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

DECISION

CASTANEDA, JR., J.:

STATEMENT OF THE CASE

This Petition for Review filed by CE Casecnan Water and Energy Company, Inc. prays for the refund or issuance of tax credit certificate in the amount of P24,287,875.57, representing its alleged unutilized input value-added tax (VAT) attributable to its zero-rated sales for the first (Pt) quarter to the fourth (4th) quarter of calendar year (CY) 2012.

STATEMENT OF FACTS

Petitioner CE Casecnan Water and Energy Company, Inc. is a domestic corporation duly organized and existing under Philippine jk- erA case No. 8788 laws, with principal office in Pantabangan, Nueva Ecija.¹ It is primarily incorporated to design, develop, construct, erect, assemble, commission, finance, own and operate a combined irrigation and hydro-electric 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 (NIA) and for the supply of water for agricultural purposes to the NIA; 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.² Petitioner is also registered as a VAT taxpayer, with Taxpayer's Identification No. 004-500-931-000.³ On the other hand, respondent is the duly appointed Commissioner of the Bureau of Internal Revenue (BIR) vested with authority, among others, to act upon and approve claims for refund or tax credit of overpaid or erroneously paid internal revenue taxes. She holds office at the 5th Floor, BIR National Office Building, Agham Road, Diliman, Quezon City.

On June 26, 1995, petitioner and NIA entered into an Amended and Restated Casecnan Project Agreement, which amended, restated and continued in its entirety the original agreement they executed.⁴ Under the Agreement, petitioner shall deliver electricity and water to NIA for a fee.

Petitioner filed its Quarterly VAT Returns for the four quarters of 2012, through the Electronic Filing and Payment System (EFPS), on April 25, 20125, on July 25, 20126, on October 25, 20127, and on January 25, 20138, respectively. Subsequently, petitioner amended those Quarterly VAT Returns on November 14, 2013.~

erA case No. 8788

On November 19, 2013, petitioner filed an administrative claim for the refund or issuance of tax credit certificate for its alleged unutilized input VAT pertaining to the sale of power from its operations as a hydro-electric power plant during the four quarters of calendar year 2012.10 Due to the inaction of respondent on petitioner's refund claim, petitioner filed the instant Petition for Review before this Court on March 27, 2014. 11 In the Answer12 filed on April 24, 2014, respondent interposed the following special and affirmative defenses: "4.

Petitioner's alleged claim for refund is subject to administrative routinary investigation/examination by the Bureau.

5.

The amount of P24,287,875.57 representing alleged unutilized input VAT for the 1st to the 4th quarter of calendar year 2012 was not properly documented. 6.

In an action for refund, the burden of proof is on the taxpayer to establish its right to refund, and failure to sustain the burden is fatal to the claim for refund/credit. 7.

Petitioner must show that it has complied with the provisions of Section 112 of the NIRC of 1997 on the prescriptive period for claiming tax refund/credit. 8.

Petitioner must prove that it paid the alleged VAT input taxes for the periods stated. 9.

Petitioner must prove that its sale of services is subject to VAT at zero percent (0°/o). 10.

Petitioner must prove that its alleged unutilized input VAT has not been applied against any output tax liabilities both in the current or succeeding year./'-

11.

There is no record of petitioner ever submitting complete documents to substantiate its administrative claim for refund. Such is a requirement, otherwise, the administrative body will have sufficient reason to deny the claim. As held by the Honorable Court in the case of Atlas Consolidated Mining and Development Corporation vs. Commissioner of Internal Revenue, G.R. 145526, 16 March 2007:

'Petitioner's contention that non- compliance with Revenue Regulations 3-88 could not have adversely affected its case in the CTA indicates a failure on its part to appreciate the nature of the proceedings in that court. First, a judicial claim for refund or tax credit in the CTA is by no means an original action but rather an appeal by way of petition for review of a previous, unsuccessful administrative claim. Therefore, as in every appeal or petition for review, a petitioner has to convince the appellate court that the quasi-judicial agency a guo did not have any reason to deny its claims. In this case, it was necessary for petitioner to show the CTA not only that it was entitled under substantive law to the grant of its claims but also that it satisfied all the documentary and evidentiary requirements for an administrative claim for refund or tax credit. Second, cases filed in the CTA are litigated de novo. Thus, a petitioner should prove every minute aspect of its case by presenting, formally offering and submitting its evidence to the CTA. Since it is crucial for a petitioner in a judicial claim for refund or tax credit to show that its administrative claim should have been granted in the first place, part of the evidence to be submitted to the CTA must necessarily include whatever is required for the successful prosecution of an administrative claim.' (emphasis and underscoring supplied) ~

11.

The implementing rule for these complete documents required by law is RMO No. 53-98. Annex B-1 of said RMO lists all the required documents as follows:

VALUE-ADDED TAX

(For audit involving Claim for Refund/TCC) A.) Requirements from Taxpayer I.

Requirements mention in Annex B II.

Additional General Requirements

1) 3 copies

of 'Application

for

VAT

Credit/Refund'

2) Summary List of Local Purchases specifying the following:

XXX

XXX

XXX

3) Photocopies of VAT purchase invoices for purchase of goods and official receipts for purchase of services.

(The invoices/official receipts must be arranged according to the summary list) 4) Summary of importations made during the period with the following details:

XXX

XXX

XXX

5) Photocopies of invoices, import entry documents, official receipts or confirmation receipts evidencing payment of VAT.

(Segregate documents paid by cash from those paid by tax debit memo) 6) VAT Returns filed for the quarter showing that the amount applied for refund/TCC has been reflected as a deduction from the total available input tax, as well as VAT Return for the succeeding quarter jt- erA case No. 8788

7) Certification of taxpayer showing the amount of Zero-rated Sales, Taxable Sales and

Exempt Sales

8) A statement showing the amount and description of the sale of goods and services, name of persons or entities (except in case of exports) to whom the goods or services were sold and date of the transaction, where the applicant's zero-rated transactions are regulated by certain government agency. 9) Articles of Incorporation- for first time filers

10) Sales Contract/Agreement

11) BOI Certificate of Registration

12) BIR Certificate of Registration

13) Certification from BOI, DOF, BOC, EPZA, etc., that subject taxpayer has not filed similar claim for refund covering the same period. 14) Sworn statement that ending inventory as of the close of the period covered by the Claim has been used directly or indirectly in the products subsequently exported as supported by export documents, if the applicant is 100°/o exporter.

15) Documents of liquidation evidencing the actual utilization of the raw materials in the manufacture of goods at least 70°/o of which has been actually exported, if the applicant is an indirect exporter.

16) Copy of the ITR and Certified Financial

Statements, if applicable. ?v

CfA case No. 8788

17) Beginning and ending inventory of raw materials, work-in-process, finished goods, supplies and materials.

Additional Specific Requirements

1) For Zero-Rated Sales of Services (contractors, mining, etc)

a. Authenticated copy/ies of the contract/s showing the person/s for whom the services were rendered, amount of consideration, description of the services and documents evidencing actual payments.

b. Photocopies of official receipts and billings together with a summary of the date of billing, name of principal, official receipt number, date of receipt, amount in foreign currency and the corresponding value thereof, date of remittance, name of bank, bank credit memo number and amount remitted in pesos.

c. Bank credit memoranda and certificate from the BSP with information similar to 1-c (export sales) 12.

As stated above, the first documentary requirement is that provided in Annex B of the same RMO. Annex B provides for more requirements as follows:

VALUE-ADDED TAX

A) Requirements from Taxpayers 1) Proof of claimed tax credits 2) Proof of Tax Compliance Certificates applied 3) Xerox copy of used Tax Credit Certificate (TCC) with annotation of issued TDM at the back, if applicable 4) Proof of payment of deficiency tax, if any a) current year/period b) previous year/period~ erA case No. 8788

5) Certification of the appropriate government agency as to taxpayer's entitlement to tax incentives. if applicable 6) Xerox copies of the Official Receipts evidencing VAT payment on imported purchases, if applicable 7) Proof of exemption under special law, if applicable 8) Certification of the appropriate regulatory agency as to the exempt or zero-rated sales of the taxpayer under its regulatory supervision, if applicable 9) Certificate of Registration issued by the appropriate regulatory agency, together with the conditions attached to such registration, if applicable 10)

Proof of 'Approval for Effective Zero-Rating of

Sales', if applicable 11) Sample invoice/s for 'Export/Exempt Sales', if applicable 12) Proof that the acceptable foreign currency exchange proceeds on export sales/foreign currency denominated sales had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP), if applicable.

13.

Far from complying with the checklist of requirements, petitioner merely stated in the petition that it filed an administrative claim for refund together with supporting documents. This is not a claim for erroneously or illegally collected taxes where petitioner has the discretion of choosing the evidence it deems fit to prove its case.

This is a claim for excess but legally collected, unutilized input taxes. It does not have to prove its case because the law already acknowledges it is entitled to refund. Thus, it merely has to substantiate the export sales and the excess amount.

Hence, petitioner's failure to comply with the duly mandated legal requirements in such claims for refund/tax credit warranted the denial by inaction of the administrative claim. 14.

The power to tax is the most effective instrument to raise needed revenues to finance and~ support the myriad activities of the government for the delivery of basic services essential to the promotion of the general welfare and enhancement of peace, progress, and prosperity of the people (Mactan Cebu International Airport Authority vs. Marcos, 261 SCRA 667, 690). Consequently, any delay in implementing tax measures would be to the detriment of the public. It is for this reason that claims for refund are required to be done within certain time frames. In the instant petition, the failure of petitioner to comply with such periods is fatal to its cause. 15.

Moreover, petitioner's failure to submit documents supporting its claim for refund makes its administrative claim for refund pro-forma. This pro-forma administrative claim should not be taken as proper compliance with the requirements of the law that an administrative claim for refund should have been filed prior to the institution of a judicial claim for refund. Thus, without a validly and duly filed administrative claim for refund, the Honorable Court is without jurisdiction to entertain the Petition for Review. Petitioner's failure to comply with a condition precedent prior to the institution of its petition for review makes its dismissible for absence of jurisdiction on the part of the Honorable Court. 16.

The claimant has the burden of proof to establish the factual basis of his claim for tax credit or refund.

After all tax refunds, like tax exemptions, are construed strictly against the taxpayer (Citibank N.A. vs.

Court of Appeals and Commissioner of Internal

Revenue, 280 SCRA 459; Commissioner of Internal Revenue vs. Tokyo Shipping Co., Ltd., 244 SCRA 332, both cited in Benguet Corporation vs. Commissioner of Internal Revenue, CTA Case No. 5392 promulgated October 30, 1998). 17.

Partaking of the nature of exemptions, claims for refund are strictly construed against the claimant and cannot be allowed unless granted in the most explicit and categorical language (Sps. Aguilar vs. Commissioner of Internal Revenue, et al., CA G.R.SP No. 16432, March 30, 1999). Being in the nature of tax exemptions, these claims are regarded as in derogation of sovereign authority and to be construed strictissimi juris against the~ claimant and liberally in favor of the taxing authority (Commissioner of Internal Revenue vs. Procter and Gamble Philippines Manufacturing Corporation, 204 SCRA 377).

18.

Claims for refund are construed strictly against the claimant for the same partake the nature of exemption from taxation (Commissioner of Internal Revenue vs. Ledesma, 31 SCRA 95) and such, they are looked upon with disfavor (Western Minolco Corp. vs. Commissioner of Internal Revenue, 124 SCRA 1211)." The case was scheduled for pre-trial conference on June 5, 2014. Accordingly, respondent's Pre-Trial Brief and petitioner's Pre-Trial Brief were filed on May 23, 201513 and on May 30, 201514, respectively. The parties submitted their Joint Stipulation of Facts and Issues15 on June 20, 2014. Thereafter, the Court issued a Pre-Trial Order16 on July 3, 2014.

Upon motion of petitioner, the Court commissioned Mr. Protacio T. Tacandong as the Independent Certified Public Accountant (CPA) for this case on July 21, 2014. To prove its claim, petitioner presented Leilah Yasmin E. Alpad and Protacio T. Tacandong as its witnesses. Petitioner likewise filed a Formal Offer of Evidence on November 17, 2014, consisting of Exhibits "P-1" to "P-192", inclusive of submarkings. In the Resolution17 dated January 8, 2015, the Court admitted Exhibits "P-1" to "P-113", "P-116" to "P-187", and "P-191" to "P-192"; but denied Exhibits "P-114" to "P-115", "P-188" to "P-189", and "P-190" for petitioner's failure to present the original copies for comparison.

On the other hand, respondent manifested through her counsel during the hearing on January 28, 2015 that she has no witness to ;L

present and she is submitting this case for decision based on the pleadings.

The Court declared this case submitted for decision on June 18, 2015,18 after petitioner filed its Memorandum19 through registered mail on June 8, 2015 and received by the Court on June 11, 2015, and after respondent filed her Memorandum20 on February 25, 2015.

STATEMENT OF ISSUES

The parties submitted the following issues21 for the Court's resolution:

1.

Whether or not petitioner's alleged input VAT for the period from the 1st quarter to 4th quarter of CY 2012 in the total amount of P24,287,875.57 is substantiated by documentary evidence in the form of invoices and official receipts; 2.

Whether or not petitioner's alleged input VAT for the period from 1st quarter to 4th quarter of CY 2012 in the total amount of P24,287,875.57 was applied or credited against any output VAT of the petitioner in the same or subsequent quarters; 3.

Whether or not petitioner's alleged input VAT for the period from 1st quarter to 4th quarter of CY 2012 amounting to P24,287,875.57 is attributable or allocable to zero-rated sales of generated power; 4.

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

5.

Whether or not petitioner is entitled to a refund and/or issuance of a tax credit certificate for its unutilized input VAT amounting to P24,287,875.57. The above-enumerated issues may be summarized as follows: "Whether or not petitioner is entitled to a refund or issuance of tax credit certificate in the amount of P24,287,875.57, allegedly representing its unutilized input VAT incurred from its purchases of goods and services attributable to its zero-rated sales of power to NIA for the four quarters of CY 2012."

DISCUSSION/RULING

Section 112(A) of the National Internal Revenue Code (NIRC) of 1997, as amended, lays down the requisites for the refund or tax credit of input tax due or paid attributable to zero-rated or effectively zero- rated sales, quoted hereunder for easy reference: "SEC. 112. Refunds or Tax Credits of Input Tax. - (A) Zero-rated or Effectively Zero-rated Sales. - Any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales under Section 106(A)(2)(a)(1), (2) and (b) and Section 108(8)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero- rated sale and also in taxable or exempt sale of goods or properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales: Provided, finally, That for a person making sales that are 1z-- zero-rated under Section 108(8)(6), the input taxes shall be allocated ratably between his zero-rated and non-zero- rated sales."

Based on the foregoing provision, 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 satisfied:

1. that the taxpayer-claimant must be VAT-registered;

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

3. that input taxes were incurred or paid;

4. that such input taxes were attributable to zero-rated or effectively zero-rated sales;

5. that the input taxes were not applied against any output VAT liability; and

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

Timeliness of the filing of the administrative and judicial claims This Court shall determine first the timeliness of the filing of petitioner's administrative and judicial claims. As explicitly stated in Section 112(A) of the NIRC of 1997, as amended, the application for tax credit certificate or refund of unutilized excess input VAT must be filed within two years after the close of the taxable quarter when the zero-rated or effectively zero- rated sales were made.

The present claim covers the four taxable quarters of CY 2012 which closed on March 31, 2012, on June 30, 2012, on September 30, 2012, and on December 31, 2012, respectively. Records confirm that petitioner's administrative claim for refund was timely filed, as shown below:~

Period

Close of Taxable

Covered

_(_CY 2012)

Quarter

1st Quarter March 31, 2012 2nd Quarter

June 30 2012

3rd Quarter September 30, 2012 4th Quarter December 31, 2012

Last Day for Filing

Date of Filing of of Administrative

Administrative

Claim for Refund

Claim for Refund

March 31, 2014 June 30, 2014 November 19, 201322 September 30, 2014 December 31, 2014 As to the timeliness of petitioner's judicial appeal, the pertinent provision is Section 112(C) of the NIRC of 1997, as amended, which states:

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

XXX

XXX

XXX

(C) Period within which Refund or Tax Credit of Input Taxes shall be Made. - In proper cases, the Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in accordance with Subsection (A) hereof.

In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty

(30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty day- period, appeal the decision or the unacted claim with the Court of Tax Appeals."

Respondent argued that since petitioner failed to submit the required complete documents in support of the administrative claim, there was no valid and duly filed administrative claim for refund. As such, this Court has no jurisdiction to entertain this Petition for Review.)h--

erA Case No. 8788

Records reveal that upon filing of the administrative claim on November 19, 2013/3 petitioner simultaneously submitted the supporting documents, to wit: "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 Tax

Credits/Refunds'

2. Schedule/Summary list of domestic purchases of non-capital goods/capital goods not exceeding P1 m iII ion/ services; domestic purchases/importations of capital goods exceeding

P1

million with amortization of deferred input VAT; importations of non-capital goods; and services rendered by non- residents for first to fourth quarters of 2012- 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 (BOC)/Statements of settlement of duties and taxes/Bank certifications/Invoices issued by foreign suppliers of goods 5.

BIR Forms 1600 - 'Withholding VAT returns' and payment acknowledgment receipts for 2012 6.

BIR Forms 2550Q- 'Quarterly VAT Returns' for first to fourth quarters of 2012 - original (returns only) and amended (returns and schedules) 7.

BIR Forms 2550Q- 'Quarterly VAT returns' for first to third quarters of 2013 and Schedule which shows that the claim for VAT refund for 2012 was not utilized/applied against output VAT for succeeding quarters

8. Schedule/Summary list of zero-rated and VATable sales for first to fourth quarters of 2012 - print out/soft copies

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

erA Case No. 8788

10. Zero-rated sales invoices issued to NIA

11. Zero-rated official receipts issued to NIA

12. VAT sales invoices issued to NIA

13. VAT official receipts issued to NIA

14. VAT official receipts issued for miscellaneous collections

15. Certificate of accreditation issued by DOE

16. Certificate of compliance issued by the Energy Regulatory Commission- original and renewal

17. Project Agreement between CE Casecnan and NIA

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

Commission (SEC)

19. General Information Sheet filed with the SEC

20. Certificate of registration issued by the BIR

21. Form 0605- 'Annual VAT registration fee' payment for the year 2012

22. BIR Form 1702 - 'Annual income tax return' for taxable year ended December 31, 2012 together with the audited financial statements

23. BIR Forms 2306 -

'Certificate of Final VAT' for

January to December 2012

24. Authority to print official receipts/sales invoices and use of computerized accounting system issued by

the BIR

25. Books of accounts for 2012 (in CD copy)

26. Summary of Philippine Dealing System (PDS) exchange rates used by CE Casecnan

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

Finance

28. Certification that VAT on importation of goods (capital and non-capital) were duly remitted to the

BOC

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

EPIRA Law

30. Copy of Section 108 (B) (7) and Section 112 (A) of RA 9337 or the National Internal Revenue Code, as amended

31. Copy of Section 4.108-5 of RR 16-2005 or the Consolidated Value-Added Tax Regulations of 2005"jt.---

Contrary to

respondent's allegation, petitioner informed respondent, through the Letter dated November 19, 201324, that the enumerated documents are considered as the complete supporting documents, viz:

"We wish to inform you that these constitute the complete set of documents and schedules of CE Casecnan to support its input VAT claim for the first to fourth quarters of calendar year 2012. Further, the books of accounts and accounting records of CE Casecnan are already available for your audit and verification. xxx." The term "complete documents" under Section 112(C) of the NIRC of 1997, as amended, should be understood to refer to those documents that are necessary to support the application for refund or tax credit certificate, as determined by the taxpayer.

The BIR

examiner can require the taxpayer to submit additional documents but the examiner cannot demand what type of supporting documents should be submitted. Otherwise, the taxpayer will be at the mercy of the examiner, who may require the production of documents that the taxpayer cannot submit. Moreover, it is basic that respondent ought to know the tax records of all taxpayers. 25 Considering the foregoing and without respondent's written notice informing petitioner that the submitted documents are incomplete or requiring petitioner to submit additional documents, the 120-day period must be reckoned from November 19, 2013, the date when petitioner filed its administrative claim together with the complete set of supporting documents. Moreover, the Supreme Court already explained in the case of Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenuti-6 that it is the taxpayer and not the BIR who determines what relevant supporting documents to submit as basis of its claim. Likewise, the question of "when should the submission of documents be deemed 'completed' for purposes of determining the running of the 120-day period" had already been clarified therein, to wit: jv

"xxx for purposes of determining when the supporting documents have been completed - it is the taxpayer who ultimately determines when complete documents have been submitted for purposes of commencing and continuing the running of the 120-day period After all, he may have already completed the necessary documents the moment he filed his administrative claim, in which case, the 120-day period is reckoned from the date of filing.

XXX

XXX

XXX

Then, except in those instances where the BIR would require additional documents to fully appreciate a claim for tax credit or refund, in terms what additional document must be presented in support of a claim for tax credit or refund- it is the taxpayer who has the right and the burden of providing any and all documents that would support his claim for tax credit or refund. After all, in a claim for tax credit or refund, it is the taxpayer who has the burden to prove his cause of action. As such, he enjoys relative freedom to submit such evidence to prove his claim. The foregoing conclusion is but a logical consequence of the due process guarantee under the Constitution. Corollary to the guarantee that one be afforded the opportunity to be heard, it goes without saying that the applicant should be allowed reasonable freedom as to when and how to present his claim within the allowable period.

Thereafter, whether these documents are actually complete as required by law- is for the CIR and the courts to determine. Besides, as between a taxpayer-applicant, who seeks the refund of his creditable input tax and the CIR, it cannot be denied that the former has greater interest in ensuring that the complete set of documentary evidence is provided for proper evaluation of the State.

XXX

XXX

XXX r

In all cases, whatever documents a taxpayer intends to file to support his claim must be completed within the two-year period under Section 112(A) of the NIRC. The 30- day period from denial of the claim or from the expiration of the 120-day period within which to appeal the denial or inaction of the CIR to the CTA must also be respected.

XXX

XXX

XXX

As explained earlier xxx, taxpayers cannot simply be faulted for failing to submit the complete documents enumerated in RMO No. 53-98, absent notice from a revenue officer or employee that other documents are required. Granting that the BIR found that the documents submitted by Total Gas were inadequate, it should have notified the latter of the inadequacy by sending it a request to produce the necessary documents in order to make a just and expeditious resolution of the claim. Indeed, a taxpayer's failure with the requirements listed under RMO No. 53-98 is not fatal to its claim for tax credit or refund of excess unutilized excess VAT. This holds especially true when the application for tax credit or refund of excess unutilized excess VAT has arrived at the judicial level. After all, in the judicial level or when the case is elevated to the Court, the Rules of Court governs. Simply put, the question of whether the evidence submitted by a party is sufficient to warrant the granting of its prayer lies within the sound discretion and judgment of the Court." Applying the foregoing to the instant case, petitioner's judicial claim filed on March 27, 201427 is well within the period prescribed by law, to wit:

Date of Filing of the

End of the 120-day

End of the 30-

Administrative

period for the BIR day period from

Date of Filing

Claim and

Commissioner to

the expiration of

of the Judicial

Submission of

decide on the claim the 120-day

Claim

Documents

period November 19, 2013 March 19, 2014 April 18, 2014 March 27, 2014

erA case No. 8788

Petitioner is a VAT- registered entity As evidenced by its Certificate of Registration No. OCN 8PC0000019905/8 petitioner is registered, among others, as a VAT taxpayer.

Existence of zero-rated sales This Court has already ruled in previous cases29 involving the same parties and issues but different taxable periods, that petitioner's sale of electricity to NIA is zero-rated for VAT purposes. The governing law is Section 108(8)(7) of the NIRC of 1997, as amended by Republic Act No. 9337, and implemented by Section 4.108-S(b)(7) of Revenue Regulations 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°/o) rate:

XXX

XXX

XXX

(7) Sale of power or fuel generated through renewable sources of energy such as, but not limited to, biomass, solar, wind, hydropower, geothermal, ocean energy, and other emerging energy sources using technologies such as fuel cells and hydrogen fuels." Jz--

"SECfiON 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°/o) 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; Providect 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 4.108-3(f) of Revenue Regulations No. 16-2005 states: "SECfiON 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 10°/o 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°/o VAT. 'Generation companies' refers to persons or entities authorized by the Energy Regulatory Commission (ERC) to jh-- erA Case No. 8788 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, the sale of power generated through renewable sources of energy is subject to zero percent (0°/o) VAT. Same as in the previous cases, petitioner proved in the instant case that (a) its 140-megawatt hydro-electric power plant project has been accredited by the Department of Energy (DOE) as a Private Sector Generation Facility (PSGF) under the Implementing Rules and Regulations of Executive Order No. 215, as amended;30 (b) the Energy Regulatory Commission (ERC) has issued Certificate of Compliance No. 10-06-GN 8-10701 for its generation facility;31 and (c) it generates power through its hydro-electric power plant and subsequently sells it only to NIA in accordance with the Amended and Restated Casecnan Project Agreement dated June 26, 1995.32 Thus, petitioner has sufficiently established that it is in the business of power generation and sold the corresponding generated power to NIA as VAT zero-rated sales.

For the four taxable quarters of CY 2012, petitioner generated total sales in the amount of P⁵,766,239,640.44. From this amount, the receipts of P2,886,785,784.52 were derived from sales of power generation services to NIA and declared by petitioner in its Amended Quarterly VAT Returns as zero-rated sales, to wit:

Period

VAT

Covered

Sales/Receipt

Zero-Rated

(2012)

-Private

Sale to Government

Sales/Receipts

1st Qtr33 p - p 963 812 657.26 p 2nd Qtr34 76 142.04 551 742 901.05 3rd Qtr35 460,517.64 540 764,013.83 4th Qtr36 411,984.28 822 185 639.82 30 Exhibit "P-2", docket, p. 451. 31 Exhibit "P-5", docket, pp. 536 to 539. 32 Exhibit "P-4", docket, pp. 453 to 529 and Exhibit "P-6". 33 Exhibits "P-11", docket, pp. 557 to 558 and "P-24". 34 Exhibits "P-12", docket, pp. 559 to 560 and "P-25". 35 Exhibits "P-13", docket, pp. 561 to 562 and "P-26". 36 Exhibits "P-14", docket, pp. 563 to 564 and "P-27". 677 382 072.28 388 602 060.00 965 436 346.21 855 365,306.03

Total

p 1 641 194 729.54 940 421I103.09 1 506 660,877.68 1 677 962 930.13

P948,643.96 Petitioner’s zero-rated sales were evidenced by sales invoices and official receipts?” pre-printed with the words “zero-rated”, which were summarized in its Schedule of Revenues®® and Amended Summary List of Sales?? as well as the National Irrigation Administration (NIA) Foreign Exchange Rates*° as reference for zero- rated sales transactions traded in US Dollars. The reported zero-rated sales of P2,886,785,784.52 are supported by official receipts, detailed as follows:

ee Laie Loe | ee | Sa

Number OR Date In US Rate In Peso

6 | "p36" pages | 0636 | 26-Jan-12 | == -| ~—0.0000| ~—_—_—6,539, 176.09 | 129,180,240.00 "p-36" page 9 42,791,964.12 "P-36" page 11 0639 29-Mar-12 3,032,400.00 42.7000 129, 483,480.00 "P-36" page 13 0640 29-Mar-12 512,278.84 42.7000 21,874,306.47 sutott | | | as682,azs.s7| ———_|_677,382,072.28

Second Quarter

"P-37" page 1 128,725,380.00 "p-37" page 3 131,909,400.00 "p-37" page 5 127,967,280.00 Sub-Totaa | | ~—————|_9,097,200.00| —=_—|__388,602,060.00

Third Quarter

| "P-38"page3 | 0645 | 26-Aug-12 | _3,032,400.00| 41.9000 | _127,057,560.00 | | sub-total | | | 23,082,811.49| | 965, 436,346.21

Fourth Quarter

| "p-39" page3 | 0650 | 30-Oct-12 | _5,775,106.59| 40.9500 | _236,490,614.86 | "p-39" page 9 | "P-39" page 11 | 0654 | 27-Dec-12 | _3,599,046.33| 40.9000 | _147,200,994.90 | | Sub-total | | | 20,943,183.37 | Total Zero-Rated Sales (68,805,313.83| | 2,886, 785,784.52_ 37 Exhibits “P-36” to “P-39”. 38 Exhibits “P-32” to “P-35”. 39 Exhibits “P-28” to “P-31”. 40 Exhibit “P-21”, Annex B.

—— >

As such, petitioner's receipts/collections from its zero-rated sales of electricity generated through a renewable source of energy, particularly, hydropower, are fully substantiated. 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 CY 2012 in the amount of P2,886,785,784.52, the Court shall now determine the amount of unutilized excess input VAT attributable thereto. For the four quarters of CY 2012, petitioner reported a total amount of P48,974,437.07 input VAT arising from its amortization of input VAT on capital goods exceeding P1,000,000.00, purchase of capital goods not exceeding P1,000,000.00, domestic purchases of non-capital goods, importation of non-capital goods, domestic purchases of services, and services rendered by non-residents, as follows:

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

P-11/ P-24

P-12/ P-25

P-13/ P-26

P-14/ P-27

Total

Amortization of Input VAT on Capital Goods

Input Tax

Deferred on

Capital Goods

exceeding P1M from Previous

_Quarter

p 2,380 471.52 p 2 761420.32 p 3 353 630.81 p 3 374 627.89 p 2 380 471.52

Purchase of

Capital Goods

exceeding P1M 620 228.31 872 515.18 318 195.61 235 383.43 2 046 322.53

Input Tax on

Purchases of

Capital Goods

exceeding P1M deferred for the succeeding period (2,761 420.32) (3,353 630.81) (3 374 627.89) (3.299 015.45) (3 299 015.45)

Amortization

239,279.51 280,304.69 297.198.53 310.995.87 1,127. 778.60

Current

Transactions:

-

Purchase of

Capital Goods not exceeding P1M 2,877.12 40 758.25 38,999.29 168,702.68 251 337.34

Domestic

Purchases Of

Goods Other than

Capital Goods

685 334.50 801188.65 757.782.08 931172.39 3 175 477.62

Importation of

Goods other than

Capital Goods

322 625.00

Domestic

Purchase of

Services

12,504 565.80

Services

Rendered by

Non-residents

114 821.36

Total Input

from Current

Purchases

:1.3,630. 223.78 Total Input VAT P13,869,503.29 521 660.00 101,005.00 508 818.00

1454 108.00

8 805 408.49 12 414,986.56 9 120 961.90 42 845 922.75 - - 4 991.40 119 812.76 :1.0,:1.69,0:1.5.39 :1.3 3:1.2,772.93 :1.0,734,646.37

47. 846. 658.47 P10,449,320.08 P13,609,971.46 P11,045_,642.24 P48,974,437 .07 Out of the P48,974,437.07 allowable input VAT for CY 2012, petitioner is claiming the refund of the amount of P24,287,875.57 allegedly attributable to its zero-rated sales, using the following allocation:

VAT

Sales/Receipt -

Zero-Rated

Period Covered

Private

Sale to Government

Sales/Receipts

Total

(CY 2012)

(a) (b) (c) (d)=(a)+(b)+( c) 1st Qtr - p 963 812,657.26 p 677,382 072.28 p 1 641194 729.54 2nd_Qtr 76 142.04 551 742L901.05 388 602 060.00 940 421,103.09 3rd Qtr 460 517.64 540 764,013.83 965,436 346.21 1 506 660,877.68 4th Qtr 411 984.28 822 185,639.82 855,365 306.03 1 677 962,930.13

Total

p 948,643.96 p 2,878,505,211.96 p 2,886,785,784.52 p 5,766,239,640.44

Actual Input VAT

Actual Input VAT

attributable to Sales attributable to Sales

Total Input VAT to Private

p p Substantiated Ingut VAT attributable to zero-rated sales p 24,393,994.83

Less: Output VAT

Output VAT on sales to private P113,837.28 Less: Input VAT attributabld to sales to private 7 717.99 106,119.29

Input VAT Claim for Refund/TCC

P24,287,875.5441 41 With difference of P0.03 due to rounding off.

1.

2.

3.

4.

5.

6.

7.

To determine the accuracy of petitioner's declaration, Mr. Protacio T. Tacandong, the Court-commissioned Independent CPA, examined the voluminous documents of petitioner in support of its claim for refund.

Based on the Independent CPA's findings, petitioner's claim in the amount of P283,866.11 shall be disallowed for petitioner's failure to comply with the invoicing and substantiation requirements provided by Sections 110(A), 113(A) and (B), 237, and 238 of the NIRC of 1997, as amended, and as implemented by Sections 4.110-1, 4.110-2, 4.110- 8, and 4.113-1 of Revenue Regulations No. 16-05, as amended, as shown below:

Reference

(Annex to

Exhibit P-

2nd 3rd 4th

Particulars

21) 1st Quarter

Quarter

Quarter

Quarter

Amortized input VAT on

P-1Q

p 13,232.13 p p p purchase of capital goods

P-2Q

13,232.13 supported by TIN # Invoice with notarized certification from supplier that VAT paid by

P-3Q

4,410.92 the Company was already remitted to the BIR Input VAT on domestic

Q-1Q

6,254.04 purchases of goods supported

Q-2Q

2,913.99 by documents other than a

Q-3Q

499.51 TIN VAT invoice

Q-4Q

1,899.61 Input VAT on domestic purchases of goods supported

R-3Q

1,286.25 only by a photocopy of the

R-4Q

2,523.21 TIN VAT invoice Input VAT on domestic purchases of goods supported

5-1Q

301.87 by a TIN VAT invoice not issued in the name of the

5-3Q

9.08 Company or without the name

of the Company

Input VAT on domestic

T-1Q

986.66 purchases of goods supported

T-2Q

524.75 by a TIN VAT invoice with name of the Company

T-3Q

133.28 written/stamped/altered without countersignature or

T-4Q

1,599.05 with countersignature but without letter from supplier Input VAT on domestic purchases of goods supported by a TIN VAT invoice but the

U-1Q

36.75 name of the Company was misspelled Input VAT on domestic

V-1Q

2,256.03 purchases of goods supported

V-2Q

2,351.12 by tape receipt with the name

of the Company

V-3Q

9,551.72 written/stamped/altered without countersignature or

V-4Q

2,266.54 with countersignature but without letter from supplier

Total

13,232.13 13,232.13 4,410.92 6,254.04 2,913.99 499.51 1,899.61 1,286.25 2,523.21 301.87 9.08 986.66 524.75 133.28 1,599.05 36.75 2,256.03 2,351.12 9,551.72 2,266.54

F

8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

Input VAT on domestic purchases of goods supported

by a TIN VAT Invoice but

without invoice date Input VAT on domestic purchases of goods supported by a TIN VAT Invoice issued in the name of the Company but without the Company's TIN and/or address Input VAT on domestic purchases of goods supported by a TIN VAT Invoice issued in the name of the Company but with misstatement in the Company's TIN and/or address Input VAT on domestic purchases of goods supported by an invoice with TIN # only Input VAT on domestic purchases of goods supported by a TIN VAT invoice with alteration in date without countersignature or with countersignature but without letter from supplier Input VAT on domestic purchases of goods supported by a TIN VAT invoice with alteration in taxable and/or gross amount without countersignature or with countersignature but without letter from supplier Input VAT on domestic purchases of goods supported by a TIN VAT invoice issued in the name of the Company where VAT was not separately indicated Input VAT on domestic purchases of goods supported by a TIN VAT invoice with alteration in the amount of VAT separately indicated without countersignature or with countersignature but without letter from supplier Input VAT on domestic purchases of services supported by documents other than a TIN VAT OR Input VAT on domestic purchases of services supported by a TIN VAT OR not issued in the name of the Company or without name of

the Company

Input VAT on domestic purchases of services supported by a TIN VAT OR with the name of the Company written/stamped/altered without countersignature or with countersignature but without letter from supplier

W-2Q

1,543.45 1,543.45

X-3Q

420.86 420.86

Y-2Q

4,325.31 4,325.31

Y-3Q

636.96 636.96

Y-4Q

1,467.86 1,467.86

Z-1Q

12.86 12.86

AA-1Q

32.71 32.71

BB-1Q

542.10 542.10

BB-2Q

1,011.03 1,011.03

BB-4Q

30.54 30.54

CC-1Q

2,318.03 2,318.03

CC-2Q

50.36 50.36

CC-4Q

53.57 53.57

DD-3Q

125.24 125.24

EE-1Q

1,370.64 1,370.64

EE-2Q

338.33 338.33

EE-3Q

230.97 230.97

EE-4Q

572.95 572.95

FF-1Q

3,412.56 3,412.56

FF-2Q

44.65 44.65

FF-3Q

21.32 21.32

FF-4Q

457.96 457.96

GG-1Q

129.44 129.44

GG-2Q

91.92 91.92

GG-3Q

9.21 9.21

GG-4Q

85.49 85.49

HH-1Q

190.29 190.29 20.

21.

22.

23.

24.

25.

26.

27.

28.

29.

erA case No. 8788

Input VAT on domestic purchases of services supported by a TIN VAT OR but the name of the Company was misspelled Input VAT on domestic purchases of services supported by tape receipt without the Company's name or the Company's name was written/stamped/altered without countersignature or with countersignature but without letter from supplier Input VAT on domestic purchases of services supported by a TIN VAT OR that is not BIR-reaistered Input VAT on domestic purchases of services supported by TIN VAT OR but without OR date Input VAT on domestic purchases of services supported by a TIN VAT OR issued in the name of the Company but without the Company's TIN and/or address Input VAT on domestic purchases of services supported by a TIN VAT OR issued in the name of the

Company but with the

Company's TIN and/or address stamped/added/altered without countersignature or with countersignature but without letter from suoolier Input VAT on domestic purchases of services supported by a TIN VAT OR issued in the name of the

Company but with

misstatement in the Company's TIN and/or address Input VAT on domestic purchases of services supported by receipts with TIN #only; TIN-V; TIN-YAT/NV or no TIN OR Input VAT on domestic purchases of services supported by a TIN VAT OR with alteration in date without countersignature or with countersignature but without letter from suoolier Input VAT on domestic purchases of services supported by a TIN VAT OR printed with "not allowed for claiming Input VAT" (or similar statements) Input VAT on domestic purchases of services supported by a TIN VAT OR with alteration in taxable or gross amount without countersignature or with

HH-2Q

HH-4Q

II-1Q

II-2Q

II-3Q

II-4Q

JJ-1Q

JJ-4Q

KK-1Q

KK-3Q

LL-1Q

LL-2Q

LL-3Q

LL-4Q

MM-1Q

NN-2Q

00-2Q

00-3Q

PP-1Q

PP-3Q

QQ-1Q

QQ-2Q

QQ-4Q

RR-1Q

RR-2Q

RR-3Q

RR-4Q

23.04 23.04 644.25 644.25 2,792.92 2,792.92 2,268.41 2,268.41 1,741.01 1,741.01 3,339.67 3,339.67 42,651.93 42,651.93 12.11 12.11 41.79 41.79 25.82 25.82 267.17 267.17 1,014.96 1,014.96 2,518.00 2,518.00 14,348.29 14,348.29 1,018.56 1,018.56 2,260.60 2,260.60 69.64 69.64 10.39 10.39 10.71 10.71 984.00 984.00 69.64 69.64 1,087.40 1,087.40 134.69 134.69 170.04 170.04 902.43 902.43 26.84 26.84 52,933.71 52,933.71 r- 30.

31.

32.

33.

34.

35.

36.

37.

38.

countersignature but without letter from supplier Input VAT on domestic purchases of services supported by a TIN VAT OR issued in the name of the Company where VAT was not separately indicated Input VAT on domestic purchases of services supported by a TIN VAT OR with alteration in the amount of VAT separately indicated without countersignature or with countersignature but without letter from supplier Input VAT on importation of goods supported by photocopies or scanned copies of BOC ORs only Amortized input VAT on importation of capital goods exceeding P1M supported only by photocopies of IEIRD and

BOCOR

Overclaimed portion of input VAT arising from erroneous computation of amortized input VAT on purchase of capital goods (e.g., arithmetical error, rounding differences) Overclaimed portion of input VAT arising from erroneous computation of input VAT on domestic purchases of goods(e.g., arithmetical error, rounding differences) Overclaimed portion of input VAT arising from erroneous computation of input VAT on domestic purchases of services (e.g., arithmetical error, rounding differences) Overclaimed portion of input VAT arising from foreign exchange (forex) rate used in foreign currency denominated purchases of services Input VAT on domestic purchases of goods and services where supporting documents were not available for verification

55-1Q

696.74 696.74

55-2Q

475.55 475.55

55-3Q

256.76 256.76

55-4Q

981.42 981.42

TT-1Q

46.77 46.77

TT-3Q

59.79 59.79

UU-3Q

11,281.00 11,281.00

W-3Q

1,977.62 1,977.62

W-4Q

5,932.86 5,932.86

WW-3Q

0.22 0.22

XX-1Q

7.76 7.76

XX-2Q

13.43 13.43

XX-3Q

0.20 0.20

XX-4Q

299.11 299.11

YY-1Q

20.43 20.43

YY-2Q

21.55 21.55

YY-3Q

3,967.26 3,967.26

YY-4Q

24.93 24.93

ZZ-1Q

0.51 0.51

ZZ-2Q

0.03 0.03

ZZ-3Q

2.71 2.71

ZZ-4Q

0.52 0.52

AAA-1Q

29,096.74 29,096.74

AAA-2Q

2,014.62 2,014.62

AAA-3Q

2,991.00 2,991.00

AAA-4Q

6,533.31 6,533.31

TOTAL

P107,967.82 P36,578.70 P43,177.94 P96,141.65 P283,866.11 In addition, the Court finds that the input VAT in the aggregate amount of P613,541.24 should likewise be disallowed for failure to meet the substantiation requirements prescribed under the afore- mentioned laws and regulations, detailed as follows: 5k- erA Case No. 8788

Exhibit

Vendor Name

1st Quarter 2nd Quarter

1. Input VAT amount not separately indicated in invoice/OR

"P-71"

South Star Drug Inc

p 26.84 page 167

"P-71"

South Star Drug Inc

51.83 page 168

"P-71"

South Star Drug Inc

155.64 page 169

"P-75"

All Recognition Gift (Roneena Inc)

1,960.71 page 9

"P-75"

All Recognition Gift (Roneena Inc)

1,928.57 page 10

"P-75"

Escosas Native Foods and Ihaw

48.75 page 66 I haw

"P-75"

Escosas Native Foods and Ihaw

76.61 page 68 I haw

Subtotal

4,248.95 -

"P-72"

Christian Edward C Tan

13.50 page 24

"P-76"

Cabanatuan Fastfood Ventures Inc

32.89 page 13

"P-76"

Escosas Native Foods Eva L Escosa

87.32 page 57

"P-76"

Escosas Native Foods Eva L Escosa

21.43 page 58

"P-76"

Golden Arches Development Corp

13.93 page 107

"P-76"

Gruppo De Guapo Gold Corp

9.75 page 112

"P-76"

Nueva Ecija Pro Health Inc

12.64 page 198

"P-76"

Nueva Ecija Pro Health Inc

12.64 page 199

"P-76"

The Lakeshore Toll Service Facility

36.86 page 299

Inc

Subtotal

- 240.96

"P-77"

Angela Amandy Velasco

_page 7

"P-77"

GEC OS Foods Corp

"P-77"

Kristian Rae G Aglibo Magellans

Garden Grill and Resto Bar

"P-77"

Peper Broers Inc

"P-77"

Peper Broers Inc

Subtotal

- -

"P-78"

Georgetown Electrical Systems

page 85

Subtotal

- -

TOTAL

4,248.95 240.96

2. Input VAT supported by ORs without Authority to Print (ATP)

"P-75"

Philippine Long Distance Telephone

443.02 page 179

Company

"P-75"

Philippine Long Distance Telephone

24,365.93 Qa_g_e 180

Company

"P-75"

Philippine Long Distance Telephone

10.01 page 181

Company

"P-75"

Philippine Long Distance Telephone

1,974.15 page 182

Company

"P-75"

Philippine Long Distance Telephone

40.95 page 183

Company

"P-75"

Philippine Long Distance Telephone

2,107.52 page 184

Company

3rd Quarter 4th Quarter

Total

p 26.84 51.83 155.64 1,960.71 1,928.57 48.75 76.61 - - 4,248.95 13.50 32.89 87.32 21.43 13.93 9.75 12.64 12.64 36.86 - - 240.96 225.00 225.00 22.39 22.39 89.68 89.68 245.89 245.89 31.07 31.07 614.03 - 614.03 1,928.57 1,928.57 - 1,928.57 1,928.57 614.03 1,928.57 7,032.51 443.02 24,365.93 10.01 1,974.15 40.95 2,107.52

"P-75"

"P-75"

"P-75"

"P-75"

"P-75"

"P-75"

"P-75"

"P-75"

"P-75"

"P-75"

"P-75"

"P-75"

"P-75"

"P-75"

"P-75"

"P-75"

"P-75"

"P-75"

"P-75"

"P-75"

"P-75"

"P-75"

paae 206

"P-75"

"P-75"

"P-75"

"P-75"

"P-75"

"P-75"

paqe 212

"P-75"

paqe 213

"P-75"

paqe 214

"P-75"

paae 215

"P-75"

paae 216

"P-75"

"P-75"

Philippine Long Distance Telephone

Comoany

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Comoany

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

35.63 35.63 1,959.55 1,959.55 30.00 30.00 1,975.06 1,975.06 28.40 28.40 1,943.12 1,943.12 35.91 35.91 1,944.18 1,944.18 443.02 443.02 24,365.93 24,365.93 28.31 28.31 1,945.75 1,945.75 33.37 33.37 1,967.29 1,967.29 35.76 35.76 1,967.07 1,967.07 26.79 26.79 1,945.38 1,945.38 31.69 31.69 1,948.13 1,948.13 34.93 34.93 1,903.29 1,903.29 443.02 443.02 24,365.93 24,365.93 2,097.24 2,097.24 38.59 38.59 1,968.50 1,968.50 20.43 20.43 1,939.72 1,939.72 35.27 35.27 2,026.03 2,026.03 37.15 37.15 1,996.77 1,996.77 29.27 29.27

"P-75"

"P-75"

"P-76"

"P-76"

"P-76"

"P-76"

"P-76"

"P-76"

"P-76"

"P-76"

"P-76"

"P-76"

"P-76"

"P-76"

"P-76"

"P-76"

"P-76"

"P-76"

"P-76"

paqe 225

"P-76"

paqe 226

"P-76"

"P-76"

"P-76"

"P-76"

"P-76"

paqe 231

"P-76"

"P-76"

"P-76"

"P-76"

"P-76"

paqe 236

"P-76"

paoe 237

"P-76"

"P-76"

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Subtotal

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

2,038.14 34.69 110,640.89 2,038.14 34.69 - - - 110,640.89 443.02 443.02 24,365.93 24,365.93 443.02 443.02 24,365.93 24,365.93 1,920.33 1,920.33 1,930.13 1,930.13 1,944.73 1,944.73 1,974.59 1,974.59 22.81 22.81 36.09 36.09 1,985.04 1,985.04 27.97 27.97 1,917.06 1,917.06 29.06 29.06 28.80 28.80 16.00 16.00 2,076.65 2,076.65 1,957.51 1,957.51 1,993.46 1,993.46 2,106.76 2,106.76 2,110.57 2,110.57 2,002.17 2,002.17 24,365.92 24,365.92 443.02 443.02 22.85 22.85 2,056.42 2,056.42 27.89 27.89 2,040.30 2,040.30 33.27 33.27 1,938.44 1,938.44 43.67 43.67

"P-76"

paae 240

"P-76"

paae 241

"P-76"

paae 242

"P-76"

paae 243

"P-76"

paae 244

"P-77"

paae 193

"P-77"

paae 194

"P-77"

paae 195

"P-77"

paae 196

"P-77"

paae 197

"P-77"

paae 198

"P-77"

paae 199

"P-77"

paae 200

"P-77"

oaae 201

"P-77"

paae 202

"P-77"

"P-77"

"P-77"

paae 205

"P-77"

.Paae 206

"P-77"

paae 207

"P-77"

paae 208

"P-77"

paae 209

"P-77"

oaae 210

"P-77"

oaae 211

"P-77"

oaae 212

"P-77"

oaae 213

"P-77"

oaae 214

"P-77"

oaae 215

"P-77"

oaae 216

"P-77"

oaae 217

"P-77"

paae 218

"P-77"

oaae 219

"P-77"

oaae 220

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Subtotal

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

CompanY

Philippine Long Distance Telephone

CompanY

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Companv

Philippine Long Distance Telephone

Companv

Philippine Long Distance Telephone

Companv

Philippine Long Distance Telephone

Companv

Philippine Long Distance Telephone

Comoanv

Philippine Long Distance Telephone

Comoanv

Philippine Long Distance Telephone

Comoany

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Companv

Philippine Long Distance Telephone

Companv

Philippine Long Distance Telephone

Companv

Philippine Long Distance Telephone

Companv

Philippine Long Distance Telephone

Companv

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Companv

2,277.96 31.23 2,055.96 21.18 1,999.58 - 111,055.32 2,277.96 31.23 2,055.96 21.18 1,999.58 - - 111,055.32 36.80 36.80 2,155.38 2,155.38 37.81 37.81 2,058.49 2,058.49 34.26 34.26 1,941.27 1,941.27 37.87 37.87 1,977.85 1,977.85 35.93 35.93 2,090.46 2,090.46 29.34 29.34 1,969.88 1,969.88 443.02 443.02 24,365.93 24,365.93 423.39 423.39 7.70 7.70 24,365.93 24,365.93 443.02 443.02 2,113.84 2,113.84 39.33 39.33 1,931.67 1,931.67 35.12 35.12 2,134.40 2,134.40 27.77 27.77 2,069.97 2,069.97 40.66 40.66 2,180.77 2,180.77 32.56 32.56

"P-77"

"P-77"

"P-77"

"P-77"

"P-77"

"P-77"

"P-78"

paqe 204

"P-78"

_p_qge 205

"P-78"

_page 206

"P-78"

page 207

"P-78"

J>age 208

"P-78"

"P-78"

"P-78"

"P-78"

"P-78"

"P-78"

"P-78"

"P-78"

"P-78"

"P-78"

paae 218

"P-78"

paae 219

"P-78"

oaae 220

"P-78"

paae 221

"P-78"

paae 222

"P-78"

"P-78"

"P-78"

"P-78"

paqe 226

"P-78"

paqe 227

"P-78"

paqe 228

"P-78"

paqe 229

"P-78"

paqe 230 erA Case No. 8788

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Subtotal

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

2,056.43 32.12 105.12 1.91 24,365.93 443.02 - 100,064.95 2,056.43 32.12 105.12 1.91 24,365.93 443.02 - 100,064.95 2,120.17 2,120.17 30.28 30.28 2,070.36 2,070.36 23.08 23.08 2,053.07 2,053.07 31.75 31.75 2,100.33 2,100.33 33.06 33.06 1,933.79 1,933.79 35.19 35.19 2,107.50 2,107.50 36.39 36.39 105.12 105.12 1.91 1.91 24,365.93 24,365.93 443.02 443.02 2,015.18 2,015.18 32.27 32.27 1,935.43 1,935.43 35.19 35.19 2,006.86 2,006.86 39.94 39.94 2,006.37 2,006.37 19.29 19.29 2,086.81 2,086.81 30.87 30.87 2,011.80 2,011.80

"P-78"

"P-78"

"P-78"

"P-78"

"P-78"

"P-78"

"P-78"

"P-78"

"P-78"

"P-78"

"P-78"

"P-78"

"P-78"

"P-78"

"P-78"

"P-78"

"P-78"

"P-78"

paae 248

"P-78"

paae 249

"P-78"

page 250

"P-78"

_page 251

"P-78"

"P-78"

"P-78"

"P-78"

"P-78"

"P-78"

"P-78"

"P-78"

"P-78"

"P-78"

"P-78"

paae 262

"P-78"

"P-78"

_page 264

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Compai}Y

Philippine Long Distance Telephone

Company

Philippine Long Distance Telephone

Company

36.88 36.88 36.18 36.18 2,114.93 2,114.93 39.54 39.54 2,159.02 2,159.02 34.61 34.61 1,903.78 1,903.78 22.37 22.37 2,093.08 2,093.08 36.05 36.05 2,128.88 2,128.88 38.81 38.81 2,113.26 2,113.26 105.12 105.12 1.91 1.91 24,365.93 24,365.93 443.02 443.02 20.43 20.43 2,063.43 2,063.43 34.60 34.60 2,052.56 2,052.56 34.76 34.76 1,911.82 1,911.82 38.70 38.70 2,104.38 2,104.38 32.34 32.34 2,003.73 2,003.73 36.23 36.23 2,111.05 2,111.05 1.91 1.91 105.12 105.12 443.02 443.02 24,365.93 24,365.93 105.12 105.12 !>--

"P-78" Philippine Long Distance Telephone 1

page 265 | Compan 91 1.91 page 267 | Compan : :

|| TOTAL 110,640.89 | 111,055.32 | 100,064.95 | 149,660.32 | 471,421.48

3. Input VAT supported by ORs without authorized signature , 8 Fairview Marine Transport Corp Pf 41,832.00 P| 41,832.00 "P-77" ra .

nage 49. | Fairview Marine Transport Corp Pf 51,857.14 P| 51,857.14 "p.77" 28,137.27 129,686.25

TOTAL

4, Input VAT supported by tape receipts

"P-77" | Makati Shangrila Hotel and Resorts

page 170 | Inc "p-85" .

nage 1 Canelle Food Corporation po

5. Input VAT supported by invoices issued not in the name of the company "p-79" 101,548.98 ee [verteromsorcan [| safc BE [rometerammorcem [|| sma [ tm C | Subtota—OSCSC=‘“*~sdSC“‘C*S “aonsaeas| __—- | 02,548.98 | Subtotal |e P| 28,137.27 | 28,137.27 | oC | 101,548.98 | 28,137.27 | 173.56 173.56 83.04 83.04 256.60 11.76 19.19 28.93 59.88 "p-79" .

nade 4 Sto Rosario Drug Corporation 28.93 TOTAL 59.88

6. Input VAT supported by ORs pre-printed/stamped with "NOT ELIGBLE FOR INPUT TAX” "p77" "p.77" "p-77" nade 248 Robeth Dyen Inc

TOTAL

7. Input VAT supported by Invoice with alteration but without counter-signature "p-8{" nage 4 South Star Drug Inc Pf 26.68

8. Input VAT supported by invoice without the name of the purchaser "P-106" .

3

TOTAL

GRAND TOTAL P114,949.72 | P111,296.28 | P202,577.68 | P184,717.56 | P613,541.24 erA Case No. 8788

It is worthy to emphasize that the Philippine Long Distance Telephone Company's Permit To Use Computerized Accounting System42 submitted by petitioner was denied admission as evidence by this Court on March 17, 201543• Accordingly, the Court disallows petitioner's claim in an aggregate amount of P471,421.48, which was supported by the computer-generated Official Receipts from the Philippine Long Distance Telephone Company, due to the lack of authority to print the same. Therefore, out of petitioner's reported input

VAT

of P48,974,437.07 for CY 2012, only the amount of P48,077,029.72 represents petitioner's valid input VAT, as computed below: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

Total

Total Input VAT

p 13 869,503.29 p 10 449 320.08 p 13 609 971.46 p 11 045 642.24 p 48 974 437.07

Less: Disallowances

Per Independent CPA

107,967.82 36 578.70 43 177.94 96,141.65 283 866.11 Per this Court's

Findings

114,949.72 111 296.28 202 577.68 184,717.56 613 541.24

Substantiated Input VAT

P13 646,585.75 P10,301,445.10 P13,364,215.84 PlO 764 783.03 P48 077,029.72 1st Qtr 2nd Qtr Allocation of validly substantiated input VAT payments to petitioner's zero-rated sales and sales subject to 12°/o VAT The substantiated input VAT of P48,077,029.72 is not entirely attributable to petitioner's zero-rated sales since petitioner had sales to government and private entities for CY 2012 which were subject to 12°/o VAT.

Allocating the substantiated input VAT of P48,077,029.72 based on the percentage of each type of sales to total sales would show that only the amount of P23,940,236.44 is attributable to zero- rated sales, while the rest of the input VAT pertains to sales subject to 12°/o VAT, i.e., input VAT attributable to sales to private entities in the amount of P7,561.94, and input VAT attributable to sales to government in the amount of P24,129,231.35, as shown below:

Sales to

Sales to Private

Government

Zero-Rated Sales

Total Sales

(a) (b) (c) (d)=(a)+(b)+( c) p 963 812,657.26 p 677,382 072.28 p 1,641,194L729.54 p 76,142.04 551 742,901.05 388,602 060.00 940,421,103.09 42 Exhibit "P-190".

43 Resolution, docket, pp. 606 to 610. l..~o 3rd Qtr 4th Qtr

Total

460,517.64 411984.28 p 948,643.96 540 764,013.83 822 185,639.82 p 2,878,505,211.96

Actual Input VAT

attributable to

Sales to Private

p Excess substantiated input VAT over output VAT 965,436 346.21 855,365 306.03 p 2,886,785,784.52

Actual Input VAT

attributable to Sales

to Government

p 1 506,660,877.68 1 677,962,930.13 p 5,766,239,640.44 After deducting the input VAT allocated to sales to private entity in the amount of P7,561.94, petitioner still has a net output VAT payable of P106,275.34, computed as follows: Output VAT due P113,837.2844 Less: Input VAT attributable to sales to private entities 7,561.94

Net Output VAT Payable

P106,275.34 Thus, by deducting the net amount of output VAT payable of P106,275.34 from its total input VAT attributable to zero-rated sales of P23,940,236.44, petitioner's refundable input VAT attributable to zero- rated sales amounts to P23,833,961.10, computed as follows: Input VAT attributable to zero-rated sales

Less: Output VAT Payable

Refundable Input VAT attributable to zero-rated sales Input VAT was not applied against any output VAT liability in the succeeding quarters p 23 940,236.44 106,275.34 P23,833,961.10 Even though the claimed input VAT is included in petitioner's reported excess input VAT amounting to P24,287,875.5745 in the fourth quarter of CY 2012 and was carried over to the first, second, third, and ~

fourth quarters of CY 2013,46 the same remained unutilized since it was deducted as "VAT Refund/TCC claimed"47 in the fourth quarter of CY 2013. Therefore, the excess input VAT of P22,950,929.0748 as of the end of the fourth quarter of CY 2013, which was carried over to the succeeding first quarter of 201449, no longer included the subject claim.

In sum, the Court finds that petitioner has sufficiently proven its entitlement to a refund or issuance of tax credit certificate in the reduced amount of P23,833,961.10 representing unutilized excess input VAT attributable to its zero-rated sales for the four quarters of CY 2012.

WHEREFORE, premises considered, the instant Petition for Review is hereby PARTIALLY GRANTED. Accordingly, respondent is ORDERED TO REFUND or TO ISSUE A TAX CREDIT

CERTIFICATE

in favor of petitioner in the amount of P23,833,961.10, representing its unutilized excess input VAT attributable to its zero-rated sales for the four quarters of calendar year 2012.

WE CONCUR:

~t;c.at-~~ .9. .

.ffiANITO c. CASTANEDA, JR.

Associate Justice

~ /· 4---/)---- AMELIA R. COTANGCO-MANALASTAS

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. ~~~ C-~;4.Q fUANITO c. CASTANEDR, JR.

Acting Presiding Justice