits);

g. The requirements as enumerated under Section 4 .104-5 of Revenue Regulations No. 7-

95. (Re: Substantiation of Claims for Input Tax

Credits)

11. The amount of Sixteen Million Seven Hundred

Two Thousand Five Hundred One and 38/100

(P16,702,501.38) being claimed by petitioner arising from alleged unutilized input value-added tax ('VAT') paid and incurred for the taxable year 2009 is not properly documented;

12. Following the premise above-mentioned, petitioner has the burden of proving that the right to such tax refund indubitably exists and well-founded doubt is fatal to the claim." On October 17, 2011 , upon Motion7 of petitioner, this Court commissioned Mr. Ab bet R. Barce of Reyes Tacandong & Co. as Independent Certified Public Accountant (CPA) .B During trial, petitioner presented Leilah Yasmin E. Alpad9 , Head of the Tax Services of CalEnergy International Services, Inc.-ROHQ; and Abbet R. Barcelo, the Independent CPA duly commissioned by this Court. Thereafter, petitioner filed on March 2, 2012 its Formal Offer of Evidence 11 submitting Exhibits "B" to "N" "P" "R" ' ' ' ' "S" and "U" to "LLLL" inclusive of their sub-markings· which ' ' ' was admitted by this Court in the Resolution 12 dated March 23, 2012, except Exhibit "CCCC". J

Subsequently, on July 6, 2012, petitioner filed its Supplemental Formal Offer of Evidence13, submitting Exhibits "FF-1-1" to "FF-1-14" "FF-2-1" to "FF-2-8" "FF-3-1" to "FF-3- , ' 13" "FF-4-1" to "FF-4-12" "HH-1-1" to "HH-1-6" "HH-2-1" to ' ' ' "HH-2-6" "HH-3-1" to "HH-3-17" "HH-4-1" to "HH-4-12" "NN- ' ' ' 1-1" to "NN-1-2", "NN-2-1" to "NN-2-3", "NN-3-1" to "NN-3-3", "NN-4-1" to "NN-4-3" "TT-1-1" to "TT-1-39" "TT-2-1" to "TT-2- , ' 15" "WW-1" to "WW-1532" "XX-1" to "XX-9" "YY-1" to "YY- ' ' ' 54" "ZZ-1" to "ZZ-8" "AAA-1" to "AAA-16" "BBB-1" to "BBB- ' ' ' 3, "CCC-1" to "CCC-8" "DDD-1" to "DDD-2" "FFF-1" to "FFF- ' ' ' 2, "GGG-1" to "GGG-34 2" "HHH -1" to "HHH -1 7" "III -1" to ' ' ' "III-5" "JJJ-1" to "JJJ-15" "KKK-1" to "KKK-2" "LLL-1" to ' ' '

"LLL-115"

"MMM-1" to "MMM-3"

"NNN-1" to "NNN-23"

' ' ' "000-1" to "000-2", "PPP-1" to "PPP-1 0", "QQQ-1" to "QQQ- 113" "RRR-1" to "RRR-300" "SSS-1" to "SSS-71" "UUU- 1" to ' ' ' "UUU-12" "VVV-1" to "VVV-78" "WWW-1" to "WWW-3" "XXX- ' ' ' 1" to "XXX-29" "YYY-1" to "YYY-42" "AAAA-1" to "AAAA-10" ' ' '

"BBBB-1" to "BBBB-138" "CCCC-2" to "CCCC-6" "DDDD-1"

' ' to "DDDD-2" "EEEE-1" to "EEEE-9" "FFFF -1" to "FFFF -90" ' ' ' "GGGG-1" to "GGGG-9" "HHHH -1" to "HHHH-2" "IIII -1" to ' ' "IIII-2" and "KKKK -1" to "KKKK -11" inclusive of their sub- ' ' markings; which were admitted by this Court in the Resolutions dated August 2, 2012 14 and September 27, 201215 except Exhibits "WW-834" "MMM-1" to "MMM-3" and ' ' ' "WWW-1" to "WWW-3".

On the other hand, during the hearing held on November 8, 2012, counsel for respondent manifested that she has no evidence to present.

The Court then granted both parties thirty (30) days from said date to file their respective Memorandum.16 On December 27, 2012, this case was submitted for decision, considering petitioner's Memorandum filed on December 21, 2012 and respondent's Memorandum filed on November 22, 2012. 17/

STATEMENT OF ISSUES

The following are the parties' jointly stipulated issues18 submitted for this Court's resolution: "6. Whether or not Petitioner's alleged unutilized input VAT for the 1st to the 4th quarter of calendar year

(CY)

2009 amounting to P16,702,501.38 is sufficiently substantiated by documentary evidence in the form of invoices and official receipts;

7.

Whether or not Petitioner's alleged unutilized input VAT for the 1st to the 4th quarter of CY 2009 was applied or credited against any output VAT of the Petitioner in the same or subsequent quarter or quarters; 8.

Whether or not Petitioner's alleged unutilized input VAT of P16,702,501.38 is attributable or allocable to zero-rated sales of power to the National Irrigation Administration (NIA);

9. Whether or not Petitioner filed its administrative and judicial claims for refund or tax credit within the prescriptive periods provided by law;

10. Whether or not Petitioner has complied with Section 112(C) of the Tax Code with respect to the submission of supporting documents; and

11. Whether or not Petitioner is entitled to a refund of and/ or issuance of a tax credit certificate (TCC) in the amount of P16, 702,50 1.38." The foregoing issues can be summarized as follows: "Whether or not petitioner is entitled to a refund or issuance of tax credit certificate 1n the amount of P16, 702,501.38, representing its unutilized input VAT j

incurred from its purchases of goods and services attributable to its zero-rated sales of power to NIA for taxable year 2009."

DISCUSSION /RULING

In CE Casecnan Water and Energy Company, Inc. vs. Commissioner of Internal Revenue19, which involves the same parties, type of tax and case except for the taxable period, this Court has found, and is herein given judicial notice, that petitioner has sufficiently established that it is in the business of power generation and as such sold generated power to NIA; hence, it can treat its sale of generated power to NIA as VAT zero-rated sales. The pertinent portions of the decision are quoted below:

"As correctly pointed out by petitioner, the law explicitly states that sales of generated power by generation companies are VAT zero-rated beginning June 26, 2001, the date of effectivity of Republic Act (R.A.) No. 913620. The significant parts of Section 6 of R.A. No. 9136 read as follows: 'SECTION 6. Generation Sector. - Generation of electric power, a business affected with public interest, shall be competitive and open.

XXX

XXX

XXX

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.' (Emphasis supplied) Likewise, the

Rules

and

Regulations

to Implement Republic Act No. 9136, specifically, Section 6 of Rule 5 thereof states that: j

'SECTION 6. Generation Charges and VAT.-

XXX

XXX

XXX

(b)

Pursuant to the

policy of reducing electricity rates to End-users, sales of generated power by a Generation Company shall, from the effectivity of the Act, be zero-rated for the purpose of imposition of value- added tax.

Towards this end, the imposition of zero percent (Oo/o) VAT shall apply to the sale of generated power by a Generation Company through all stages of sale until it reaches the End-user. The DOF, through the BIR, shall issue the necessary revenue regulation within sixty

(60) calendar days from effectivity of these Rules.' (Emphasis supplied) In order for a power generation company to qualify for VAT zero-rating in accordance with R.A. No. 9136, two (2) requirements must concur, namely, (1) it is a generation company; and (2) it derived sales from power generation. However, the foregoing provision was expressly repealed by R.A. No. 933721. The repealing clause of R.A. No. 9337 provides:

'SECTION 24.

Repealing Clause. - The following laws or provisions of laws are here by repealed and the persons and/ or transactions affected herein are made subject to the value-added tax subject to the provisions of Title IV of the National Internal Revenue Code of 1997, as amended: t

XXX

XXX

XXX

(B) Section 6, fifth paragraph of R.A. No. 9136 on the zero VAT rate imposed on the sales of generated power by generation companies; and' Notwithstanding the said repeal, the sale of power or fuel generated through renewable source of energy continued to be VAT zero-rated under

Section 108(B)(7) of the National Internal Revenue

Code (NIRC) of 1997, as amended by R.A. No. 9337, which states:

'SEC. 108. Value-added Tax on Sale of Services and Use or Lease of Properties.

XXX

XXX

XXX

(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°/o) 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, ocean energy, and other emerging energy sources using technologies such as fuel cells and hydrogen fuels.' (Emphasis supplied) In this case, records show that petitioner's 140- megawatt hydro-electric power plant project has been accredited by the Department of Energy as a

Private

Sector

Generation

Facility under the

Implementing Rules and Regulations of Executive

Order No. 215, as amended. Likewise, the Energy

Regulatory

Commission

issued

Certificate

of j

Compliance No. 05-07GN8-10701 for its generation facility. Further, under the Amended and Restated Casecnan Project Agreement between petitioner and NIA, petitioner generates power and subsequently sells it only to NIA. Thus, petitioner has sufficiently established that it is in the business of power generation and as such sold corresponding generated power to NIA. Accordingly, it can treat its sale of generated power to NIA as VAT zero-rated sales."

As in the above-cited case, petitioner presented in evidence its DOE Certificate of Accreditation No. 95-07- 12 dated July 20, 199522, its ERC Certificate of Compliance No. 05-07-GNB-10701 dated July 27, 200523, and the Amended and Restated Casecnan Project Agreement by and between petitioner and NIA dated June 26, 199524, which all proved that: (a) petitioner's 140-megawatt hydro-electric power plant project has been accredited by the Department of Energy as a Private Sector Generation Facility under the Implementing Rules and Regulations of Executive Order No. 215, as amended; (b) the Energy Regulatory Commission issued Certificate of Compliance No.

05-07-GNB-10701

for its generation facility; and (c) petitioner generates power through its hydro-electric power plant and subsequently sells it only to NIA. As such, petitioner has sufficiently established that it is in the business of power generation and sold corresponding generated power to NIA as VAT zero-rated sales. This Court will now resolve the issue of whether petitioner's claim for a refund or issuance of tax credit certificate in the amount of P16, 702,501.38, representing its unutilized input VAT incurred from purchases of goods and services attributable to its zero-rated sales to NIA for taxable year 2009, is duly substantiated. Section 112(A) of the National Internal Revenue Code of 1997 lays down the requisites for refunds or tax credit of input tax due or paid attributable to zero-rated or effectively zero- rated sales, quoted hereunder for easy reference: j..

"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(B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods 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: xxx" (Emphasis supplied) Thus, in order to be entitled to a refund or issuance of tax credit certificate for its unutilized input VAT attributable to zero-rated or effectively zero-rated sales, petitioner must comply with the following requisites:

1. that there must be zero-rated or effectively zero- rated sales;

2. that input taxes were incurred or paid;

3. that such input taxes are directly attributable to zero-rated sales or effectively zero-rated sales; 4 . that the input VAT payments were not applied against any output VAT liability; and

5. that the claim for refund was filed within the two- year prescriptive period. {

For the four taxable quarters of 2009, petitioner derived receipts from sales of power generation services to NIA in the total amount of P3,243,753,698.55 as evidenced by official receipts25 issued by petitioner to NIA and declared in petitioner's Quarterly VAT Returns for the same period, as follows:

ZERO-RATED

EXHIBIT

YEAR 2009

SALES/RECEIPTS

J 26jZ- 1 1st Quarter p 537,904,551.13

K27 /Z-2

2nd Quarter 664,713,902.37 L28jZ-3 3rd Quarter 1,336,299,982.50 M29jZ-4 4th Quarter 704,835,262.55

TOTAL

P3,243,753,698.55 This Court shall now determine the amount of input VAT attributable thereto.

Petitioner reported a total amount of P34,562,585.92 input VAT for the four quarters of 2009, arising from its domestic purchases and importation of non-capital goods, domestic purchase of services, services rendered by non- residents, and amortization of input VAT on capital goods exceeding Pl million, detailed as follows:

INPUT VAT

YEAR2009

1ST QUARTER

2ND QUARTER

3RDQUARTER

4TH QUARTER

TOTAL

Exhibit

Z-1

Z-2

Z-3

Z-4

Domestic purchases - Non-capital goods p 557,514.83 p 546,412.31 p 1,030,732.02 p 910,173.34 p 3,044,832.50

Importation

- Non-capital goods 74,220.44 220,175.97 109,258.19 204,534.42 608,189.02 Domestic purchase

-Services

10,047,086.75 7,345,152.97 7,054,558.65 5,955,283.59 30,402,081.96 Services rendered by non-residents 216,781.49 - - 50,318.93 267,100.42 Amortization of input VAT on capital goods exceeding P1 million 46,174.98 64,735.68 64,735.68 64,735.68 240,382.02

TOTAL INPUT VAT

P10,941,778.49 P8,176,476.93 P8,259,284.54 P7,185,045.96 P34,562,585. 92 Out of the reported input VAT of P34,562,585.92, petitioner is claiming a refund in the amount of P16,702,501.38, computed as follows:{-

YEAR2009

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

TOTAL

RATIO OF

ZERO-RATED SALES

INPUT TAX

OVER TOTAL SALES

p 10,941,778.49 45.37% 8,176,4 76.93 51.72% 8,259,284.54 68.22% 7,185,045.96 28.17% P34,562,585.92 Less: Input VAT applied to Miscellaneous Sales Less: rounding-off difference

TOTAL INPUT VAT CLAIMED FOR REFUND/TCC

INPUT VAT

ATTRIBUTABLE

TO

ZERO-RATED

SALES

p 4,964,389.39 4,228,553.28 5,634,863.96 2,023,695.52 P16,851,502.14 (149,000.74) (0.03) P16, 702,501.38 Petitioner submitted in evidence various suppliers' invoices, official receipts, Bureau of Customs (BOC) Import Entries and Internal Revenue Declarations (IEIRDs), BOC and bank official receipts3° in support of its P34,562,585.92 input taxes reflected in the Quarterly VAT Returns for the four quarters of 2009. The Court-commissioned Independent CPA examined and verified the aforesaid documents and summarized his findings as follows31: I ~;:~~~A!~;~;;::;;.t.;.~~;:~:.~~~~~:.;~~~~;~~i;;:~=~~::~~~~;:~:.~:=~::~:~ J :Input VATN::u::mestic ~~~~t

I~ -~

! purchases of goods and AnnexN, Page 14 ! P10,366,908.75 I I services supported by I original VAT invoices and ! VAT ORs, respectively, I with BIR Registration, I I dated within the quarter 1 1 (i.e. , January 1 to March 31, 2009, April 1 to June

I

September 30, 2009, and ;

,nflru::.x N, Page 2 7 ;

1 30, 2009, July 1 to i October 1 to December 1 Annex N, Page 55 6,592,303. 71 i

I

p 32,648,468.91 !

i 31 , 2009) issued in the

I

IS~fE?:~il ... ··················································-··-···················································+-----------! ····---

I

~ ~~p~~Y~!~~?~~~~~~i?n Annex 0 , Page 32,942.85 j _ ~~!. .. ~?~ :?~ ~

on purchases of capital goods exceeding P 1 million supported by original VAT invoices, with BIR Registration, issued in the name of the Annex 0 , Page 1 51,503.55 Annex 0, Page 2 51,503.55 Annex 0, Page 3 51,503.55 ~~: ::;~:~~~s;om parry's --------·-------·····-···-····--·------+'----,--,--,---,----;---------···-··--·····------------···-·······--·----1 Input VAT on importation I Annex !'.?..J! .. <?:.9f!.L _j ................................ ~§_1~~-?.: :~':!:_ ! of goods duly supported ! .... !i'!:'!:~~-~- !.:..a.fl.~L ·- __ ?_?_!.~~?_: !~ I by original IEIRDs with 1 !i!.':.'.!:.f!.~!'.,_ !'.C!:.fl.f!.! ··············i' ... ?~,649.79 321,445.76 machine validation 1 and/ or original BOC ORs 1 Annex P, Page 1

I

110,091.40 ___________ _ -~-r.?:_<:.l.L~!:~!:~g_ir.?:~!?~r.?:~Q8::>. _j ___ .............................................................. . 1 Input VAT on services [_ :f.!:'!:'!:~~Q'. _f9Jl.~L- j ____ -~1.§.,?.?!:~2. _J 1 rendered by non-residents ! _ -'i'!:_'!.~~-~!!..<?::fl.~J --1 I ~WI ;;:~~~~~~OE~~~d !- !.!:'!:'!:f!:.~QLf?:9._~ _! _j

----- ······---_J I

267,100.42 II payment confirmation Annex Q, Page 1 50,318.93 1 from the BIR 1 ·· ... ··---·-·-··-·····---·····-··········-···--·-··············-···----·-·····-·-·· ·························································-····-·--·-········-······ L__------+--==-=---=-=-=--=-=-=-==-=---'

Total

I

P33,424,468.59 ···················--·-··-·-·-····-···-·····-·······--········································································-·---·-··-···············-·······················-········································-··················..i .............. :::. .. ::::: .. :::.: .. ~ .... : .. :::.c._-__ , __ .:....:: ... :::: ... : ... :: .. :::: ...... , Input VAT which are substantiated by proper VAT documents with certain · · o~~~!.~9 -lt? ... ~1:~ifei:;::~eas shown below: 1 ....................................................................... .

Nature

------~--- ~~~~!~!!_~!!!.!~'L _J -~~~~-nt -·····-· _____ To~~-~- ~~~~~~~ ~~ g~~r;;:stic f-----~~-~=~~' Pag_~ 1 i P _?.~-~~ 9~---1 supported by VAT ~-~~~:~~~ ~~ge~ ___ j _________ ~'.~~?.~ ... ?. i ! invoices with name of the Annex R, Page 1

I

67.15 I Company written or • ···-----~ stamped with

I

I

countersignature but

I

without letter of Annex R, Page 1 649.20 1 p 3,149.40 __ ;~~~~;~~:~i:.:~~:.=~-~-~ -

L

__ ---------------r-----------;1 _ _ __ _ ··-·-·-···--- .

~';ir~~~:.~ ~~ g~~';I:stic [_ ~~~'=-~~ ~

~~~~J~

supported by VAT ;----~-~~=~-~'... .. !'.~~:L ___ ~------- _______ , ;~~::::gz:~;~.but 1-A~~=-~~'.~~?.: . !. ____ 1_____ ....

______ ~ TIN and/ or address, or misstatements or alterations or additions Annex S, Page 1

I

(written or stamped) of i

the Company's TIN

countersi nature !

1,563.55 and/or address without

I

Input VAT ·c;·~-cio~~;-ti~ -----r----A~nex r, ;;~;--;1------ 2,58o.oo - ..... ____________ _ purchases of goods ·····---··-··--------·-·- ....................... ······-···-·-····--·-········- .......................... j supported by a VAT nexT, Page 1 5 , 3~~ : ?.~ _ 1 !

Invoice issued in the name of the Company but Annex T, Page 1

I

with misstatements or alterations or additions

I

I (written or stamped) of _,i'

I the Company's TIN

1 1 and/ or address with Annex T, Page 1 4,800.00 1 countersignature but 1 12,723.01

I

! without letter of

I

lf:~!;~ti:::7~ : r ~~nex u, ~ J ~41.6~ J: --~~;~-~ purchases of goods supported by VAT

Invoices but with

alterations in the name of the Company but without countersignature Input VAT on domestic purchases of goods supported by VAT invoices with alterations in the date but without Annex U, Page 1 Annex U, Page 1 Annex U, Page 1 46.09 Annex V, Page 1 424.29 Annex V, Page 1 424.29 Annex V, Page 1 1 c .. o .... u ........ n ........ t .. e ...... r ...... s .... i .... g ...... n ...... a ...... t .... u ....... r .... e.................................................. l················~·~·~.~~ ~ ~a=~-~ . ·······+- ~ --------+ ........................................................................................ .. L .......... ~'.:l:~~~¥.0.f.~g~} ................ l ............................................................................................... , Input VAT on domestic purchases of services supported by VAT ORs with name of the Company written or

I

stamped with , countersignature but without letter of l,i ::. :~ .• -....... ~.·.·.n _n .-.. ·. e_e ..... x .x .·.··.·.·.·.·.~ .• -...•.•.. :.·.·.·.·.·.·.~ -·-·.·.·.·.~ -·-·.·.·.·.9 9 ... ·.·.:.·.·.·.·.·.·.·.·.

1 _i_·_·.-.. ·.·.·.·.·.·.·.·.·.·.·.·.·.!,: ······································································

I

......................................................................................... !

I

I

Annex W, Page 1 1,714028 authorization from the supplier ...............

J..

············+-' ----:--::-:-::--- Input VAT on domestic ~~'.:!:f!:.~?i!.f.~gf!:.~ j..

2 237062 purchases of services ~~'.:!:f!:.~?i!.f.~gf!:_'!_ :

1,794081 supported by tape ~~'.:!:f!:.~?i!.f.~g~? l i;RRR:7o receipts with the Company's name written or stamped with countersignature but Annex X, Page 11 12,432023 without letter of 1,714028 18,353036 authorization from the su lier i Input VAT on domestic I purchases of services nnex Y, Page 1 r

I

,.......................................... . ·······················································································! 1 supported by VAT ORs I issued in the name of the I Company but without the I Company's TIN andjor I a~dress, or 1 misstatements or I alterations or additions I (written or stamped) of

I the Company's TIN

I and/or address without I ~9.:L.!:r.?:!~r:~ig!J:~!~r:~ ............ .

I Input VAT on domestic I purchases of services : supported by VAT ORs I issued in the name of the

I

o

1 Company but with

1 misstatements or 1 alterations or additions

I

(written or stamped) of . the Company's TIN I and/ or address with i countersignature but without letter of au thor~~!i?!l:9.f ~:L.!:P.P~!~T Input VAT on domestic purchases of services supported by VAT ORs but with alterations in the Annex¥;?~~~1-·l 1 409 74 1 , 0

I

Y, Page 1 377090 !

···················································! Annex Y, Page 1 5,071.21 i 6,858085 I

I

I

.............................................................................. .. ............ +-' ------- ......................................................................... .............. i Annex Z, Page 1

I

~~~~i!.ix r 185.74 1 1 [ Annex Z, Page 1 791073 1 t···-· .................................................................................................. .

I

1,615.29 Annex Z, Page 1 637082

I

;----------; .................................................................. .........! !

97051 name of the Company but ~i!h2~!

.. ~9.~t.::t.!~E~~gt.::t.9.:t~!:~----!·························-····················································· Input VAT on domestic purchases of services supported by VAT ORs , but with alterations in the I name of the Company 1\' with countersignature but without letter of AnnexBB, AnnexBB, Annex BB, Page 1 ---------!············································································-·····---·-··-··-···- 1,212.21 1,2 12.21

I

authorization from the ~~EP.!.i:~.!:-·························--······ --- L ···········································································-·- ········-·· ·'- ! ---------i---------=-=--=-=--=-=-=--1

1 Total

P

48,382.78 · [ -···--······ ........... ··············--···- .................... i .................... -..... -..... .

Amoun

Total

p 74,388.62 11,262.09 1,581.71 215.49 18,713.89 8,342.26 25,869.28

I

I

7,503.33 II

I

l i

I

·····-···-·-·····-·--··--· ... ...!

......................... ........ ........ !?.!!9.?.:~~ --~

!"ln.putVAT~~-d~~esti~ -----;=- A;;_;_e£:Z0Ji_(ig~] ---J-- --- ~-!.9:2?.] ------------- purchases of goods .

!!.'!::'!::f!.J!: _!_.f...f..~g~] .

1 !..........

··-····4 .1 .~.~.?...: .. 2.?. .. 1

I

supported by TIN # only;

____ !2'!::'!::~~-!_.f... _ f..~g~~ ........ ;....... 1?..~:~9- TIN-V; TAN-V; TAN-VAT;

TIN-NV /NON VAT;

stamped or handwritten Annex JJ, Page 4 6,893.11 12,106.83 I

I

l f~~~~tYfr!~;;~~;;:~={~ts +--------··························----- -- ................................... j .: .: ... : .: .. :.::::.:.:: ... : .. : :: . .:!.. ... : .... :::::.;;c::: ..... ::: .......... ;........ ___

_ I

I

278.25 !

···········j !

I purchases of goods ! supported by VAT I invoices but without \

A

KK p 1

I

I invoice date i nnex ' age

L

p-~p~tvi\r~-;--ct~;:;;~~ti~ --- , --- x;_;_-e~-£i~ - ?ci ~j J ............................... ~.~-1-~-~--~--:.~2 . II purchases of goods , !2'!::'!::~!.-. _f.f, Fag~_ !_ -+---··-- supported by VAT [ __ ~n'}:_f!.J!: _f.f.'- .f..~ge 1 ·-···························--···---·-··--··! invoices but not dated

I

within the VAT taxable year (e.g., 2008, 2010, -- ~!<?..:) ______ ···························-·- Annex LL, Page 1 Input VAT on domestic Annex MM, Page 1 , 47,916.99 purchases of services - A_;;_;_-e~-MM,--Pa e 2

I

60,9 .

supported by documents

Annex MM Page2-T-~~~:

I~ ;I[Q.~Q~ jl other than a VAT OR ....

[.~~:~~i.~:Mg~9.il.i.~ ) 16,966.39 ~r:~~~~~ ~~ s~~~:!ic 1--~~=~~~- ~d~:i -j } 12

:_~Q __

supported by a VAT OR

L-

~~~~!.:__NN, .e~9.~I::]:

·-=~-~!.~§. :36- f:i~~?~lf ·~~~~~~~~ii~Y.····l · ·~~~:~~~~~~~i ···:

307.61 purchases of services [ A~~~~oo: .P~~~ - 1 j --- 1 supported by VAT ORs ~-----····-······-·········-···········-··························---------r----····-·-···- not issued in the name of 1 Annex 00, Page 1 I §.1~1o~i~~~#~~~~~ 1-=00,::-J-i··································=~ 262.97 278.25 .......................... ,_, ________ ] 33,824.39 1

------------······-···I

138,061.95 I 628.16 1 .............................. . ·-·····!

I

1,474.66 i

I

................................................ ________________ ! ·--~~!h~.~! ... ~?..~nt~E~~gE-9:~~!:~\--·--··-·····- ·····················································-···+-' ----------i ~r:~~~~~ ~~ s~~~:!lc 1 l--.·.·.-.. ·.·· .. ·.·~~ ---·~··_·:~ .. ·.·:··_·:~ .. :::=··=·~ ·-=···.·.·_·:::~ ... :::~ ... 1: ...... :::~ ..... ~ :::.

9 ;;z .. ~ :::: .. · .... :j :·.· .... ·· .. ·.·········+1 . ·.·.·.· .. · ............... ·.·.· .. ·.· . ·.·.·.·.·.·.·.·~ .: .... I.::::.·.:1 .. :i= ····· .. ~ .-:.-... ~= ·····.··.: .. ~:: .. l::··.·.·.·.·.·_· 1

I

I :~:~~~:d0 ~Yc~1T0~~~t -----~-n._nex_Ef!L f..~gf!_"!_ j }_~~ : ?⁵ 239,850.57 1 Annex PP, Page 2 i 108,420.78 !

_Ene~gy _______ _ _____ 1____ ----------!

.------------------!

I

~Jr~~~~~ ~~ s~~~=!ic ~gg~~:§§;f~~~::J: ::t·-~- ~ :: ~~).~?

~ supported by TIN- ~'!::'!::~!.:_ QQ1 f..~gf!.!. .J ......................................... : ......................................... ...!

I

NV/NON VAT ORs but

stamped with "VAT"/"TIN , VAT" or the word VAT Annex QQ, Page 1 I NONE was erased l ~i~p~t VAT on domestic purchases of services \ supported by TIN# ONLY;

TIN-V; TAN-V; TAN-VAT;

_ _!!~ : ~/.~Q~Yf...!.. Q.8 .s ::: ................. +·························································-··-··············· Input VAT on domestic AnnexSS, Pa _ ~_T}:_I'}:f!.J!:~~ Pag~ -~ --- ~'!::'!::~J!:~~~ -fag__~ }._ 180.53 801.43 ___l?.Q?. :9~

-I

1,085.55 .

i I 40.32 i . . . . ......

------1

I

30,709.47 ! purchases of services I supported by a tape receipt without the Company's name and/or 10,977.64 .

1 1 TIN , or the Company's I name is written or Annex SS, Page 5 8,283.63

I

-----· --·-1 L~~~~feer~~~~~~~-- _____ __]__ --·--- -----+-------~ _ ..

:

~;;~c J::~~~~ft~~~~ ::l _ ::;~~ ~ =:

~=~49 k

CTA CASE NO. 824S

458.35 !

I

1,097.02 !

1

InputVATondomestic

l .. !~~ ... 1 ]_ 1,425.63 !- ····-··

I

1 ~ftEf~f~~~1~c =~.'..

. :

.: .. ::.::>l .. ::: ...... :::::: .............. j ................................................... 1 .......... :=-.. :·· .. :

... =:

1 4•066.41 I

~~' TI

... n}Np ...... u.:Yt/V .. YA ... :f...T ... .!o .... ~n§.l:Pd . f:!o ....... mt.:~e .~s~t!I. cts '·········································-···- ...............

I

!.:'!r.!:.f!:.!.:XX! !!..~9..f!:. ... ! .. .... ... ;.... ...... ... ... ........... ~ .. 9.?.?.: .. ?.9.1 I purchases of services A'!'!f!:.!.:XX! f.~gf!:.L ... ...........

I

I i~~~';l~;~~~ ORs I ~n~ex XJ(,J'afl"L 1 CLAIMING INPUT VAT" (or I Annex XX, Page 1 similar wordin s Input VAT on importation of goods not supported by , original copy of the I IEIRDs with machine · validation or BOC ORs or

LBP ORs

·····························-·········-·-····- ································-········· Input VAT on importation of goods supported with original IEIRDs with machine validation or ........... ~ .'!.r.!:.f!:..~ ..... Y!j .... f~g l ............ ~.'!.r.!:..~~ ... Y!j .... f~g~L YY, Pa Annex YY, Page 1 1,704.00

BOC ORs or Bank ORs

I

not issued in the name of Annex ZZ, Pagel 3,055.00 I

the Com an

.... .............................................. ················+- ! ----------1~ I Input VAT on importation r: ~'!r.!:.f!:.!.:~! :P~9..f!:.L .. j II i:~~~~~~~:!::~:!t ~ ~~~:~~~~ ] .

................................... . !

1 with pertinent BOC OR, i issued pursuant to the

I Voluntary Disclosure

· Program of the BOC, not Annex AAA, Page 1 91 ,388.02

I

4,761.50 l

I

I

I

I

2,102.00 I ........................................................................................... ! [ 281,586.26 1

I

I dated within the period of ~ ~l§.l:i.~(~ :~ : >.9:§.1:!.~9:~9.}9.l ............. j ..................... ......................... ····+- [ -----=-=-=---=---+----------! ! Overclaimed portion of ! ....... !.: .. '!.r.!:.f!:.?£ ... !?.!.!..!.!.! ..... !!..~9...f!:..J ........ ;i ................................................... 7 ....... 6 ...... 8 ........ · .. 3 ....... 4 ........... 1 I input VAT arising from 1 !.:'!::r.!:.f!:.!.:!?.!.!..!.!.!P.~gf!:.!.? j ................................................................ 3 ....... · ..................... ,

I

~~~r~:.:~Fo':n":;~~~or ~~9~~ I 55.14 I goods/services (e.g., I arithmetical error, Annex BBB, Page 3 73.95 900.70

I

.. I~~~4i.!:?:K9:~ff~!:~~~.«:! . ~J ......

i"""""""""""'""""""'""""""'""""""''""" """"'" " ""''""""""""""""'"+ - - - - - - - - - - !' ·······"""'""""""""""""""""""""""""'"""""" ""'""""""'""""""1 I ~~:~~~~e~rfs~~~~~~ 1 1;;~~§§~-·~~~~} ~~·I~t~l~ !,.

I foreign exchange rate r AnneX.ccc?agei 45.05 1 I ~:~;~n~t:~~u~~;;r:.~;

1 :~=~~:,;:9~ - ;~;

I

10,562.46 1 [.l.·.o . -.. -.. f.···········g·······o ···········o ··········d ·············s···············a ···········n ·········-d··········.-.s ........ e .... rv ........... i .... c ..... e ...... s .................................. t 1 ................................................................................................................ +---------+ .................................................................. 1 / .....

L

.~r.!:.r.!:.f!:.!.:P..!?..!?..~ ?.. 8,106. 11 118,?._9? : ~~ 1:--

Exhibit

ww

CfA CASE NO. 8245 l i~piitvi\T~~ct~~~~ti~ r ~n~~~ ·i5i5i5,- ?d~ 2 purchases of goods and !.!:.r:!'!::~!.:.P..P.g!!_l:!fl~_ ;} +···--··························:·····:···'·········:· ~~r;~:=n~~~:r:~ttorting !.!:.'!::'!::f!!.:.!?P.g . f.9:9~:! j 13,868.91 118,597.32 Annex DDD, Page 5 i available for verification . ·············································-······· ······+---------+· ........ ···················-······· Input VAT amortization !.!:.r:!'!::~!.:.J~.§.§'- ?.9:9~1. j J~ '-~~~:1.~ on purchases of capital 6..'!.'!::~!.:.§§§'- ?.9:9~} , . .J. ~ '-~.~2.13 goods exceeding P1 6..7!.'!::~!.:.§§§'-?.9:9~ _} J 13,2 million supported by TIN #Invoice supported by notarized certification from supplier that VAT paid by the Company was already remitted to the

BIR (Exhibit W)

Annex EEE, Page 1 13,232.13 52,928.52 1-··················:···-·············································-··-····························································L .......................................................................................... ··· ·· ·· ·······'-- ~ ------+---------!

Total

I P

1,089,739.26 . Q~P!Qi~!...............

······················- ......................... __ ::::::::::::..........::::::::::::::.:1 P34,562,590.6332 The Court finds the Independent CPA Report in order. The input taxes of P1,089,739.26 should be disallowed for failure to meet the substantiation requirements under Sections 110(A) and 113(A) of the National Internal Revenue Code of 1997, as amended by Republic Act (R.A.) No. 9337, in relation to Sections 4.110-1, 4.110-8, and 4.113-1 of Revenue Regulations (RR) No. 16-2005. Likewise, the input taxes of P48,382.78 should be denied because there were alternations or additions in the supporting invoice or official receipt without countersignature or with countersignature but it cannot be ascertained whether the person who countersigned the alterations was the authorized representative of the supplier. The Court also found that aside from the Independent

CPA's

recommended disallowances of P48,382. 78 and P1,089,739.26 in the total amount ofP1,138,122.04, the input taxes of P173,842.15, should also be denied, as shown below:

OR/

OR/

TOTAL

Input VAT

VENDOR NAME

Allocable to

(from Annex N of Exhibit "BB")

INVOICE

INVOICE

AMOUNT OF

Zero-Rated

DATE

NUMBER

INPUT VAT

Sales

1. Input VAT on purchases of goods/services wherein the VAT amount was not separately shown in the invoice/OR. 116 Freeway Motor Sales of Cabanatuan Corp. 03/23/09 27044 p 644.93 p 292.61 122 Global Restaurant Concepts Inc. 01 / 12/09 51470 461.00 209.16

TOTAL FOR THE 1ST QUARTER

p 1,105.93 p 501.77 932 L.A. Photo Center 08/ 02/ 09 41005 p 57.21 p 39.03 940 Ma. Theresa J . Aguinaldo 08/23/09 23489 7.82 5.34 32 This amount is over by P4.71 when compared with the reported input VAT ofP34,562,585.92.

941 942 981 98 1 986 990 1035 1035 1036 1038 1040 1042 1044 1045 1054 1055 1085 1107 1108 1118 1149 1150 1160 1161 1162 1162 1191 1194 1201 1203 1213 1226 1227 1276 1278 1285 1290 1291 1315 1347 1351 1360 1361 1407 1408 1409 1410 1410 1411 1412 1416 1423

Ma. Theresa J. Aguinaldo

Magellan's Garden & Resto Bar

Noemi L. Andres Noemi L. Andres One Commerce International Corp. Pancake House, Inc.

RFD Food Services Inc. Red Food Services Inc. RFD Food Services Inc. Red Food Services Inc. RFD Food Services Inc. Red Food Services Inc. RFD Food Services Inc. Red Food Services Inc. RFD Food Services Inc. Red Food Services Inc. RFD Food Services Inc. Red Food Services Inc. RFD Food Services Inc. Red Food Services Inc. RFD Food Services Inc. Red Food Services Inc.

Roper Hardware TIN

Roper Hardware TIN

Teriyaki Boy

Wholesome Foods Inc.

Wilfredo R. Santos

TOTAL FOR THE 3RD QUARTER

A-1 Agro Fertilizer & Chemical Supply

Caalibangbangan Caltex Service Station

Cabanatuan Fastfood Ventures, Inc.

Bistro Americana Corp

California Pizza Kitchen/Global Restaurant

Concepts, Inc.

Caltex Super Station

Caltex Super Station

Diadem Court Inc.

DLC Foods (Balagtas) Inc.

Eleanor Santa Romana

Eleanor Santa Romana

Erie A. Fontanilla

Farragut's General Merchandise

Ferdinand V. Dysico

John DG Bernardo

John DG Bernardo

JSReyes Enterprises

Lourdes De Dios-Cruz

Lucullus Gourmet Products, Corp.

Mark Anthony Mendoza

New Synergy Garments Inc.

Noemi L. Andres

Pancake House

Pancake House

Remedios F. Ignacio

Remeng Food Serv

RFD Food Services Inc.

RFD Food Services Inc.

RFD Food Services Inc.

RFD Food Services Inc.

RFD Food Services Inc.

Rijovi Foods Corporation

Royce Motor Center Inc.

08/23/09 07/24/09 07/29/09 08/01/09 09/24/09 08/14/09 08/03/09 08/03/09 08/13/09 08/14/09 08/12/09 07/24/09 07/21/09 07/21/09 08/06/09 07/20/09 08/20/09 08/11/09 07/11/09 12/18/09 10/18/09 10/17/09 11/03/09 11/09/09 10/27/ 09 10/19/09 11/13/09 12/02/09 12/12/ 09 12/12/09 11/13/09 11/25/09 10/09/09 12/12/09 10/22/09 11/15/09 12/13/09 11/19/09 11/13/09 12/ 01/09 12/12/09 10/30/09 11/19/09 12/11/09 11/09/09 10/12/09 10/01/09 10/02/09 12/10/09 11/10/09 11/19/09 10/31/09 23490 15.96 10.89 6476 82.71 56.43 62887 32.14 21.93 63165 32.14 21.93 950 46,741.07 31,888.91 2319 34.21 23.34 5330 13.39 9.14 5333 9.64 6.58 5388 8.14 5.55 5387 10.50 7.16 5373 13.82 9.43 5246 7.82 5.34 5232 8.04 5.49 5230 15.96 10.89 2207 64.29 43.86 1943 64.29 43.86 8489 28.93 19.74 10277 46.18 31.51 5214 45.75 31.21 p 47,340.01 p 32,29 7.53 447862 p 250.71 p 70.61 70121 53.57 15.09 3566 755.36 212.75 20425 499.57 140.71 52719 331.45 93.35 40368 53.57 15.09 46052 3.75 1.06 18634 80.36 22.63 36517 17.14 4.83 0817 107.14 30.18 0950 53.57 15.09 0079 37.71 10.62 0413 420.00 118.29 148779 32.14 9.05 73469 107.14 30.18 70292 53.57 15.09 127488 17.14 4.83 886974 53.57 15.09 5536 1,177.01 331.51 2553 43.50 12.25 2909 43.93 12.37 71726 156.30 44.02 17488 371.71 104.69 1674 63.43 17.87 46817 160.71 45.26 1535 617.57 173.94 5629 9.64 2.72 5588 9 .11 2.57 5592 9.21 2.59 5842 13.71 3 .86 5739 8.36 2.35 5601 72.64 20.46 773562 154.71 43.57 I l-- 1442 1444 1495

Smiley Chix Corporation

St. Cecilia's Caltex Toby's Sports Hou se

TOTAL FOR THE 4TH QUARTER

12/24/09 10/22/09 10/18/09 2324 160.71 45.26 08015 8.14 2.29 67069 41 0.89 115.73 p 6,418.74 p 1,807.86

2. Purchase of goods supported by sales invoice dated outside the period of claim. 173 Lu minaire Printing & Publishing Corp 12/09/08 16141 p 9 10.71 p 413.20

TOTAL FOR THE 1ST QUARTER

p 910.71 p 413.20 3 . Discrepancy between input VAT per claim and input VAT per supporting documents. p 11,103.87 12,338.47

Quisumbing Torres Law Offices OR#6716

12,918 .13 15,425.68 21,975.32 56,904.99 Input VAT per claim P130,666.46 Input VAT per official receipt OR#6716 12,599.70 p 118,066.76 p 61 ,059.50

TOTAL FOR THE 2ND QUARTER

p 118,066.76 p 61,059.50

GRAND TOTAL

P173,842.15 p 96,079.86 Accordingly, out of petitioner's reported input tax of P34,562,585.92, only the amount of P33,250,621.73, as computed below, is duly substantiated in accordance with Sections 110(A) and 113(A) of the NIRC of 1997, as amended by R.A. No. 9337, in relation to Sections 4 .110-1,4.110-8, and 4.113- 1 of RR No. 16-2005:

1ST QTR

2NDQTR

3RDQTR

4TH_Q_TR

TOTAL

Inpu t VAT per Quarterly VAT

Returns

p 10,941,778.49 p 8 ,176,4 76.93 p 8 ,259,284.54 p 7 ,185,045.96 p 34,562,585.92

Less: Disallowances

Per I CPA's report 286,887.96 321,608.76 148,792.24 380,833.08 1 138,122.04 Per this Cou rt's fmdings 2,01 6.64 118,066.76 47,340.01 6,418.74 173,842.15

Total Disallowances

288,904.60 439,675.52 196,132.25 387,251.82 1,311 ,964.19

Substantiated Input VAT

P10,652,873.89 P7, 736,801.41 P8,063,152.29 P⁶,797,794.14 P33,250,621. 73 It is to be noted that the substantiated amount of P33,250,621 . 73 is not entirely attributable to petitioner's zero- rated sales, since petitioner had VATable sales to government and private entities for the year 2009.

Allocating the

substantiated input taxes of P33,250,621. 73 among petitioner's zero-rated sales, VATable sales to government and VATable sales to private entities would result in the following:

(a) input VAT attributable to VATable sales to private entities in the amount of P5,297.67; (b) input VAT attributable to

VATable

sales to government 1n the amount of/--

P16,995, 165.02; and (c) input VAT attributable to zero-rated sales in the amount of P16,250, 159.04, as computed below:

Input VAT

Attributable

Input VAT

to 12%

Attributable to

VA Table

12% VATable

Input VAT

Sales to

Sales to

Attributable to

Year 2009

Private

Government

Zero-Rated Sales

Total

1st Quarter - 5,819,563.28 4,833,310.61 10,652,873.89 2nd Quarter - 3,735,631.07 4,001 ,170.34 7,736,801.41 3rd Quarter 5,297.67 2,556,801.11 5,501 ,053.51 8,063,152.29 4th Quarter - 4,883,169.56 1,914,624.58 6,797,794.14

Total

5,297.67 16,995,165.02 16,250,159.04 33,250,621.73 Allocation was based on the percentage of each type of sales to total sales as shown below:

12%

VA Table

12% VATable

Sales to

Sales to

Year 2009

Private

Government

Zero-Rated Sales

Total

1st Quarter 647,665,715.48 537,904,551.13 1,185,570,266.61

% to Total

Sales

54.6290451% 45.3709549% 100.00% 2nd Quarter 620,599,898.45 664,713,902.37 1,285,313,800.82

% to Total

Sales

48.2839209% 51 .7160791% 100.00% 3rd Quarter 1,286,893.89 621 ,090,719.31 1,336,299,982.50 1 '958,677 ,595. 70

% to Total

Sales

0.0657022% 31.7096964% 68.2246014% 100.00% 4th Quarter 1,797,652,733.76 704,835,262.55 2,502,487,996.31

% to Total

Sales

71.8346196% 28.1653804% 100.00% After deducting the input tax of P5,297 .67 attributable to VATable sales to private entities from its output VAT liability of P154,427.27, petitioner still has a net amount of output VAT payable for 2009 in the amount of P149, 129.60, computed as follows:

Output VAT Due

p 154,427.27

Less: Input VAT

5,297.67

Net Output VAT Payable

Pl49, 129.60

Thus, by deducting the net amount of output VAT payable of P149, 129.60 from petitioner's total input tax attributable to zero-rated sales of P16,250, 159.04, a refundable amount ofP16,101,029.44 is in order:

Input VAT Attributable to Zero-Rated Sales

p 16,250,159.04

Less: Net Output VAT Payable

149,129.60

Net Amount Refundable

P16,101,029.44 Even though the claimed input VAT was carried over by petitioner in its succeeding Quarterly VAT Returns for year 201033, the same remained unutilized until it was deducted as "VAT Refund/TCC claimed"34 in its Quarterly VAT Return for the fourth quarter of 2010. Thus, the excess input VAT of P16,012,494.4635 as of the end of the fourth quarter of 2010, which was to be carried over to the succeeding first quarter of 2011, no longer included the subject claim. Finally, pursuant to Section 112(A) of the NIRC of 1997, as amended, a taxpayer must file an application for refund or tax credit of unutilized or excess creditable input VAT attributable to its zero-rated sales within two (2) years after the close of the taxable quarter when the sales were made. In the instant petition, the subject of the claim for refund or issuance of tax credit certificate is petitioner's excess and unutilized creditable input VAT attributable to its zero-rated sales for the four quarters of taxable year 2009.

Counting

from March 31, 2009, June 30, 2009, September 30, 2009 and December 31 , 2009, the close of the first, second, third and fourth quarters of 2009, respectively, petitioner had until March 31, 2011, June 30, 2011 , September 30, 2011 and December 31, 2011, respectively, within which to file its administrative claim with respondent. Clearly, petitioner seasonably filed its administrative claim for the first to fourth quarters of 2009 on November 10, 201036. Anent petitioner's judicial claim, Section 112(C) of the NIRC of 1997, as amended, states that: /-

erA CASE NO. 8245

"SEC. 112. Refunds or Tax Credits of Input Tax.-

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." {Emphasis supplied) As stated above, the taxpayer may appeal to the Court of Tax Appeals within thirty (30) days from receipt of the decision or from inaction of the Commissioner of Internal Revenue after the lapse of the one hundred twenty (120)-day period via a Petition for Review.

Since petitioner's administrative claim for refund was filed on November 10, 2010, the 120-day period provided under Section 112(C) ended on March 10, 2011.

Counting

from March 10, 2011, petitioner may file its judicial claim within 30 days or until April 11, 201137. Thus, the judicial claim of petitioner filed on March 30, 20 11 was filed well within the prescriptive period./ 37 April 9, 20 11 fe ll on a Saturday.

Respondent argues that petitioner must prove that it submitted the complete documents required under RMO No. 53-98 before the 120-day audit period shall apply and before judicial remedies as provided for in the law may be availed of. Respondent also alleges that perusal of the petition for review would show that petitioner never made mention that it submitted documents in support of its claim for refund. The allegation of submission of complete documents is a material fact necessary to invoke jurisdiction and to justify relief demanded.

Having failed to allege submission of complete documents, respondent claims that she was evidently deprived of her opportunity to validate petitioner's claim for refund in the administrative level.

This Court disagrees.

In

Team

Sual

Corporation

(formerly:

Mirant

Sual

Corporation) us. Commissioner of Internal Revenue, and Commissioner of Internal Revenue us. Team Sual Corporation (formerly Mirant Sual Corporation) 38, the Court En Bane discussed the proper interpretation of the term "complete documents" under Section 112 (D) of the NIRC of 1997, to wit: "The contention of the Commissioner that the law requires the submission of complete documents in support of the application filed with the BIR before the 120-day period shall apply, and before the taxpayer could avail of judicial remedies as provided for in the law, deserves scant consideration. This issue boils down to the proper interpretation of the term 'complete documents' under Section 112 (D) of the NIRC of 1997. In the case of Commissioner of Internal Revenue us. First Express Pawnshop Company, Inc. , the Supreme Court ruled:

'The term 'relevant supporting documents' should be understood as those documents necessary to support the legal basis in disputing a tax assessment as determined by the taxpayer. The BIR can only inform the taxpayer to submit additional documents.{ 38 CT A EB Nos. 649 and 65 1, Resolution dated March 21, 20 12.

The BIR cannot demand what type of supporting documents should be submitted. Otherwise, a taxpayer will be at the mercy of the BIR, which may require the production of documents that a taxpayer cannot submit.' Although the foregoing ruling refers to the interpretation of the term 'relevant supporting documents' under Section 228 of the NIRC of 1997 pertaining to 'Protesting of Assessment', We find no reason why the same doctrine cannot be applied in the interpretation of 'complete documents' referred to under Section 112 (D) of the same Code, for the following reasons:

1.

If the determination of the completeness of the documents depends on the BIR, the concerned taxpayer will also be at the mercy thereof; and 2.

It has been held that the Commissioner ought to know the tax records of all taxpayers, and thus, the Commissioner can easily decide whether or not to grant the concerned taxpayer's administrative claim for refund or tax credit certificate. In this connection, nothing in RMO No. 53-98 mandates that the list of documents therein stated, insofar as the VAT is concerned, should be submitted in connection with an application for refund or tax credit certificate under the said Section 112, upon the filing thereof. Furthermore, said RMO is explicit, in its subject and objective, that it provides a checklist of documents to be submitted 'upon Audit', and that it was issued to '(i)dentify the documents to be required from a taxpayer during audit', respectively. In this case, it was not shown that the audit was ever conducted by the BIR in connection with Team Sual's application for refund or tax credit certificate. This is manifested by the lack

of BIR

Records

transmitted to this Court, and by the absence of any 'report of investigation' concerning Team Sual's administrative claim for refund or tax credit certificate. But even if We are to assume that anj audit was made, it was never established that the Commissioner ever required Team Sual to submit the documents stated in the said RMO. Accordingly, the term 'complete documents' under Section 112(D) of the NIRC of 1997 should be understood as those documents necessary to support the application for refund or tax credit certificate as determined by the taxpayer. Thus, should the taxpayer decide to submit only certain documents, or should the taxpayer fail, or opted not, to submit any document at all, in support of its application for refund or tax credit certificate under Section 112 of the NIRC of 1997, it is reasonable and logical to conclude that the reckoning date of the 120-day period thereunder, should be reckoned from the filing of the said application." (Emphasis supplied and citations omitted) In the instant case, record shows that petitioner filed its administrative claim for refund on November 10, 2010 together with several documents39 in support of its application.

Notably, respondent neither sent any written notice informing petitioner that the aforesaid documents are incomplete nor required the latter to submit additional documents. Respondent cannot now belatedly argue that petitioner was not able to submit the complete documents in support of its claim for refund or tax credit certificate. In fact, perusal of the records show that there was no audit conducted on petitioner's application for refund or tax credit certificate as evidenced by lack of BIR records on petitioner's administrative claim.

Since respondent failed to act on or respond to petitioner's claim within the 120-day period required by law, petitioner exercised its statutory right to appeal before this Court.

As earlier emphasized, the completeness of documents to support a claim is determined by a taxpayer.

Should the

taxpayer decide to submit only certain documents, or should the taxpayer fail, or opted not, to submit any document at all, in support of its application for refund under Section 112, the 120-day period should be reckoned from the filing of the said/ 39 List of documents submitted was enumerated in the claim for administrative refund filed on November 10, 20 I 0 (Exhibit "N").

application. Moreover, the alleged non-submission of complete documents at the administrative level is not fatal to a claim for refund in the judicial level. 40 The foregoing belies respondent's argument that petitioner should have alleged submission of complete documents. Nevertheless, contrary to respondent's allegation, petitioner did allege in its petition for review that "[O]n November 10, 2000, Petitioner filed with the Large Taxpayers Audit and Investigation Division I of the Bureau of Internal Revenue ('BIR L T AID I') an administrative claim for refund or tax credit of its unutilized input VAT for the period from the 1st quarter and to the 4th quarter of CY 2009, together with supporting documents." 41 In recapitulation, the Court finds that petitioner has sufficiently proven its entitlement to a refund or issuance of tax credit certificate for its unutilized input VAT attributable to zero-rated sales for the year 2009, but in the reduced amount of P16, 101,029.44.

WHEREFORE, the instant Petition for Review is hereby PARTIALLY GRANTED. Accordingly, respondent is hereby ORDERED to REFUND or to ISSUE A TAX CREDIT CERTIFICATE in the amount of P16,101 ,029.44 to petitioner, representing unutilized input VAT attributable to its zero-rated sales to NIA for taxable year 2009.

Associate Justice

UTISTA

4° CE Casecnan Water and Energy Company, Inc. vs. Commissioner of Internal Revenue, CTA Case Nos. 8041 and 8111 , Resolution dated November 29, 2012 citing Commissioner of Internal Revenue vs. Toledo Power Company (CTA EB Case No. 589, Resolution dated January 12, 2011 ).

ATTESTATION

I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

LOVE

STA

CERTIFICATION

Assoc1p.te stice

Chairperson

( Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court.

Presiding Justice