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

DECISION

DEL ROSARIO, P.J.:

This involves a Petition for Review 1 filed by CE Casecnan Water and Energy Company, Inc. (petitioner), assailing the inaction of the Commissioner of Internal Revenue (respondent)2 on petitioner's administrative claim for refund or issuance of TCC in the total amount of P16,000,888.15, representing its unutilized input Value-Added Tax (VAT) for the 1st to 4th quarters of 2010, which are attributable to petitioner's zero-rated sales of generated power to the National Irrigation Administration (NIA).

THE PARTIES

Petitioner is a domestic corporation, duly organized and existing under and by virtue of Philippine laws. Its principal office is at Pantabangan, Nueva Ecija.3 Respondent is the duly appointed Commissioner of Internal Revenue, empowered to perform the duties of said office, includingdl 1 Dated March 27, 2012. CTA Docket, p. 6. 2 Section 112 (C) of the NIRC, as amended , in relation to Section 229. 3 CTA Docket, p. 6.

CE Casecnan Water and Energy Company, Inc. v. Commissioner of Internal Revenue among others, the power to decide, approve, and grant refunds or TCC of erroneously paid taxes, as provided by law.4

FACTS OF THE CASE

Petitioner was incorporated on September 21 , 1994. Its primary purpose is "to design, develop, construct, erect, assemble, commission, finance, own and operate a combined irrigation and hydro-electric power project and related facilities in Central Luzon, Philippines for the conversion into electricity of water provided for and under contract with 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."5 It is a registered VAT taxpayer with the Bureau of Internal Revenue ("BIR") engaged in the business of power generation, with Tax Identification No. 004-500-931-000.6 Petitioner's multipurpose irrigation and power plant project, with an installed capacity of 140-150 MW hydropower generation power plant component, has been duly accredited and certified as a Private Sector Generation Facility by the Department of Energy ("DOE").7 On July 27, 2005, the Energy Regulatory Commission ("ERC") issued Certificate of Compliance No. 05-07-GNS-10701 8 for petitioner's Hydroelectric Generation Facilities, which was renewed on June 21 , 2010 by Certificate of Compliance No. 1 0-06-GNS-1 0701. 9 On the following dates, petitioner filed its Original and Amended Quarterly VAT Returns for the taxable period January 2010 to December 2010:

CY\ 4 /d.

5 Exhibit "A" Amended Articles of Incorporation, CTA Docket, p. 341 . 6 Exhibit "E" Certificate of Registration, CTA Docket, p. 373. 7 Exhibit "B" Certificate of Accreditation No. 95-07-12 issued by the DOE on July 20, 1995, CTA Docket, p. 364. 8 Exhibit "C" Certificate of Compliance, CTA Docket, p. 365. 9 Exhibit "D" Certificate of Compliance, CTA Docket, p. 369.

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

Exhibit Period Q January to March 2010 G Jan. to Mar. 2010 (Amended) R April to June 2010 H April to June 2010 (Amended) s July to August 2010 I July to August 2010 (Amended) T September to December 2010 J Sept. to Dec. 2010 (Amended) Date of Filing April 26, 2010 November 3, 2011 July 26, 2010 November 3, 2011 October 26, 2010 November 3, 2011 January 25, 2010 November 3, 2011 On November 9, 2011, petitioner filed with the Large Taxpayers Excise Audit Division I of the BIR ("BIR L TEAD I") an administrative claim for refund or issuance of TCC of its unutilized input VAT for the 1st to 4th quarters of 2010. 10 It allegedly has incurred unutilized input VAT from its purchases of capital goods, as well as non-capital goods, domestic purchases of service, and services rendered by non- residents in the total amount of P37,755,632.06. 11 Of this amount, petitioner allegedly did not carry over nor applied against output VAT in succeeding quarters its unutilized input VAT in the amount of P16,000,888.15. 12 On November 18, 2011 , petitioner filed with the BIR L TEAD I a copy of a certification issued by the Department of Finance stating that petitioner had not filed a similar claim for refund covering the period concerned.13 Due to the inaction of respondent in deciding the administrative claim for refund or issuance of TCC beyond the 120-day period provided for by Section 112 (C) of the National Internal Revenue Code of 1997 (1997 NIRC), as amended, petitioner filed the instant Petition for Review on March 27, 2012 before this Court. Respondent interposed in her Answer14 the following special and affirmative defenses: (i) petitioner's claim for refund was not properly documented; (ii) the burden of proof is on petitioner to establish its right to refund, and failure to sustain the burden is fatal to its claim; (iii) petitioner must show that it complied with the provisions c:riJ 10 Exhibit "P" CE Casecnan Water and Energy Company, Inc. Request for Refund for the Period January to December 2010, CTA Docket, p. 473. 11 Exhibits "G", "H", "1", and "J", CTA Docket, p. 457, 459, 461 , and 463, respectviely, and "Y-1" to "Y-4", Box 1 of the Formally Offered Exhibits. 12 Exhibits "K", "L", "M", and "N", CTA Docket, p. 465, 467, 469, and 471 , respectively, and "PP-1" to "PP-4", and "RR", Box 2 and 3 of the Formally Offered Exhibits.

13 Exhibit "P-2", CTA Docket, p. 478. 14 CTA Docket, pp. 107 - 117.

CE Casecnan Water and Energy Company, Inc. v. Commissioner of Internal Revenue of Section 112 of the 1997 NIRC, as amended on the prescriptive period for claiming tax refund/credit; (iv) records do not show that petitioner submitted complete documents to substantiate its administrative claim for refund, thus making said claim pro forma; (v) without a validly and duly filed administrative claim for refund, this Court is without jurisdiction to entertain the petition for review; and, (vi) petitioner's failure to comply with a condition precedent prior to the institution of its petition for review makes it dismissible by this Court for lack of jurisdiction. During trial, only petitioner presented its documentary and testimonial evidence while respondent manifested that she would not present evidence. On June 5, 2013,15 the case was submitted for decision after the filing of respondent's Memorandum 16 on April 15, 2103, and petitioner's Memorandum 17 on May 10, 2013.

THE ISSUES

Both parties stipulated as to the following issues: "1. Whether or not the Honorable Court has jurisdiction to act on the instant petition for review;

2. Whether or not the denial by inaction of the administrative application for refund was proper;

3. Whether or not petitioner is entitled to the refund/tax credit in the amount of ~16,000,888.15 allegedly representing unutilized input VAT for the first to the fourth quarters [of calendar year 201 0];

4. Whether or not petitioner's input VAT for the period from the first quarter to the fourth quarter of calendar year 2010 in the total amount of ~16 , 000 , 888 . 15 is substantiated by documentary evidence in the form of invoices and official receipts;

5. Whether or not petitioner's input VAT for the period from the first quarter to the fourth quarter of calendar year 2010 in the total amount of ~16,000,888 . 15 was applied or credited against any output VAT of the petitioner in the same or subsequent quarters;

6. Whether or not petitioner's input VAT for the first quarter to the fourth quarter of calendar year 2010 in the total amount of()VJ 15 Resolution dated June 5, 2013, CTA Docket, p. 641 . 16 CTA Docket, pp. 590- 602. 17 CTA Docket, pp. 604- 638.

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

P16,000,888.15 is attributable or allocable to zero-rated sales of generated power;

7. Whether or not petitioner filed its administrative and judicial claims for refund or tax credit of its unutilized input VAT within the periods prescribed under the Tax Code; and,

8. Whether or not petitioner is entitled to a refund of, or issuance of a TCC for its unutilized input VAT amounting to P16,000,888.15, which input VAT: (i) arose from petitioner's domestic purchases of non-capital goods and services, services rendered by non- residents, importation of non-capital goods, and purchases of capital goods; and (ii) are all attributable to petitioner's zero- rated sales of generated power."18 The foregoing issues can be summarized into one issue: "Whether or not petitioner is entitled to a refund of or issuance of a tax credit certificate in the total amount of P16,000,888.15, representing its unutilized input Value-Added Tax (VAT) for the 1st to 4th quarters of 2010, which are attributable to its zero-rated sales of generated power to N lA.

THE COURT'S RULING

Section 112 (A) of the 1997 NIRC, as amended, outlines the requirements for refund or tax credit of input tax due or paid which are attributable to the taxpayer's zero-rated sales. The provision 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 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 Q1 18 Amended Pre-Trial Order dated December 3, 2012, CTA Docket, p. 573.

CE Casecnan Water and Energy Company, Inc. v. Commissioner of Internal Revenue 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 XXX xxx" Thus, in order to be entitled to a refund or tax credit of unutilized input VAT attributable to zero-rated sales, the following requisites are to be complied with: 1.

There must be zero-rated or effectively zero-rated sales;

2.

Input taxes were incurred or paid; 3.

Such input taxes are attributable to zero-rated or effectively zero-rated sales; 4.

Such input taxes were not applied against any output VAT liability; and, 5.

The claim for refund was filed within the two-year prescriptive period.

Timeliness of the filing of the administrative and judicial claims As preliminary, it is appropriate to first determine the timeliness of the filing of petitioner's administrative and judicial claims. By determining whether or not the claim was timely filed, the Court will determine whether it is still necessary to resolve petitioner's compliance with the other requisites for input VAT refund. As explicitly stated under Section 112(A) of the 1997 NIRC, as amended, the application for tax credit certificate/refund of unutilized excess input VAT must be filed within two years after the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made.

The present claim covers the four taxable quarters of year 2010 which closed on March 31 , 2010, June 30, 2010, September 30, 2010 and December 31 , 2010.

Records show that petitioner's administrative claim for refund was timely filed, viz. : o4 CE Casecnan Water and Energy Company, Inc. v. Commissioner of Internal Revenue

Period /Quarter Close of Last Day for Filing Covered Taxable Quarter of Administrative Claim for Refund 15{ Quarter of 2010 March 31 , 2010 March 31 , 2012 2nd Quarter of June 30, 2010 June 30, 2012 2010 3ra Quarter of 2010 September 30, September 30, 2012 2010 4m Quarter of 2010 December 31 , December 31 , 2012 2010 Date of Filing of Administrative Claim for Refund November 9, 2011 As to the timeliness of petitioner's judicial appeal, Section 112(C) of the 1997 NIRC, as amended, provides that the Commissioner of Internal Revenue (CIR) has 120 days from the date of the submission of the complete documents in support of the application for tax refund/credit within which to grant or deny the claim. In case of full or partial denial by the CIR, the taxpayer's recourse is to file an appeal before this Court within 30 days from receipt of the decision of the CIR. If after the 120-day period, the CIR fails to act on the application for tax refund/credit, the remedy of the taxpayer is to appeal the inaction of the CIR to this Court within 30 days.

Respondent, in her Memorandum, contends that this Court has no jurisdiction to entertain the Petition for Review because no valid administrative claim was filed with respondent on account of petitioner's failure to submit complete documents in support of its administrative claim for refund. The "complete documents" required by law are allegedly those enumerated under Revenue Memorandum Order No. 53-98.

Records show, however, that petitioner, upon the filing of its administrative claim on November 9, 2011 , simultaneously submitted the documents in support thereof. This is evident from the petitioner's letter claim which stated: 19 "In support of our request, we enclose the following documents for your perusal: 1.

Duly accomplished BIR Form No. 1914 - Application for Tax Credits/Refunds; 2.

SEC certificate of registration and articles of incorporation; a') 19 Exhibit "P", CTA Docket, pp. 474-475.

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

3.

BIR certificate of registration; 4.

801 certificate of registration; 5.

DOE certificate of accreditation/ERG certificate of compliance;

6.

VAT registration payment for the year 2010; 7.

Project Agreement between CE Casecnan and NIA; 8.

General Information Sheet; 9.

Annual income tax return for taxable year ended December 31 , 201 0 together with the audited financial statements;

10. Quarterly VAT returns for the first to fourth quarters; 11 . Schedule of purchases and importations for first to fourth quarters;

12. Schedule of sales for first to fourth quarters;

13. Summary of actual input VAT attributable to sale of power;

14. Zero-rated sales invoices issued to NIA;

15. Zero-rated official receipts issued to NIA;

16. VAT sales invoices issued to NIA;

17. VAT official receipts issued to NIA;

18. Withholding VAT returns for first to fourth quarters;

19. Copy of BIR Authority to print official receipts/sales invoices and use of computerized accounting system;

20. Official receipts/sales invoices issued by local supplier of goods and services; 21 . Import entry internal revenue declarations and/or official receipts issued by the Bureau of Customs;

22. Soft copy of the detailed schedule of input VAT on local purchases of goods and services and importations." Further, in a separate lette,-2° filed with the BIR on November 18, 2011 , petitioner stated that it was submitting a copy of the certification issued by the Department of Finance that petitioner has not filed a similar claim for refund covering the year 2010. Petitioner likewise informed the BIR that its books of accounts and accounting records were already available for the SIR's audit and verification. Since the records do not show that a written notice was sent by the BIR informing petitioner that the submitted documents are incomplete nor requiring petitioner to submit additional documents, the 120-day period is reckoned from November 18, 2011 , the date when petitioner submitted additional supporting document. This is in accordance with Revenue Memorandum Circular No. 029-09 which states that:

"Ill. Period within which Refund a Tax Credit of Input Taxes shall be Made.

---~ 20 Exhibit "P-2", CTA Docket, p. 478.

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

Section 112(C) of the Tax Code of 1997, as amended by Republic Act No. 9337, provides among others, that in proper cases, the Commissioner shall grant a refund or issue the tax credit certificate (TCC) for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents. For the purpose of defining "proper cases" in the said provision, the taxpayer/claimant must have complied with the following conditions/requirements upon audit/verification of his/its claim:

a. Submission of complete documents necessary to determine and/or ascertain the correctness of the return and the amount to be refunded;

b. That all books of accounts and accounting records pertaining to the claim are immediately available to the concerned Revenue Office (RO) for audit/verification;

c. Any discrepancies/findings upon audit/verification shall be reconciled/explained in writing by the taxpayer/claimant within five (5) days from receipt of the notification from the RO; and

d. The taxpayer/claimant has signified his concurrence to the outcome of the audit/verification, which shall be evidenced by an Agreement Form.

In cases where taxpayer failed to comply with the above conditions/requirements, i.e., failure to present accounting books and records for audit/verification, additional documents to explain discrepancies/findings are not submitted, taxpayer refuses or incurs delay in the submission of the Agreement Form, the running of the 120-day period shall stop from the date of notification to the taxpayer. Likewise, the running of the 120-day period shall be suspended in case a question of law arises during the conduct of audit/verification and/or review of the claim for tax refund/credit, and the issue is referred to the Legal Division or the Legal Service, as the case may be, for resolution and issuance of legal opinion, which should be rendered within thirty (30) working days from receipt of the request. (Emphases added)" Thus, pursuant to Section 112(C) of the 1997 NIRC, as amended, petitioner timely filed its appeal by way of a Petition for Review on March 27, 2012, as the same was filed within the 30-day period after the 120-day period ended on March 17, 2012. Existence of zero-rated sales The issue of whether or not petitioner's sale of electricity to NIA is zero-rated for VAT purposes is not one of first impression as thisowV} CE Casecnan Water and Energy Company, Inc. v. Commissioner of Internal Revenue Court had already ruled in the affirmative in previous cases21 involving the same parties and issues but different taxable years. As in the previous cases, the governing law is Section 1 08(8)(7) of the 1997 NIRC, as amended by Republic Act (R.A.) No. 9337, and implemented by Section 4.1 08-5(b )(7) of Revenue Regulations (RR) No. 16-2005, which are all quoted herein below for easy reference: "SEC. 1 08.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%) 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."

"SEC. 4.108-5. Zero-Rated Sale of Services.- XXX XXX XXX "(b) Transaction Subject to Zero Percent (0%) VAT Rate.- The following services performed in the Philippines by VAT- registered persons 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 energy 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."

Corollary to the above provisions, Section 4.1 08-3(f) of RR No. 16-2005 states: ~ 21 CE Casecnan Water and Energy Company, Inc. vs. Commissioner of Internal Revenue, CTA Case Nos. 8041 and 8111 , September 11 , 2012; CE Casecnan Water and Energy Company, Inc. vs. Commissioner of Internal Revenue, CTA Case No. 8245, May 10, 2013.

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

"SEC. 4.108-3. Definition and Specific Rates on Selected Services.- XXX XXX XXX (f) Sale of electricity by generation, transmission, and distribution companies shall be subject to 10% [now 12%] VAT on their gross receipts: Provided, That sale of power or fuel generated through renewable sources of energy such as, but not limited to, biomass, solar, wind , hydropower, geothermal, ocean energy, and other emerging sources using technologies such as fuel cells and hydrogen fuels shall be subject to 0% VAT. "Generation companies" refers to persons or entities authorized by the Energy Regulatory Commission (ERG) to operate facilities used in the generation of electricity. For this purpose, generation of electricity refers to the production of electricity by a generation company or a co-generation facility pursuant to the provisions of the 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." In this case, petitioner operates a multipurpose irrigation and power plant project, as is stated in its Amended Articles of lncorporation. 22 Its business is duly accredited and certified as a Private Sector Generation Facility23 and the same is compliant as a Hydroelectric Generation Facility. 24 Thus, petitioner, being a generation company, is entitled for VAT zero-rating on its sale of generated energy from renewable sources. Clearly, from the foregoing, the sale of power generated through renewable sources of energy is subject to zero percent (0%) VAT. For the four taxable quarters of 2010, petitioner derived receipts from sales of power generation services to NIA in the amount of P2,299,849,402.56, as declared in petitioner's Quarterly VAT Returns for the same period and evidenced by sales invoices and official receipts25 which were summarized in its Schedule of Revenues26 and Amended Summary List of Sales,27 as followsQN\ 22 Exhibit "A", CTA Docket, p. 342. 23 Exhibit "B".

24 Exhibit "C".

25 Exhibits "BB-1" to "BB-4". 26 Exhibits "AA-1" to "AA-4". 27 Exhibits "Z-1" to "Z-4".

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

Quarterly VAT Returns Year Zero-Rated Exhibit 2010 Sales/Receipts G

28 I Y-1

1st Quarter ~ 416,955,000.00

H29 I Y-2

2nd Quarter 414,019,636.80

130 1Y-3

3rd Quarter 410,683,996.80

J 31 I Y-4

4th Quarter 1 ,058,190,768.96 Total P2,299,849,402.56

OR SALES

OR SALES AMOUNT

ZERO-RATED AMOUNT REFERENCE

OR NUMBER

OR DATE

(USD)

1ST QUARTER

Exhibit BB-1, Pages 1-2 0598 02-Feb-10 $3,032,400.00 Exhibit BB-1, Pages 3-4 0599 25-Feb-10 3,032,400.00 Exhibit BB-1, Pages 5-6 0600 26-Mar-10 3,032,400.00 Subtotal- 1st Quarter $9,097,200.00

2ND QUARTER

Exhibit BB-2, Pages 1-2 0601 26-Apr-10 $3,032,400.00 Exhibit BB-2, Pages 3-4 0602 25-May-10 3,032,400.00 Exhibit BB-2, Pages 5-6 0603 25-Jun-1 0 3,032,400.00 Subtotal- 2nd Quarter $9,097,200.00

3RD QUARTER

Exhibit BB-3, Pages 1-2 0604 27-Jul-10 $3,032,400.00 Exhibit BB-3, Pages 3-4 0605 25-Aug-10 3,032,400.00 Exhibit BB-3, Pages 5-6 0606 27-Sep-10 3,032,400.00 Subtotal- 3rd Quarter $9,097,200.00

4TH QUARTER

Exhibit BB-4, Pages 1-2 0607 26-0ct-10 $3 '032 ,400. 00 Exhibit BB-4, Pages 4-5 0609 27-0ct-10 3,409,709.25 Exhibit BB-4, Pages 6- 7 0610 26-Nov-10 3,032,400.00 Exhibit BB-4, Pages 8-9 0611 26-Nov-10 3,200,582.88 28 CTA Docket, pp. 457-458. 29 CTA Docket, pp. 459-460. 3° CTA Docket, pp. 461-462. 31 CTA Docket, pp. 463-464. 32 Exhibits "AA-1 " to "AA-4", Schedule of Revenues.

CONVERTED TO

PESOS32 p 140,551,740.00 138,883,920.00 137,519,340.00 p 416,955,000.00 p 133,728,840.00 140,400,120.00 139,890,676.80 p 414,019,636.80 p 140,139,333.60 137,573,923.20 132,970,740.00 p 410,683,996.80 p 130,544,820.00 146,787,983.21 132,970,740.00 140,345,559.29 CE Casecnan Water and Energy Company, Inc. v. Commissioner of Internal Revenue

Exhibit 88-4, Pages 10- 11 0612 28-Dec-10 Exhibit 88-4, Pages 12- 13 0613 28-Dec-10 3,032,400.00 8,555,309.28 Subtotal- 4th Quarter $ 24,262,801.41 132,819,120.00 374,722,546.46 p 1,058,190,768.96 Total zero-rated sales per zero-rated VAT ORs $51,554,401.41 P2,299,849,402.56 The aforestated receipts/collections from petitioner's sales of electricity generated through a renewable source of energy, particularly, hydropower, qualify for VAT zero-rating, as was discussed above.

Input VAT paid or incurred which are attributable to zero-rated sales Having resolved that petitioner had VAT zero-rated sales for the four taxable quarters of 2010 in the amount of P2,299,849,402.56, the Court shall now determine the amount of unutilized excess input VAT attributable thereto. For the four quarters of 2010, petitioner reported a total amount of P35,755,632.06 input VAT arising from its amortization of input VAT on capital goods exceeding P1 million, domestic and importation of non-capital goods, domestic purchase of services, services rendered by non-residents, detailed as follows: Year 2010 1st Quarter 2nd Quarter Exhibit

G I Y-1

H /Y-2

Input Tax Deferred on Capital Goods Exceeding P1 Million from Previous Quarter p 782,405.53 p 1 '153,340.07 Add: Input Tax on Capital Goods exceeding P1Million Purchased this quarter 452,083.16 138,196.93 Total Unamortized Input Tax on Capital Goods exceeding P1Million 1 ,234,488.69 1,291 ,537.00 Less: Input Tax on Purchases of Capital Goods exceeding P1 Million deferred for the succeeding period 1 '153,340.07 1 '185,288.93 Amortization of Input Tax on Capital Goods exceeding P1Million p 81 '148.62 p 106,248.07 Add: Input Tax on Domestic Purchases of Goods Other than Capital Goods 996,457.39 422,930.02 Importation of Goods other than Capital Goods 133,862.73 69,321 .00 Domestic Purchase of Services 7,122,037.34 8,034,364.90 Services rendered by non-residents 227,922.15 14,928.48 Total Input VAT p 8,561,428.23 p 8,647,792.47 CE Casecnan Water and Energy Company, Inc. v. Commissioner of Internal Revenue

3rd Quarter 4th Quarter Total Exhibit

1/ Y-3

J/Y-4 Input Tax Deferred on Capital Goods Exceeding P1 Million from Previous Quarter p 1,185,288.93 p 1,311 ,563.78 p 782,405.53 Add: Input Tax on Capital Goods exceeding P1 Million Purchased this quarter 255,076.63 348,471 .99 1,193,828.71 Total Unamortized Input Tax on Capital Goods exceeding P1Million 1,440,365.56 1,660,035.77 1,976,234.24 Less: Input Tax on Purchases of Capital Goods exceeding P1 Million deferred for the succeeding period 1,311 ,563.78 1,513,220.32 1,513,220.32 Amortization of Input Tax on Capital Goods exceeding P1Million p 128,801 .78 p 146,815.45 p 463,013.92 Add : Input Tax on Domestic Purchases of Goods Other than Capital Goods 472,648.44 692,091 .65 2,584,127.50 Importation of Goods other than Capital Goods 487,071 .00 142,786.00 833,040.73 Domestic Purchase of Services 10,405,771 .27 6,070,425.77 31 ,632,599.28 Services rendered by non-residents - - 242,850.63 Total Input VAT p 11 ,494,292.49 p 7 ,052,118.88 P35, 755,632.06 Out of the reported input VAT of P35,755,632.06, petitioner is claiming refund in the amount of P16,000,888.15, 33 computed as follows:

Ratio of Input Vat Zero-rated Sales attributable to Year 2010 Input Tax over Total Sales zero-rated sales 1st Quarter p 8,561,428.23 36.63% p 3,136,173.30 2nd Quarter 8,647,792.47 41.33% 3,573,741 .67 3rd Quarter 11 ,494,292.49 41 .31% 4,748,771 .63 4th Quarter 7,052,118.88 65.28% 4,603,801 .50 Total p 35,755,632.06 p 16,062,488.10 Less: Input VAT applied to Miscellaneous Sales (61 ,599.93) Less: rounding-off difference (0.02) Total Input VAT claimed for refund/TCC p 16,000,888.15 Petitioner submitted various suppliers' sales invoices,34 official receipts, 35 Bureau of Customs (SOC) Import Entries and lnternaCiJ 33 Exhibit "U", A26, CTA Docket, p. 492. 34 Exhibits "SS-10" to "SS-40", "UU-10" to "UU-40", "WW-10" to "WW-40", "CCC-10" to "CCC-40", "DDD-10" to "DDD-40", "EEE-10" to "EEE-20", "FFF- 30" to "FFF-40", "GGG-10" to "GGG-20", "HHH-10", "HHH-30", "111-10", "JJJ- 10", "JJJ-20", "JJJ-40", "KKK-10", "KKK-30", "KKK-40", "UUU-30", "UUU- 40", "VW-10", "VW-20", "WWW-10", "YYY-20" and "ZZZ-30".

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

Revenue Declarations (IEIRDs), BOC official receipts, 36 BIR Form No. 1600 with BIR EFPS filing acknowledgement and payment confirmation receipts, 37 Single Administrative Documents, Statement of Settlement of Duties and Taxes, Certifications from Authorized Agent Bank, 38 cash or collector's receipt,39 tape receipt, 40 and other documents41 in support of the P35,755,632.06 input taxes reflected in its Quarterly VAT Returns for the four quarters of 2010. Upon verification of the aforesaid documents, the Court-commissioned independent CPA, Mr. Protacio T. Tacandong, of Reyes Tacandong & Co., found that out of petitioner's reported input VAT of P35,755,632.06, only the amount of R35, 162,953.78 is properly substantiated, detailed as follows: 42 r .................................... r r···· ............................................ """"""""1 I r ~~~~~-:; ~n~~:s;,~ -1 ~;~~i::~::~~~ l ~ A~;:"~:1 ~~ i·· I I I ~~r~~;~~~ ~i~~1; ~nU:~~=sed r :a;~:x;~~~~-:-l :~~ ,;~; .~~ ;

i 1. I ::~~i~~t~:~~~~~tj~n~uda~~e~ I AnnexE~3o, I . . .............

, ..

J I l:~~~~~~~~~~~d 1nthe I :~;:fxJ!~~- ---·:::·:::~ .. ~~.~·~::;,;~ ~~ .. ~- I ~.;,~~~:.: ~~ :~z;~!:csupported flnnexa6~, 6 987 1as o4 i ' ! by original TIN VAT Official I Receipts (ORs) with BIR ! 2· I registration, dated within the !

ages 0 ' ' I Annex F-2Q, I Pages 100 to 7,989,1 95.24 128 Annex F-3Q, i il period January to December I Company Pages 129 to 10,297,676.37 158 Annex F-4Q, 1 !

!..

, 2010, issued in the name of the ~· ~~:~g~~:~~tlnQ --~- ~;i:;~~Q~t- : -.... - .... - .... - .... - ..... - .. ~ . -~~-.6-!)--'~ - ~~ i Pages 159 to i 5,973,991 .52 I I 31 ,248,048.17 I 35 Exhibits "TI-10" to "TT-40", "W-10" to "W-40", "LLL-10" to "LLL-40", "MMM-10" to "MMM-40", "NNN-20" to "NNN-40", "000-10", "000-30", "000-40", "PPP-20" to "PPP-40", "000-10", "RRR-10" to "RRR-40", "SSS- 10" to "SSS-40", "CCCC-10", "CCCC-30", "CCCC-40", "0000-10", "0000- 30", "EEEE-10", "FFFF-10" to "FFFF-40", "HHHH-40", "1111-10" to "1111-40", "JJJJ-1 0" and "LLLL -20". 36 Exhibits "XX-10" to "XX-40", "ZZ-10", "NNNN-10", "NNNN-30", "NNNN-40" and "PPPP-20".

37 Exhibits "AAA-10" to "AAA-20". 38 Exhibits "YY-20" to "YY-40", "0000-30" and "0000-40". 39 Exhibits "BBB-20" to "BBB-40". 40 Exhibits "XXX-10" to "XXX-40", "AAAA-10" to "AAAA-40", "GGGG-10" to "GGGG-40" and "KKKK- 1 0" to "KKKK-40". 41 Exhibits "TTT-10" to "TTT-40", "BBBB-10" to "BBBB-40", "MMMM-30" and "MMMM-40".

42 Exhibit "V", pp. 10-12.

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

..................... ! Total r A ··~n -~n ··~eix~iG~ ·-·2~0,,,~~~ ~-····· ~~-=~ 1 ,11 I· 1 toiessthan~1 ; ooosupparteCi · 1 1 ··························································································! I by original TIN VAT Invoices Page 191 i 48.22 !

1 with SIR registration, dated 1 A~~~; G=3o:

·· - j ·····-·····-·-·-··············---·-···- 1 I within the period January to I p 192

183 27 I

I I December 2010, issued in the i An::: 8 _40: L : j- · j ······---···' ~~:~---~~ t~-~--~~: .~.~-~-~---····················································l..... Page 193 , ______ 1 0_1_. 9_5_ +1· ...................................................... 4 ·······7······8········· o ...... 9 .......... 11 I ~ ~~~~i~~~~;i,~~f~::l'1.ooo ~-~ 493~-~-·······································································1 I 4. I ~~~~~~d s~~ ~~~:~~~~~~ .~:~ed t 197 r _5~? : ~~ -l - I 1 within the period January to Annex H-3Q, !

I I I ~=~~:~~~:~~~~:~;d in the , ~~=~J.~~~~~~- I 355.05 1 i ··I I ::~: ~~~· J ----:~~~l 1,501.39 I I - - - ~~- :n~~: ~~~~---···································6 ······7·····:· .. 9 _______ 1 _____ 6 ______ .4 _________ 9 ___ +··.·· .. ·.·.··.-... ·.··_·_· __ ·_·_·_· __ ·_·_·_· __ ·_·_· __ ·_·_·_·.· .. ·.· .. ··_· __ ·_·_·_·_·_·_·_·_· __ ··_··_·· .. ··_· __ ·_·_· __ ··.· .. ·.·.·· .. ·.·· .. ·.·.·· ............ 1 I Input VAT on purchase of capital

__ II

P 202 t ' ! goods exceeding ~1 million ages 0 93,015.94 I I I supported by original TIN VAT 203 __ ;

I 5. I ~~;g.;;~~~~~%~~iEtn ~ ~~~~: !-·················· :§~;]~ ~10:085] tl iri;:;;;tv:A'fnni .mnr).t;::;tin;);::;t ······i x;,;,;;~~L1n r---~ I I ~!~~~~~~ii~£E~~~~:;ue /a~: Ji~ -1-~ 6 ' 48~~1, --- --~!

1 II Declarations (IEIRDs) with ~;~ 2q~ ' l ?.·~~? :9.9 1 1 16· I :;;~~~~eB~~~~~~~t" c~ns~~%s I -~ [ I g~2~a~e~s:i~~~o~h~i~~~~:ank I Annex J-4Q, 177,195.00 i I ---t!:~:~~~~~~:~~:~~ _ 1~o. __ 1 12,354.oo 211,919.50 I I I t:;~~~~~~"t:;~:!,~~~~~:~lement I Annex K-30, -~····················· ~3ooj ---- - 1 7 · I i~~~i5:!;~~~ir~~~::) 1A:::::.: 3

o. I·· -~--- T- -- l I Printing of SADs and SSDTs Page 214 111 ,517.00 I 426,651 .00 I from VASP verified.

I , ............. !·····:························:·····:···:···= ··················:·····································:·····················::····························+· ............................................................................ r---------+ I Input VAT on importation of 1 goods supported by original · · SOC ORs dated July to Annex L-1Q, !

l 8· September 2010 but claimed as Page 215 101 ,043.02 I 101 ,043.02 i ·····················~lfk~a~~~~ii~ig:~~:e-,ea l Annex M-1Q, -1

· ~~- I

l i i by non-residents supported by i E:C:..f!..f!.?!?..

l 227,922.15 !

... ----· ................................... 1 1

9. ! e-filed SIR Form No. 1600 and !

. j I payment confirmation from the ! Annex M-20 , 1 1

························J· ~IB

I ~~~~~~~ - 14,928.48 1 .............. - ~~~ : ~~?-~~ I 10 Input VAT on domestic purchase i I i · ' of services supported by 2,625.00 !

CE Casecnan Water and Energy Company, Inc. v. Commissioner of Internal Revenue r···· ..................................... li ....................... rm .

Exhibit "V" I .

rvAfcasharcaiieciar;sReceipt 1 ·· ························ ~.i i with BIR registration , dated I within the period January to Annex N-40, Page 219 Am~ -~~ -~·· ·· · ·· ··············~······· ......

+··· 759.21 3,384.21 I December 2010, issued in the name of the Company and containing all the required , ............................... i ___ n _____ f ___ o ...... r. _ mation ... .... ..

J Total Input VAT Properly Substantiated . . .............. ·············t--- 1 -~-3-5- , 1-6-2,-9-53-.-78-+ l -~-3-5- , 1-6-2,-9-53- .-78---i As regards the rema1n1ng input VAT in the amounts of P52,928.52 and P539,748.28 (in the sum on P592,678.80), the ICPA noted the following findings43: "We also noted that there are amortizations of input VAT claimed by the Company on purchase of capital goods which we did not include in the Total Input VAT Properly Substantiated in the tables above. These amounted to P52,928.52 as shown below: ···························- --1 Nature Exhmll v '"'mount I Total Annex 0-10, Input VAT on purchase of Page 2?n P.13,232.13 capital goods supported by Annex 0-._2<?, 1.

TIN# Invoice with notarized Payt: .c..c., 13,232.13 certification from supplier that Annex 0 -30, VAT paid by the Company was D<:>rra 222 I 13,232.13 already remitted to the BIR Annex 0-40, !

Page 223 13,232.13 1 52,928.52 Total ~52,928.52 !

~52,928.52 !

Based on our review, the said amortizations of input VAT pertain to one (1) transaction only, which was supported with a TIN invoice with BIR Authority to Print (ATP) dated February 8, 1996 on the face of the invoice. We noted that the Company obtained a notarized certification (Exhibits CCC-1 Q to CCC-40) from the related supplier that the VAT paid by the Company was remitted by the supplier to the BIR.

Other Exceptions:

··············-····· . ! : Afifiexfi=1o; T , , !

I ~f~~~e~1~~~:~J~~~rted ::::;r to p 1425997 .. 69.o3 l,l- -I I name of the Company Page 22 , 1· I written/stamped/altered without •······A ········n·····n ······e ..

c .. x········P ·······-···3······0········.···· · ··+····························································································+!· ......................................................................................... , countersignature or with Page 227 185.95 1 , countersignature but without , ............ A ... , .. n ...... n ...... e .. c.x ......... p.= .. _ .... 4 ...... 0 .. ,, .. , ... ....... + ........................................................................................ + ............................................................................................ ,1. I letter from supplier Pages 228 to i .

]............................................................................................................................ ;........

229 t---1 _ _ _ 1_,8_3_5_.9_2-i! ............................................... ~.: -~~~ : -~.?. .l L 2 ~~~~:e~~~~;~port~d _j ~ - 337.61 J ..

....

&!

43 Exhibit "V", pp. 12-20.

I I

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

3.

Nature by a Tl N VAT invoice but the name of the Company was 'nisspelled Input VAT on domestic purchase of goods supported by a TIN VAT Invoice issued in the name of the Company but without the Company's TIN and/or address Input VAT on domestic purchase of goods supported by a TIN VAT Invoice issued in the name of the Company but Exhibit "V" Annex Q-2Q,

Annex R-3Q,

Annex R-4Q,

Annex S-1Q,

4.

with the Company's TIN and/or ' 1 address stamped/ [ I added/al~ered without _ h I Annex S-20, ,!, Amount Total 318.71 656.32 376.42 376.42 752.84 1,655.52 214.29 countersignature or w1t :

Page 235 count~rsignatur~ but without 1 I I ~~~~i:: o~~!~;.·:~~~ported j· A~~:~;~· +~~-____ 1_1_5_2_3_8-1~·· ................................................................................... ] 1.869.81 I 5 by a TIN VAT Invoice issued in m ' ' :

L ........

l .

· 1 the name of the Company but Annex T-3Q, 6.

7.

8.

with misstatement in the Company's TIN and/or address Page 237 Input VAT on domestic purchase of goods supported by a Tl N VAT invoice with alteration in date without countersignature or with countersignature but without letter from supplier Input VAT on domestic purchase of goods supported by a Tl N VAT invoice with alteration in the amount of VAT separately indicated without countersignature or with countersignature but without letter from c:oonnli<=>r Input VAT on domestic purchase of goods supported by a TIN VAT invoice issued in the name of the Company where VAT was not separately indicated Annex U-1Q,

Annex V-1Q,

Annex V-2Q,

Annex V-4Q

Annex W-1Q, i Annex W-3Q, o .

'>A3 Annex W-4Q, Page 244 Annex X-1Q, Pages 245 to 246 Input VAT on domestic purchase of services supported by a TIN VAT OR with the Annex X-2Q, 2,07 1.41 3,223.79 1 I 49.29 49.29 1,001 .79 160.71 179.46 1,341 .96 23.57 10.23 139.28 173.08 1,384.66 I i 9.

name of the Company Page;

4 ~47 to 1,154.11 written/stamped/altered without i .1 ;:;;:;;;;;> Y.~~r) 1 .................................................................................. :................................................................. ··1 i countersignature or with , 1'11111tiX X-3Q, I I countersignature but without Paf!~?.~~ j ........................................................ c::?.~". 1 .l .. : ~n~c:::> !.................................................................................. 1 L- letter from supplier I_ A~~:~;~·~- ! ____ 1_7_7_ .. 9_7""""1 ........................................... 3 ....... ' .. 3 ...... 5 ..... 8 ....... · .. 6 ....... 9 ...... iJ I Input VAT on domestic : Annex Y-1Q, I I I i 10 ! purchase of serv1ces supported i Pa.f:!~?. ?.. t -I J~ .gg ;

j I · ~ ~~o~~~~;=~t::_~:=• ~ A;:~:~~f· J ..... - ........ 1 . 4.0···3~~- ~cr'J CE Casecnan Water and Energy Company, Inc. v. Commissioner of Internal Revenue

Nature Exhibit "V" Amount Total j misspelled Annex Y-3Q, i j ....... P ....... a .... ~g~·e ·········2 ······5 ······3 ················· +······················································1 ...... 1 ..... 4 ....... · ... 2 ... :.6: 4 .......................................................................................... ~ I Annex Y-4Q, jm .

t· Page 254 .......... f-.- 1 _ _ _ _ 9.::...0:...:9_.7:...:0---j ............................................ 1 .... :'.2 ...... 3.: .... 9: ... ·: .. 3.: .. ::2: ...... j ! Input VAT on domestic I Annex Z-2Q, l I purchase of services supported o,,..,e 255 t . } . ~058 . 21 , ................................................................................ m ..... ,

I 11·

!1 ~~~:~~t~:6~~~~~~ebdu~n the 120.00 j without the Company's TIN ! Annex z- i 1 I and/or address i Page 257 2,943.29 L ~ !. ~?} : ?9 l I rinputVATondomestic + Annex AA-1Q, I !

I ! ~~r~~~e~1fo~~~sssu~:do~et~e !······ E'..~f!~?~?. 1 ......... !.~~ : }} jm ...

1 I name of the Company but with Annex AA-3Q, i 12 I the Company's TIN and/or Page 259 612.75 \ · 1 ~~;~~:~ri~~:~:~~~ith ~~~:~~~:~: ~--- · -1- ! countersignaturebutwithout Page260 1,417.50 !

2,819.36 t ..................... J .... I.~.!.!.~E ... f~Sl.r.n .... ~ .. ~ .ppli~E..... ···f--------- ...j ..................................................................................... __ j :,I I ~~~~~:eTo~::~~:~t~upported An;:;:~_ 430.73 I I by a TIN VAT OR issued in the AnnexBB-3Q, I ' I

13. I ::~a~!~:n~~~~:6'o~~;;~~. h:;::ea~~!o ... 1 _ 33164f_ ~ [ TIN and/or address j P~f!.-~?f!_~_ i 149.57 901 .94 !

\l ~n~~~~:e=r~~~~~~:~t~~~~:~:: , ··· ----------~ I by a TIN VAT OR with

14. i alteration in date without An~ex cg6;Q, i 28 1 I countersignature or with age I .7 28.71 ~~~;~~ut=rth~~~ J _____ i ................................................................... I 1 1 ~ny~~~~~e~!~:;Jc!~~upported I~: -l.l .. ... __7gB? I --- .

I 1 alteration in the amount of VAT ~ _ Page 266 1 193.29 I j 115. ' ~~~~~~~:~~~1~~=t~~;;~hout I An~:;~f6;o. --= 1~DJ-- I , countersignature but without i "Anne; 00 ~-;ici I 1 .............................. -~ \. .........

l=t~~~ f~~~ ~u~~li=~ .. ....

J E'..C1f!f!.. ??..?. J 117.43 1 ~ !.?!.~ :~~ j An;:;eEi6;Q, 123.22 1 _ ................... .ml i Input VAT on domestic I purchase of services supported i by a TIN VAT OR issued in the I name of the Company where I VAT was not separately I indicated i Annex EE-2Q, 1 i Page 270 36.96 !

j A~~~~ EE~3o: r··· .................

'I ............

m•• •••••••••••••••••••••••••• ! I Page 271 ······,i ............................. ?.~ : ?.T J ................................ j Annex EE-4Q, Pages 272 to 1 I 273 1.059.76 !

1,270.51 1 i ......................... I .......................................................................................................................................................... J .................................. cc ... : ..... :........................... i-----------1 .................................................................... . ... ~.~p_:~~;!;~· .... 1 ..................................................... ?? .. ? :.~.? .... 1 ······························································-······- ........... ! I 17.

Input VAT on domestic purchase of goods supported by documents other than a TIN VAT invoice Annex FF-2Q, !

' .... ~~.~~Ix~~·~····~~ . l 4,868.17 1 ........................................................................................ 1 :~~: r;;-g~ I -- I I 281 9,148.28 CE Casecnan Water and Energy Company, Inc. v. Commissioner of Internal Revenue !

!

Nature Exhibit "V" Amount I i I Total I I Annex FF-4Q, !

Pages 282 to 284 4,199.49 18,768.76 1 Annex GG-3Q, i 1 I , l lnpul VAT on domestic r ::~~~~~~:~ !················ ..... -~::: ~---4 19· ~~'~r~~A~~~~1;.~~~~~rted I An:::::io.l ~ 14~ · ---~ Input VAT on domestic purchase of goods supported 18· only by a photocopy of the TIN VAT invoice , ....................... + ...... n ..... a ..... m ......... e .......... o ...... f ...... c ......... a ..... 1 ..... ' ..... c ........ a ...... ~ ...... E ....... n ..... e ........ r .. g_ ....... Y ............................... j.. Page 288 ···············t-- l ____ 2_8_.4_0_.,i .................................................... ~? :?.g ] Input VAT on domestic Annex 11_10 , I I -~-~-· ..... ~~~!~~~~;~~Y~I~i~~;i~~-~~-~-~-~ ...... J...... Page 289 f-------6_2_1 _.4_3--tJ··················································~-~-~ .. :.~.: ..... j i Annex JJ-1Q, I 1 Input VAT on domestic purchases of goods supported by tape receipt with the name of the Company 21 · written/stamped/altered without countersignature or with countersignature but without letter from supplier Page;o~90 to 7,233.19 I I ' ~~J::: t ..................... ~649 1.: ---------- --1 Pages 316 to J -=31~:~-1 __ 3,58222l ---, ! 22 ' ~nu-~ ·····~ -----~ ·--.. ~ , ...... : ... ,.e .. T" .. "o ..... ~ ..... n .. g ........ ~ .... ~ ........ ; ....... s ... e ..... : ...... ~--.. i .. ~ ..... p ...... o ..... rt ...... e ....... d ................. -+ ........ A ....... n ..... n ....... ~~~;:;~, .I 7,381.43 1-~ 1 · 1 byaTINVATinvoicethatis Page347 85.71 85.71 j L ................

1 . r:'..9.Jf.?.IB ::r~gi~!~r~si ......................................... .. . ........... J ................................................................................ : .......................................... 1 I 1 Input VAT on domestic ' 1 i 23 I purchase of goods supported Annex LL-3Q, I I · by a TIN VAT invoice but Page 348 1,538.04 l 1,538.04 !

without invoice date I i

I --

- ·,~ ...... A ..... p .. n ..... a.n .... ;

....... : .... ;., ..... ~ , .... , .. ~ ......... 9 ...... 1 .. t.o .. o ....... · ..... · .. +! .................................... 30~9~-J =----~~ ! Input VAT on domestic Apnnex M 3 M- 1 2Q, _,1 ..

• 1 ' purchase of goods supported ages 5 to 352 3,018.71

24. 1 by tape receipt with TIN# only; 1 TIN-v; TIN-vtNv; TIN vAT/Nv ; 1 Annex- MM~io. r · 1 or no TIN tape receipt 1 Page 353 I 272.65 :

i Input VAT on domestic purchases of services 25· supported by documents other than a TIN VAT OR 1··· A;;;;s ~~~4 t~' ~-························································································] ················································································~ 355 1,509.09 1 7,812.37 I A;;;:s ~6 1 ~· I ..

.

j ~ ;.,;,ne!SZN:2a. 1 - - -- 706~ -----l Pages 358 to

746_69 I

359 !

................................................................................ ,, .................................................................................. ,, ............................................................................................. i Ann I I Page 360 j ?~ : ~?.

j .

j .... + ..................................................... ~ ··--···J A;;;:;~~i!__lf-___ 4_.4_3_7_.6_o-tl s.961 gsj - ~-~~~:;;i~G _ _l ~f6£": j__ ~,86 1 .......................... _ ~ CE Casecnan Water and Energy Company, Inc. v. Commissioner of Internal Revenue Nature Exhibit "V" supported only by a photocopy Annex 00-3Q, Amount Total 204.42 of the TIN VAT OR Page 364 !····················~···· -····························+··················································································+····························-·-·············- 1 Input VAT on domestic purchase of services supported ' by a TIN VAT OR not issued in

II 27·

the name of the Company or without the name of the Input VAT on domestic Annex 00-4Q, Page 365 Annex PP-1 Q, 366 Annex PP-3Q, Page 367 \.

111 Com an · 28 purchases of services , Annex QQ-1Q, 91 .02 120.24 25.17 24,895.67 100,811 .28 lf~;=c"~~~~~~ l~- i Input VAT on domestic !

Annex RR~2Q;

······································· - -- purchases of services .1 Pages 373 to 338.30 145.41 24,895.67 374 24,330.42 29.

~~r:~~e~ ~~~~~ o~ff~c~~~~~t j A-ririex-RR'···_·-3 ·······o·=··.·······+····································-············· ························+·································································································\

VAT OR

I Pages 375 to 1 l- 377 98,092.52 I I An;:~:;~~Q, 1--:ut ~~~~n ::~~Stl: r ":a":e;1~; ~ I Ill ~:~~:7;.~I~:~~~~~~h~orted 1 1":;~~f~· r 1 30.

Company's name is , ......... A ... , ..................... 4 ...... 1 .. s·=0 .... s=······ 3 ·=··o·=······· ,, ............................................. 2 ....... · ...

9 .....

5 ......

8 ....... · ..

6 .......

9 ._, .......................................................................................... 1 i written/stamped/altered without nnex - · I countersignature or with Pages 411 to I 424 !

I countersignature but without letter from supplier Annex SS-4Q, 'I Pages 425 to 436 74,525.95 297,760.17 2,814.44 3,221 .31 2,253.28 11 ,247.72 I Input VAT on domestic 1 I purchase of services supported i Annex TT-4Q I t 31 · byaTINVATORthatisnot I Page437 ' I 212.68 212.68 I ~R:r~~!~d -- .

----~ Am;,:~~~;;o. ···--+!------6-6-.5-9--+·················································································· ' Input VAT on domestic i Annex UU- I l p.-,ron A · , 32_ 1 purchases of services 'I ~~f~~t~~~t~~ ~~~eVAT OR I ~~F.;~~~r~~~'. _J ' I Annex UU-4Q, I r j - Page 441 ...... ,__ !

_ _ _ _ 1 0_4_. 1_9_,~ ........................................................ ~.~!:.8!. ____ ] !

, Input VAT on domestic 1 I 1 !

! purchases of services 1 I 1f£IiJE(~!§~~T~~~ l An;:;evJ~~ Q, ...... ~ ____ 1_1_1_.5_4_·,~ ..... ····················································1······1······1···· ···-5-··4·····-·• I Input VAT on domestic i Annex WW-1Q. l

34. i purchases of services I Pages 443 to 312_26 L..

l__,;~RP~b~~!eceie_t_s_~ _j_ ______ H4 _____ , _ .. _ --~ _____J<fl 91 .24 75 . 8~_]_ .............................. -- ______ _.)

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

,..

...

~~~~;~ / Exhibit ''V;' l.········· I i r···· r TIN···#an.iy ;

.TIN ~V; fi ·N·~vAfiN·v ···1·····:4~~~~~~~~· rm· I 447 I 1 Annex WW'~3o;

I Pages 448 to I 449 .

L . ...............

T ....................

j Amount 1-· Total 423.81 l I ..... ··················r····· ......................................................................... ) i 722.68 ! .Annex WW-40, , ~Ui Vli:TOn dOmeStiC

---+· ········P

······a ······g ·······e .... :

.. : ... 5~·~ ·=·5 ·······o ········t···o ····· +-----4-03_._3---;

8 ;

1 1 purchase of services supported ' Annex xx-2o, 1,862.13 i ···················································i I 35. I by a VAT OR printed with "not i : allowed for claiming Input VAT" Page 453 366.00 366.00 lm· ~~~~!~~~~~r~~;!!ti~ ··· ...................... jm Annex YY-30, 36 purchase of services supported I ~E!.f!f! i~'!.

.

.. .. ....

1 ................................................................................... ; -+~~~~~~ ~~~ ·~~~~ 1 eceopt"+:~;~::f~~::

1 .

4 ::.:: ~ ..

22~ 85 !

r .......

126.96 !

1 J lnput VAT on importation of i··· A ..... n ...... n ....... e ... ,x ....... z ....... z ...... _ ....

3 ...... 0 ............ , ................................................................. . \ 37 · 1 ~~~~~c~~f~so~e~~C ORs only ':..E!.F!..~~~ !.

, ~·-697 · 00 + ........................................................................................... ; , , Annex ZZ-40, I l ........................ j................................................................................................................... ....

j ............ fJ..~F!.~. 458 .......... ,_, ___ 2_,1_6_6_.o_o_+ ............... ······-·-----!-~~5 S. .. ~g j 1 j' 1 Input VAT on importation of Annex AAA- !·', 1 goods supported by 30, l 38 I photocopies of SADs and/or Page 459 rm 1 · i photocopies of IEIRDs, and Annex AAA- !

I Certifications from Authorized 40, ~--- --j- ~~~i~!;!,D~~~~~rtation of A:;::

~::_ · BOC OR not in the name of the ' 1 Page 461 48,828.00 16,440.00 1,508.00 i I OOOOOOOOOOOOOOOOOOOOOO·········••u•••• .......... H ................. { i 65,268.oo 1 ..

j 1 .5o8.oo 1 l I , 39 I goods supported by original 20 i j g<?r:!.lP§l~Y J Annex CCC- r-----------''· ......................................................................... ; I I I I Page:~62 to 19.04 1 I ! ••••••••••••••••••••••• 4~? , ·+•"""'"""""""""'''""""'""""""""'"""'"""'""""""'+'m'""""""'""""""''""""""'""""""'''""""""'"'"""""'l I I Overclaimed portion of Input Anne;O~CC- I VAT arising from erroneous Pages 466 to 0.78 I I [ 4o.

~~~~~~~ti~:r~~~~~t ~~:~~s Ann::~cc- ! · j I (e.g., arithmetical error, 30, rounding differences) Pages 470 to Overclaimed portion of Input VAT arising from erroneous computation of Input VAT on 41 · domestic purchases of services (e.g., arithmetical error, rounding differences) ~ Ann~~CC-+ Pages 475 to 480 Annex 000- 10, Pages 481 to 484 Annex 000- 20, Pages 485 to 491 Annex 000- 30, 6.62 :

I 1 ;

................................ L ............................................................................... i 6.49 152.95 4,805.55 12.52 32.93 1 ............ ...

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

Nature ·········· · ·j Pages 492 to 494 Total Annex ODD- i 1

L__ _ __ __

. Page:~95to 1 i _______ 3_.0_6___,1 4,974.08 1 i Overclaimed portion of Input "J Annex EEE- ...

- I I VAT arising from discrepancy 1Q,

0 21 I

i i in the amount of VAT per Page 498 · i i 42 · 1 ~Ii~~~~~~~g~ ~~~~:lor Ann~xQ~EE- , - -~ ·::::J amount claimed by the , Page 499 I

309·00 I

__ g<:?t:T:l.E?.~Y ........................................................................................... j. ...............

......

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+--------t·················································································-·· 1 I Annex FFF-1 Q, 1 1 I : :~~~;9~~~~~ l 197.49 I I ~- ~~~~~~~~~dtfo":~~~.~~~nput I A;~;~::b;~~· I --=1:1 ~ ~-···'1 I 43.

exchange (forex) rate used in L ?9.~ I : . r i 1 fore1gn currency denommated ! Annex FFF-JQ, ',!

· I purchases of services I Page;0 ~04 to 1 1 11 '~;;;!o~~~~~ i················································--···················0·······_ ·· 5 ·······9 ···· ~~---···············································6 ······.··· 0·····5 ······3·······_ ···6······5·········· l 2,459.41 J J Anne;Q~GG- +~-----93- 8-.0- 3___,1 .......... ................................ --~~ Pa e 510 I , I .

! Input VAT on domestic !

i purchases of goods and j 44. I services where supporting i 1 docum_~nts _ were not available i ! for venf1cat1on . I Annex GGG- ' I Page%~11 to 2,270.86 1 I I i i ·········································································! ~ ... ~:::~i1~~~ :

·······················----~87 ~1 _____j Annex GGG- ' I 40, I I I Pages 515 to 8,020.28 1 12,016.50 1 ···················!····························· ····················································································································.: 516 ·····························+!- ------1 1 Annex HHH- i ! ! Input VAT on importation of 1Q, !

1 45 I goods where supporting !

E'..BJJ£!. ~L!

i 1 ~ · ~~~ · ?? 1 1 J 1 _l~~c~~~~::otavari::Jz- I 4,14soo 1 18,987oo I To.~~~ - i J;l539,748.28 i J;l539,748.28 I Upon review and scrutiny, the Court finds the above findings of the ICPA in order.

The input taxes of P592,678.80 should be disallowed because either the supporting invoices or official receipts did not meet the substantiation requirements under Sections 11 O(A), 113, 237 and 238 of the 1997 NIRC, as amended, in relation to Sections 4.110-1 , 4.110-8 and 4.113-1 of RR No. 16-2005, as amended, or it cannot be ascertained whether the alteration in theC1'1 CE Casecnan Water and Energy Company, Inc. v. Commissioner of Internal Revenue supporting invoice or official receipt was made by the authorized representative of the petitioner's supplier. It is to be noted that there is a minor discrepancy of P1.48 between the P35,755,630.58 input VAT verified by the ICPA and the P35,755,632.06 input VAT declared by petitioner in its 2010 Quarterly VAT Returns due to rounding-off differences.44 Therefore, out of petitioner's claimed input VAT for taxable year 2010 in the amount of P35, 755,632.06, only the amount of ~35 , 162,953.78 as summarized by the ICPA in his report dated August 21 , 2012,45 represents petitioner's valid input VAT, broken down as follows:

Quarter Total Input VAT 1st Quarter j ~?.~!3._Q!_!?_71 .:~.4. l 2~dQ~~rt~;

f 8,572,754.36 ] 1 3~dQ~~ rt~~ ! ............. - 11.362.337.63 i [-4thQ·~-~rt~r [ .............

6:967.296.95 ] 1 ........ I . !<:>.!~!

. -·--·- ~35 ,162,953.78 i Input VAT oavments which are not directly attributable to petitioner's zero-rated sales. Since petitioner had VATable sales to government and private entities for the year 2010, the substantiated input VAT of ~35 , 162,953.78 is not entirely attributable to petitioner's zero-rated sales. Allocating , therefore, the substantiated input VAT of ~35 , 162,953.78 among petitioner's zero-rated sales, VA Table sales to government and VATable sales to private entities would result in the following input VAT attributable to VATable sales to private entities in the amount of P5, 102.66, input VAT attributable to VA Table sales to government in the amount of P19,366,475.43 and input VAT attributable to zero-rated sales in the amount of P15, 791 ,375.69, as shown below:cf\ 44 Exhibit "V", p. 22 and Annex Ill. 45 Exhibit "V", pp. 10-12.

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

Input VAT Input VAT Attributable to Attributable to 12% VATable 12% VATable Sales to Year 2010 Sales to Private Government 1st Quarter p 1,891 .96 p 5,308,756.60 2nd Quarter - 5,030,022.55 3rd Quarter 3,092.76 6,629,777.45 4th Quarter 117.95 2,397,918.83 Total p 5,102.66 p 19,366,475.43 Input VAT Attributable to Zero-Rated Sales Total p 3,069,922.88 p 8,380,571.44 3,542,731 .81 8,572,754.36 4,669,466.83 11,302,337.03 4,509,254.17 6,907,290.95 p 15,791,375.69 p 35,162,953.78 Allocation was based on the percentage of each type of sales to total sales as shown below: 12% VATable 12% VATable Sales to Year 2010 Sales to Private Government 1st Quarter (Exh. Gl Y-1) p 256,964.29 721 ,031,991 .21 %to Total Sales 0.0225755% 63.3459978% 2nd Quarter (Exh. H/Y-2) p - 587,831 '149.18 %to Total Sales 0.0000000% 58.6745209% 3rd Quarter (Exh. 1/Y-3) p 272,010.77 583,095,158.61 %to Total Sales 0.0273639% 58.6584653% 4th Quarter (Exh. J/Y-4) p 27,678.57 562,721 ,788.28 %to Total Sales 0.0017076% 34.7157641% Output VAT liability of petitioner against which its input VAT should be applied Zero-Rated Sales Total 416,955,000.00 P1 , 138,243,955.50 36.6314267% 100.00% 414,019,636.80 P1 ,001 ,850,785.98 41 .3254791% 100.00% 410,683,996.80 p 994,051 ,166.18 41 .3141708% 100.00% 1 ,058,190,768.96 P1 ,620,940,235.81 65.2825283% 100.00% After deducting the input tax of PS, 102.66 which is attributable to petitioner's VATable sales to private entities from its output VAT liability of P66,798.43,46 petitioner still has a net amount of output VAT payable for 2010 in the amount of P61 ,695.77, computed as follows:

Output VAT Due p 66,798.43 Less: Input VAT 5,102.66 Net Output VAT Payable p 61,695.77 46 Sum of ~30,835 . 71 (Exhibit G/Y-1 ), ~32 , 641 . 29 (Exhibit 1/Y-3) and ~3 , 321.43 (Exhibit J/Y-4).

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

Thus, by deducting the net amount of output VAT payable of P61,695.77 from petitioner's total input VAT attributable to zero-rated sales of P15,791 ,375.69, a refundable amount of P15,729,679.92 is in order:

Input VAT Attributable to Zero-Rated Sales Less: Net Output VAT Payable Net Amount Refundable Input VAT was not applied against any output VAT liability in the succeeding quarters ~ 15,791 ,375.69 61 ,695.77 p 15,729,679.92 Although the claimed input VAT was carried-over by petitioner in its succeeding amended Quarterly VAT Returns for the year 2011 ,47 the same remained unutilized until it was deducted as "Any VAT Refund/TCC Claimed"48 in its Quarterly VAT Return for the fourth quarter of 2011.

Thus, the excess input VAT of P17,829,989.2549 as of the end of the fourth quarter of 2011 which was carried-over to the succeeding first quarter of 201250 no longer included the subject claim. In fine, petitioner has sufficiently proven its entitlement to a refund or issuance of a tax credit certificate in the amount of P15,729,679.92 representing its unutilized input VAT incurred for the four quarters of taxable year 2010 which are attributable to its zero- rated sales of generated power to N lA.

WHEREFORE, premises considered, the instant Petition for Review is hereby PARTIALLY GRANTED. Accordingly, respondent Commissioner of Internal Revenue is hereby ORDERED to REFUND or to ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner the amount of P15,729,679.92, representing its unutilized input VAT incurred for the four quarters of taxable year 2010 which are attributable to its zero-rated sales of generated power to NIA. 04 47 Exhibits "K", "L", "M" & "N", CTA Docket, pp. 465-472; and Exhibits "PP-1 " to "PP-4".

48 Exhibit "N", line 23D, CTA Docket, p. 471 and Exhibit "PP-4", line 23D. 49 Exhibit "N", line 29, CTA Docket, pp. 471-472. 50 Exhibit "RR", line 20A.

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

WE CONCUR:

' ERL~.UY Associate Justice Presiding Justice ~W . M~~.G"'~ CIELITO N. MINDARO-GRULLA Associate Justice CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, 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