San Roque Power Corporation vs. Commissioner of Internal Revenue

DECISION

RINGPIS-LIBAN, J.

Tlu s is a Petition for Review¹ flied on July 24, 2013, to seek judicial relief from the Commissioner of Internal Revenue's (CIR) inaction on petitioner San Roque Power Corporation's (San Roque) administrative claim for refund or application for the issuance of a tax credit certificate (TCC) which San Roque flied with the Bureau of Internal Revenue (BIR) on February 28, 2013.

STATEMENT OF THE CASE

The relevant antecedents arc as follows: Petitioner is a corporation duly organized and existing under the laws of the Philippines, with principal office at Barangay San Roque, San Manuel, Pangasinan~

Petitioner is one of the generation companies under Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act of 2001 whose sales of generated power is value added tax zero-rated.3 Petitioner is a duly registered Value-Added Tax (''VAT") taxpayer with Tax Identification No. 005-017-501.4 Petitioner is likewise classified as a large taxpayer and under the jurisdiction of the Large Taxpayers Service of the Bureau of Internal Revenue ("BIR"). 5 Respondent is the duly appointed Commissioner of the BIR empowered to perform the duties of her office, including, among others, to decide disputed assessments, taxes, fees or other charges under the law, as well as administrative claims for refund, with office address at the 4/F, BIR National Office Building, BIR Road, Diliman, Quezon City.6 Petitioner filed with the BIR its quarterly VAT returns for the period covering April1, 2011 to March 31,2012.

QUARTERLY RETURN

DATE FILED

Aoril1, 2011 to Tune 30, 2011 July 15, 2011 Tulv 1, 2011 to September 30, 2011 October 18, 2011 October 1, 2011 to December 31,2011 January 25, 2012 Tanuarv 1, 2012 to March 31, 2012 April24, 2012 On February 28, 2012, petitioner filed with the BIR-Revenue District Office ("RDO") No. 121 its Application for Refund/Tax Credit Certificate for the unutilized input VAT for the fiscal year/period April1, 2011 to March 31, 2012.7 On March 18, 2013, San Roque submitted additional documents to support its claim for tax refund or credit of its unutilized input taxes.8 Respondent failed to act on San Roque's claim for tax refund/tax credit within the allowable period. Hence, petitioner ftl.ed the instant petition on July 24, 2013.

3 Ibid.

4 1bid.

s Ibid.

6 Ibid.

The Summons was issued on August 7, 2013~ 7 Exhibit "P-18".

8 Petitioner's Memorandum, Docket, p. 1312.

On August 30, 2013, respondent flied by registered mail a Motion to Admit Answer with attached Answer.10 On September 3, 2015, respondent flied a Manifestation stating that on August 30, 2013, respondent flied her Answer and Motion to Admit Answer. 11 In the Answer,12 respondent interposed as its Special and Affurnative Defenses, that the Court does not have jurisdiction over petitioner's claim for tax refund; that the burden of proof to establish entitlement to a tax refund rests upon petitioner, and its failure to discharge such burden is fatal to its claim; and that the claims of tax exemption must be justified by the clearest grant oflaw.

On September 23, 2013, petitioner flied a Manifestation with Motion for Time to File Reply.13 On October 11,2013, the Court issued a Resolution granting the Motion to Admit Answer and the Motion for Time to File Reply.14 On November 6, 2013, petitioner flied its Reply. 15 On April 3, 2014, the parties flied their Joint Stipulation of Facts and Issues. 16 On April23, 2014, the Court issued the Pre-Trial Order.17 Trial thereafter ensued. Petitioner presented Ms. Laline Estayo, an accountant of San Roque, and Ms. Ma. Milagros F. Padernal- the Court-commissioned Independent Certified Public Accountant, as its witnesses and the documentary evidence marked as Exhibits "P-1" to "P-42". During the hearing on September 18, 2014,18 the respondent's counsel manifested that she had no witness to present since there was still no report of BIR investigation. Thereafter, as prayed for by the parties, the parties were granted thirty (30) days or until October 18, 2014 within which to file their respective memorandaH 1o Docket, p. 279.

n Ibid. p. 258.

12 Ibid. pp. 285-295. n Ibid. p. 300.

" Ibid. p. 306.

1s Ibid. p. 310.

" Ibid. p. 738.

17 Ibid. p. 871.

lB Docket, Minutes of the hearing, p. 1248.

On October 17, 2014, respondent filed her Memorandum.19 On October 20, 2014, San Roque filed its Memorandum. 20 This case was deemed submitted for decision in a Resolution21 dated November 4, 2014.

ISSUES

As stipulated by the parties, the following are the issues22 for this Court's consideration:

1. Whether or not this Court has jurisdiction over the present case; and

2. Whether or not petitioner is entitled to a refund or tax credit in the total amount of Thirty-Five Million Seven Hundred Fifty-Three Thousand Seven Hundred Seventy-Nine pesos and Four Centavos (P35,753,779.04);

a. Whether or not the amount of P35,753,779.04 represents the excess and unutilized creditable input taxes paid by petitioner for the period April 1, 2011 to March 31, 2012 which is directly attributable to its VAT zero-rated sales to the National Power Corporation (NAPOCOR);

b. Whether or not the excess unutilized creditable input taxes for the period April 1, 2011 to March 31, 2012 is duly supported by pertinent documents, such as VAT compliant invoices and official receipts;

c. Whether or not petitioner's excess and unutilized creditable input taxes paid by petitioner for the period April 1, 2011 to March 31, 2012 in the total amount of P35,753,779.04 remains unutilized. The issues raised boil down to the sole issue of whether or not petitioner is entitled to its claim for refund or issuance of TCC on its alleged unutilized input tax attributable to zero-rated sales to NAPOCOR the amount of P35,753,779.04, incurred during the fiscal period April 1, 2011 to March 31, 2012.

PETITIONER'S ARGUMENTS

San Roque claims that the Court has jurisdiction over the instant case since the same was filed within the prescriptive period; that it is entitled to a tax refund or credit in the total amount of Thirty-Five Million Seven Hundred Fifty Three Thousand Seven Hundred Seventy-Nine Pesos and Four Centavoy 1'' Docket, pp. 1252-1263. 2o Ibid. pp. 1308-1344.

(P35,753,779.04); that the amount of P35,753,779.04 represents the unutilized input taxes paid by San Roque for the fiscal period April1, 2011 to March 31, 2012 which is attributable to its VAT zero-rated sales to Napocor; that the unutilized input taxes is supported by VAT compliant invoices and official receipts; and that San Roque's unutilized input taxes paid by it for the fiscal period April1, 2011 to March 31,2012 in the total amount ofP35,753,779.04 remains unutilized.

RESPONDENT'S ARGUMENTS

Respondent argues that San Roque failed to show that its purchases of non-capital goods and services were made in the course of its trade and business; that San Roque failed to show that the said purchases were properly supported by VAT invoices and/ or official receipts and other documents; that San Roque failed to prove that the input taxes were attributable to its zero- rated sales and such have not been applied against any output tax and were not carried over in the succeeding taxable quarter or quarters; and that there is no proof of compliance with the prescribed checklist of requirements to be submitted involving a claim for VAT refund pursuant to Revenue Memorandum Order (RMO) No. 53-98;

RULING OF THE COURT

Timeliness of the Petition Section 112 of the NIRC of 1997, as amended provides: "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 sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales under Section 106 (A)(2)(a)(1), (2) and (b) and Section 108(B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods or properties or services, and the amount of creditable input tax due or paid cannot be direcdy and entirely attributed t~ any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales: Provided, ftnai!J, That for a person making sales that are zero-rated under section 108(B)(6), the input taxes shall be allocated ratably between his zero-rated and non-zero-rated sales. (B) XXX XXX XXX (C) Period within which refund or Tax Credit of Input Taxes shaJJ be Made. - In proper cases, the Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in accordance with Subsection (A) hereof. In case of full or partial denial of the claim for tax refund or tax credit, or the failure of the part of the Commissioner to act on the application, within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty day- period, appeal the decision or the unacted claim with the Court of Tax Appeals." (Emphasis supplied) The instant case involves a claim for refund for the period from April 1, 2011 to March 31, 2012. The close of the taxable quarter and the last day for filing the administrative claim are illustrated below:

PERIOD COVERED

CLOSE OF

THE LAST DAY OF THE

TAXABLE PERIOD

TWO-YEAR PERIOD

April to June 2011 June 30, 2011 June 30, 2013 July to September 2011 September 30, 2011 Sej>tember 30, 2013 October to December December 31, 2011 December 31, 2013 2011 January to March 2012 March 31, 2012 March 31, 2014 Records show that San Roque ftled its administrative claim with the BIR on February 28, 201223 and filed its supporting documents on March 18, 2013.24 Hence, San Roque's administrative claim for refund or TCC was seasonably ftled with the respondent. In the case of Commissioner of Internal Revenue vs. San Roque Power Corporation, Taganito Mining Corporation vs. Commissioner of Internal Revenue, Phi/ex Mining Corporation vs. Commissioner of Internal Revenu?S, the Supreme Cour~ Z3 Exhibit "P-18".

24 Exhibit "P-23".

2s G.R. No. 187485, February 12,2013. Citation omitted.

clarified the rule with regard to the application of prescriptive periods under Section 112(A) and (C). Thus: "This law is clear, plain, and unequivocal. Following the well-settled verba legis doctrine, this law should be applied exactly as worded since it is clear, plain, and unequivocal. As this law states, the taxpayer may, if he wishes, appeal the decision of the Commissioner to the CTA within 30 days from receipt of the Commissioner's decision, or if the Commissioner does not act on the taxpayer's claim within the 120-day period, the taxpayer may appeal to the CTA within 30 days from the expiration of the 120- day period."

In the instant case, from the date of submission of the supporting documents on March 18, 2013, respondent has a period of one hundred twenty

(120) days or up to July 17, 2013 within which to act on the petitioner's claim. After the lapse thereof, San Roque has thirty (30) days or up to August 16, 2013 within which to file a judicial claim before this Court. Petitioner filed before this Court its Petition for Review on July 24, 2013, also within the period required by the rules. Hence, both the administrative and judicial claims were filed on time. The Court shall now proceed on the merits of San Roque's claim for refund or TCC on its alleged unutilized input tax for the fiscal period from April1, 2011 to March 31,2012. In a long line of cases26, the Supreme delineated the requirements that must be satisfied by a taxpayer-claimant, the petitioner in the instant case, in order that its claim for a refund or issuance of a tax credit certificate (TCC) of unutilized input VAT attributable to zero-rated sales may be allowed or granted, to wit:

1. The taxpayer must be VAT -registered;

2. The taxpayer must be engaged in zero-rated or effectively zero-rated sales;

3. The input taxes were incurred or paid;

4. The input tax due or paid must be attributable to such sales;

5. The input taxes have not been applied against any output taxes; and

6. The claim must be filed within the two-year prescriptive period~ 26 AT&'l' Communications Services Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No. 182364, August 3, 2010; Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No. 166732, April27, 2007; Luzon Hydro Corporation vs. Commissioner of Internal Revenue, G.R. No. 188260, November 13, 2013; San Rc.KJUC Power Corporation vs. Commissioner of Internal Revenue, G.R. No. 180345, November 25, 2009; and Silicon Philippines, Inc. (Formerly Intel Philippines Manufacturing, Inc.) vs. Commissioner of Internal Revenue, G.R. No. 172378,January 17, 2011.

Evidence forwarded to this Court shows that petitioner satisfactorily complied with the first and sixth requisites. Whether San Roque's sales are subject to VAT at zero percent Anent the second requisite, San Roque duly established that it is a power generation company under Republic Act (R.A.) No. 9136, otherwise known as the "Electric Power Industry Reform Act of 2001". Its BIR Certificate of Registration27 shows that it is engaged in the generation, collection and distribution of electricity. Likewise, petitioner is registered with the BOI as a "New Operator of Hydroelectric Power Generating Plant" pursuant to the Omnibus Investments Code of 1987.28 Furthermore, San Roque's 345-megawatt hydroelectric power generation facility at Brgy. San Roque, San Miguel Pangasinan has been certified by the Energy Regulation Commission (ERC) that it has complied with the requirements set forth by the latter for its new generation facility, as evidenced by the Certificate of Compliance (COC) with COC No. 09-08-GN 1-0064.29 On October 11, 1997, San Roque entered into a Power Purchase Agreement (PP A)30 with the National Power Corporation (NPC) to operate and maintain the San Roque hydroelectric facilities on a build-operate-transfer (BOT) basis.

By virtue of the PP A, petitioner generated zero-rated sales of electricity through hydropower to NPC as evidenced by the journal vouchers31, and VAT zero-rated invoices32 and official receipts (OR)33 issued by petitioner to the latter. Such receipts from the sale of electricity, qualify for VAT zero- rating under Section 1 08(B) (7) of the NIRC of 1997, as amended by R.A. No. 9337, as implemented by Section 4.108-5(b)(7) of Revenue Regulations (RR) No. 16-2005 to wit:

"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 27 Exhibit "P-9", Docket, Vol. 2, p. 963. 28 Exhibit "lLS", Docket, Vol. 2, pp. 952-955. 29 Exhibit "P-7", Docket, Vol. 2, pp. 959-962 3o Exhibit "P-8", Docket, vol. 2, pp. 964-1068 31 Exhibits "P-24-2-1" to "P-24-2-8" -~2 Exhibits "P-24-1-1" to "P-24-1-38"

CTA CASE NO. 867S

(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.- (b) Transactions Subject to Zero Percent (0%) VAT Rate. - The following services performed in the Philippines by a VAT- registered person shall be subject to zero percent (0%) VAT rate: XXX XXX XXX (7) Sale of power or fuel generated through renewable sources of energy such as, but not limited to, biomass, solar, wind, hydropower, geothermal and steam, ocean energy, and other emerging sources using technologies such as fuel cells and hydrogen fuels; Provided, however, That zero-rating shall apply strictly to the sale of power or fuel generated through renewable sources of energy, and shall not extend to the sale of services related to the maintenance or operation of plants generating said power." (Emphasis supplied) Corollary thereto is the provision of Section 4.108-3(£) of RR No. 16- 2005, as amended by RR 4-2007, which states: "SECT. 4.108-3. Definitions and Specific Rules on Selected Services.- XXX XXX XXX

(f) Sale of electricity by generation, transmission, and distribution companies shall be subject to twelve percent (12%) on their gross receipts starting Feb. 1, 2006; Provided, that sale of power or fuel generated through renewable sources of energy such as, but not limited to, biomass, solar, wind, hydropower, geothermal, ocean energy, and other emerging energy sources using technologies such as fuel cells and hydrogen fuels shall be subject to 0% VAT. 'Generation companies' refer to persons or entitles 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 RA No. 9136 (EPIRA). They shall include all Independent Power Producers (IPPs) and NPC/Powe5,/

Sector Assets and Liabilities Management Corporation (PSALM)- owned generation facilities." (Emphasis supplied) In its Quarterly VAT Rerurns for tbe four quarters of FY 2012, San Roque declared zero-rated sales/receipts in the total amount of P7,486,945,900.74, broken down as follows: Period Amount Exhibit 1st Quarter (04/01/11 to p P-10 (Docket, Vo/.2, 06/30/11) 1,689,737,658.39 p.1069) 2nd Quarter (07/01/11 to P-12 (Docket, Vo/.2, 9 /30/11) 1,767,668,674.32 p.1090) 3rd Quarter (10/01/11 to P-14 (Docket, Vo/.2, 12/31/11) 2,225,320,491.31 p.1106) 4tb Quarter (01/01/12 to P-16 (Docket, Vo/.2, 03/31/12) 1,804,219,076.72 p.1124) Total p 7,486,945,900.74 I Correspondingly, tbe zero-rated VAT ORs submitted by petitioner for tbe same period reflected a total amount of P7,486,945,900.74, as detailed below:

Date US Dollar Japanese Yen Philippine Peso Exhibit p 4/27/2011 32,672,897.20 P-24-3-1 5/26/2011 34,773,614.82 P-24-3-2 6/24/2011 33,782,710.28 P-24-3-3 4/27/2011 484,215,000.00 259,732,926.00 P-24-3-4 5/26/2011 484,215,000.00 255,471,834.00 P-24-3-5 6/24/2011 484,275,000.00 256,633,950.00 P-24-3-6 4/27/2011 6,598,214.45 285,913,828.55 P-24-3-7 5/26/2011 6,473,158.95 279,633,993.48 P-24-3-8 6/24/2011 5,772,121.18 251,121,904.06 P-24-3-9 7/27/2011 33,782,710.28 P-24-3-10 8/25/2011 33,782,710.28 P-24-3-11 9/23/2011 33,782,710.28 P-24-3-12 7/27/2011 484,215,000.00 261,524,521.50 P-24-3-13 8/25/2011 484,215,000.00 261,815,050.50 P-24-3-14 9/26/2011 484,215,000.00 266,608,779.00 P-24-3-15 7/27/2011 5,797,245.63 251,727,999.75 P-24-3-16 8/25/2011 6,536,386.64 277,273,521.27 P-24-3-17 9/23/2011 8,168,238.33 347,370,671.46 P-24-3-18 I ?/

10/27/2011 11/28/2011 11/28/2011 12/28/2011 10/28/2011 12/7/2011 12/28/2011 10/27/2011 12/12/2011 12/28/2011 1/25/2012 2/24/2012 3/28/2012 1/25/2012 2/24/2012 3/28/2012 1/25/2012 2/24/2012 3/28/2012 Total 11,315,444.66 10,662,565.30 7' 7 65,080.48 6,906,602.48 6,888,177.90 7,178,263.98 33,782,710.28 P-24-3-19 33,849,299.07 P-24-3-20 53,700.63 P-24-3-21 33,849,299.07 P-24-3-22 484,215,000.00 277,600,459 .so P-24-3-23 484,215,000.00 275,566,756.50 P-24-3-24 484,215,000.00 274,017,268.50 P-24-3-25 496,103,040.23 P-24-3-26 460,270,956.31 P-24-3-27 340,227,001.23 P-24-3-28 33,849,299.07 P-24-3-29 33,849,299.07 P-24-3-30 33,849,299.07 P-24-3-31 484,215,000.00 270,676,185.00 P-24-3-32 484,215,000.00 269,175,118.50 P-24-3-33 484,215,000.00 259,055,025.00 P-24-3-34 300,37 5,048.46 P-24-3-35 296,770,256.64 P-24-3-36 306,619,545.91 P-24-3-37 --·· P7,486,945,900.74 From the foregoing, the amount declared in San Roque's quarterly VAT returns are duly substantiated by zero-rated VAT ORs. Hence, the total amount of P7 ,486,945,900. 7 4 qualifies as zero-rated sales. Whether San Roque incurred input VAT during the subject fiscal period and whether the input tax due was attributable to the zero-rated sales Based on its Quarterly VAT returns for FY 2012, San Roque's input VAT for the subject period amounts to P36,093,484.03, detailed as follows: Apr-June 2011 July-Sept 2011 Oct-Dec 2011 Jan-Mar 2012 Particulars Exhibit P-10 Exhibit P-12 Exhibit P-14 Exhibit P-16 Input tax Deferred on Capital Good~ Exceeding PtM from Previous Quarter ~in< 20/l] p 5,179,453.30 f' 4,799,666.43 p 4,400,816.(14 p 5,307,985.71 Add: Input tax on Purchases of Capital Goods exceeding P1M (l.i"' 21£J) 298,928.57 255,209.38 1,575,658.31 1,375,547.69 Total p 5,47H,381.87 p 5,054,875.81 p 5,976,474.35 p 6,683,533.40 Less: Input tax on Purchases of Capital Gocx.ls e:-.:cccding Pl M deferred for the succeeding period (line 23A) 4,799,666.43 4,400,816.04 5.307.985.71 6,109,395.12 Amortization of Input tax on Purchases of Capital Goods exceeding PlM p 678,715.44 654,059.77 668,488.64 574,138.28 Add: Input taxes on Current Purchases (188,950.94) p p .

- Total 5,179,453.30 3,505,343.95 8,684,797.25 6,109,395.12 p 2,575,402.13 ~ Page 12 of Zl

Purchase of Capital (3oods not exceeding Pl i\1 (fine 21/l) Domestic Purcha:>cs of Goods Other than Capital Goo<h ~im21F) Importation of Goods Other than Capital Goods (1 ine 21H) Domestic Purchase of Services (Une 2 f I) Services Rendered by Non- residents (Line 21 L) · Total input tax on current purchases Total input tax for the period 94,774.29 83,978.57 42,667.97 1,233,521.45 983,816.73 1,242,436.45 2,036,504.24 25,810.44 831,842.00 11,420,176.86 3,412,512.19 3,850,253.17 3,961,978.11 1,208,760.81 429,633.91 2,616,530.29 42,884.42 13,983,043.85 4,909,941.40 8,$41,061.91 6,084,034.74 P14,661,759.29 P5,564,001.17 P9,209,SSO.SS P6,658,173.02 In support of its input VAT, San Roque presented various VAT invoices3\ VAT 0Rs35, Bank ORs/Bureau of Customs ORs (BCOR/6, Import Entry Internal Revenue Declarations (IEIRD) 37 and BIR Forms No. 1600 (manual and EFPS) 38• The Court-commissioned ICPA, Ms. Ma. Milagros F. Padernal of Uy Singson Abella & Co., examined the documents presented by San Roque and noted erroneous items pertaining to input VAT on Capital Goods Exceeding Pl million-amortization, Purchases of Goods other than Capital Goods, and Purchases of Services, totaling 1'56,661.06, which shall be disallowed for the reasons stated below: 221,420.83 5,496,278.87 857,652.44 22,644,920.33 4,297,809.43 33,518,081.90 P36,093,484.03 Reason for Disallowance Period Total Exhibit/Reference Capital Goods Exceeding PJ million - amortization Not Supported I 4th Qtr I" 610.38 P-42 Purchases of Goods Other Than Capital Goods Supported by original VAT invoices in 1st Qtr 6,727.48 P-28-338 to P-28-340 the Petitioner's name not dated or 4th Qtr 14,464.18 P-28-1650 issued within the taxable year 21,191.66 Supported by original VAT invoices in 3rd Qtr 2,028.11 P-29-1 to P-29-2 the Petitioner's name with no BIR 4th Qtr 950.78 P-29-3 to P-29-4 Permit to print 2,978.89 3rd Qtr 8,942.33 P-30-1 Supported by original VAT invmces 4th Qtr 6,467.32 P-30-2 not in the Petitioner's name 15,409.65 Not supported 4th Qtr 15,559.77 P-32 Total 55,139.97 Purchases of Services Supported by original VAT ORs in the Petitioner's name marked as "Not a 3rd Qtr 910.71 P-34-1 Valid Source of Input Tax" Grand Total p 56,661.06 3-J. Exhibits "P-26-1" to "P-26-7", "P-27-1" to "P-27-27", "P-27-29" to "P-27-31", "P-27-34" to "P-27-35", "P-27-38" to "P-27-39", "P-28-1" to "P-28-1650", "P-29-1" to "P-29-4", "P-30-1" to "P-30-2" and "P-31-1" to "P-31-2", "P-36-1-1" to "P-36-1-14" 3-~ Exhibits "P-27-28", "P-27-32" to "P-27-33", "P-27-36" to "P-27-37", "P-33-1" to "P-33-1649" and "P-34-1" %Exhibits "P-35-1-1" to "P-35-1-8" 37 Exhibits "27-32-1", "P-27-33-1", "P-27-36-1", "P-27-37-1", "P-35-2-1" to "P-35-2-8" 38 Exhibits "P-36-2-1" to "P-36-2-8'' and "P-36-3-1" to "P-36-3-8". /o/

Further review of the !CPA's report and San Roque's supporting documents reveals that in addition to the disallowance of f'56,661.06, input VAT in the amount of f'1 ,875,784.68, should also be disallowed from San Roque's claim for the supporting invoices and ORs failed to meet the substantiation requirements under Sections 110(A), 113(A) and (B), and 237 of the NIRC of 1997, as amended, in relation to Sections 4.110-1, 4. 110-8 and 4. 113-1 of RR No. 16-05, as amended. Below is the breakdown of the additional input VAT disallowances of f'1 ,87 5,784.68: Findings Amount Exhibit 1 Input VAT on purchases of goods supported by documents other than VAT invoices Tyco Integrated Systems Phils. Inc. I" 4,236.23 P-27-28 SM ACA Shell Forbes 342.32 P-28-5 SM ACA Shell Forbes 228.62 P-28-21 SM ACA Shell Forbes 374.37 P-28-46 SM ACA Shell Forbes 355.83 P-28-47 Wellcross Freeport Inc. 14,529.96 P-28-48 SM ACA Shell Forbes 199.52 P-28-71 SM ACA Shell Forbes 358.27 P-28-75 SM ACA Shell Forbes 277.05 P-28-93 SM ACA Shell Forbes 409.78 P-28-94 SM ACA Shell Forbes 424.94 P-28-116 SM ACA Shell Forbes 375.55 P-28-139 SM ACA Shell Forbes 369.76 P-28-165 SM ACA Shell Forbes 260.78 P-28-165 SM ACA Shell Forbes 385.92 P-28-198 SM ACA Shell Forbes 240.98 P-28-199 SM ACA Shell Forbes 194.00 P-28-215 SM ACA Shell Forbes 124.71 P-28-232 SM ACA Shell Forbes 152.10 P-28-253 SM ACA Shell Forbes 275.22 P-28-260 SM ACA Shell Forbes 256.32 P-28-271 Proline Sports Center 1,660.71 P-28-295 SM ACA Shell Forbes 398.60 P-28-296 SM ACA Shell Forbes 331.67 P-28-311 SM ACA Shell Forbes 299.90 P-28-317 SM ACA Shell Forbes 216.02 P-28-323 SM ACA Shell Forbes 335.44 P-28-324 SM ACA Shell Forbes 240.13 P-28-362 SM ACA Shell Forbes 272.30 P-28-363 SM ACA Shell Forbes 232.21 P-28-416 SM ACA Shell Forbes 346.ot P-28-437 SM ACA Shell Forbes 349.22 P-28-498 SM ACA Shell Forbes 292.52 P-28-527 SM ACA Shell Forbes 342.00 P-28-698 SM ACA Shell Forbes 334.25 P-28-719 SM ACA Shell Forbes 314.59 P-28-726 SM ACA Shell Forbes 296.91

P-28-737 /V

Subtotal 30,634.71 1 2 Input VAT on purchases of goods or services supported by VAT invoices or ORs wherein the input VAT amounts were not separately shown Mercury Drug Corporation 1,571.36 P-28-365 Mercury Drug Corporation 1,792.47 P-28-366 SM A CA Shell Forbes 357.06 P-28-426 MySolutions, Inc.

4,510.80 P-28-509 Kia Traders Autocenter, Inc. 1,592.68 P-28-856 GNS Tire & Service Center, Inc. 522.21 P-28-865 Mercury Drug Corporation 3,585.91 P-28-903 Exclusively His Men's Clothing 3,085.71 P-28-1098 Coem Sales & Supplies Inc 944.89 P-28-1105 Eastern Communications 7,161.03 P-33-65 Plumas Transport Corporation 3,481.56 P-33-367 Rasa Surveying & Realty 15,000.00 P-33-1073 Subtotal 43,605.68 3 Input VAT on purchase of goods supported by invoice with serial no. outside the authority to print granted to petitioner Sporteum Philippines, Inc. 15,804.14 P-28-652 4 Input VAT on purchases of services supported by documents other than VAT ORs Travel Managers International Inc 1!,908.20 P-28-1122 Travel Managers International Inc 13,588.08 P-28-1145 Travel Managers International Inc 6,364.18 P-28-1167 Travel Managers International Inc 1,041.86 P-28-1168 Travel Managers International Inc 11,389.86 P-28-1242 Kia Traders Autocenter, Inc. 763.93 P-28-609 Subtotal 45,056.11 5 Input VAT on purchases of services supported by NON-VAT OR or ORs with supplier's TIN but without the word "VAT" Plumas Transport Corporation 4,966.09 P-33-1025 Phil. Long Distance Tel. Co. 112.37 P-33-33 Phil. Long Distance Tel. Co. 1,913.41 P-33-34 Phil. Long Distance Tel. Co. 16,920.00 P-33-35 Phil. Long Distance Tel. Co. 1,919.99 P-33-36 Phil. Long Distance Tel. Co. 112.37 P-33-37 Phil. Long Distance Tel. Co. 112.37 P-33-38 Phil. Long Distance Tel. Co. 4,855.94 P-33-39 Phil. Long Distance Tel. Co. 168.66 P-33-40 Phil. Long Distance Tel. Co. 177.69 P-33-41 Phil. Long Distance Tel. Co. 112.37 P-33-42 Phil. Long Distance Tel. Co. 3,712.41 P-33-43 Phil. Long Distance Tel. Co. 279.49 P-33-44 Phil. Long Distance Tel. Co. 160.71 P-33-45 Phil. Long Distance Tel. Co. 119.88 P-33-46 ?/

Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Dis lance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. 160.71 160.71 160.71 160.71 160.71 160.71 160.71 160.71 130.37 112.37 5,285.13 112.37 16,920.00 1,913.41 112.37 1,920.00 5,726.05 165.35 181.17 112.37 3,712.40 262.33 160.71 119.88 160.71 160.71 160.71 160.71 160.71 160.71 160.71 160.71 130.37 3,558.95 4,635.33 1,913.41 112.37 16,921.32 112.37 457.26 1,920.00 2,722.41 164.82 159.34 112.37 3,712.40 358.12 160.71 119.88 160.71 P-33-47 P-33-48 P-33-49 P-33-50 P-33-51 P-33-52 P-33-53 P.-33-54 P-33-55 P-33-147 P-33-148 P-33-149 P-33-150 P-33-151 P-33-152 P-33-153 P-33-156 P-33-157 P-33-158 P-33-159 P-33-160 P-33-161 P-33-162 P-33-163 P-33-164 P-33-165 P-33-166 P-33-167 P-33-168 P-33-169 P-33-170 P-33-171 P-33-172 P-33-262 P-33-263 P-33-264 P-33-265 P-33-266 P-33-267 P-33-268 P-33-269 P-33-270 P-33-271 P-33-272 P-33-273 P-33-274 P-33-275 P-33-276 P-33-277 P-33-278 :?/

Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. RAJ Ce Construction Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. 161.43 160.71 160.71 160.71 160.71 160.71 160.71 130.37 2,724.74 163.18 165.38 112.37 3,712.40 341.05 160.71 119.88 160.71 160.71 160.71 160.71 160.71 160.71 160.71 160.71 130.37 1,912.93 112.37 1,913.41 16,920.33 1,920.00 112.37 112.37 4,163.52 6,469.60 7,440.40 2,771.79 170.70 190.40 3,712.41 162.97 160.71 119.88 160.71 160.71 160.71 160.71 160.71 160.71 160.71 160.71 P-33-279 P-33-280 P-33-281 P-33-282 P-33-283 P-33-284 P-33-285 P-33-286 P-33-405 P-33-406 P-33-407 P-33-408 P-33-409 P-33-410 P-33-411 P-33-412 P-33-413 P-33-414 P-33-415 P-33-416 P-33-417 P-33-418 P-33-419 P-33-420 P-33-421 P-33-460 P-33-462 P-33-463 P-33-464 P-33-465 P-33-466 P-33-467 P-33-468 P-33-492 P-33-493 P-33-524 P-33-525 P-33-526 P-33-527 P-33-528 P-33-529 P-33-530 P-33-531 P-33-532 P-33-533 P-33-534 P-33-535 P-33-536 P-33-537 P-33-538 y

CTA CASE NO. 867S Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Dis lance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. 130.37 112.37 112.37 1,913.41 16,920.00 1,924.50 112.37 112.37 1,573.57 2,746.63 171.85 199.70 3,712.41 162.97 160.71 119.88 160.71 160.71 160.71 160.71 160.71 160.71 160.71 160.71 130.37 112.37 6,449.73 6,646.84 7,668.89 6,646.40 7,782.55 112.37 1,913.41 16,920.00 1,920.00 112.37 112.37 3,755.63 3,712.41 181.13 160.71 119.88 160.71 160.71 160.71 160.71 160.71 160.71 160.71 160.71 P-33-539 P-33-540 P-33-541 P-33-542 P-33-543 P-33-544 P-33-545 P-33-546 P-33-547 P-33-656 P-33-657 P-33-658 P-33-659 P-33-660 P-33-661 P-33-662 P-33-663 P-33-664 P-33-665 P-33-666 P-33-667 P-33-668 P-33-669 P-33-670 P-33-671 P-33-672 P-33-760 P-33-762 P-33-763 P-33-764 P-33-765 P-33-775 P-33-776 P-33-777 P-33-778 P-33-779 P-33-780 P-33-781 P-33-808 P-33-809 P-33-810 P-33-811 P-33-812 P-33-813 P-33-814 P-33-815 P-33-816 P-33-817 P-33-818

P-33-819 //

Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. 130.37 112.37 2,772.49 297.77 112.37 112.37 9,163.84 1,913.41 1,920.00 16,920.33 2,889.80 172.40 192.05 3,712.41 400.54 160.71 119.88 160.71 160.71 160.71 160.71 160.71 160.71 160.71 160.71 130.37 112.37 2,930.10 170.75 189.86 3,712.41 180.08 160.71 119.88 160.71 160.71 160.71 160.71 160.71 160.71 160.71 160.71 130.37 112.37 7,633.87 6,637.82 112.37 1,913.41 16,920.00 1,920.00 P-33-820 P-33-821 P-33-822 P-33-958 P-33-959 P-33-960 P-33-961 P-33-962 P-33-963 P-33-964 P-33-965 P-33-966 P-33-967 P-33-968 P-33-969 P-33-970 P-33-971 P-33-972 P-33-973 P-33-974 P-33-975 P-33-976 P-33-977 P-33-978 P-33-979 P-33-980 P-33-981 P-33-1093 P-33-1094 P-33-1095 P-33-1096 P-33-1097 P-33-1098 P-33-1099 P-33-1100 P-33-1101 P-33-1102 P-33-1103 P-33-1104 P-33-1105 P-33-1106 P-33-1107 P-33-1108 P-33-1109 P-33-1173 P-33-1174 P-33-1175 P-33-1176 P-33-1177 P-33-1178 />!

Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. EKC Construction & Aggregates Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Phil. Long Distance Tel. Co. Eastern Communications Java Hotel Subtotal 112.37 P-33-1179 112.37 P-33-1180 1,524.08 P-33-1181 25,397.07 P-33-1323 7,633.87 P-33-1613 6,637.82 P-33-1614 7,631.57 P-33-1620 6,635.83 P-33-1621 6,922.15 P-33-1630 1,232.14 P-33-1631 420,231.94 6 Input VAT on purchases of goods supported by invoices dated outside the period of claim Pasamonte Gasoline Station 145.93 P-28-4 Pasamonte Gasoline Station 152.58 P-28-90 Subtotal 298.51 7 Input VAT on services rendered by non-resident supported by BIR Form 1600 dated outside the period of claim Kokusai Commerce Co Ltd & AMEC 1,126,939.67

P-36-2-1 & P-

36-3-1 8 Overclaimed input tax on purchases previously classified as goods other than capital goods in the third quarter of FY 2012 and subsequently reclassified as capital goods subject to amortization in the fourth quarter of FY 2012 Septem, Inc.

7,232.14 P-31-1 Eastern Copperfields Trading, Inc. 175,928.57 P-31-2 Accent Micro Technologies, Inc. 10,053.21 P-31-3 Subtotal 193,213.92 Grand Total p 1,875,784.68 Therefore, out of San Roque's reported input VAT for FY 2012 in the amount of P36,093,484.03, only the amount of P34,161,038.29 represents San Roque's valid input VAT, computed as follows: Total Input VAT per Returns p 36,093,484.03 Less: Disallowances Per ICP A's findings p 56,661.06 Per this Court's findings 1,875,784.68 1,932,445.74 Valid Input VAT p 34,161,038.29 However, a portion of the P34,161,038.29 valid input VAT shall be applied against San Roque's reported output VAT liability for FY 2012 in the amount of P339,705.19. Hence, only the remaining input VAT ~

P33,821,333.10, as computed below, is attributable to the entire valid zero-rated receipts of P7 ,486,945,900. 7 4: Valid Input VAT I' 34,161,038.29 Less: Output VAT 339,705.19 Valid Excess Input VAT p 33,821,333.10 --· Although the claimed excess input VAT was carried-over by petitioner in its Quarterly VAT Returns39 from the first quarter of FY 2013 to the fourth quarter of FY 2013, the same remained unutilized until it was fully deducted in its Quarterly VAT Return for the fourth quarter of FY 2013 as "VAT Refund/TCC Claimed"40 from the total available input tax ofP73,799,536.7441 • Thus, the claimed input tax for the taxable FY 2012 could not have been carried-over to the succeeding first quarter of FY 2014. Tax refunds partake the nature of tax exemptions and are thus construed strictissimi juris against the person or entity claiming the exemption.42 The burden in claiming tax refund rests upon the taxpayer. In this case, petitioner was able to prove its entidement to the claim for refund or issuance of tax credit certificate for its unutilized creditable input VAT attributable to its zero- rated sales for the fiscal year covering April 1, 2011 to March 31, 2012, but in the reduced amount ofP33,821,333.10.

WHEREFORE, premises considered, the instant Petition for Review is hereby PARTIALLY GRANTED. Accordingly, respondent is hereby ORDERED TO REFUND in favor of petitioner the amount of P33,821,333.10 representing its unutilized input VAT for the fiscal period from April!, 2011 to March 31,2012.

WE CONCUR:

LO$BAUTISTA Associate Justice 39 Exhibits "P-37-1" to "P-37-4"; "P-19" to "P-22" 40 Exhibit "P-37-4(1/2)" and "P-22", ],inc 23D 41 Exhibit "P-37-4(1/2)", line 22 qtJv. . "11.v<.-- --s ~ MA. BELEN M. RINGPIS-LIBAN Associate Justice ' . FABON-VICTORINO

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

LOVELL Iy.BAUTISTA Associ4e Justice Chairperson CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, and the Division Chairperson's Attestation, is it 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