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

DECISION

DEL ROSARIO, PJ:

THE CASE

This is a Petition for Review 1 filed by CE Casecnan Water and Energy Company, Inc. (petitioner) which assails the inaction of the Commissioner of Internal Revenue (respondent) on petitioner's administrative claim for refund or issuance of a tax credit certificate (TCC) in the amount of P17,807,940.34, allegedly representing petitioner's unutilized input value added tax (VAT) attributed to its zero-rated sales of generated power to the National Irrigation Administration (NIA) for the year 2011.

THE PARTIES

Petitioner is a domestic corporation duly organized and existing under the laws of the Republic of the Philippines with principal office at Pantabangan, Nueva Ecija.2 0'\

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

Respondent, on the other hand, is the duly appointed Commissioner of Internal Revenue (CIR), empowered to perform the duties of said office, including among others, the power to decide, approve, and grant refunds and/or tax credits of erroneously paid taxes, as provided by law. 3

THE FACTS OF THE CASE

Petitioner was incorporated on September 21 , 1994, the primary purpose of which 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 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."4 It is registered with the Bureau of Internal Revenue (BIR) with Taxpayer Identification No. 004-500-931-000. 5 Petitioner's multipurpose irrigation and power plant project, with an installed capacity of 140-150 MW hydropower generation plant component, has been duly accredited and certified as a Private Sector Generation Facility by the Department of Energy (DOE) as evidenced by its Certificate of Accreditation No. 95-07-12 issued by the DOE on July 20, 1995.6 On June 21, 2010, petitioner was issued a Certificate of Compliance No. 10-06-GNB-10701 by the Energy Regulatory Commission (ERC) for its Hydroelectric Generation Facilities which is valid until June 20, 2015. 7 Petitioner filed with the BIR its Original and Amended Quarterly VAT Returns for the 1st to 4th quarters of the year 2011 on the following dates:

Exhibit

Taxable Quarter

Date of Filinq of Quarterly VAT Return and Reference No.

"P-8"

151 April25, 2011/101100004709121

"P-12"

15 (Amended)

November15, 2012/101200006573724

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

"P-9"

2nu July 25, 2011/101100004968255

"P-13"

2na (Amended) November15, 2012/101200006574447

"P-10"

3ra October 25, 201 1/101100005233508

"P-14"

3ru (Amended) November 15, 201 2/101200006575354

"P-11 "

4m Janua~25 , 2012/1 01200005545659

"P-15"

4m (Amended) November16, 2012/101200006577452 On November 16, 2012, petitioner filed with the Large Taxpayers Excise Audit Division I of the BIR (BIR-L TEAD I) an administrative claim for refund or tax credit of its unutilized input VAT for the period covering the 1st quarter to the 4th quarter of the year 2011.8 Claiming inaction on the part of respondent, petitioner filed on March 21 , 2013 the present Petition for Review invoking Section 112 (C) of the National Internal Revenue Code of 1997 (1997 NIRC), as amended. Petitioner prays for a refund or issuance of a TCC in the amount of P,17,807,940.34 allegedly representing its unutilized input VAT for the four quarters of the year 2011 . On June 10, 2013, within the extended period allowed by this Court, respondent filed her Answer9 interposing the following special and affirmative defenses: i) petitioner's claim for refund was not properly documented; ii) petitioner failed to prove that it submitted complete documents to support its administrative claim for refund; iii) considering that petitioner failed to comply with the duly mandated legal requirements for administrative claims for refund/TCC, the same is considered merely pro forma , thus, the 120-day period provided for by law within which the CIR has to act on petitioner's claim for refund has not yet commenced; iv) tax refunds are regarded as tax exemption which are to be construed in strictissimi juris against the person or entity claiming the exemption; and v) the petition for review is prematurely filed for failing to exhaust all available administrative remedies, hence, dismissible by this Court for lack of jurisdiction.

Durin~ pre-trial, the parties filed their Joint Stipulation of Facts and Issues 0 on October 1, 2013 which the Court approved in the Resolution dated October 8, 2013.11 The same Resolution terminated the pre-trial and directed the parties to proceed with the trial, limiting the presentation of evidence only to relevant matters that have not been covered by their joint stipulation of facts and issues. During trial, only petitioner presented its testimonial and documentary evidence while respondent manifested that she will no

(YIJ

8 ld., CTA Docket p. 434; Exhibit "P-7". 9 CTA Docket, pp. 78-91.

1° CT A Docket, pp.434-441.

CE Casecnan Water and Energy Company, Inc. v. Commissioner of Internal Revenue longer present any evidence.12 As prayed for, both parties were given thirty (30) days from May 13, 2014 to submit their respective memoranda.13 On June 13, 2014 respondent manifested that she will adopt the arguments raised in her Answer as her Memorandum.14 Meanwhile, petitioner filed its Memorandum 15 within the extended period allowed by this Court on July 2, 2014. With the filing of the parties' respective memoranda, the petition was submitted for decision on July 11 , 201416.

ISSUES

The parties agreed that the sole issue to be resolved in this case is:

"Whether or not Petitioner is entitled to a refund of, and/or issuance of TCC for, its unutilized input VAT amounting to R17,807,940.34, 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."17

THE COURTS'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 SectioD-1 12 CTA Docket, p. 797.

13 ld.

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

1 06(A)(2)(a)(¹ ), (²) and (b) and Section 1 08(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 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 " Thus, in order to be entitled to a refund or tax credit of unutilized input VAT attributable to zero-rated sales, the following requisites must 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 The timeliness of the filing of petitioner's administrative and judicial claims will be determined first to ascertain if it is still necessary to resolve petitioner's compliance with the other requisites for input VAT refund or issuance of TCC. As explicitly stated under Section 112(A) of the 1997 NIRC, as amended, the application for refund or TCC of unutilized excess input VAT must be filed within two (2) 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 the year 2011 which closed on March 31 , 2011 , June 30, 2011 , September 30, 2011 and December 31, 2011. Records show that the petitioner's administrative claim was filed timely, viz:<JI\.

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

Period/Quarter

Close

of

Taxable

Last

Day

for

Filing

Date

of

Filing

of

Covered

Quarter

Administrative Claim for

Administrative

Claim

Refund/Issuance of TCC for Refund

1 s Quarter of 2011 March 31 , 2011 March 31 , 2013 2nu Quarter of 2011 June 30, 2011 June 30, 2013 >- November 16, 2012 3ra Quarter of 2011 September 30, 2011 September 30, 2013 4m Quarter of 2011 December 31, 2011 December 31 , 2013 As to the timeliness of petitioner's judicial appeal, Section 112 (C) of the 1997 NIRC, as amended, provides that the CIR has 120 days from the date of submission of the complete documents in support of the application for tax refund/credit within which to grant or deny the claim, and 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 the receipt of the decision of the CIR. If after the 120-day period, the CIR fails to act on the application for refund/credit, the remedy of the taxpayer is to appeal the inaction of the CIR to this Court within 30 days after the lapse of the 120-day period. Respondent, in her Answer, which also served as her Memorandum, argues that the failure of petitioner to submit the required complete supporting documents renders the instant petition to have been prematurely filed. The "complete documents" required by law are allegedly those enumerated under Revenue Memorandum Order No. 53-98.

Records show, however, that petitioner, upon filing of its administrative claim on

November

16, 2012, simultaneously submitted the documents in support of its claim. This is evident from petitioner's letter which stated: "In support of our request, we enclose the following documents for your perusal:

1.

Duly accomplished Bureau of Internal Revenue (BIR) Form No. 1914- "Application for VAT Credit/Refund" 2.

Schedule/Summary list of domestic purchases of goods (capital and non-capital) and services, importations of goods (capital and non-capital) and services rendered by non-residents for first to fourth quarters of 2011 - print-out/soft copies 3.

Invoices and official receipts issued by domestic suppliers of goods and services 4.

Single administrative documents/Import entry internal revenue declarations and/or official receipts issued by the Bureau of Customs/Statements of settlement of duties and taxes/Bank certifications 5.

BIR Forms 1600 -

"Withholding VAT returns" and payment acknowledgment receipts for 2011 ~

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

6.

81R Forms 25500- "Quarterly VAT Returns" for first to fourth quarters of 2011 - original and amended 7.

Schedule/Summary list of zero-rated and VATable sales for first to fourth quarters - print out/soft copies 8.

Zero-rated sales invoices issued to NIA 9.

Zero-rated official receipts issued to NIA

10. VAT sales invoices issued to NIA

11. VAT official receipts issued to NIA

12. VAT official receipts issued for miscellaneous collections

13. Certificate of registration issued by the 801

14. Certificate of accreditation issued by the DOE 15.

Certificate of compliance issued

by the Energy

Regulatory Commission -original and renewal

16. Project Agreement between CE Casecnan and NIA

17. Certificate of filing of amended articles of incorporation issued by the Securities and Exchange Commission

(SEC)

18. General Information Sheet filed with the SEC

19. Certificate of registration issued by the 81R

20. Form 0605- "Annual VAT registration fee" payment for the year 2011 21 . 81R Form 1702- "Annual income tax return" for taxable year ended December 31, 2011 together with the audited financial statements

22. 81R Forms 2306- "Certificate of Final VAT" for January

to December 2011

23. Authority to print official receipts/sales invoices and use of computerized accounting system issued by the 81R

24. Certification that CE Casecnan has not filed a similar claim for refund duly issued by the Department of

Finance

25. Summary of allocation of actual input VAT attributable to energy, water delivery, and miscellaneous collections

26. Copy of Section 6, Chapter II of RA 9136 or the EPIRA

Law

27. Copy of Section 1 08(8)(7) and Section 112 (A) of RA 9337 or the National Internal Revenue Code, as amended

28. Copy of Section 4.108-5 of RR 16-2005 or the Consolidated Value-Added Tax Regulations of 2005."18 The same letter informed the respondent that the books of accounts and accounting records of petitioner are already available for audit and verification of the BIR. Based on the foregoing, the 120-day period is reckoned from November 16, 2012, the date when petitioner filed its administrative claim together with the supporting documents with the BIR L TEAD l{r?

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

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 21, 2013, as the same was filed within the 30-day period after the 120-day period ended on March 16, 2013. 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 this Court had already ruled in the affirmative in previous cases 19 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(b )(7) of Revenue Regulations (RR) No. 16-2005, which are all quoted below for easy reference: "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%) 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."

XXX

XXX

XXX

"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

&VI

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

"(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:

"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% VAT on their gross receipts: Provided, That sale of power or fuel generated through renewable sources of energy such as, but not limited to, biomass, solar, wind, hydropower, geothermal, ocean energy, and other emerging sources using technologies such as fuel cells and hydrogen fuels shall be subject to 0% VAT. "Generation companies" refers to persons or entities authorized by the Energy Regulatory Commission (ERC) to operate facilities used in the generation of electricity. For this purpose, generation of electricity refers to the production of electricity by a generation company or a co-generation facility pursuant to the provisions of the 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. "

Clearly, from the foregoing, the sale of power generated through renewable sources of energy is subject to zero percent (0%) VAT.

As in the previous cases, 20 petitioner proved that (i) its 140- megawatt hydro-electric power plant project has been accredited by the DOE as a Private Sector Generation Facility under the Implementing Rules and Regulations of Executive Order No. 215, as amended; (ii) the ERC issued Certificate of Compliance No. 05-07- GN8-1 0701 for its generation facility; and (iii) it generates power through its hydro-electric power plant and subsequently sells it only to NIA by presenting in evidence its Amended and Restated Casecnan Project Agreement by and between petitioner and NIA dated June 26, ()-// 20 ld.

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

1995.21 Clearly, 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. For the four taxable quarters of the year 2011, petitioner derived receipts from sales of power generation services to NIA in the amount of P2,731,669,945.32, 22 as declared in petitioner's Quarterly VAT Returns for the same period and evidenced by sales invoices and official receipts23 which were summarized in its Schedule of Revenues24 and Amended Summary List of Sales, 25 as follows:

Quarterly

VAT Returns

Exhibit

Year 2011

P-1226 I P-24

1st Quarter

P-1327 I P-25

2nd Quarter

P-1428 I P-26

3rd Quarter

P-1529 I P-27

4th Quarter

Total

ZERO-

ZERO-

RATED

RATED

INVOICE

OR

REFERENCE

NUMBER

NUMBER

OR DATE

1ST QUARTER

Exhibit P-36,

Pages 1-3

0601 0614

27-Jan-11

Exhibit P-36,

Pages 4-5

0602 0615

27-Jan-11

Exhibit P-36,

Pages 6-8

0603 0616

25-Feb-11

Exhibit P-36,

Pages 9- 10

0604 0617

25-Feb-11

Exhibit P-36,

Pages 11- 13

0605 0618

30-Mar-11

Exhibit P-36,

Pages 14- 15

0606 0619

30-Mar-11

Subtotal- 1st Quarter

2ND QUARTER

Exhibit P-37,

Pages 1-3

0607 0620

27-Apr-11

Exhibit P-37,

Pages 4-6

0608 0621

26-May-11

Exhibit P-37,

Pages 7 - 9

0609 0622

27-Jun-11

21 Exhibit "P-4"; CTA Docket pp.565-647. 22 Annex A, Exhibit P-21 .

23 Exhibits "P-36" to "P-39".

24 Exhibits "P-32" to "P-35".

25 Exhibits "P-28" to "P-31 ". 26 Line 17, CTA Docket, p. 669. 27 Line 17, CTA Docket, p. 676. 28 Line 17, CTA Docket, p. 683. 29 Line 17, CTA Docket, p. 690.

Zero-Rated Sales/Receipts

p 547,794,559.42 392,695,800.00 7 46,782,658.70 1,044,396,927.20 p 2,731,669,945.32

OR SALES

EXCHANGE

OR SALES

AMOUNT

RATE

AMOUNT

GROSS OF

(Exhibit P-

GROSS OF EWT

EWT

21,

CONVERTED TO

(USD)

Annex B)

PESOS

$ 3,032,400.00 P44.100 P133, 728,840.00 $ 1,778,508.00 44.100 78,432,202.80 $ 3,032,400.00 43.550 132,061 ,020.00 $ 920,430.40 43.550 40,084,743.92 $ 3,032,400.00 43.200 130,999,680.00 $ 752,038.72 43.200 32,488,072.70 p 547,794,559.42 $ 3,032,400.00 P43.050 P130,544,820.00 $ 3,032,400.00 43.300 131 ,302,920.00 $ 3,032,400.00 43.150 130,848,060.00

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

Subtotal - 2nd Quarter , 392,695,800.00

3RD QUARTER

Exhibit P-38,

Pages 1-3

0610 0623

27-Jul-11

$ 3,032,400.00 P41 .950 P127,209,180.00 Exhibit P-38,

Pages 4-6

0611 0624

26-Aug-11

$ 3,032,400.00 42.250 128,118,900.00 Exhibit P-38,

Pages 7-8

0612 0625

26-Aug-11

$ 3,384,229.17 42.250 142,983,682.43 Exhibit P-38,

Pages 9- 11

0613 0626

26-Sep-11

$ 3,032,400.00 43.350 131,454,540.00 Exhibit P-38,

Pages 12- 13

0614 0627

26-Sep-11

$ 5,006,144.32 43.350 217,016,356.27 Subtotal- 3rd Quarter ~ 746,782,658.70

4TH QUARTER

Exhibit P-39,

Pages 1-3

0615 0628 28-0ct-11 $ 3,032,400.00 P42.600 P129, 180,240.00 Exhibit P-39,

Pages 4-5

0616 0629 28-0ct-1 1 $ 6,669,098.98 42.600 284,103,616.55 Exhibit P-39,

Pages 6-8

0617 0630

25-Nov-11

$ 3,032,400.00 43.400 131 ,606,1 60.00 Exhibit P-39,

Pages 9- 10

0618 0631

25-Nov-11

$ 2,298,583.36 43.400 99,758,517.82 Exhibit P-39,

Pages 11- 13

0619 0632

28-Dec-11

$ 3,032,400.00 43.600 132,212,640.0Q_ Exhibit P-39,

Pages 14- 15

0620 0633

28-Dec-11

$6,136,1 41.12 43.600 267,535,752.83 Subtotal- 4th Quarter ~ 1,044,396,927.20 Total zero-rated sales per zero-rated VAT ORs P2, 731 ,669,945.32 The receipts/collections tabulated above from petitioner's sales of electricity generated through a renewable source of energy, particularly, hydropower, qualify for VAT zero-rating as discussed above.

Input VAT paid or incurred which are attributable to zero-rated sales Having resolved that petitioner had VAT zero-rated receipts for the four taxable quarters of the year 2011 in the amount of P2,731 ,669,945.32, the Court shall now determine the amount of unutilized excess input VAT attributable thereto. For the four quarters of the year 2011 , petitioner reported a total amount of P33,249,414.29 input VAT arising from its amortization of input VAT on capital goods exceeding P1 million, purchase of capital goods not exceeding P1 million, domestic ()tJ

CE Casecnan Water and Energy Company, Inc. v. Commissioner of Internal Revenue purchases of non-capital goods, importation of non-capital goods, domestic purchases of services, and services rendered by non- residents, detailed as follows:

Year 2011

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

Total

Exhibit

P-1230 I P-24

P-1331 I P-25

P-1432 I P-26

P-1533 I P-27

Input Tax Deferred on Capital Goods

exceeding P1 Million from Previous Quarter P1 ,513,220.32 p 2,036, 791 .05 p 2,161 ,947.62 P2,118,902.16 p 1 ,513,220.32 Add: Input Tax on Capital Goods exceeding P1Million Purchased this Quarter 701 ,699.97 327,260.36 173,282.29 474,374.92 1 .~76 , 617 . 54

Total Unamortized Input Tax on

Capital Goods exceeding P1 Million 2,214,920.29 2,364,051.41 2,335,229.91 2,593,277.08 3,189,837.86

Less: Input Tax on Purchases of

Capital Goods exceeding P1 Million deferred for the succeeding period 2,036,791 .05 2,161 ,947.62 2,118,902.16 2,380,471 .52 2,380,471 .52

Amortization of Input Tax on

Capital Goods exceeding P1 Million p 178,129.24 p 202,103.79 p 216,327.75 p 212,805.56 p 809,366.34

Add: Input Tax on

Purchase of Capital Goods

not exceeding P1 Million 62,298.65 2,220.00 34,312.57 15,522.86 114,354.08

Domestic Purchases of Goods

other than Capital Goods 812,959.40 611 ,063.54 646,066.96 1,411 ,881 .58 3/ 91 ,971.48

Importation of Goods

other than Capital Goods 48,491.00 51 ,022.00 356,969.00 78,492.00 534,974.00

Domestic Purchase of Services

5,389,912.25 5,814,065.34 10,918,004.81 6,046,002.63 28,167,985.03 Services rendered by non-residents 72,965.76 - - 67,797.60 140,763.36

Total Input VAT

P6,564, 756.30 P6,680,474.67 P12,171,681 .09 P7,832,502.23 P33,249,414.29 Out of the reported input VAT of P33,249,414.29, petitioner is claiming refund in the amount of P17,807,940.34,34 computed as follows:

Total

Ratio of

Input Vat

Input

Zero-rated Sales

attributable to

Year 2011

Tax

over Total Sales zero-rated sales 1st Quarter f'> 6,564,756.30 49.30% f'> 3,236,375.30 2nd Quarter 6,680,474.67 41 .33% 2,760,738.17 3rd Quarter 12,171 ,681 .09 57.60% 7,010,910.06 4th Quarter 7,832,502.23 62.54% 4,898,379.06

Total

p 33,249,414.29 p 17,906,402.59 Less: Input VAT applied to Miscellaneous Sales (98,462.25) Total Input VAT claimed for refund/TCC p 17,807,940.34 Petitioner submitted various suppliers' sales invoices, official receipts, Bureau of Customs (BOC) Import Entries and Internal 3° CTA Docket, p. 669.

31 CTA Docket, p. 676.

32 CTA Docket, p. 683.

33 CT A Docket, p. 690.

34 Exhibit "P-20", A27, CTA Docket, p. 711 .

(Y/

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

Revenue Declarations (IEIRDs), BOC official receipts, BIR Form No. 1600 with

BIR

EFPS filing acknowledgement and payment confirmation receipts, Single Administrative Documents, Statement of Settlement of Duties and Taxes, Certifications from Authorized Agent Bank, cash or collector's receipt, tape receipt and other documents35 in support of the P33,249,414.29 input taxes reflected in its Quarterly VAT Returns for the four quarters of the year 2011. Upon verification of the aforesaid documents, the Court-commissioned independent CPA (ICPA), Mr. Protacio T. Tacandong of Reyes Tacandong & Co., found that out of petitioner's reported input VAT of P33,249,414.29, only the amount of P32,849,636.85 is properly substantiated, detailed as follows:36 Input VAT on domestic purchases of goods supported by original TIN VAT ~--···· ..

1 i

Total

I

[ ................. :::: ....... ::···::::······ +··························································· + --- ............... l i Q.

R:R~ .dQR.37 i

Amount

... ···················-~ ................................................................................... ~ 605,519.69 i ···················-·········-·······-~···-······--··----·--··-···-···· ···········-····----·---1 670,641 .33 !

1.

Invoices with BIR registration, dated within , .............. : ............. : ... >£ the period January to December 2011 , issued in the name of the Company

I

.

I Input VAT on domestiC purchases of 5,743,113.

I services supported by original TIN VAT

I Official Receipts (ORs) with BIR

2· I registration, dated within the period 10,781 ,393.07 I ' January to December 2011 , issued in the [____ _J __ ~::_:_:f~~: ~:=~a~~ . , ~~~:.~:.~;~· I Input VAT on domestic purchases of ~~p;;E?~~;~· J ............................................ 1 ....

8 .......

9 ...... · ..

6 .......

3 ..... + ....................................................................................... . 5,996,996.56 27,875,509.01 i.' goods amounting to less than P1 ,000 Annex G-20, i :

324.39 !

i 3 I supported by original TIN VAT Invoices ........

F'..f!9!?~~ j .............................. 1 1 · 1 with BIR registration, dated within the Annex G-30, 9_64 1 1 I rne;~~d nJ:~~aoit~oe ~eoc~~::; 2011' issued A~~::J?4oo, f [····· · ....

i

Page 101

i 52.56 i ...........

=~~ -== ) Input VAT on domestic purchases of ~;e;f!~~?~· ~ ~~~ : ~~ ~ _ ~ :~;~~~~~~~~~~~~~atlo~~~~~~~;~~h ......... ~.;e;f!~~3.0'. ............. 1 ............................................ 4 ..... 3 ...... 0 ..... ·· .. 8 ..... 4 ........ +·····················································································! 4.

~!~~=~~~a6i~~~~~~rd 2~~~i.ni~:~~e~~ot~e ........ ~;e:~ -~#1~· .... ]

................ ···········-~-~~:~= ~ ·······-···-···· ... ···-·· . ... ............. J !···················+·····n······a·····m ········e········o······f·····t···h·····e·········C ······o ······m

·········P

·····a·····n·····Y ·····························································································+! ~£.:;f!~Q~~· 172.63 1 ~ :~~~ : ~~ j Input VAT on purchase of capital goods ~p;;;l;;~ . ··· ~~~ :~=~ :?:

[...................................................................... ;

exceeding P1 million supported by original Annex l-20• 188 871 .61 l

Page 108

' ' TIN VAT Invoices with BIR registration t A:;;;;;:; ~; i=:~iO , ........................... ........................................................................ ·············----·-·····---············ issued in the name of the Company duly "'' """ l-30· • 203 095 57 amortized

Page 110

, .

5.

• Annex l-40• 199,426.06 756, ",,,...,... ..,.., l----l•m•••••••••••••••••••••••••••m•m••••••••••••••m•••··•··········· •••m•••·•·•••••·•••m•m•••••••••••••• i .............. Jn~.g~e ... !1J1;2?. ............... ~--~~~~~ --····••··············•·•••·•····· :~ Input VAT on importation of goods 6.

supported by original Import Entry Internal

Revenue Declarations (IEIRDs) with

Annex J-10,

Page 113

35 Exhibits "P-71 " to "P-101 " and "P-104" to "P-172". 36 Exhibit "P-21 ", pp. 10-12. 8,033.00

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

............................................................................................... ············ ···· .................................................................................... ........................................................................... r ........................................................................ T .... · ········· ·························· ··························1 l..... ,.......... . ................ ~.~.~~.~: .................................................................................. ······i ··········~·~·~· i ·~.i~····~·~·~·~·············•····· ············~·= ·~u~·~··· .......... [.......... . ............ T~~~~ .............................. ! i i machine validation and/or origina~ ~ureau 1 !

· 1 of Customs (SOC) ORs and/or ong1nal 1 Annex J-2Q,

I

! Bank ORs dated within the period January i

Page 114

i 5,536.00 [ to December 2011 and SOC Certifications i Annex J-3Q, l

I

..

1 ........ ........ ......................

J

f!_f!g~JJ.? .......... !

2,313.00 !

~~ :~~~ : ?.?. ;

! Input VAT on importation of goods .

I

I supported by Single Administrative I Documents (SADs), Statement of ! 7 ! Settlement of Duties and Taxes (SSDTs)

I

I and Certifications from Authorized Agent i I Bank (AAB) and the SOC. Printing of i ! SADs and SSDTs from VASP verified. i ' r.i ··-· ·!- Tni)LiTvi\Tonimportation ·aigoods ' supported by SOC-verified Single

I 8·

Administrative Document (SAD) and

Certifications from AAB and the SOC 9.

10.

Input VAT on importation of goods supported by SOC-verified photocopy of SOC ORs and certification from the SOC Input VAT on services rendered by non- residents supported by e-filed SIR Form No. 1600 and payment confirmation from

the SIR

Input VAT on domestic purchase of services supported by TIN VAT Cash or Collection Receipt with SIR registration, 11.

dated within the period January to December 2011, issued in the name of the Company and containing all the required information

Total Input VAT Properly Substantiated

Annex K-1Q, !

1

Page 116

;

7,973.00 I -····························································-· -·-----l---······································································r·····

A

K2Q

.

I

L

~;~e._J~~T · ; .............. ~2.9~~·?? ; ............ ......................................... J Annex K-3Q, [

Page 118

!

Annex K AQ, i

Annex L-1Q,

Annex M-3Q,

Annex M-4Q,

-1Q, n.

123 Annex N-4Q,

Annex 0-1Q,

Annex 0-3Q,

Annex 0-4Q, l 346,980.00 !

i 72,320.00 I 32,485.00 3,429.00 3,088.00 72,965.76 67,797.60 2,560.92 2,404.34 1,854.14 P32,849,636.85 470,?''\7 nn 32,485.00 6,517.00 140,763.36 6,819.40 i P32,849,636.85 As regards the rema1n1ng input VAT, the ICPA found the amount of P399,776.86 as input VAT with exceptions, as follows: 37

I

............................................................................................................................................................................................................................................... T ........................................................................... T''""' i

Reference

Amount

...................................................................... .1.... .. ........................................... l ........................................................ .! . .. ........ ~ I Input VAT on purchase of capital goods supported ;~~~!~~~:

L P

13 , 232 .

13 +··· ··························································+

1. ! ~~p~l~e~t~n~o0':Tw~~dn~~;~~e~~~~:~~t~~sfrom i A~~:!J~gQ + ... 13 ,2~~ : 1?

:·····························································~ I already remitted to the SIR [ F'_f!g~J}q ' . L ~~ :~~~ : ~~

J

.)

................................................................................................................................ +··········A··::··;: ..... : .::::~~~~1~· ' 13,232.13 I = ~-~ ·=~~ ·~~ ] ' ' ' ................... f ......... . l lnpul VAT on domeSI;c puccha'e of good' I -~~~~~: = : . : ~:~~_j --

I

I supported by documents other than a TIN VAT

I

F'_<!9f!J³..3..

+ . ' omo: ..... ;

i Annex Q-3Q, ' ' I invoice Pa e 134 i ~ · 1~~ ·~~ ~ j i 2.

I

10,400.56 i 1............... )

·······················=····:·:···=········································································································=··································································! ............. f~?g~~J}i~···················~-___::2 ·:96::__:8:. 7~

9 I_

Input VAT on domestic purchase of goods

13. 1 supported only by a photocopy of the TIN VAT ................. L.J.!:!v~:> .. i .. ~~············································································································· ...... . 37 Exhibit "P-21", pp. 12-16.

Annex R-3Q,

Page 137

490.18 !

490.18 ' '--------'[m ••• .!()1

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

Nature ······..................................... l ~:;:;:~:: r···· Amount · · ----~:tal -~ ,_ .. __ ............. , ...... , .. n ..... p ........ u .... t ...... t .. a ...... x ........ 0 .... n ......... d ... , .. o ..... m ....... e ....... s ... t ... i,-c ....... p .... urct1ase ot9oods 1 ········ ···· - ····· · · · 1 f supported by a VAT invoice not issued in the Annex S-2Q, ················································f 4· i name of the Company or without the name of the

Page 138

!

: c :

261 Ao I

261.40 1- ... j---Q..t:J:l_P9r:!Y ................................................................................ ···············································································!······ l rnput VAT on domestic purchase of goods i supported by a TIN VAT invoice with name of the 1 Company written/stamped/altered without

Annex T-

E'..<!9 +--------+ i 526.48 I .................................................. l

I

214.29 I countersignature or with countersignature but i without letter from supplier Annex T-3Q, 425_79 ................. E'!!9f!J'!1 ................. ! ................ ...................................... ·1:

·······························································.: Annex T-4Q,

Page 142

1,236.48 I ~ ·~?~ :?~ !

··········-·--·+ ....................................................................................................................................................................................................................... 1. ..... . Annex U-1Q,

Page 154

8,035.72 Annex U-2Q, !

Page 162

4 , 99~~ . 391 :

Input VAT on domestic purchases of goods supported by tape receipt with the name of the I Company written/stamped/altered without I countersignature or with countersignature but I without letter from supplier i ......

..... , .... P ..... a .. _e;_~~t6,Q .,, .. • ............... f... .......... 4 ........ · ... 1 .... 2_ .... 5 ...... · .. 1 ...... 2 ........ ; ............................................ i Annex U-4Q, 8,452.37 I 25 ,~n" .~n !

t ! Input VAT on domestic purchase of goods i 7.

: supported by a TIN VAT invoice that is not BIR- j E~9i!'.!~~~g .

. _ .... . ..................

_ ! Input VAT on domestic purchase of goods · i supported by a TIN VAT Invoice issued in the !I 8· i name of the Company but without the Company's i TIN and/or address ................... 4 ······························-·--···- ················-···-·-···-·········· i Input VAT on domestic purchase of goods I supported by a TIN VAT Invoice issued in the I name of the Company but with the Company's 9· ! TIN and/or address stamped/added/altered I without countersignature or with countersignature . .J ~~!Y.'.'!!b9.~JI~!~~r.f~9.1!'!'.1J.PPii~r. ! Input VAT on domestic purchase of goods

10. I supported by a VAT invoice but not dated within I the VAT taxable year (i.e., 2010 or 2012) Input VAT on domestic purchase of goods supported by an invoice with TIN# only; TIN-V; 11 .

Tan-V; Tan-VAT; TIN-NV/Non VAT; stamped/handwritten TIN-VNAT; or no TIN invoice . Input VAT on domestic purchase of goods I supported by a TIN VAT invoice with alteration in 12· i date without countersignature or with

Annex V-4Q,

Annex W-10,

Annex X-3Q,

Annex Y-1Q,

Annex Z-2Q,

Annex Z-4Q,

·····················~ Annex AA-4Q,

49.29 49.29 549.57 549.57 142.50 142.50 792.36 792.36 60.00 i l 12,214.29 !

12,274.29 10.80 10.80 i j countersignature but without letter from supplier i l l~~~tvAr~~d~~~~ti~~~;~h~~~~i~~~d~ 1.1 I supported by a VAT invoice with alteration in .......................... ;

I

13. ! taxable and or gross amount without i countersignature or with countersignature but I without letter from supplier

I

+m '''''''''''''''''''''''''''''''''''''''''' !

.I Input VAT on domestic purchase of goods supported by a TIN VAT invoice issued in the 14· name of the Company where VAT was not separately indicated ····················! ························································································································································································································r Input VAT on domestic purchases of services 15.

supported by documents other than a TIN VAT

OR

Annex BB-2Q,

Page 182

108.68 j 113.74 108.68 .......................................... j

I

"'"'"'""""i-- i ___ 30_2_.9_2-4 "" ''''~~~ :~~omj .

1,031 .22 ········!······································- ................... !.. ···············---·····-···-······ .... J 397.44 1 . . . .......

.. ·······················~

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

.......................................... ...................................................................................................................................................................................• ..............................................................................•.............................................................. , ...... .

Nature

Reference

.. L .... Amount

I

T nameoftheCompanyorwithout name of the AnnexEE~2Q, 157.81

I Company

t m :ll.np/1a€;g;Eet~t1~9~·33o: t·························:: ~.===: t······································· 1

I

Pa: :;~::

5,027.14 ................... 1 ................................................................................................................................................................................................................... ... , ..................... P ...... a ..... g, .. Ee .......... 1 .... 9 ...... 5............... +---6_6_2_.1_6_ !;. .. ............. 5 ...... · . 9 ...... 1 ...... 0 ...... · .. 1 ...... 1 ....... ;

i Annex FF-20, I Input VAT on domestic purchase of services

Page 196

198·96 I supported by a TIN VAT OR with the name of the

17. I Company written/stamped/altered without Annex FF-30,

Page 197

255.10 1 I countersignature or with countersignature but I ~ ~;~~::,~:~~~~~,.-0,::., ::~;~;~;:. I ::::: i ~,, I_,! :J~~:~~1:JRbullhenameoflhe ] ::::~~! : · 1 .0~~~~ [_~~ 08

I

' F'..C!9f!..?.:9 .. 1 L .... ............ ~~ :~~ ~ ............................... j 19.1 ~;~;~£~;.~;5~~~~~:~~J;~!~1~ ~~~~f~: 1 ~~~:;:~:=-............................ j 1

Page 208

f---2_5_,8_3_4_.2_7--+l 1~~·~-~~-63 nnex 11-10, I.

p 217 2,433.61 I Input VAT on domestic purchase of services ___ f!.FJ!!.. ..................................... , ................................................................. , I I ~~~~~~1h~y 6~~ep~~~~!p~:~:~~t the Company's I ~~;;~~~:.~· J .

I 20· I written/stamped/altered without countersignature ~ !::::::.:~:P:~~~::o::;::,~;~ J ~~~:'is1_ ! 21 j supported by a TIN VAT OR issued in the name of j AnnexJJ-10,

I

i · J ~~nedz~~~~;:>'s~ut without the company's TIN [ ~:~~~~~ +!-__ 1_,0_6_6_.2_5-r[ Input VAT on domestic purchase of services l i supported by a TIN VAT OR issued in the name of '

the Company but with the Company's TIN and/or

Annex KK-20, address stamped/added/altered without

Page 253

13,101 .83 2 , 90~) . 1 01 :

3,452.49 122 857.08 !

1,066.25 ....... ············;

857.08 countersignature or with countersignature but · -~i!b9_~:~_t_ l~!!~rf~9~- ~~PP!if::!t .... ............................... . ........... L.. _ ....

_ .......... ,__ ! -----+ ............................................................. ;

I

i ~:0~~~~~~~~~~~~-/'~t;:~~::~:~~~~meof [ ~~:;.~~~- ~--~~ 7 ~ 1 1_ .. __ j i 1 23· the Company but with misstatement in the · Annex LL-30, l i 907 _

54 I

Company's TIN and/or address

Page 255

460.13 j ...... .... ........ . ] ~ ;~tilii~:r~~:i~r~~;i~~~~~~t" .... ,_A";:~:~; a. ·····i- 1 ___ 1_1_9_.0_3-11.

i i Input VAT on domestic purchases of services i 6.268.80 I 1 119.03 i ........ ·········i i 6,268.80 I

I

I 25. ! supported by receipts with TIN# only; TIN-V; TIN- An~ex N~5~0

· I

1 VAT/NV or no TIN OR age .......... I t Annex 00-10, !---- 4 - 2 - 8 _- 5 - 7 4!

m---- ....

P.C!9..~ ?.?.EJ.

+ .......... .............. .. ; .................................................................. ,

I

27.

Input VAT on domestic purchase of services supported by a VAT OR printed with "not allowed for claiming Input VAT" (or similar wordings) ! Input VAT on domestic purchase of services I supported by a VAT OR with alteration in taxable I or gross amount without countersignature or with I countersignature but without letter from supplier Annex 00-20, ' Pa e 259 7,328.06 I 663.22 I 2,831.87 !

730.40 112.51

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

.......................................................................................................................................................................................................................................... r ·············································································r ·····························································r ······················································-····

I

~- fl ,nput V: :n :::,,: p~;:a=::- 1 1 ! supported by a TIN VAT OR issued in the name of 1 28· I the Company where VAT was not separately I indicated 1 I Input VAT on domestic purchase of services

I

I supported by a TIN VAT OR with alteration in the

Reference

Annex RR-1Q,

Page 269

I

I 29. I amount of VAT separately indicated without · countersignature or with countersignature but Annex RR-2Q,

Amount

50,101 .12 1 ······························································+ i 133.63 i 50,9 213.58 75.54 289.12 without letter from supplier

Page 270

I

1 ..... , ................. , ... , ... , .. , ... :::::. ................ , ................................... , ................... , ...................... , ..................................... , .......... , ... , ................... +·······;······· ................... :o···:;::·····:: .. ·::· .. ·········+------+·········· ..................................................... i 1 3~~~~~:~~~~~~~~:~~~: 1 ~~:~ 1 !-- ' ..... -- .

-- ..... -- ... --2_.5_2_:--:--:-i: 2.s I 31 · I purchase of capital goods (e.g., arithmetical error, ! ;; :::::::::~': .. ·;:;:···;;·;;;:;;· : .............................................. :····:··:······:··· t:

_ _j i rounding differences)

I

' !......

!

........... 1······"' . ·············~·· 132 t ..... .

!

I Overclaimed portion of Input VAT arising from ! erroneous computation of Input VAT on domestic i purchases of goods(e.g., arithmetical error, l rounding differences)

I

j . ..................................................................................................................................................................... f. Overclaimed portion of Input VAT arising from !

erroneous computation of Input VAT on domestic L purchases of services (e.g., arithmetical error, rounding differences) f ............ , ................................................................................................................................................................................................................. !f .. j Overclaimed portion of Input VAT arising from 34.

foreign exchange (forex) rate used in foreign currency denominated purchases of services 0.05 0.17 6.53 2.23 128.40 ·········+!------+ ................................................................ j 663.76 ....... +····· .. -· ...................................................... ; ................................................................. j 7,092.05 !

········-~ ...... ·······················································~ ........................................................... ! ............................................................................................................................................... ; ....... , .... CCI.~g~~ 0.44 I i ~~P.:;tlo..;~· J =~·~~~ -~~ l ........ j 55 .

135 I ~~~~~~ :~~r~ 0 s~~~~~i~~r~~~~~~~r~~~~:~~t ~~p;;~~~~· L ~~~ :~~ ~m .....

. ...

I · 1 ava;table fo<Verificat;on r AAnnpn!e:~.e .. :

x3:X0;~t.- ~ j : ..... :----:

.... :

.. :

...... :

........ ,1~ • ' ....... , ..................... P ...... ~9~;1..9! ..................... ~-----+ ............................ · .................... · ................. , ~---1 Input VAf ondomestic purcha-se of capitai -goods- '1 36. I where supporting documents were not available jf~t .. Y~r.if.!~~!ign.

_ _ _ ____ _

I

! Input VAT on importation of goods where :

j 37. I supporting documents were not available for !

' verification i

Total

.................................................. ,_ ·········································'! Annex YY-4Q,

Page 308

147.32 147.32 4,247.00 l 3,084.00 7,331 .00 i H ! ~ 399,776.86 ~ 399,776.86 ~ ··········································- ........................................................................................................................................... - ···························• ····································- ~

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

Upon review and scrutiny, the Court finds the above findings of the I CPA in order.

The input taxes of P399, 776.86 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 the 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 P0.58 between the P33,249,413.71 38 input VAT verified by the ICPA and the P33,249,414.29 input VAT declared by petitioner in its 2011 Quarterly VAT Returns due to rounding-off differences. 39 Therefore, out of petitioner's claimed input VAT for taxable year 2011 in the amount of P33,249,414.29, only the amount of ~32,849,636.85, as summarized by the ICPA in his report dated August 16, 2013, 40 represents petitioner's valid input VAT, broken down as follows:

r······ ............................... ,. .......... ..

I

i i 1 -- ~-~-~~-~-~ _]_ Total Input V~~ -l . 1st Quarter

I ~

6,507,120.36 !

t 2 ~d···a ·~~rier t ····················· 6:sa6;760:4a··-·1 l ~if~Tp~~:m~ i

Allocation

of validly substantiated input

VAT

payments to petitioner's zero rated sales and sales subject to

12% VAT

Details of petitioner's sales for the four quarters of the year 2011 with corresponding percentage are shown below.

12% VA Table

Year 2011

Sales to Private

1st Quarter (Exh P-12 I P-24) p -

% to Total Sales

0.0000000% 38 ~32 , 849 , 636 . 85 plus ~399 , 776 . 86 . 39 Exhibit "P-21 ", p. 18 and Annex AAA. 40 Exhibit "P-21 ", pp. 10-12.

12% VA Table

Sales to

Government

Zero-Rated Sales

Total

563,367,605.17 547,794,559.42 1 '111 '162, 164.59 50.7007549% 49.2992451 % 1 00.0000000%

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

2nd Quarter (Exh P-13 I P-25) p - 557,555,253.12 392,695,800.00

% to Total Sales

0.0000000% 58.6745209% 41 .3254791 % 3rd Quarter (Exh P-14 I P-26) p 551 ,356.34 549,159,633.47 746,782,658.70

% to Total Sales

0.0425267% 42.3572945% 57.6001787% 4th Quarter (Exh P-15 IP-27) p 325,000.00 625,267,505.69 1,044,396,927.20

% to Total Sales

0.0194612% 37.4414049% 62.5391339% 950,251 ,053.12 1 00.0000000% 1 ,296,493,648.51 1 00.0000000% 1,669,989,432.89 100.0000000% The substantiated input VAT of ~32 , 849 , 636.85 is not entirely attributable to petitioner's zero-rated sales since petitioner had sales to government and private entities for the year 2011 which were subject to 12°/o VAT. Allocating, therefore, the substantiated input VAT of ~32 ,849,636.85 based on the percentage of each type of sales to total sales would show that only the amount of P17,691 ,831.87 is attributable to zero-rated sales while the rest of the input VAT pertains to sales subject to 12% VAT, i.e. input VAT attributable to sales to private entities in the amount of P6,615.11, and input VAT attributable to sales to government in the amount of P15, 151 ,189.87, as shown below:

Input VAT

Attributable to

12% VA Table

Year 2011

Sales to Private

1st Quarter p - 2nd Quarter - 3rd Quarter 5,107.89 4th Quarter 1,507.22

Total

p 6,615.11 Substantiated input VAT's excess over output VAT

Input VAT

Attributable to

12% VA Table

Input VAT

Sales to

Attributable to

Government

Zero-Rated Sales

Total

p 3,299,159.14 p 3,207,961 .22 p 6,507,120.36 3,864, 750.16 2, 722,010.32 6,586,760.48 5,087,538.65 6,918,362.90 12,011 ,009.44 2,899,741 .92 4,843,497.43 7,744,746.57 p 15,151 '189.87 p 17,691,831.87 p 32,849,636.85 After deducting the input tax of P6,615.11 attributable to sales to private entities from its output VAT liability of P105, 162.76,41 petitioner still has a net amount of output VAT payable for the year 2011 in the amount of P98,547.65, computed as follows:

Output VAT Due

p 105,162.76

Less: Input VAT

6,615.11 Net Output VAT Payable p 98,547.65

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

By deducting the net amount of output VAT payable of P98,547.65 from petitioner's total input VAT attributable to zero-rated sales of P17,691 ,831.87, a refundable amount of P17,593,284.22 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 p 17,691,831 .87 98,547.65 p 17,593,284.22 Although the claimed input VAT was carried-over by petitioner in its succeeding Quarterly VAT Returns for the year 2012,42 the same remained unutilized until it was deducted as "Any VAT Refund/TCC Claimed"43 in its Quarterly VAT Return for the fourth quarter of 2012. Thus, the excess input VAT of P24,285,282.5044 as of the end of the fourth quarter of 2012, which was carried-over to the succeeding first quarter of 2013,45 no longer included the subject claim.

In fine, petitioner has sufficiently proven its entitlement to a refund or issuance of a TCC in the amount of P17,593,284.22, representing its unutilized input VAT incurred for the four quarters of the year 2011 attributable to its zero-rated receipts for the same period.

WHEREFORE, premises considered, the instant Petition for Review is hereby PARTIALLY GRANTED. Accordingly, respondent COMMISSIONER OF INTERNAL REVENUE is ORDERED TO REFUND or TO ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner CE CASECNAN WATER AND ENERGY COMPANY, INC. in the reduced amount of P17,593,284.22, representing petitioner's unutilized excess input VAT attributable to its zero-rated sales of generated power to NIA for the four quarters of the year 2011. rYI

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

WE CONCUR:

• ER~. UY

Associate Justice

ROMAN G. DEL ROSARIO

Presiding Justice

~ N. 1"1~. c~ 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