San Roque Power Corp. v. Commissioner of Internal Revenue

FORMER SECOND DIVISION [C.T.A. CASE NO. 7424. January 8, 2010.] SAN ROQUE POWER CORPORATION , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . [C.T.A. CASE NO. 7492. January 8, 2010.] SAN ROQUE POWER CORPORATION , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . DECISION CASTAEDA, JR. , J p : This case is a consolidation of two Petitions for Review separately filed by petitioner, both seeking refund or issuance of tax credit certificate in the amount of P31,976,709.88, representing excess input value-added tax (VAT) incurred from domestic purchases and importation of goods and services, which are attributable to zero-rated sales of electricity to the National Power Corporation (NPC) for the four quarters of 2004; broken down as follows: SCIAaT CTA Case No. Period Covered Amount of Claim 7424 1st quarter P17,017,648.31 7492 2nd-4th quarters 14,959,061.57 TOTAL P31,976,709.88 ============= San Roque Power Corporation (Petitioner) is a domestic corporation duly organized and existing under the laws of the Philippines, with principal office at Barangay San Roque, San Manuel, Pangasinan. It was incorporated on October 14, 1997, to design, construct, erect, assemble, own, commission, operate, and maintain power-generating plants and related facilities, pursuant to and under contract with the Government of the Philippines, or any subdivision, instrumentality or agency thereof, or any government-owned or controlled corporation, or other entity engaged in the development, supply, or distribution of energy. 1 Petitioner is registered with the Board of Investment (BOI) on a preferred pioneer status as new operator of hydroelectric power generating plant for which it was issued a Certificate of Registration No. 97-356 dated February 11, 1998. 2 Likewise, it is registered as a VAT taxpayer with the BIR and was issued a Certificate of Registration No. OCN 98-006-007394. 3 Respondent is the duly appointed Commissioner of the Bureau of Internal Revenue (BIR) empowered to perform the duties of his office, including, among others, the duty to act upon and approve claims for refund or tax credit as provided by law. On October 11, 1997, petitioner entered into a Power Purchase Agreement (PPA) with NPC for the development of the San Roque hydroelectric facilities (Power Station) located at the Lower Agno River in San Manuel, Pangasinan on a build-operate-transfer basis. 4 Under the PPA, petitioner shall be responsible for the design, construction, installation, completion, testing, commissioning, operation, and maintenance of the Power Station, subject to NPC instructions. Article 8 of the PPA specifically provides that during the cooperation period of twenty-five (25) years, commencing from the completion date of the Power Station, NPC will take and pay for all electricity available from the Power Station. In other words, the electricity to be generated by the Power Station will be sold to and purchased entirely by NPC. 5 Petitioner filed an Application for VAT Zero-Rate for its sale of electricity to NPC, which was granted on January 14, 2004; with the effectivity period from January 14, 2004 up to December 31, 2004. 6 AaCcST For the four quarters of 2004, petitioner filed with respondent its Quarterly VAT Returns, with its Amended Quarterly VAT Returns for the first, second, and third quarters of 2004, showing excess input VAT payments in the amount of P31,976,709.88; detailed as follows: Date Filed Date filed Year Original Quarterly Amended Quarterly Excess 2004 Exh. VAT Returns Exh. VAT Returns Input Tax 1st Qtr C April 26, 2004 D October 5, 2004 P17,017,648.31 2nd Qtr E July 14, 2004 F October 5, 2004 4,910,873.42 3rd Qtr G October 5, 2004 H October 21, 2004 3,514,588.58 4th Qtr I January 25, 2005 - - 6,533,599.57 P31,976,709.88 ============ On December 22, 2005 and February 27, 2006, petitioner instituted two separate administrative claims for refund of its alleged unutilized input tax for the period covering January 1, 2004 to March 31, 2004 and April 1, 2004 to December 31, 2004, respectively. 7 Respondent however failed to act on both administrative claims, which led to the filing of the present Petitions for Review docketed as CTA Case Nos. 7424 and 7492. The Petition for Review docketed as CTA Case No. 7424 was filed on March 30, 2006, to seek the refund or issuance of tax credit certificate in the amount of P17,017,648.31, allegedly representing unutilized input taxes for the period from January 1, 2004 to March 31, 2004. On June 2, 2006, respondent filed his Answer in CTA Case No. 7424, interposing the following counter-arguments: 8 "7. Petitioner's alleged claim for refund is subject to administrative investigation by the Bureau; 8. Petitioner must prove that it paid the alleged VAT input taxes for the periods stated; 9. Petitioner must prove that its sales of electricity is subject to VAT at zero percent (0%) rate; SEDICa 10. Petitioner must prove that the alleged input VAT is directly attributable to such alleged zero-rated sales; 11. Petitioner must prove that its alleged unutilized input VAT has not been applied against any output tax liabilities; 12. Petitioner must prove that the alleged claim was filed within the two (2) year period prescribed in Section 112 of the NIRC of 1997; 13. 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; 14. Claims for refund are construed strictly against the claimant for the same partake of the nature of exemption from taxation." Subsequently, another Petition for Review 9 was filed by petitioner on June 20, 2006 and docketed as CTA Case No. 7492, seeking the issuance of tax credit certificate or refund of the amount of P14,959,061.57, purportedly representing unutilized creditable input taxes for the period from April 1, 2004 to December 31, 2004. On July 10, 2006, petitioner filed a Motion to Consolidate CTA Case No. 7492 with the Above-captioned Case, 10 which was granted by this Court via Resolution 11 dated August 2, 2006. Respondent filed his Answer in CTA Case No. 7492 on September 1, 2006, raising the same special and affirmative defenses. 12 During trial, petitioner was able to present its documentary and testimonial evidence to support its claims and contentions; while respondent was deemed to have waived his right to present evidence for failure to appear at the scheduled dates for initial presentation of his evidence on September 22, 2008 13 and October 15, 2008. 14 On February 17, 2009, a Resolution 15 was issued by this Court submitting the case for Decision, considering the Memorandum filed by petitioner on January 30, 2009 and the report of this Court's Record Division that respondent did not file his Memorandum. IDcHCS The parties submitted the following issues for this Court's resolution: "1. Whether or not petitioner's administrative claim was timely filed. 2. Whether or not petitioner's judicial claim was timely filed. 3. Whether or not petitioner's sale of electricity to NPC is effectively VAT zero-rated under the NIRC, as amended. 4. Whether or not the amount of P31,976,709.88 represents the accumulated excess creditable input taxes paid by petitioner within the Year 2004. 5. Whether or not petitioner's accumulated excess creditable input taxes for the Year 2004 were directly attributable to its primary source of revenue which is effectively VAT-zero rated. 6. Whether or not petitioner's accumulated excess creditable input taxes for the Year 2004 is duly supported by pertinent documents, such as VAT invoices and official receipts. 7. Whether or not the accumulated excess creditable input taxes paid by petitioner within the Year 2004 in the total amount of P31,976,709.88 remain unutilized. 8. And in sum, whether or not petitioner is entitled to the claim for refund or issuance of tax credit certificate in the accumulated amount of P31,976,709.88 representing its accumulated excess and unutilized creditable input taxes for the Year 2004." 16 The above-enumerated issues can be summarized into a single issue, to wit: "Whether or not petitioner is entitled to a refund of or issuance of tax credit certificate in the amount of P31,976,709.88, representing its alleged accumulated excess and unutilized creditable input taxes for the year 2004." Section 112 (A) of the National Internal Revenue Code (NIRC) of 1997, as amended, lays down the requisites for claims for issuance of tax credit certificate or refund of input tax attributable to zero-rated or effectively zero-rated sales, to wit: "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(B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sales 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." aATHES From the foregoing provision, it is imperative that petitioner must comply with the following requisites to be entitled to a refund: 1. there must be zero-rated or effectively zero-rated sales; 2. that input taxes were incurred or paid; 3. that such input taxes are attributable to zero-rated or effectively zero-rated sales; 4. that the input taxes were not applied against any output VAT liability; and 5. that the claim for refund was filed within the two-year prescriptive period. Anent the first requisite, the Court finds the existence of zero-rated or effectively zero-rated sales in this case. Section 108 (B) (3) of the NIRC of 1997, as amended and Section 13 of Republic Act No. 6395, 17 provide as follows: "SEC. 108. Value-added Tax on Sale of Services and Use or Lease of Properties. xxx xxx xxx (B) Transactions Subject to Zero Percent (0%) Rate. The following services performed in the Philippines by VAT-registered persons shall be subject to zero percent (0%) rate: xxx xxx xxx (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 ." (Emphasis supplied) "SECTION 13. Non-profit Character of the Corporation, Exemption from All Taxes, Duties, Fees, Imposts and Other Charges by the Government and Government Instrumentalities. The Corporation shall be non-profit and shall devote all its returns from its capital investments, as well as excess revenues from its operation, for expansion. To enable the Corporation to pay its indebtedness and obligations and in furtherance of 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) DHcEAa This Court has consistently upheld the tax-exempt status of NPC. Under the PPA entered into by petitioner and NPC, petitioner San Roque Power Corporation generates the power which will be subsequently sold to NPC. Republic Act No. 6395, as amended, categorically exempts NPC from payment of all taxes, whether direct or indirect, including VAT. Such exemption provided for by NPC's charter, which is a special law, necessarily makes the sale of electricity to NPC a VAT zero-rated transaction in accordance with Section 108 (B) (3) of the NIRC of 1997. NPC's tax-exempt status was also affirmed by the Supreme Court in the case of Ernesto M. Maceda vs. Catalino Macaraig, Jr., et al. , 18 in the following manner: "A chronological review of the NPC laws will show that it has been the lawmaker's intention that the NPC was to be completely tax-exempt from all forms of taxes direct or indirect. xxx xxx xxx 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." Moreover, it is noteworthy that respondent approved petitioner's Application for Zero-rate 19 of its sale of electricity to NPC on January 14, 2004, with effectivity period from January 14, 2004 up to December 31, 2004. Petitioner was also able to establish, after a close scrutiny of the various sales invoices and official receipts 20 issued by petitioner to NPC, that for the four quarters of 2004, petitioner derived revenues from sales of electricity to NPC in the amount of P7,323,071,646.15; which was reflected in its Quarterly VAT Returns for the same period as follows: Exh. Period Zero-rated Sales D 1st Qtr P1,700,495,121.42 F 2nd Qtr 1,626,429,967.96 H 3rd Qtr 2,159,385,881.48 I 4th Qtr 1,836,760,675.29 TOTAL P7,323,071,646.15 ============== After resolving that petitioner's sales of electricity to NPC for the four quarters of 2004 in the amount of P7,323,071,646.15 qualifies for VAT zero-rating under Section 108 (B) (3) of the NIRC of 1997, as amended, the Court will now determine the amount of unutilized input VAT attributable thereto. CSIHDA In support of its claim, petitioner presented its Summary Lists of Purchases 21 and the related suppliers' invoices and official receipts, 22 Bureau of Customs (BOC) Import Entry and Internal Revenue Declarations, official receipts issued by the BOC, Land Bank of the Philippines and others, 23 showing that the amount of P31,976,709.88 represents excess input VAT reflected in its Quarterly VAT Returns for the four quarters of 2004, as follows: Exh. Period Input Tax Output Tax Excess Input Tax D 1st Qtr P17,017,648.31 P - P17,017,648.31 F 2nd Qtr 4,910,873.42 - 4,910,873.42 H 3rd Qtr 3,516,990.86 2,402.28 3,514,588.58 I 4th Qtr 6,533,599.57 - 6,533,599.57 TOTAL P31,979,112.16 P2,402.28 P31,976,709.88 ============ ======== ============ Upon verification of the aforesaid documents, the Court-commissioned Independent Certified Public Accountant (CPA), Mr. Eliseo A. Aurellado, noted the following exceptions in his Report 24 dated February 8, 2007: Per Summary attached to Findings Exhibit P as Input VAT No supporting documents Annex E.1 P654,491.44 Claims erroneously computed Annex E.2 2,278.84 Purchases of goods not within the refund period Annex E.3 128,531.93 Purchases of services not within the refund period Annex E.4 85,029.81 Purchases of goods and services supported by tape receipts only Annex E.5 227.93 BIR authority to print not indicated in the invoice or official receipts Annex E.6 261,110.45 Purchases of goods not supported by suppliers' sales invoices Annex E.7 32,667.85 Purchases of services not supported by suppliers' official receipts Annex E.8 8,600.93 Supplier's official receipts marked "Non-VAT" Annex E.9 19,133.05 No "VAT" indicated in the official receipts/sales invoices Annex E.10 194,739.12 Invoices or official receipts not in the name of the Company Annex E.11 32.72 Double claim of input VAT Annex E.12 3,427.27 Importations not supported by IEIRD Annex E.13 31,955.49 Originals not examined Annex E.14 8,197.59 Discrepancy of VAT returns versus Annex C (Summary of Input VAT) Annex A 575,653.69 TOTAL P2,006,078.11 =========== On the other hand, petitioner presented accountant, Ms. Pia Rose O. Talosig, to oppose the above disallowance. In her affidavit, 25 she testified that the foregoing exceptions should be reduced by P868,033.96. She explained why several disallowances should be cancelled, particularly those in Annexes "A", "E.1", "E.2", "E.3", "E.4", "E.7", "E.8", "E.9", and "E.14"; and how petitioner's adjustments, such as the levelization adjustment, the diesel withdrawn from petitioner's inventory, the ten percent (10%) contract price retention, and the recoupment of downpayment, were treated for accounting and tax purposes. In relation to Ms. Talosig's statement, additional documents were submitted and verified by the Independent CPA as contained in his Supplemental Report 26 dated July 26, 2007. This Court finds that the exceptions reported by the Independent CPA in the amount of P2,006,078.11 on petitioner's input VAT claim under Annexes "E.1" to "E.14" of Exhibit "P" should be reduced by P679,742.26, detailed as follows: 27 Per Summary attached to Findings Exhibit P as Input VAT No supporting documents Annex E.1 P641,283.36 Claims erroneously computed Annex E.2 28.18 Purchases of goods not within the refund period Annex E.3 15,752.37 Purchases of services not within the refund period Annex E.4 2,305.04 Purchases of goods not supported by suppliers' sales invoices Annex E.7 1,156.72 Purchases of services not supported by suppliers' official receipts Annex E.8 3,556.77 Supplier's official receipts marked "Non-VAT" Annex E.9 8,068.91 Originals not examined Annex E.14 7,590.91 TOTAL P679,742.26 ========== As regards the P575,653.69 discrepancy in input VAT found by the Independent CPA, 28 Ms. Talosig argued that the Independent CPA based Annex "C" of his original Report 29 on the Monthly VAT Schedules for the year 2004, prepared by petitioner and not on the Summary Lists of Purchases attached to the Quarterly VAT Returns for the same year. Consequently, adjustments made by petitioner at the end of the quarters supposedly were not considered or included in Annex "C", resulting in a total discrepancy of P575,653.69. 30 EDCTIa Petitioner submitted the following Summary List of Purchases: Input VAT- Input VAT- Exhibit Period Domestic Importation Total Q-10 to Q-12 1st Qtr P15,493,480.52 P451,233.49 P15,944,714.01 E-1; Q-15 to Q-17 2nd Qtr 4,763,854.42 147,019.00 4,910,873.42 G-1; Q-20 to Q-21 3rd Qtr 3,508,806.31 4,055.00 3,512,861.31 I-1; Q-23 to Q-25 4th Qtr 6,515,503.57 18,096.00 6,533,599.57 TOTAL P30,281,644.82 P620,403.49 P30,902,048.31 ============ ========== ============ Upon close examination of the foregoing list, this Court finds that the total input VAT per Summary Lists of Purchases of P30,902,048.31 does not tally with the total declared input VAT of P31,979,112.16. This is because the Summary Lists of Purchases submitted for the first and third quarters were for petitioner's original Quarterly VAT Returns for the said quarters; while the Summary Lists of Purchases submitted for the second and fourth quarters were for petitioner's amended Quarterly VAT Returns for the same period. Ms. Talosig further explained that petitioner prepared a reconciliation of the input VAT per Summary Lists of Purchases and per Monthly VAT Schedules. 31 The reconciling items consisted of transactions not included in the monthly schedules (Annex "C") but included in the summary lists and adjustments made on the last month of the quarters not included in Annex "C"; but the documents supporting thereto were submitted by petitioner and verified by the Independent CPA. Evaluation of the foregoing showed that out of the P575,653.51 difference between the input VAT reported per Quarterly VAT Returns and per Monthly Schedule of Input VAT, only the following were properly supported by documentary evidence: Exh. Invoice/OR Invoice/OR Date Supplier Input VAT DD-30 BIR Form No. 2550M 4/26/2004 KPIC P18,498.98 DD-31 BIR Form No. 2550M 9/8/2004 Habico 8,984.80 DD-32 BIR Form No. 1600 12/10/2004 R.W. Beck International 119,498.22 U-123 2047 11/12/2004 Foxboro Express Cargo Systems Corp. 647.50 U-137 142918 11/3/2004 Industrial & Transport Equipment, Inc. 255.00 DD-35 11841 9/17/2004 S.K. Hardware and Gen. Merchandise 771.91 U-666 25634 12/1/2004 PGA Sompo Japan Insurance, Inc. 10,575.80 TOTAL P159,232.21 =========== Thus, the input VAT discrepancy of P575,653.51 found by the Independent CPA should be reduced by P159,232.21. In effect, the total amount of input VAT disallowances as per the Independent CPA Report is reduced to P1,167,103.64, computed as follows: Total Input VAT Disallowances per ICPA report P2,006,078.11 Less: Valid input VAT Per Annexes E.1 to E.14 679,742.26 Per Annex A 159,232.21 Adjusted Input VAT Disallowances per ICPA Report P1,167,103.64 =========== Aside from the input VAT disallowances of P1,167,103.64, this Court finds, upon its own verification of the records and of the supporting documents submitted, that input taxes in the amount of P878,101.06 should be denied for the following reasons: 32 Particulars Amount 1. No supporting documents P57,641.76 2. Claims erroneously computed 61,466.78 3. Purchases of goods not within the refund period 180,842.53 4. Purchases of services not within the refund period 101,615.14 5. Purchases of goods and services supported by documents other than invoices or ORs 97,648.88 6. Invoice or OR not duly registered with the BIR 54,217.00 7. Purchases of goods not supported by invoices 3,668.64 8. Purchases of services not supported by official receipts 67,927.80 9. Supported by ORs without the imprinted word "VAT" after the suppliers' TIN 13,195.99 10. Invoice or OR not in the name of Petitioner 8,212.50 11. Supported by ORs or invoices with TIN-V only or without supplier's TIN 124,132.62 12. Supported by undated invoice 1,306.36 13. Purchase of services supported by blank OR or not legible OR 93,448.79 14. Double Claim of input VAT 49.00 15. Supplier's OR marked "Non-VAT" 12,727.27 TOTAL P878,101.06 ========== In sum, petitioner's valid input VAT for the four quarters of 2004 amounted only to P29,931,505.18, computed as follows: TEHIaD Total Input VAT Claim P31,976,709.88 Less: Disallowances Per ICPA Report 1,167,103.64 Per this Court's further verification 878,101.06 Refundable Input VAT P29,931,505.18 ============= Moving on to the third and fourth requisites, petitioner's VAT Returns for the year 2004 showed that the P31,976,709.88 input VAT claim is net of its output tax liability of P2,402.28 and is entirely attributable to its zero-rated sales of electricity to NPC. Although petitioner carried over the said claim in its Quarterly VAT Returns for the succeeding quarters until the fourth quarter of 2005 and first quarter of 2006, the same remained unapplied until it was deducted as "VAT Refund/TCC Claimed" from the "Total Available Input Tax" as of the fourth quarter of 2005 33 and first quarter of 2006. 34 In other words, no amount of the subject claim was carried over/applied to the succeeding second quarter of 2006. Anent the fifth requisite, petitioner's claim was timely filed within the two-year prescriptive period. Section 112 (A) of the NIRC 1997, as amended, provides: "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: . . ." (Emphasis supplied) The afore-quoted provision was later interpreted by the High Tribunal in the case of Commissioner of Internal Revenue vs. Mirant Pagbilao Corporation (Formerly Southern Energy Quezon, Inc.) , 35 the pertinent portions of which state: " The above proviso clearly provides in no uncertain terms that unutilized input VAT payments not otherwise used for any internal revenue tax due the taxpayer must be claimed within two years reckoned from the close of the taxable quarter when the relevant sales were made pertaining to the input VAT regardless of whether said tax was paid or not . As the CA aptly puts it, albeit it erroneously applied the aforequoted Sec. 112(A), '[P)rescriptive period commences from the close of the taxable quarter when the sales were made and not from the time the input VAT was paid nor from the time the official receipt was issued.' Thus, when a zero-rated VAT taxpayer pays its input VAT a year after the pertinent transaction, said taxpayer only has a year to file a claim for refund or tax credit of the unutilized creditable input VAT. The reckoning frame would always be the end of the quarter when the pertinent sales or transaction was made, regardless when the input VAT was paid ." (Emphasis supplied) Based on the foregoing provision and jurisprudence, the two-year prescriptive period for filing the claim for refund must be reckoned from the close of the taxable quarter when the pertinent sales or transaction was made. In this case, petitioner claims refund of its unutilized input tax for the four quarters of 2004. The close of the taxable quarter for the first, second, third, and fourth quarters of 2004 are on March 31, 2004, June 30, 2004, September 30, 2004, and December 31, 2004, respectively. Counting from said dates, petitioner should have filed its administrative and judicial claims for refund on or before March 31, 2006 for the first quarter, June 30, 2006 for the second quarter, September 30, 2006 for the third quarter, and December 31, 2006 for the fourth quarter. Petitioner filed its claim for refund with the Bureau of Internal Revenue on December 22, 2005 for its unutilized input VAT for the first quarter of 2004 and February 27, 2006 for its unutilized input VAT for the second, third, and fourth quarters of 2004. 36 On the other hand, the judicial claims for refund were filed on March 30, 2006 for the first quarter, and June 20, 2006 for the second to the fourth quarters of 2004. The same are detailed as follows: Date of filing the Date of filing Year Close of the Administrative the Judicial Last Day for filing 2004 Exh. taxable quarter Claim Claim claim for refund 1st Qtr C March 31, 2004 December 22, 2005 March 30, 2006 March 31, 2006 2nd Qtr E June 30, 2004 February 27, 2006 June 20, 2006 June 30, 2006 3rd Qtr G September 30, 2004 February 27, 2006 June 20, 2006 September 30, 2006 4th Qtr I December 31, 2004 February 27, 2006 June 20, 2006 December 31, 2006 From the above table, it is clear that the dates of filing of the administrative and the judicial claims are well within the two-year period prescribed by law, reckoned from the end of the quarters covered by petitioner's claims. To recapitulate, this Court finds that petitioner has sufficiently proven its entitlement to a refund or issuance of tax credit certificate, representing unutilized input VAT attributable to effectively zero-rated sales. WHEREFORE , premises considered, the instant Petitions for Review are hereby PARTIALLY GRANTED . Accordingly, respondent Commissioner of Internal Revenue is hereby ORDERED TO REFUND or TO ISSUE A TAX CREDIT CERTIFICATE in the reduced amount of TWENTY-NINE MILLION NINE HUNDRED THIRTY-ONE THOUSAND FIVE HUNDRED FIVE PESOS AND 18/100 (P29,931,505.18) in favor of petitioner, representing unutilized input VAT attributable to effectively zero-rated sales of electricity to NPC for the four quarters of 2004. SO ORDERED . (SGD.) JUANITO C. CASTAEDA, JR. Associate Justice Erlinda P. Uy and Olga Palanca-Enriquez, JJ., concur. ANNEX A DISALLOWANCES PER ICPA THAT WERE RECONSIDERED Invoice/ Exh. Invoice/OR # OR Date Supplier Input VAT Annex E.1 T-423 108833 6/21/2004 United Bearing Industrial Corp. 1,169.09 AA-43, DD-1 & DD-1a BIR-Harza 305,808.90 DD-4 18870 6/2/2004 Bitstop, Inc. 2,400.00 DD-5 20065 11/10/2004 Bitstop, Inc. 945.45 U-1045 158791 10/20/2004 Newton Hardware & Lumber 96,320.23 U-1046 158792 10/20/2004 Newton Hardware & Lumber 14,284.35 U-1047 158793 10/20/2004 Newton Hardware & Lumber 70,237.95 U-1049 158788 10/20/2004 Newton Hardware & Lumber 77,769.68 U-1050 158789 10/20/2004 Newton Hardware & Lumber 10,915.98 U-1051 158790 10/20/2004 Newton Hardware & Lumber 60,701.14 DD-3-a 0276 5/6/2004 Orville Networx, Inc. 90.00 DD 0831 2/2/2004 Virgo Services and Trading Corp. 640.59 Subtotal 641,283.36 Annex E.2 T-247 217 6/17/2004 Marine Depot Manila, Inc. 28.18 Subtotal 28.18 Annex E.3 R-81a 17619 12/16/2003 Bitstop, Inc. 1,081.82 DD-9, R-488 17855 12/16/2003 Bitstop, Inc. 650.00 R-490a 17621 12/16/2003 Bitstop, Inc. 1,272.73 R-258, R-258a 98341 12/26/2003 NCH Philippines, Inc. 4,476.00 R-446, DD-6 5472 12/19/2003 Uptown Industrial Sales, Inc. 200.00 R-448, DD-7 5634 12/26/2003 Uptown Industrial Sales, Inc. 181.82 R-449 5543 12/20/2003 Uptown Industrial Sales, Inc. 616.36 R-450, DD-8 5475 12/19/2003 Uptown Industrial Sales, Inc. 2,982.73 R-452, R-452a 36602 12/3/2003 Ureka Steel Industries Company 4,290.91 Subtotal 15,752.37 Annex E.4 R-40 51951 12/23/2003 Longwood Garden/Orlando Internal 76.86 U-845 19832 10/26/2004 Bitstop, Inc. 1,928.18 U-848 19987 12/2/2004 Bitstop, Inc. 154.55 AA-128 25399 12/17/2004 Ricton Trading & Industrial Corp. 145.45 Subtotal 2,305.04 Annex E.7 S-534 4824073 5/30/2004 Manila Bulletin (Elaine Estrada) 1,104.00 R-632 13710 2/5/2004 Charles Cellzone 26.36 R-637 13748 2/9/2004 Charles Cellzone 26.36 Subtotal 1,156.72 Annex E.8 T-79 25491 7/29/2004 Ciudad Fernandino 3,556.77 Subtotal 3,556.77 Annex E.9 T-884 002520 7/21/2004 Rivera's Hollow Blocks 8,068.91 Subtotal 8,068.91 Annex E.14 AA-14 30623 2/10/2004 Sunshine Commodities 3,261.36 R-826 27713 4/14/2004 Ciudad Fernandino 4,329.55 Subtotal 7,590.91 TOTAL 679,742.26 ========== ANNEX B ADDITIONAL DISALLOWANCES PER COURT'S VERIFICATION Invoice/ Exh. Invoice/OR # OR Date Supplier Input VAT 1.) No supporting documents IL Lovenares Merch 15.27 IL Lovenares Merch 27.27 Magiclub Inc. 60.69 E.L. Frani Fastfood 58.18 Jollibee Urdaneta 395.45 CSI Warehouse 203.38 Kapit Bahay Lumber 36.36 IL Lovenares Merch 58.00 IL Lovenares Merch 7.27 Long Last Anne 294.55 Club Fairway 535.45 Cyncore Trading 227.27 Regus Centres, Inc. 11,515.29 Jocelyn A. Dela Cruz-PCF 83.22 PLDT 3,106.82 Leemasters International System, Inc. 11,673.65 Phil. Fuji Xerox 493.02 Acra Service Center, Inc. 1,159.09 The Good Earth Tea Room 10.00 Milcor Management Corporation 27,272.73 Pacific Strategies & Assessments Phils. 408.80 Subtotal 57,641.76 2.) Claims erroneously computed S-44 062 4/30/2004 BMP Environment 17,544.82 U-264 2527815 10/6/2004 PLDT 1,042.96 U-264 2527814 10/6/2004 PLDT 2,099.50 U-276 2527948 10/6/2004 PLDT 5,287.59 U-276 2527947 10/6/2004 PLDT 1,815.76 U-308 0066 10/19/2004 San R Construction Corp. 4,616.69 U-312 0067 10/28/2004 San R Construction Corp. 5,707.99 U-600 0044 11/25/2004 Galeo Equipment Corp. 3,491.18 U-724 0069 11/8/2004 San R Construction Corp. 15,093.02 U-731 0071 11/18/2004 San R Construction Corp. 4,767.27 Subtotal 61,466.78 3.) Purchases of goods not within the refund period U-1045 158791 1/20/2005 Newton Hardware & Lumber 96,320.23 U-1046 158792 1/20/2005 Newton Hardware & Lumber 14,284.35 U-1047 158793 1/20/2005 Newton Hardware & Lumber 70,237.95 Subtotal 180,842.53 4.) Purchases of services not within the refund period R-69 22292 1/14/2003 Ayala AON Risk Services, Inc. 1,321.07 S-398-a 19941 6/3/2003 Bitstop Network Services, Inc. 11,172.60 S-398-b 19941 6/3/2003 Bitstop Network Services, Inc. 523.46 U-906 10102 1/7/2005 Crown Worldwide Movers Inc. 1,538.35 U-958 304371 1/7/2005 Eastern Telecom 500.00 U-1012 2124 1/5/2005 International SOS 14,050.00 U-1015 2132 1/10/2005 International SOS 14,107.50 U-1067 78009 1/21/2005 Phil-Data Business Systems, Inc. 802.90 U-1128 300 1/9/2003 RASA Surveying & Realty 7,636.36 U-1132 5980 1/6/2005 Resourceful Pest Control 1,913.34 AA-153 1070 3/21/2005 Tyco Integrated System 48,049.56 Subtotal 101,615.14 5.) Purchases of goods and services supported by documents other than invoices or ORs T-978 25087 8/9/2004 Magiclub Inc. 25.65 T-979 25089 8/9/2004 Magiclub Inc. 58.25 T-980 25088 8/9/2004 Magiclub Inc. 100.18 T-985 25086 8/9/2004 Magiclub Inc. 218.03 U-861 128937 12/8/2004 Rustan Coffee Corporation 8.64 U-861 128933 12/8/2004 Rustan Coffee Corporation 62.27 S-653 5/7/2004 Power Service Providers Inc. 64,230.36 U-682 55003965607 10/27/2004 PLDT 2,284.62 U-683 56002764540 9/17/2004 PLDT 4,776.60 U-684 56002764541 9/17/2004 PLDT 3,134.91 U-685 56002764542 9/17/2004 PLDT 2,725.35 U-686 56002764543 9/17/2004 PLDT 2,985.41 U-687 56002764532 9/17/2004 PLDT 2,879.48 U-688 56002764533 9/17/2004 PLDT 1,561.57 U-689 56002764534 9/17/2004 PLDT 3,251.16 U-690 56002764535 9/17/2004 PLDT 1,641.03 U-691 56002764536 9/17/2004 PLDT 1,641.03 U-692 56002764537 9/17/2004 PLDT 1,641.57 U-693 56002764538 9/17/2004 PLDT 1,641.30 U-694 56002764539 9/17/2004 PLDT 1,609.86 U-695 56002767120 9/17/2004 PLDT 1,171.61 Subtotal 97,648.88 6.) Invoice or OR not duly registered with the BIR R-350 N40247 1/9/2004 Rockwell Automation (Phils), Inc. 51,981.30 S-991 30315 6/10/2005 Ford Alabang 2,235.70 Subtotal 54,217.00 7.) Purchases of goods not supported by invoices R-581 1676 1/28/2004 RF Trading & Distribution Corp. 34.09 U-361 32574 9/15/2004 Western New Farmers Company 3,634.55 Subtotal 3,668.64 8.) Purchases of services not supported by official receipts R-631 54960 1/24/2004 Longwood Garden 94.45 R-635 55964 2/1/2004 Longwood Garden 86.32 R-635 55774 2/1/2004 Longwood Garden 85.32 S-365 60349 3/21/2004 Longwood Garden 88.32 S-365 60433 3/22/2004 Longwood Garden 77.82 S-366 59832 3/15/2004 Longwood Garden 81.64 S-366 59907 3/16/2004 Longwood Garden 84.18 S-367 60855 3/27/2004 Longwood Garden 83.82 S-367 60756 3/26/2004 Longwood Garden 78.82 S-368 60974 3/28/2004 Longwood Garden 86.32 S-368 61033 3/29/2004 Longwood Garden 80.32 S-693 82 5/3/2004 San R Construction Corp. 10,952.93 S-1138 3/30/2004 Tokio Marine Malayan Insurance 105.91 S-1157 33345 5/25/2004 Bauzon Battery & Electrical Shop 545.45 T-876 7/27/2004 RASA Surveying & Realty 3,818.18 U-355 65501 10/11/2004 Lisland Rainforest Resort 195.64 U-852 2963 11/3/2004 Bitstop, Inc. 136.36 U-853 2978 11/6/2004 Bitstop, Inc. 136.36 U-854 3053 11/13/2004 Bitstop, Inc. 1,363.64 U-855 19921 11/30/2004 Bitstop, Inc. 2,272.73 U-972 1176 11/18/2004 Fraser Place 37,407.36 U-1117 SO1103-0002 11/25/2004 Power Service Providers Inc. 10,065.91 Subtotal 67,927.80 9.) Supported by ORs without the imprinted word "VAT" after the suppliers' TIN R-922 5106 3/3/2004 FD Esguerra Enterprises 6,167.91 S-361 2579 4/13/2004 Zodiac Pest Control 3,514.04 S-363 2580 5/6/2004 Zodiac Pest Control 3,514.04 Subtotal 13,195.99 10.) Invoice or OR not in the name of Petitioner U-418 42139 10/8/2004 Greenlee Electrical & Industrial Supply 1,714.73 U-1192 VYPI14K0058 10/29/2004 Yokogawa Philippines, Inc. 6,497.77 Subtotal 8,212.50 11.) Supported by ORs or invoices with TIN-V only or without supplier's TIN R-257 5676-A 2/23/2004 MOF Company (Subic) Inc. 38,777.60 R-536 303 2/23/2004 Inspection Consultants Int'l Phil., Inc. 28,499.90 U-786 036 11/30/2004 A3 Industrial Sales 2,468.18 U-787 031 11/30/2004 A3 Industrial Sales 2,742.73 U-788 024 11/30/2004 A3 Industrial Sales 9,144.55 U-789 023 11/30/2004 A3 Industrial Sales 5,429.09 U-790 018 11/30/2004 A3 Industrial Sales 3,331.82 U-791 017 11/30/2004 A3 Industrial Sales 2,363.64 U-792 025 11/30/2004 A3 Industrial Sales 7,941.82 U-793 030 11/30/2004 A3 Industrial Sales 927.27 U-794 033 11/30/2004 A3 Industrial Sales 2,554.55 U-795 034 11/30/2004 A3 Industrial Sales 2,554.55 U-796 032 11/30/2004 A3 Industrial Sales 786.36 U-797 029 11/30/2004 A3 Industrial Sales 1,409.09 U-798 028 11/30/2004 A3 Industrial Sales 734.55 U-799 027 11/30/2004 A3 Industrial Sales 772.73 U-800 026 11/30/2004 A3 Industrial Sales 1,303.64 U-801 022 11/30/2004 A3 Industrial Sales 1,303.64 U-802 021 11/30/2004 A3 Industrial Sales 2,131.82 U-803 020 11/30/2004 A3 Industrial Sales 788.18 U-804 016 11/30/2004 A3 Industrial Sales 2,363.64 U-805 019 11/30/2004 A3 Industrial Sales 1,327.27 R-258 24176 12/26/2004 NCH Philippines, Inc. 4,476.00 Subtotal 124,132.62 12.) Supported by undated invoice U-1020 702 Jadestar Machinery Corporation 1,306.36 Subtotal 1,306.36 13.) Purchase of services supported by blank OR or not legible OR R-582 156 RF Trading & Distribution Corp. 45.45 T-696 893671 8/17/2004 Globe Telecom 45.46 T-926 12877 8/23/2004 SGV & Co. 10,983.28 T-1296 14752 9/20/2004 SGV & Co. 38,441.48 U-315 15318 10/20/2004 SGV & Co. 43,933.12 Subtotal 93,448.79 14.) Double Claim of input VAT T-499 25410 7/27/2004 Tokio Marine Malayan Insurance Co. 49.00 Subtotal 49.00 15.) Supplier's OR marked "Non-VAT" U-1127 0659 12/17/2004 RASA Surveying 12,727.27 Subtotal 12,727.27 TOTAL 878,101.06 ========= Footnotes 1. Annex "A", Petition for Review, CTA Case No. 7424, p. 8. 2. Annex "B", Petition for Review, CTA Case No. 7424, pp. 9-12. 3. Annex "C", Petition for Review, CTA Case No. 7424, p. 13. 4. Exhibit "A". 5. Exhibit "A". 6. Exhibit "B". 7. Exhibits "J" and "L". 8. Docket, pp. 39-40. 9. Petition for Review with Motion to Consolidate with CTA Case No. 7424. 10. Docket, pp. 51-53. 11. Docket, p. 57. 12. CTA Case No. 7492, pp. 48-49. 13. Docket, p. 305. 14. Docket, p. 307. 15. Docket, p. 385. 16. Issues, Joint Stipulation of Facts and Issues, docket, pp. 112-113. 17. The Revised National Power Corporation's Charter. 18. G.R. No. 88291, June 8, 1993. 19. Exhibit "B". 20. Exhibits "W" and "W-1" to "W-71". 21. Exhibits "Q-10" to "Q-12", "E-1", "Q-15" to "Q-17", "G-1", "Q-20" to "Q-21", "I-1", and "Q-23" to "Q-25". 22. Exhibits "R", "R-1" to "R-1197", "S", "S-1" to "S-1186", "T", "T-1" to "T-1352", "U", and "U-1" to "U-1196". 23. Exhibits "V" and "V-1" to "V-67". 24. Exhibit "P", Annex "E". 25. Exhibit "EE". 26. Exhibit "CC". 27. See details per Annex "A" of this Decision. 28. Exhibit "P", Annex "A". 29. Schedule of Input VAT on Local Purchases. 30. Exhibit "EE", page 22, 165Q to 170A. 31. Exhibit "DD-72". 32. See details per Annex "B" of this Decision. 33. Exhibit "K-3". 34. Exhibit "M-3". 35. G.R. No. 172129, September 12, 2008. 36. Exhibits "J" and "L".