BIR Ruling [DA-131-03]

April 25, 2003 BIR RULING [DA-131-03] R.A. 9136 BIR Ruling No. 020-2002 Power Sector Assets & Liabilities Management Corporation 2nd Floor SGV II Building 6758 Ayala Avenue, Makati City Attention: Mr. Edgardo M. Del Fonso President Gentlemen : This refers to your letter dated December 26, 2002 requesting confirmation of your opinion that the asset management and consultancy services to be provided to TRANSCO under Phase One of the TRANSCO Privatization (Phase One), as described below, is subject to zero percent VAT (0%) pursuant to Section 108 B(3) of the Tax Code of 1997 in relation to Republic Act No. 6395, as amended by Presidential Decree No. 938, and Republic Act No. 9136, also known as the "Electric Power Industry Reform Act of 2001" or "EPIRA." SUMMARY OF FACTS A. NPC PRIVATIZATION The EPIRA provided for the creation of two government-owned corporations, namely: the Power Sector Assets and Liabilities Management Corporation (PSALM) 1 and the National Transmission Corporation (TRANSCO) 2 for the privatization of the National Power Corporation (NPC). PSALM will structure the sale, privatization or disposition of NPC assets and IPP contracts and/or their energy output based on such terms and conditions to optimize the value and sale prices of said assets. 3 The EPIRA provides that within six (6) months from its effectivity, the transmission and subtransmission facilities of NPC and all other assets related to transmission operations, including the nationwide franchise of NPC for the operation of the transmission system and the grid, shall be transferred to TRANSCO. Thereafter, Section 8 of the EPIRA mandates TRANSCO to assume the electrical transmission function of NPC and to assume the authority and responsibility of NPC for the planning, construction and centralized operation and maintenance of its high voltage transmission facilities, including grid interconnections and ancillary services. Under Section 11 (a) of Rule 22 of the Rules and Regulations implementing Republic Act No. 9136 (IRR), PSALM and TRANSCO shall secure a nationwide franchise for and in behalf of the Buyer or Concessionaire. The award shall result in maximum present value of proceeds to the National Government. In case a Concession Contract is awarded, the Concessionaire shall have a contract period of twenty-five (25) years, subject to review and renewal for a maximum period of another twenty-five (25) years. 4 TRANSCO PRIVATIZATION PROCESS In pursuit of its mandate, PSALM proposes to commence the bidding process and select an investor consortium for the privatization of the nationwide high voltage grid in the Republic of the Philippines by concession prior to the Congressional grant of a Franchise and assuming that Congress will grant a Franchise in favor of a concessionaire after the date of such selection. PSALM would implement the transaction to privatize the nationwide grid under three milestones: Selection Date, Award Date, and Franchise Date. 1. Selection Date On the Selection Date, PSALM and the winning investor consortium will enter into a Direct Agreement under which the investors agree to satisfy the conditions precedent for the award by PSALM of the right to operate, expand, maintain and manage the nationwide Grid by concession during the period that commences on the Award Date (as defined below) and expires on the 50th anniversary thereof, subject to (i) any earlier limitation on the term of the Franchise granted by Congress, and (ii) the terms of the Concession Agreement (the "Concession" ). 2. Award Date PSALM awards the Concession to the Concessionaire, the entity established by the investors, on the date (the "Award Date" ) on which the investors satisfy the conditions precedent. The Concessionaire begins to provide services, except the Non-Delegable Services, under the Concession Agreement on this same date. The Non-Delegable Services refer to activities that can be performed only by an entity holding a franchise to operate the nationwide transmission system. The Concession Agreement will operate in a manner that suspends the effectiveness of those provisions comprising the Non-Delegable Services until the Franchise Date. Prior to the Franchise Date, TRANSCO will continue to perform the Non-Delegable services. The provision of services by the Concessionaire approaches the role of an asset manager and consultant. Thus, it will provide the following services: "(i) Asset Management Services Prior to the Franchise Date, the Concessionaire principally repairs and maintains existing transmission assets as well as constructs and finances new transmission assets under the Concession Agreement responsibilities commonly performed by an asset manager. TRANSCO will retain the responsibility to provide transmission services, petition the ERC, invoice and collect revenue from all grid users 5 and otherwise carry out the responsibilities of a regulated common electricity carrier holding a franchise that cannot be delegated to third parties (the "Non-Delegable Services" ) until the Franchise Date. The Concession Agreement will reflect this division of responsibility. (ii) Consulting Services TRANSCO and the Concessionaire enter into an agreement under which the Concessionaire agrees to provide TRANSCO's management with consulting services prior to the Franchise Date. Notwithstanding the provision of consultation services, TRANSCO shall retain the authority to ultimately decide on all courses of action." TRANSCO pays the Concessionaire service fees for the provision of asset management and consulting services of an amount equal to the revenue that the Concessionaire would realize under a fully-operational Concession less an amount that compensates TRANSCO for the provision of Non-Delegable Services. The Republic of the Philippines, acting through the Department of Energy or other entity to be determined, provides the Concessionaire with an undertaking to assist the Concession with its application to Congress for a nationwide franchise after the Award Date. 3. Franchise Date On the Franchise Date, i.e. , the date on which Congress promulgates the Franchise Act and awards a franchise to the Concessionaire, the Concessionaire commences the performance of all responsibilities, including the Non-Delegable Services, under a fully operational Concession Agreement. The payment of asset management and consulting fees lapses on the Franchise Date and the remaining portion of the Concession Agreement go into force on the Franchise Date. DISCUSSION/ARGUMENTS It is your opinion that the sale of asset management and consulting services by the Concessionaire to TRANSCO under Phase One shall be effectively zero-rated for VAT purposes, to wit: 1. Sale of services by a VAT-registered person to a person or entity who was granted indirect tax exemption under special laws is subject to 0% VAT. In general, any person who, in the course of trade or business, sells, barters, exchanges, leases goods or properties, renders services, or who imports goods shall be subject to the ten percent (10%) VAT. However, sale of certain services is subject to zero percent (0%) VAT pursuant to Section 108 of the Tax Code of 1997, to wit: "(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: "(1) Processing, manufacturing or repacking goods for other persons doing business outside the Philippines which goods are subsequently exported, where the services are paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP); "(2) Services other than those mentioned in the preceding paragraph, the consideration for which is paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP); "(3) Services rendered to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects the supply of such services to zero percent (0%) rate; "(4) Services rendered to vessels engaged exclusively in international shipping; and "(5) Services performed by subcontractors and/or contractors in processing, converting, or manufacturing goods for an enterprise whose export sales exceed seventy percent (70%) of total annual production." (emphasis supplied) Transactions falling under category (3) are considered effectively zero-rated sale of services. As further described under Sec. 4.102-2 (c) of Rev. Regs. No. 7-95, effectively zero-rated sales of services refer to the sale by a VAT-registered person to a person or entity who was granted indirect tax exemption under special laws. 2. NPC is exempt from indirect taxes. In the case of Ernesto M. Maceda vs. Hon. Catalino Macaraig [197 SCRA 771 (1991) and 223 SCRA 217 (1993)], the total exemption of NPC from all kinds of taxes, whether direct or indirect, was settled with finality by the Supreme Court. The High Court, in its Resolution dated June 8, 1993, resolved the issue, to wit: "Section 13, R.A. No. 6395, was very comprehensive in its enumeration of the tax exemptions allowed NPC. Its Section 13(d) is the starting point of this bone of contention among the parties. For easy reference, it is reproduced as follows: "[T]he Corporation is hereby declared exempt: "xxx xxx xxx "(d) From all taxes, duties, fees, imposts and all other charges imposed by the Republic of the Philippines, its provinces, cities, municipalities and other government agencies and instrumentalities, on all petroleum products used by the Corporation in the generation, transmission, utilization, and sale of electric power." P.D. No. 380 added the phrase "directly or indirectly" to said Section 13(d), which now reads as follows: "xxx xxx xxx "(d) From all taxes, duties, fees, imposts, and all other charges imposed directly or indirectly by the Republic of the Philippines, its provinces, cities, municipalities and other government agencies and instrumentalities, on all petroleum products used by the Corporation in the generation, transmission, utilization and sale of electric power." Then came P.D. No. 938 which amended Sec. 13 (a), (o), (c) and (d) into one very simple paragraph as follows: "The Corporation shall be non-profit and shall devote all its returns from its capital investment as well as excess revenues from its operation, for expansion. To enable the Corporation to pay its indebtedness and obligations and in furtherance and effective implementation of the policy enunciated in Section one of this Act, the Corporation, including its subsidiaries, is hereby declared exempt from the payment of ALL FORMS OF taxes, duties, fees, imposts as well as costs and service fees including filing fees, appeal bonds, supersedeas bonds, in any court or administrative proceedings." (Emphasis supplied) As regards its exemption from indirect taxes, the High Court noted that while the revised charter is silent on the indirect tax liability of the NPC, it, nonetheless, mandates that the rule on strictissimi juris in the interpretation of tax statutes could not be invoked against the NPC. Under such circumstances, the High Court found the legislative intent to exempt the NPC from indirect taxes to be unmistakable. Thus, the High Court concluded: "It is crystal clear, therefore, that NPC had been granted tax exemption privileges for both direct and indirect taxes under P.D. No. 938." Likewise, in said case, the High Court quoted: "Tax exemptions are undoubtedly to be construed strictly but not so grudgingly as to defeat their purpose. It is common knowledge that many impositions taxpayers have to pay are in the nature of indirect taxes. To limit the exemption granted the National Power Corporation to direct taxes notwithstanding the general and broad language of the statute will be to thwart the legislative intention in giving exemption from all forms of taxes and impositions without distinguishing between those that are direct and those that are not." 3. Sales to NPC are either exempt from VAT or subject to 0% VAT. In the light of the decision in the case of Maceda v. Macaraig, the BIR issued various rulings recognizing that, since NPC enjoys exemption from both direct and indirect taxes, sale of electricity to NPC is exempt from VAT. (VAT Ruling No. 043-97 dated May 15, 1997; BIR Ruling 78A-95 dated April 26, 1995) However, in 1998, the Secretary of the Department of Finance issued a memorandum dated January 28, 1998, addressed to the Commissioner of Internal Revenue, citing the ruling of the Supreme Court, which upheld the total exemption of NPC from all kinds of taxes and further ruled that purchases by NPC of electricity from independent power producers are subject to VAT at 0%. Pertinent portions of said memorandum read as follows: "As explained by the Supreme Court, the rationale for the NPC's tax exemption is to ensure cheaper power. If the BIR's recent view is to be implemented, the VAT, being an indirect tax, may be passed on by the seller of electricity to NPC. Effectively, this means that electricity will be sold at a higher rate to the consumers. Estimates show that a 10% VAT on electricity which is purchased by NPC from its independent power producers will increase power cost by about P109.4 million a month or about P1.30 billion a year. The effect on the consumer is an additional charge of P0.059 per kilowatt-hour. The recognition of NPC's broad privilege will inure to the ultimate benefit of the Filipino consumer. "In view of the foregoing and using the power of review granted to the Secretary of Finance under Section 4 of Republic Act No. 8424, the DOF upholds the ruling of the Supreme Court that the NPC is exempt under its charter and subsequent laws from all direct and indirect taxes on its purchases of petroleum products and electricity. Thus, the purchases by NPC of electricity from independent power producers are subject to VAT at zero-rate." Consequently, the BIR has acknowledged that purchases by NPC of electricity from independent power producers are subject to VAT at 0% in a number of VAT and BIR Rulings (VAT Ruling Nos. 015-99, 022-99, 052-99, 067-99, 018-00; BIR Ruling Nos. DA-247-04-19-99, DA-632-11-10-99 and DA-209-04-04-00). The legal issue on the VAT zero-rating of sale of electricity to NPC had likewise been resolved in favor of the supplier to NPC in several analogous cases elevated before the courts. (Mirant (Phils.) Mobile Corp. (formerly Southern Energy Mobile, Inc). vs. Commissioner of Internal Revenue, CTA Case Nos. 5935 & 5969, January 15, 2002; Southern Energy Quezon, Inc. (formerly Hopewell Power (Phils) Corp.) vs. Commissioner of Internal Revenue, CTA Case Nos. 5933 & 5984, January 15, 2002; Mirant Navotas Corp. (formerly Southern Energy Navotas, Inc.) vs. Commissioner of Internal Revenue, CTA Case No. 5936, January 16, 2002; Mirant (Navotas II) Corp. (formerly Southern Energy Navotas II Power Inc) vs. Commissioner of Internal Revenue, CTA Case No. 5963, January 21, 2002; Magellan Cogeneration, Inc. vs. Commissioner of Internal Revenue, CTA Case No. 5765, February 26, 2002; and Mirant Pagbilao Corp. (formerly Southern Energy Quezon, Inc.). vs. Commissioner of Internal Revenue, CTA Case No. 6041, March 5, 2002 ] 4. Under Phase One, TRANSCO shall be taxed just like NPC. Therefore, asset management and consulting services provided by the Concessionaire to TRANSCO shall be VAT zero-rated. Section 8 of the EPIRA provides that the transmission and sub-transmission facilities of NPC and all other assets related to transmission operation, including the nationwide franchise of NPC for the operation of the transmission system and the grid shall be transferred to TRANSCO. In this connection, the Bureau of Internal Revenue (BIR) has ruled that the transfer of the franchise of NPC necessarily entails also the transfer of the privileges that NPC enjoys under its charter in relation to the operation of the transmission system in order for it to perform the electrical transmission functions of the NPC. 6 Considering the provisions of EPIRA and the jurisprudence laid down in the case of Maceda vs. Macaraig, the BIR ruled on May 13, 2002 that TRANSCO should be taxed in the same manner as NPC, to wit: "Thus, we confirm your opinion that TRANSCO should be taxed in the same manner as NPC, to wit: "i) With respect to income tax, the income of TRANSCO is excluded from gross income for purposes of computing its income tax pursuant to Section 32(B)(7)(b) of the Tax Code of 1997. "ii) On franchise tax, just like NPC, TRANSCO will be exempt from all forms of taxes, including-franchise tax, because the NPC franchise, including the privileges related thereto, have been transferred by operation of law to TRANSCO." For the same reasons discussed in the said ruling, TRANSCO shall also be exempt from indirect taxes, just like NPC. Accordingly, the asset management and consulting services shall be subject to 0% VAT, provided that (a) the Concessionaire registers for VAT purposes and (b) secures prior approval from the BIR for the effective zero-rating of its transactions with TRANSCO under Phase One. 5. The imposition of VAT on the asset management and consulting services provided by the Concessionaire will translate to higher cost to TRANSCO and ultimately, to the end-consumers . The privatization of NPC is aimed at ensuring the reliability, security and affordability of the supply of electric power to end-users. It is, therefore, understandable why it is emphasized, in several provisions of the law [Section 47(a); 47(c); 51(m)], that the sale, privatization or disposition of NPC assets must be undertaken in a manner that would optimize the value and sale prices of said assets. Viewed in this light, it is hoped that the operation of TRANSCO, under the NPC transferred franchise, would not attract taxes that otherwise would not be due had NPC continued to undertake these activities. To rule otherwise would contravene the objectives set forth by the EPIRA, as this would, without doubt, translate to higher cost of electricity. VAT is an indirect tax and the amount of tax may be shifted or passed on to the buyer of the goods, services or properties. Hence, the VAT passed on by the Concessionaire, if considered to be subject to the 10% VAT, shall accordingly be passed on to TRANSCO as part of the invoice price of its purchases. In support of your request you submitted the following 1. Photocopy of R.A. No. 9136, otherwise known as the Electric Power Industry Reform Act of 2001" 2. Photocopy of the Rules and Regulations implementing R.A. No. 9136 3. Photocopy of pertinent cases cited as published/reproduced 4. Photocopy of pertinent BIR rulings cited BIR REPLY In BIR Ruling 020-2002 dated May 13, 2002, this Office, referring to Section 8 of the EPIRA which provides for the transfer of the transmission and sub-transmission facilities of NPC and all other assets related to transmission operation, including the national franchise of NPC, 7 opined that the transfer of franchise of NPC necessarily entails also the transfer of the transmission system in order to perform the electrical transmission functions of the NPC, and accordingly, ruled that TRANSCO shall be taxed in the same manner as NPC, to wit: "i) With respect to income tax, the income of TRANSCO is excluded from gross income for purposes of computing its income tax pursuant Section 32(B)(7)(b) of the Tax Code of 1997. "ii) On franchise tax, just like NPC, TRANSCO will be exempt from all forms or taxes, including franchise tax, because the NPC franchise, including the privileges related thereto, have transferred by operation of law to TRANSCO." 8 Although the aforesaid ruling mentioned that TRANSCO, as the transferee of NPC's franchise, will be exempt from all forms of taxes , it proceeded to rule only on the foregoing tax exemption. As noted, the exemption ruled was focused only on the direct taxes from which TRANSCO, as the transferee of NPC's transmission and subtransmission facilities and all other assets related to transmission operation, including the national franchise of NPC, shall be exempt. It did not proceed to rule on the indirect tax exemption of TRANSCO. On the other hand, in the same BIR Ruling No. 020-2002, supra , this Office also ruled on the NPC's tax liability on its income arising from the service agreements with PSALM and TRANSCO to the effect that " services rendered by NPC under the Operations & Management Agreement (O&M) 9 are deemed rendered in the course of its business, hence, subject to VAT or the appropriate percentage tax, as the case may be ." While this Office ruled that the services rendered by NPC to TRANSCO is indeed subject to VAT or appropriate percentage tax, it did not, however, rule on whether or not such services rendered may actually be subject to the zero percent (0%) VAT considering the present status of TRANSCO as the successor-transferee of NPC's franchise. After a thorough review of Sec. 13 of R.A. 6395, as amended by Presidential Decree No. 938, and other NPC laws, the Supreme Court in the case of Maceda vs. Macaraig, Jr. (G.R. No. 88291, June 8, 1993, 223 SCRA 217), held that NPC is exempt from all taxes direct and indirect. The logic espoused by the High Court was explained as follows: "It should be noted that Section 13, R.A. No. 6395, provided for tax exemptions for the following terms: 13(a): court or administrative proceedings; 13(b): income, franchise, realty taxes; 13(c): import of foreign goods required for its operations and projects; 13(d): petroleum products used in generation of electric power. "P.D. No. 938 lumped up 13(b), 13(c) and 13(d) into the phrase "ALL FORMS OF TAXES, ETC.,", included 13(a) under the "as well as" clause and added PNOC subsidiaries as qualified for tax exemptions. "This is the only conclusion one can arrive at if he has read all the NPC laws in the order of enactment or issuance as narrated above in part I hereof. President Marcos must have considered all the NPC statutes from C.A. No. 120 up to its latest amendments, P.D. No. 380, P.D. No. 395 and P.D. No. 759, AND came up with a very simple Section 13, R.A. No. 6395, as amended by P.D. No. 938. "One common theme in all these laws is that the NPC must be enabled to pay its indebtedness which, as of P.D. No. 938, was P12 Billion in total domestic indebtedness, at any one time, and US$4 Billion in total foreign loans at any one time. The NPC must be and has to be exempt from all forms of taxes if this goal is to be achieved " (emphasis supplied) Admittedly, this Office has previously issued various ruling recognizing NPC's status as exempt from both and direct and indirect taxes; hence, we ruled that either the sale of electricity to NPC is exempt from VAT 10 or it is subject to the zero percent (0%) VAT. 11 It is noted that the subject matter of those rulings was focused on the sale of electricity to NPC. In one case, the BIR ruled that " the tax exemption privilege of NAPOCOR cannot be invoked in this case because its exemption from the payment of indirect taxes is limited only to its importation and/or purchases of petroleum products and not on the purchases of other goods or services ." 12 The exemption from all forms of taxes, direct and indirect, of NPC, which was aptly settled by the High Court in the case of Maceda vs. Macaraig, 13 has been recognized by then Secretary of Finance Roberto de Ocampo in his Memorandum to then Commissioner of Internal Revenue dated January 26, 1998, via his review power of BIR VAT Ruling No. 003-98. In some instances, this Office proceeded to rule on issues involving NPC exemption. As earlier discussed, the indirect tax exemption being enjoyed by NPC has always been the basis for treating its purchases as either effectively zero-rated VAT in the case of VAT-registered sellers pursuant to Secs. 106(A)(2)(c) and 108(B)(3) of the Tax Code of 1997, or VAT-exempt in the case of non-VAT registered seller pursuant to Sec. 108(q) thereof. Further, as ruled by this Office, the tax exemption privileges of NPC have been effectively transferred to TRANSCO by virtue of the transfer of NPC's franchise pursuant to Sec. 8 of the EPIRA, 14 henceforth, the application of similar VAT treatment to the latter. In view of the above, we hereby confirm your opinion as follows: In cases where the purchaser of goods or services is an entity exempt from indirect taxes, such as the VAT, the Tax Code of 1997 specifically prescribes the rate of VAT to be imposed on such transaction. Thus, Secs. 106(A)(2)(c) and 108(B)(3) of the Tax Code of 1997 subject to zero-percent (0%) VAT and Section 109(q) thereof exempts from VAT, among others, transactions which are exempt under special laws where the supplier of the goods or services is a non-VAT-registered person, or even if VAT-registered but there is no prior approval of application for the effective VAT zero-rating pursuant to the provisions of Revenue Regulations No. 7-95. It must be noted that VAT, being an indirect tax, may be passed on by the seller to the buyer as part of the cost of goods/services pursuant to Sec. 105 of the Tax Code of 1997. Consistent with our previous ruling that TRANSCO shall be taxed in the same manner as NPC from the time the latter franchise was transferred to it, 15 this Office hereby rules that the supply and delivery of asset management and consultancy services by the Concessionaire to TRANSCO under Phase One of the TRANSCO Privatization pursuant to the provisions of the EPIRA shall be subject to zero-percent (0%) VAT; provided that the former is VAT registered and shall apply with the Revenue District Office having jurisdiction over its principal place of business for the effective VAT zero-rating pursuant to the provisions of Revenue Regulations No. 7-95. However, if the Concessionaire is not VAT-registered or there is no prior approval of such application for the effective zero-rating, then such transactions shall be exempt only from VAT. 16 This ruling is being issued based on the foregoing facts as represented. If, upon investigation, it will be discovered that the facts are different then this ruling shall be considered null and void. Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group Footnotes 1. "Sec. 49. Creation of Power Sector Assets and Liabilities Management Corporation. There is hereby created a government-owned and -controlled corporation to be known as the "Power Sector Assets and Liabilities and Management Corporation", [sic] hereinafter referred to as the "PSALM Corp.", [sic] which shall take ownership of all existing NPC generation assets, liabilities, IPP contracts, real estate and all other disposable assets. All outstanding obligations of the NPC arising from loans, issuances of bonds, securities and other instruments of indebtedness shall be transferred to and assumed by the PSALM Corp. within one hundred eighty days (180) from the approval of this Act." 2. "Sec. 8. Creation of the National Transmission Company. There is hereby created a National Transmission Corporation, hereinafter referred to as TRANSCO, which shall assume the electrical transmission function of the National Power Corporation (NPC), and have the powers and functions hereinafter granted. The TRANSCO shall assume the authority and responsibility of NPC for the planning, construction and centralized operation and maintenance of its high voltage transmission facilities, including grid interconnections and ancillary services. . . ." 3. Section 51(m), Ibid; also: "Section 51 . Powers. PSALM Corp. shall, in the performance of its functions and for the attainment of its objectives, have the following powers: xxx xxx xxx (m) To structure the sale, privatization or disposition of NPC assets and IPP contracts and/or their energy output based on such terms and conditions which shall optimize the value and sale prices of said assets. (Rule 21, Implementing Rules and Regulations (IRR) of the EPIRA) 4. See also Page 14 of BIR Ruling 020-2002 dated May 13, 2002. 5. Note: While the right to collect revenue remains with TRANSCO at this point, TRANSCO may subcontract the physical act of collecting to third parties such as the Concessionaire. 6. Page 23, BIR Ruling No. 020-2002 dated May 13, 2002. 7. Supra . 8. Ibid . 9. Under the O&M, NPC will assign to TRANSCO its employees presently involved in the operation and management of the facilities. It should be noted that the nationwide franchise of NPC for the operation of the transmission system and grid is transferred to TRANSCO in accordance with Section 8 of the EPIRA. 10. BIR Ruling Nos. 043-97 dated May 15, 1997, 078A-95 dated April 26, 1995 11. VAT Ruling Nos. 015-99 dated February 12, 1999; 022-99 dated March 11, 1999, 052-99 dated May 13, 1999, 067-99 dated July 14, 1999; BIR Ruling Nos. DA-247-99 dated April 19, 1999, 632-99 dated November 10, 1990 & 209-00 dated April 4, 2000 12. BIR Ruling No. DA-108-96 dated March 13, 1996 13. Supra , 197 SCRA 771 (1991) and 223 SCRA 217 14. BIR Ruling No. 020-2002, supra . 15. BIR Ruling No. 020-2002, ibid. 16. VAT Ruling No. 071-02 dated October 22, 2002; ABB Power Generation Ltd. (ABB) vs. Commissioner of Internal Revenue (C.T.A. CASE NO. 5270, March 3, 1999).