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SECOND DIVISION
CARPIO, J.,
Chairperson, BRION,
- versus - DEL CASTILLO,
PEREZ, and
PERLAS-BERNABE, JJ.
DECISION
CARPIO,J.:
The Case
Under Rule 45 of the 1997 Rules of Civil Procedure. Rollo, pp. 9-32.
Penned by Associate Justice Olga Palanca-Enriquez, with Presiding Justice Ernesto D. Acosta and
Associate Justices Juanito C. Castaneda, Jr., Lovell R. Bautista, Erlinda P. Uy, Caesar A.
Casanova, Esperanza R. Pabon-Victorino, Cielito N. Mindaro-Grulla, and Amelia R. Cotangco
Manalastas, concurring. Id. at 39-51.
Id. at 176-178.
Penned by Associate Justice Lovell R. Bautista, with Presiding Justice Ernesto D. Acosta and
Associate Justice Caesar A. Casanova, concurring. ld. at 97-115.
Petitioner was originally registered with the Securities and Exchange Commission (SEC) under
the name "Pangasinan Electric Corporation." Over the years, petitioner changed its name to
A//
Decision 10 G.R. No. 205055
The Facts
The quarterly VAT returns for the four quarters of 2004 provide:
Exh. Zero-Rated Sales/ Taxable Sales Output VAT Input VAT Excess Input
Receipts VAT
D P 3,698,654,169.48 P 0.00 P 0.00 P 13,134,435.00 P 13,134,435.00
E 3,653,185,715.68 202,558.14 20,255.81 31,973,996.35 31,953,740.54
F 3,744,693,428.11 465,744.07 46,574.41 19,967,007.14 19,920,432.73
H 3,819,303,147.15 1,044,107.15 104,410.71 38,227,189.38 38,122,778.67
Total P 14,915,836,460.42 P 1,712,409.36 P 171,240.93 P 103,302,627.87 P 103,131,386.94
On 24 April 2006, due to the BIR’s inaction, TSC filed a petition for
review with the Court of Tax Appeals (CTA). TSC prayed for the refund or
issuance of tax credit certificate for its alleged unutilized input VAT for year
2004.
In its 4 March 2010 Decision,6 the CTA Special First Division ruled
that TSC’s sale of electric power to NPC was effectively zero-rated. The
CTA Special First Division found that TSC complied with the five
requirements to be entitled to a refund or issuance of tax credit certificate on
its input VAT, to wit:
“Southern Energy Pangasinan, Inc.” on 17 August 1999; “Mirant Sual Corporation” on 28 June
2001; and Team Sual Corporation on 23 July 2007. Id. at 78.
6 Penned by Associate Justice Lovell R. Bautista, with Presiding Justice Ernesto D. Acosta and
Associate Justice Caesar A. Casanova, concurring. Id. at 77-96.
1. That 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 sales 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.7
The CTA Special First Division found that TSC is entitled to a refund
or issuance of tax credit certificate in the amount of P78,009,891.568 input
VAT, upon disallowance of the amounts of: (1) P568,628,238.98 for being
sales of electric power to Mirant Philippines Energy Corporation, Mirant
Philippines Industrial Power Corporation, and Mirant Philippines Industrial
Power II Corporation; (2) P2,430,229,567.30 zero-rated sales to NPC for not
being properly supported by VAT official receipts; and (3) P5,490,632.64
input VAT for failure to meet the substantiation requirement. The CTA
Special First Division likewise ruled that both the administrative and the
judicial claims of TSC were filed within the two-year prescriptive period.
SO ORDERED.9
7 Id. at 82.
8 Id. at 94. Computed as follows:
P14,915,836,460.42
Less: Sales to entities other than NPC 568,628,238.98
Less: Zero-Rated Sales covered by OR
dated outside the period of claim 2,430,229,567.30
Adjusted Valid Zero-Rated Sales P11,916,978,654.14
SO ORDERED.11
10
Id. at 113. Computed as follows:
P14,915,836,460.42
Less: Sales to entities other than NPC 568,628,238.98
Less: Zero-Rated Sales covered by OR
dated outside the period of claim 7,232,794.92
Adjusted Valid Zero-Rated Sales P14,339,975,426.52
P103,302,627.88
Less: Disallowances (Per ICPA) 1,092,317.62
(Per this Court’s further verification) 4,398,315.03
Add: Substantiated input VAT 3,094,606.10
Adjusted Valid input VAT P 100,906,601.33
Less: Output VAT 171,240.93
Adjusted Excess Valid Input VAT P 100,735,360.40
SO ORDERED.12
The Issue
12 Id. at 50.
13 Id. at 16.
Sec. 112. Refunds or Tax Credits of Input Tax. —
xxxx
(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.14
Under Section 112(C) of the NIRC, the CIR has 120 days to decide
the taxpayer’s claim from the date of submission of complete documents in
support of the application filed in accordance with Section 112(A) of the
NIRC. In Intel Technology v. Commissioner of Internal Revenue,15 we ruled
that once the taxpayer has established by sufficient evidence that it is
entitled to a refund or issuance of a tax credit certificate, in accordance with
the requirements of Section 112(A) of the NIRC, its claim should be
granted.
14 National Internal Revenue Code of 1997, as amended by Republic Act No. 9337, Section 112.
15 Intel Technology Philippines, Inc. v. Commissioner of Internal Revenue, 550 Phil. 751 (2007).
In Atlas Consolidated Mining v. Commissioner of Internal Revenue,16
we held that applications for refund or credit of input tax with the BIR must
comply with the appropriate revenue regulations. Thus, applications must be
in accordance with Section 2 of Revenue Regulations No. 3-88 (RR 3-88),
amending Section 16 of Revenue Regulations No. 5-87, to wit:
SECTION 2. Section 16 of Revenue Regulations 5-87 is hereby
amended to read as follows:
xxxx
xxxx
xxxx
In the present case, the CTA Special First Division found that TSC
complied with the requirements of Section 112(A) of the NIRC and granted
its claim for refund or credit of P78,009,891.56 input VAT. Upon a partial
new trial, the CTA Special First Division increased the amount to
P96,846,234.31. Upon appeal, the CTA EB concluded that TSC submitted
the relevant documents to substantiate its claim for refund or credit of input
tax, to wit:
2. Quarterly VAT returns for the first, second, third and fourth quarters
of 2004 (Exhibits “D”, “E”, “F”, “G”, & “H”);
3. Summary of Input Tax Payments for the first, second, third and
fourth quarters of 2004 showing details of purchases of goods and
service as well as the corresponding input tax paid (Exhibits “D” to “D-
3”, “E” to “E-5-b”, “F” to “F-4-b”, “H-3” to “H-4-c”);
4. VAT official receipts and invoices for the first, second, third and
fourth quarters of 2004 (Exhibits “QQ”-7” to “QQ-21-d”, “RR-17”,
“SS-1” to “SS-19” & “TT-1” to TT-18”);
The CIR, however, insists that TSC failed to submit the complete
documents enumerated in RMO 53-98. Thus, the 120-day period given for it
to decide allegedly did not commence.
SO ORDERED.
Associate Justice
WE CONCUR:
Ot&iD!d
ARTURO D. BRION
Associate Justice
25 Commissioner of Internal Revenue v. San Roque Power Corporation, G.R. No. 187485, 12
February 20 !3, 690 SCRA 336.
p ·
C. DEL CASTILLO J
Associate Justice
IAIJ.
ESTELA M:Ci;ERLAS-BERNABE
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court's Division.
Associate Justice
Chairperson
CERTIFICATION
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