“Today is Sunday, January 27, 2019 t The LAWPHIL Project custom Search | PHILIPPINE LAVS AND JURISPRUDENCE DATABANK Republic of the Philippines ‘SUPREME COURT Mania THIRD DIVISION GR. No, 180345 November 25, 2009, ‘SAN ROQUE POWER CORPORATION, Petitioner, ‘COMMISSIONER OF INTERNAL REVENUE, Respondent DECISION CHICO-NAZARIO, J. In this Pettion or Review on Certiorar, under Rule 45 of the Revised Rules of Cour, petitioner San Roque Power Corporation assails the Decision’ of the Court of Tax Appeals (CTA) En Banc dated 20 September 2007 in CTA EB No. 248, affirming the Decision? dated 23 March 2008 of the CTA Second Division in CTA Case No. 6916, which dismissed the claim of pelttoner for the refund andlor issuance of a tax credit certificate in the amount of Two Hundred Forty-Nine Milion ‘Three Hundred Ninely-Seven Thousand Six Hundred Twenty Pesos and 18/100, (9249,397,620.18) alogedly representing unutiized input Value Added Tax (VAT) fr the period covering January to December 2002. Respondent, as the Commissioner ofthe Bureau of Internal Revenue (BIR). Is responsible forthe assessment and Collection of all national internal revenue taxes, fees, and charges, Including the Value Added Tax (VAT), mposed by Section 1083 ofthe National internal Revenue Code (NIRC) of 1997. Moreover, itis empowered to grant refunds or issue tax credit certiieates in accordance with Section 112 of the NIRC of 1997 for unutlized input VAT paid on zero-rated or effectively zaro-ated sales and purchases of capital goods, to wit SEC. 112. Refunds or Tax Credits of Input Tax. ~ (A) Zero-ated or Effectively Zero-rated Sales—Any VATegistered person, whose sales are zero~ated or ffiectively zero-rated may, wihin two (2) years after the close of the taxable quarter when the sales were ‘made, apply forthe issuance of a tax ced certificate or refund of crediable input lax due or paid attributable to euch sales, except transitional input fax, to the extent that euch inpul fax has not been applied against ‘output tax: Provided, however, That inthe case of zero-ated sales under Section 108(A)(2\a\1), (2) and (8) {and Section 108 (B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly faccounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilpinas (BSP) Provided, further, Thal where the taxpayer is engaged in zoro-ated or effecvely zere-atod sale and also in taxable or exempt sale of goods or properties of services, and the amount of creditable input tax due or paid cannot be directly and entirely attnbuted to any one ofthe transactions, it shall be allocated proportionately on the basis ofthe volume of sales, (8) Capital Goods—A VAT-registered person may apply forthe issuance of a tax credit certificate or refund of. Input taxes paid on capital goods imparted or locally purchased, tothe extent the such input taxes have not been applied against ouput taxes. The application may be made only within two (2) years aller the close of the taxable quarter whon the importation or purchase was made. (On the other hand, petioner is @ domestic corporation organized under the corparate laws of the Republic ofthe Philippines. On 14 October 1997, It was incorporated far the sole purpase of building and operating the San Roque Multipurpose Project in San Manuel, Pangasinan, which san Indlvsible project consisting of the power station, the ddam, splay. and othor related factivos.* It is registered with the Board of Invasimonts (BOI) on a proferred pioneer status to engage in the design, consiructon, erection, assembly, as well @s own, commission, ang operate lettre power-generating plants and related activites, for which it was issued the Certifcate of Registration No. 97- 356 dated 11 February 1998.° As a salir of services, petitioner is registered withthe BIR as a VAT taxpayer undar Cerificate of Registration No. OCN-98-005-007394.° On 11 October 1997, peltioner entered into a Power Purchase Agreement (PPA) with the National Power Corporation (NPC) to develop the hydro potential ofthe Lower Agno River and fa be abla to generate adkitional Power and energy forthe Luzon Power Grid, by developing and operating tne San Roque Multipurpose Project. The PPA provides that pettioner shall be responsible forthe design, constuction, Installation, completion and testing {and commissioning ofthe Power Station and it shall operate and maintain the same, subject to the instructons of the NPC. During the cooperation perod of 25 years commencing from the completion date ofthe Power Station, the NPC shall purchase all the electricity generated by the Power Plant.” Because ofthe exclusive nature of the PPA between pettioner and the NPC, pettioner applied for and was granted five Centcates of Zero Rate by the BIR, through the Chief Regulatory Operations Monitoring Division, now the ‘Audit Information, Tax Exemption & Incentive Division. Based on these certiicates, the zero~aled status of peliioner commenced on 27 September 1998 and continued throughout the year 2002. For the period Jaruary to Dacember 2002, peiioner fled with the raspondent its Monthly VAT Declarations and (Quarterly VAT Returns is Quarterly VAT Returns showed excess input VAT payments on account of i importation and domestic purchases of goods and services, as follows? Period Covered [Date File Particulars “Amount TetQuarier | Apr20, | Tax Due forthe Quator (ox 130) 226,247.27 2002 (anwar 1 Input Tax carried over from previous ate] 296,124,420.21 2002 to (a)March 31, Input VAT on Domestic Purchases for 2002) the Or (@20) 95,003,348.91 Input VAT on Importation of Goods for the Or @ 20,758, 668.00 Total Avaliable Input tx (23) 411/888,446.12 VAT Refund/TCC Claimed (244) 173,909,435.68 ‘Net Greditable Input Tax (25) 237,977 010.45 VAT payable (Excess Input Tax) (26) _| (237.950,763.79) ‘Tax Payable (overpayment) (28) (237,950,763.19) ‘2nd Quarter | July 24, | Tax Due forthe Quarer (Box 190) P blank ‘2002 (Apri, 2002 to Input Tax caried over from previous at | 237,960,769.19 (228) June 30, 2002) Tnput VAT on Domestic Purchases for the Qtr (220) 65,206,480.83 Input VAT on Importation of Goods for the Qtr (22 16,486,758.00 “Total Avaliable Input tax (23) 321/648,021.02 VAT Refund TCC Claimed (248) 237,950,763.19, Not Grecitable Input Tax (25) 83,692,287-83 VAT payable (Excess Input Tax) (28) __|(83,692.257.83), "Tax Payable (overpayment) (28) (63,692,257 83) “Sed Guarier [October 25 [lax Due for he Quarter (Box 130) blank [2002 input Tax carried over from previous a ty + 200240 lage Te cared evar ten prone oy {OOA28, 0274 September 30, Inout VAT on Domestic Purchasos Tor To| 2002) lotr ay 26,924 020-73 Input VAT on Importation of Goods for tal lar [ezep 7455 875.09 [Total Available weput tax 23) 729,817 923.25] [var Refuna/TCC Ciaimed (248) Bian [Net Greditable Input Tax (25) 228,817 923.26] JAT payable (Excess Input Tex) (26) |(229.817.923.26) [Tax Payable (overpayment) (28) (229.817.923.26) “ath Quarter [January 23, [Tax Due forthe Quarter (Box 130), 34,096.36 1003 7 (october 1, 2002 apt Tex cred over tom provous ae 74608218382 ° input VAT on Domestic Purchases Tor To) December 31 late 2002) [zo 76,166,530 50 input VAT on Importation of Goods forthe) law ea 2.308 837.00 [Total Avaliable Input tx (23) 134,557,921.16 Ivar Refuna/TCC Claimed (248) 3 692.287-83 [Net Gredtable Input Tax (25) 0 885,063.53 [var payable Excoss Input Tax) @6) | (60.630,066.87)| [Tex Payable (overpayment) (22) (50,890,066.97) (On 19 June 2002, 25 October 2002, 27 February 2003, and 29 May 2008, pettoner filed withthe BIR four separate administraive claims for refund of Unutiized Input VAT paid for the perioé January to March 2002, April to June 2002, July to Seplember 2002, and October to December 2002, respectively. In these lelters addressed tothe BIR, Carlos Echevarria (Echevarria), the Viee President and Director of Finance of pettioner, explained that petitioner's sale of power to NPC are subject to VAT al zero percent rate, in accordance with Section 108(8)(3) of the NIRC."° Petitioner sought to recover the total amount of 250,258,084.25, representing its unutlized excess VAT on its importaion of capital and other taxable goods and services forthe year 2002, broken down as follows"? ur [Ourput Tax Input Tax Involved Domestic Purchases Importatons | Excess input Tax @ @ © )=@)+(-(A) Ta [waszi7ar| easaoasvmar| pao enone | rie ae ones ta =[__esaonamnea] vas reno] _sgamaasran a =[-25024.02070| 146587600] 9038609570 van sanoeae]| veseeanosa| —2aoeanr.00] 04047718 Baas] Pan. 200200.07| Bi. 07,0800 | P0258, 00448 Poston amended a Query VAT Reus atu Kanaan (1) Wp VAT on Dame Purchase ng to te gar of 205 (pa VAT on Doe Puceste lh oath ur 200 a) VA on Inport Goode reouh quater 2002, Theanine ae lone = Peed Cova [bat Fed Pa Tat ‘arQuarer | Aguas, | TaxDoo forthe Guar on 190) Baeadta nose (ean 1,202 Tap Tex caro over tom proves qt] —997.71629625 % Coa} ac 31,200) Wk VAT on Danwate Purchases 1 thea 20) B50 eT (22F) 20,758,668.00 Ten Ava tn 70404698 Vat Retr Gawd 17554. 00827 Ne Cree np TO 25) 175s 002.27 VA payable Exes nna Ta) | (90.05094987 TaxPayatecverpamen) aa) | (2380%4.09840 Trauma | Ape | TaxDow forthe Guar Gor 196) Fone Boot (on, 202 0 Tap Tox cro oar tom prove Gr] 208 03469640 Oe) sane 30,2002) Wok VAT ov Danwate Pachaaor fr thea 20) Bron Wok VAT on Inpraton ot Goda for hear eal Tats 76800 Tea Ava tt ain. on1 a2 VT ReiaiTCO Gatos @2A) 237 507078 Ne Cre np 25) 36825759 VA payable Exes nna Ta) | (9.852267. Tax Pate cverparen) G8) (e088 25789) Tanne ]ocsb 25 [Texbue orte Que (ono) [Aten seo (oy 1.2002 ip Tx cri vr roo | 686922579 ey sertenber 20, so Ip VAT on Dens Purchases or fear 5) PRA ORTH pu VAT on pain ot Gonder fear 2) ‘aes o76%0 Te Ava Rr Tia. 3 WAT ReiniTGO Ged 2A) Blk Te redler) Tian ea Wat payee Eee pu Tn) [08,1586 TaxPayte vpn) [1114 080.1538 Ta Gear Panny nxn rth Gunner Gor 16) EERE 2003 Input Tax cared over from previous qtr] tocar, 2002 na Ta card oer tom prov oe 4H, 169.82 ‘o Init VAT on Davos Puce To] xcamber 3, on) 20) TRIE