KEPCO PHILIPPINES CORPORATION v. THE COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OFTAX APPEALS QUEZON CITY FIRST DIVISION *************** KEPCO PHILIPPINES CORPORATION, Petitioner, -versus - C.T.A. CASE NO. 6100 Members: ACOSTA, Chairman BAUTISTA, and CASANOVA, fl. COMMISSIONER OF INTERNAL REVENUE, Promulgated: Respondent. FEB 0 9 2005 afJA7;&iJ~ X - --- --- -- --- -- - -- --- -- --- --- - ---- --- -- ------ -- --- -- --- --- -- --X DECISION ACOSTA, E., P.T.: This is a Petition for Review claiming for the refund or issuance of a tax credit certificate in the amount of P37,250,307.39 allegedly representing the inpu t valu e- added-tax incurred for the calendar year 1998 from petitioner's sales of electricity to the National Power Corporation. The facts as adduced from the records are as follows: Petitioner is a domestic corporation duly organized and existing under the laws of the Republic of the Philippines, with its principal place of business located at Suite 2501-A, 25th Floor, Tektite Tower 1, Exchange Road, Ortigas Center, City of Pasig. It is a Value-Added Tax (VA1) registered taxpayer engaged in the production and sale of electricity (as an independent power producer), and sells electricity to the Na tional

DECISION C'fA CASE NO. 6100 Page 2 Power Corporation (NPC) (Joint Stipulnticm of Facts, pars. 1 & 2). Petitioner has filed the appropriate Application for Effective Zero-Rating of its sales of electricity to the NPC with the respondent (ibid., par. 4). For the four quarters of the calendar year 1998, petitioner allegedly incurred VAT on its importation and domestic purchases of goods and services (including capital goods) in the total amount of P37,250,307.39 allegedly attributable to the production and sale of electricity to the NPC. On March 30, 2000, petitioner filed with the respondent, through the Revenue District Office (ROO) No. 42, a claim for refund of the input VAT incurred for the calendar year 1998 (ibid., par. 5). It likewise filed a request for a ruling with the respondent relative to its claim for refund. On April 24, 2000, due to the inaction of respondent, this instant Petition for Review was filed. On June 08, 2000, respondent filed an Answer to the inc;tant Petition for Review, and raised therein the following Special and Affirmative Defenses: 1. In an action for refund, the taxpayer has the burden to show that the taxes paid were erroneously or illegally c<illected and failure to do so is fatal to the action; 2. Oaims for refund are strictly construed against the taxpayer. Petitioner has no cause of action. In a Resolution promulgated on November 19, 2001, this Court granted petitioner's "Motion for Leave of Court to Admit Attached Amended Petition for Review' filed on October 12, 2001 to include another cause of action in pursuing its claim for refund; that is, the input VAT being claimed were incurred in the procurE>..ment of capital goods which is allowed under the (then) Section 106 (b) of the 1995 Tax Code. The p.rayer of the instant petition was also amended to include the issuance of a tax credit certificate as an alternative to the claim for refund. ' r'

DECISION CT A CASE NO. 6100 Page 3 The issues to be resolved in the case at bar are as follows: 1. Whether or not the sale of electricity by a VAT-registered entity to the National Power Corporation qualifies as a sale of services subject to VAT rate of zero percent (0%) or othetwise called a zero-rated VAT transaction; and 2. Whether the petitioner, as a VAT-registered entity, did, for the calendar year 1998, actually incur input VAT on its domestic purchases of goods and services (including capital goods) in the amount of P37,250,307.39, attributable to iL-., production and sale of electricity to the NPC Anent the first issue, We rule in favor of the petitioner. Section 13 of Republic Act No. 6395, which is the charter of the National Power Corporation, as amended by Presidential Decree No. 938, provides: "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 investment 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 A<:t, the Corporation including its subsidiaries is hereby declared exempt from the payment of all forms of taxes, duties, fees. imposts, as well as the costs and service fees including filing fees, appeal bonds, supersedeas bonds, in any court or administrative P-.rQ.!:~din_g!!." (Emphasis and underlining supplied) In the case of Maceda vs. Macaraig, Jr., G.R. No. 88291, May 31, 1991, the Supreme Court affirmed the National Power Corporation's tax exemption, thus: "The NPC is a non-profit public corporation created for the general good and welfare, wholly owned by the government of the Republic of the Philippines. From the ve:ry beginning of its corporate existence, the NPC enjoyed prt>lerential tax treatment, to enable the Corporation to pay the indebtedness and obligation and in furtherance and effective implementation of the policy enunciated in Section one of "Republic Act No. 6..'W5" which provides:

DECISION CTA CASE NO. 6100 Page 4 Section 1. Declaration of Policy. - Congress hereby declares that (1) the comprehensive development, utilization and conservation of Philippine water resources for all beneficial uses, including power generation, and (2) the total electrification of the Philippines through the development of power from all sources to meet the need of rural electrification are primary objectives of the nation which shall be pursued coordinately and supported by all instrumentalities and agencies of the government including its financial institutions. XXX XXX XXX It is noted that in the earlier law, R.A. No. 358 the exemption was worded in general terms, as to cover "all taxes, duties, fees, imposts, charges, etc. x x x" However, the amendment under Republic Act No. 6395 enumerated the details covered by the exemptions. Subsequently, P.D. No. 380, made ever more specific the details of the exemption of NPC to cover, among others, both direct and indirect taxes on all petroleum products used in its operation. Presidential Decree No. 938 amended the tax exemption by simplifying the same law in general terms. It succinctly exemptc; NPC from "all forms of taxes, duties, fees, imposts, as well as cosL'> and service fees including filing fees, appeal bonds, supersedeas bonds, in any court or administrative proceedings." The use of the phrase "all forms" of taxes demonstrate the intention of the law to give NPC all the tax exemptions it has been enjoying before. The rationale for this exemption is that being non-profit the NPC "shall devote all its returns from its capital investment as well as excess revenues of its operation, for expansion. x x x XXX XXX XXX It is evident from the provisions of P.D. No. 938 that its purpose of to maintain the tax exemption of NPC from all form of taxes including indirect taxes as provided for under R.A. No. 6395 and P.D. No. 380 if it is to attain its goals." Corollary thereto, Section 108(B)(3) provides that services rendered by a VAT- registered person to a tax-exempt entity is ~11bject to VAT at zero percent (0% ). To quote: "Sec. .108. Value-added Tax on Sale of Services and Use or Lease of Properties. - (A) Rate and base of tax. - xxx

DECISION CIA CASE NO. 6100 Page 5 (B) Transactions Subject to Zero Percent (0%) Rate. - The following services performed in the Philippines by VAT- registered persons shall be subject to ze..ro percent 0% rate: (1) XXX (2) XXX (3) Services rendered to persons or entities whose exemption under ~eciallaws or international agreements to which the Philippines is a signatory effectively subj�..>cts the supply of such services to zero percent (0%) rate," In view of the above law and jurisprudence, services rendered by a VAT - registered entity to the NPC, an entity exempt from the payment of all taxes whether direct or indirect, including VAT, are effectively zero-rated (Kepco Philippines Corporation vs. Commissioner of Internal Revenue, CTA Case No. 5761, July 14, 2003 citing Mirant Navotas Corporation vs. Commissioner of Internal Revenue, CTA Case No. 6044, October 16, 2002). As regards the second issue of whether or not petitioner incurred input VAT on its importation and domestic purchases of goods and services, including capital goods, directly attributable to its production and sale of electricity to NPC, petitioner cites as legal basis the provisions of Section 112 of the 1997 Tax Code, as follows: "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, hawever, That in the case of :t..e.ro- rated sales under Section 106(A)(2)(a)(l), (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 Banp,ko Sentral np, 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 propertit.'S or services, and the amount of crt..>ditable input tax due or paid cannot be dirt..>ctly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales."

DECISION CfA CASE NO. 6100 Page 6 (B) Capital Goods.- A VAT- registered person may apply for the issuance of a tax credit certificate or refund of input taxes paid on capital goods imported or locally purchased, to the extent that such input taxes have not been applied against output taxes. The application may be made only within two (2) years after the close of the taxable quarter when the importation or purchase was made. (Emphasis Supplied) To bolster its claim for refund of input VAT on its purchases of goods and services attributable to zero-rated sales and on capital goods, petitioner presented the following document-.,: DOCUMENT EXHIBIT 1. Schedules of input VAT U, U-1 to U-5 from January to December 1998 2. Invoices and/or official receipts Pre marked 1-l to 1-20 of goods and services purchased Pre marked 2-1 to 2-79 in1998 Pre marked 3-1 to 3-392 a. January 1998 Pre marked 4-1 to 4-168 b. February 1998 Pre marked 5-1 to 5-127 c. March 1998 Pre marked 6-1 to 6-83 d. April1998 Pre marked 7-1 to 7-112 e. May 1998 Pre marked 8-1 to 8-119 f. June 1998 Pre marked 9-1 to 9-131 g. July 1998 Pre marked 10-1 to 10-143 h. August 1998 Pre marked 11-1 to 11-109 i. September 1998 Pre marked 12-1 to 12-2313. j. October 1998 k. November 1998 L (incl. of submarkings) to 1. December 1998 T (incl. of submarkings) 3. Report of the commi'isioned Y-1 to Y-12 Independent CPA 4. Official Receipts issued by KEPCO to NAPOCOR 5. Rehabilitation, Operation W (incl. of submarkings) Maintenance & Management Agreement 6. Quarterly VAT Return for the X (incl. of submarkings) 1�t quarter of 2001 7. Audited Financial Statements V (incl. of submarking) l\'

DECISION crA CASE NO. 6100 Page 7 Petitioner offered in evidence the various official receipts (Exhibits Y-1 to Y-12) sans the Quarterly VAT Returns for the first to the fourth quarters of taxable year 1998 to prove its :zero-rated sales. However, a close scrutiny of the official receipts shows that they are not in sequential order, to wit EXHIBIT DATE OFFIOAL RECEIYfNO. Y-1 March 6,1998 077 Y-2 April6, 1998 082 086 Y-3 May 9,1998 094 098 Y-4 June10,1998 099 105 Y-5 July 8,1998 108 112 Y-6 August 7,1998 117 118 Y-7 September 14, 1998 119 Y-8 October 6, 1998 Y-9 November 4,. 1998 Y-10 December17, 1998 Y-11 January 14, 1999 Y-12 February 5, 1999 Two possibilities come to Our minds. First, the "missing" or "unaccounted for" official receipts were cancelled. Second, petitioner may� have used the other official receipts for its sales to other entities. It must be pointed out, however, that petitioner admitted in its written claim for refund to the Bureau of Internal Revenue dated March 30, 2000 (CTA Records, p. 10) that it also sells electricity to other entities. 'Thus, the input VAT on the purchases of goods and services may not be wholly attributable to petitioner's zero-.rated sales since its other sales might be subject to VAT at ten percent (10%). We cannot, therefore, grant petitioner's claim for refund of input VAT on the purchases of goods and services allegedly attributable toiL~ zero-rated sales absent ""' sufficient proofs that indeed iLc; input VAT on purchases of goods and services are solely attributable to zero-rated sales. Due to petitioner's failure to present its 1998 quarterly VAT returns and all its official receipts relative to the subject transactions, this Court cannot ascertain the acc.:uracy of its claim. Moreover, the commissioned

DECISION CfA CASE NO. 6100 Page 8 independent CPA only verified the accuracy of petitioner's claimed input VAT. Petitioner's zero-rated sales were not examined. It is a well-established rule that in an action for refund, the taxpayer has the burden of proof to show that the taxes paid were erroneously or illegally collected and failure to do so is fatal to the action. Further, a claim for re.fund is in the nature of a claim for exemption and should therefore, be construed in strictissimi juris against the taxpayer (Conunissioner oflnte:mal Revenue vs. Tokyo Shipping Co., Ltd., 244 SCRA 332). With respect to petitioner's claim of input VAT on capital goods, Section 112 (B) of the Tax Code in relation to Section 4.106-1 of Revenue Regulations No. 7-95 provides for requisites in order for a refund therefor be granted. Pertinent portions of the said Revenue Regulations are hereunder reproduced for easy reference: "SEC. 4.106-1. Refunds or tax credits of input tax (a) Zero-rated sales of goods and properties or services - xxx XXX XXX XXX (b) Capital Goods- Only a VAT registered person may apply for the issuance of a tax credit certificate or refund of input taxes paid on capital goods imported or locally purchased. The refund shall be allowed to the extent that such input taxes have not been applied against output taxes. The application should be made within the two (2) years after the close of the taxable quarter when the importation or purchase was made. Refund of input taxes on capital goods shall be allowed only to the extent that such capital goods are used in VAT taxable business. If it is also used in exempt operations, the input tax refundable shall only be the ratable portion corresponding to the taxable operations. "Capital goods or properties" refer to goods or properties with estimated useful life greater than one year and which are treated as depreciable assets under Section 29(j)[now34(/)], used directly or indirectly in the production or sale of taxable goods and services." Thus, petitioner must show compliance with the following requisites: 1) That it is a VAT registered entity; '; ( '

DECISION crA CASE NO. 6100 Page9 2) That input taxes claimed were paid on capital goods duly supported by VAT invoices and official receipts; 3) That it did not offset or apply the claimed input VAT payments on capital goods against any output VAT liability; and 4) That the claim for refund was filed within the two year prescriptive period both in the administrative and judicial levels (Telecommunications Technologies Philippines, Inc. vs. Commissioner ofInternal Revenue, CTA Case No. 6018, November 24. 2003). Petitioner complied with the first requisite as jointly stipulated by the parties (Joint Stipulation of Facts, par. 2). Petitioner also complied with the second IL>quirement. Ithas presented various invoices and official receipts. However, only the following purchases are paid on capital goods and are supported by eviden<:e: EXHIBIT DATE SUPPUER'S DESCRIPTION INVOICE INPUT NAME AMOUNT VAT 1�2 1/15198 Newton Industrial Sales Rewinding of 3050 KW Boiler p 437,437.00 p 3 9 ,7 6 7 . 0 0 Calibration & Testing of CT 1-3 1/16/98 NAR Power System Boiler Overhaul 862,331 .47 78,302 .95 Regasketing, hot-oil purifiCation 1-8 1/23198 Jeong Poong Water Disposal pit tank 17,600,973.n 1,600,088.52 Dust Collector & Ash Handling System 1-12 1/26/98 Tri-ohms Engineering Rehab of trash bar/rack 902,500.00 82,045.45 Rewinding of HSCC Pump Motor 1-17 12/51'5/ DNL Construction Warenous. Renovation 29,325.00 2,665.91 Thermal Patch Refractory Coaing 2�13 2/13198 Korea Cottrell Co. Boiler Ovemaut 19,204,411 . 12 1,745,855.56 Y-Anehor TVIisted Type 2-65 2123196 Maddem Industrial lEE for Wharf extension 2 ,482,200.00 225,654.55 3-05 312/98 Newton Industrial Sale Installation cost of wooden shelves 94,325.00 8,575.00 3-09 313198 BNJ Sash Corp Oownpayment for K-1 FDF 215,600.00 19,600.00 Impeller Spencer Vortex 3-38,incl. 3110/96 Nittobo Marketing NAR Power System 1,442,560.00 131 '141 .82 Installation of Chern. Pumps 3-50 3111/98 Jeong Poong Rep. Of High Voltage bushing 6,749,584.38 613,598.58 Generator Neutral Ground Transformer 3-59 3113/98 Arkay Energy & lnd'l Maint cortrol RM rehab 1,5 3 7 ,8 8 7.5 0 139,807.95 3-63 3113196 Rurban Planners. Inc Final paymem for spiHboon installation 37,400.00 3.400 .00 Compt CMirhaul of overhead crane 3-100 3120196 BNJ Sash Corp 58,861 .00 5,351 .00 U-Tube Manometer 3-108 3/20196 Golden Harvest Const. Supply & Installation of AJC 653,400.00 59,400.00 Final payment of Install of power house 3�112 3126/98 Ralium Engi..-rlng 159,636.12 14,512.37 3-121 3127/98 Final Payment Calibration 861,332.47 78,302.95 4-30 416/98 Advanco Surface Protect 288,605.02 26,236.82 4-31 4/6198 Tri-ohms Engineering 197,500.05 17,954 .55 4-32 416198 Tri.Qhms Engir!e$ring 403,750.05 3 6 ,7 0 4 . 5 5 4-34 418198 JAKOFS Corp. 1,144,950.51 104,088.41 4-45 3130196 Sunkyong Engineering 75,999.99 6,909.09 4-76 4120198 Priam Inc. 856,350.00 n .8so.oo 4-92 4124196 Instrumentation & Control 3 5,5 1 9 .9 9 3,229.09 4-93 4124/98 TCU Airoon Sales 108,749.96 9,886.36 4-122 4130196 Precision Developmert 1,301 ,973.42 118,361.22 , I.

DECISION CI'A CASE NO. 6100 Page 10 4-126 4/30198 Bright Venture Builder Fin. payment for cooling water channel 25.000.03 2,272.73 HVAC Const. For Malnt Control Room 662,736.09 60,248.73 5-4 516/98 ScanAire OOINI'Ipayment for Water Treatment 6 ,652,8 0 0.0 0 604,800.00 Ash Handling portable cart 140,000.00 12,727.27 5-5 516/98 Sunkyong Engineering Horizontal Beneh Lathe Machine 191 ,877.25 17,443 .39 Emergency Diesel Generator 642 ,702 .6 6 58 ,427 .51 5-6 517/98 Cotrell Netlovori< 1st progress bill. K1 & K2 Construction 974,544.84 88,594 .98 30% Sal Payment for API 670,908.21 60,991 .66 5-10 518/98 Pumpcraft Industrial Duplex Strainer 948,931 .25 86,266.48 Boiler Ove!haul 7,072,319.63 642,938.15 5-15 518/98 Power Pro Inc Floor Polisher 5-20 518/98 NAR Pawer System Full payment for contract 73,650.00 6,695.45 Ornron Power Supply 17,296,067.88 1,572,369.81 5-25 518/98 Environment First Full payment rewinding of motor Full payment boiler overhaul 29,779.00 2 ,707 . 18 5-32 5112196 Urica Industrial W ire Koppel Aircon 187,473.00 17,043.00 5-35 5112198 Jeong Poong Progress Bill for rehab of MFOT 2,840,261 .49 258,205.59 Boiler Waterwall tube replacement 5-46 510/98 Pumpcraft Industrial 1st Progress bill for water treabMnt 76,500.00 6,954.55 Chemical Exhaul>t Fan 1,840,775.94 167,343.27 5-55 5122198 Sunkyong Engineering Full payment for 0/H of air compressor 28,762.66 5-72 5126/96 Wise-Man Automation Full payment for Stator rewinding 316,389.23 157,308.48 Executive personal locker 1,730,393.28 5-9 4 5/29198 Newton Industrial Sale Supply 1 unit of airoon 1.313.64 6-30 6/19/98 Jeong Poong 1st progress bill for K2 Soller 14,450.00 8,064.42 6-31 6-11}.98 TCU Aircon Sales OOINI'Ipayment for repair 88,708.62 8,636.36 Microscanner 95,000.00 1,595.45 6-34 6/19198 FEO Construction Labor & Mat For Lilly Guard 17,550.00 13,727.27 Full payment for 75MVAX 151 ,000.00 748,775.84 6-51 6119196 LSA Builders , 2nd progress bill for K2 boiler 8,236,534.25 47,305.90 Chom . Tankyard Rehab. 520,364.93 3,681.82 7�1 7/1/98 Sunkyong Engineering K2 Transformer inspection & regasking 40,500.00 8,141 .00 Sampling Rack House repair 89,551.00 32 ,386.36 7-6 711198 Pumpcraft Industrial Turbin&, Boiler Discharge Motorize 356,250.00 741 ,687.87 8th progress bill MFTOTI 81 ,158,566.56 77,041 .98 7-16 718198 Atlas Copco Inc Install of foundation for water pump 847,461 .75 22 ,287.95 labor & Mat for d&Siltatlon 245,167.50 32,818.18 7-41 7/17/96 Philippine Electrical Rewinding of HSCCPIC Motor 361,000.00 46,533.07 Full payment for addl works 511,863.80 193,953.1 9 7-42 7/17/98 Alpha Steel Mariteting K2 Boiler Overhaul 2,133,485.04 16,366.00 Immersion Circulator 180,026.00 129,454.55 8-3 8/6/98 TCU Aircon Sales Repair of intake channel shoreline 1,424,000.00 5,517.27 Protective & Metering Devices Testing 60,689.97 18,970.00 8� 40 8/13196 Jeong Poong Aircon unit 208,670.00 445,079.41 Construction of metering structure 4,895,873.51 6 .395 .29 8-103 8125198 Fllkor Oevt & Const Rehab works on intake discharge 70,348.20 58,029.53 Boiler OVerhaul 638,324.87 71 ,681 .82 G-14 913198 Radium Engineet'ing Boiler OVerhaul 788,500.00 14,772.73 MFOT Tank Rehab 162,500.00 22,148.75 G-23 9/4/98 Rwyrich Trading 243,636.21 2,303,770.00 25,341,470.00 3,455 ,252 .68 G-53 9115198 Tri-Ohms Engineering 38,007,779.48 1,873,417.91 20,607,597.01 210,604.91 G-69 9/18/98 Jeong Poong 2,316,654.00 P19,720,799.74 p 289,929,796.25 G-77 9/18/98Advanc:e Surface Protect G-85 9120198 NAR Pawer System G-95 9/25/98 BNJ Sash Corp G-100 9/25196 MV Jr. Industrial G-122 9129/96 Fed Const Corp 1()-27 10/7/98Sunkyong Engineering 1D-32 1019f96Yellow Gold Construction 10-57 10118/98 PhUippine Electrical 10-93 10128/98 BNJ Sash Corp 1()-95 10128/98 Jeong Poong 11-{)1 11 /3198Hamwell Chem. Corp 11 -22 1116/98 Frikor Oevt & Const. 11-31 11/16198 Tri-Ohms Engineering 11-49 11118/98TCU Aircon Sales 11-75 11/25198 NAR Power System 11-88 11126198 Sunkyong Engi..-ing 12-QS 12/4/96 Jeong Poong 12-09 12/4/96 Jeong Poong 12� 197 12129/98 FED Construction TOTAL

DECISION 1 CfA CASE NO. 6100 Page 11 / .-------=----- The balance of Pl4,932,627.09 cannot be considered because it covers purchases for (but not limited to) sulfuric acid, incandescent lamp, tape, vinyl embossing, oxygen, working gloves, r.austic soda, G.I. sheet, steel brush, non-asbestos tape, clear glas~ware, flexible steel conduit, epoxy enamel, welding rod, angle bar, solvent degreaser as described in the invoices. These items do not fall within the purview of the term capital goods. While it may be argued that some of these items may have estimated useful life of more than one year, still, they are not depreciable assets. Failure to meet any requirement provided by law is fa tal to a claim for refund. Hence, only the purchases in the amount of P289,929,7%.25, with the corresponding input VAT of Pl9,720,799.74 can be considered as capital goods. The third requisite has also been complied with since petitioner did not offset or apply the claimed input VAT payments on capital goods against any output VAT liability. Petitioner's quarterly VAT return for the 1�t quarter of 2001 showed that the input VAT in the amount of ?107,468,940.30 was deducted. from the total available input VAT. The amount of P37,250,307.39, being claimed by petitioner in the instant case was included in the said amount. This is t>nough proof to show that petitioner did not apply the input tax being claimed for refund against any output tax liability. Petitioner filed the administrative claim for refund and the instant Petition for Review on March 30, 2000 and Apn1 24, 2000, respectively, which are within the two (2)-year prescriptive period allowed by law, reckoned from the required filing of the quarterly VAT returns for the four quarters of 1998 in compliance with the last requisite. ln sum, petitioner complied with all the requisites for refund of input VAT on capital goods. WHEREFORE, in the light of the foregoing, the Petition for Review is hereby GRANTED in a reduced amount of P19,720,799.74. Accordingly, the respondent is ,j 'ii>

DECISION CTA CASE NO. 6100 Page 12 ORDERED to REFUND or ISSUE a TAX CREDIT CERTIFCATE in favor of the petitioner in the amount of P19,720,799.74 representing input VAT paid on capital goods purchased during the calendar year 1998. SO ORDERED. Q. ~ lQ. D-1\_ ERNESTO D. ACOSTA Presiding Justice WE CONCUR: ~ Associate Justice CAESAR A. CASANOVA Associate Justice CERTIFICATION I hereby certify that the above decic;ion was reached after due con~ltation with the members of the Division of the Court of Tax Appeals in accordance with Section 13, Article VIII of the Constitution. CJ.-=-uz~~ ERNESTO D. ACOSTA Chairman, First Division Presiding Justice