CBK POWER COMPANY LIMITED v. COMMISSIONER OF INTERNAL REVENUE (Consolidated with Case No. 7814)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL THIRD DIVISION CBK POWER COMPANY CTA CASE NOS. 777 1 & 7814 LIMITED, Members: Petitioner, BAUTISTA, Chairperson, and C O TA N GCO -M A N ALA S T A S , J J -versus- Promulgate d: COMMISSIONER OF MAY 0 6 2016 INTERNAL REVENUE, Respondent. X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X AMENDED DECISION COTANGCO - MANALASTAS ,~: Submitted anew for decision arc the consolidated Petitions for Review docketed as CTA Case Nos. 7771 & 7814, pursuant to the ruling of the Supreme Court dated September 30, 2014 in G.R. No. 205353 remanding these cases to the Court of Tax Appeals (CTA) for the determination and computation or the amounts valid for refund or the issuance or a tax credit certificate. The consolidated Petitions for Review pray for the issuance of tax credit certificates (TCC) allegedly representing unutilizcd input value-added taxes (VAT). For CTA Case No. 7771, petitioner's tax credit claim amounts to P7,559,943.4-4 covering period ,January 1, 2006 to March 31, 2006; 1 and for v CTA Case No . 7814, petitioner claims the amount of P36,246,606.28 covering the period April 1, 2006 to December 31, 2006.2 1 Docket, CT/\ Case No. 777 J , Petition for l~eview, pp. l 14. ~ Docket, CT/\ Case No . 7814, Petition for Review, pp. 1 12 .

AMENDED DECISION CTA Case Nos. 7771 and 7814 THE FACTS The Court reiterates the relevant facts of the case as follows: Petitioner is a VAT-registered partnership organized and existing under and by virtue of the Philippine laws. The sole purpose of which is to engage in all aspects of (a) design, financing, construction, testing, commissioning, operation, maintenance, management and ownership of Kalayaan II pumped-storage hydroelectric power plant, the new Caliraya Spillway, and other assets located in the Province of Laguna, and (b) rehabilitation, upgrade, expansion, testing, commissioning, operation, maintenance and management of the Caliraya, l3otocan and Kalayaan I hydroelectric power plants and their related facilities, located in the Province of Laguna.3 On March 17, 2006, RIR issued RIR Ruling No. DA- 146-2006, confirming petitioner's claim that as an entity engaged in hydropower generation, its billings/fees for the sale of electricity to NPC are subject to VJ\.T at zero percent (0%) rate, under Section 108 (R)(7) of the Tax Code of 1997, as amended by Nepublic/\ct 9337(RJ\. 9337).4 Petitioner filed with the Bureau of Internal Revenue (UIR) its Monthly VJ\.T Declarations and Quarterly VJ\.T Returns for the period January 1, 2006 to December 31, 2006 on the following dates:J Original VAT Return Amended VAT Return (Date filed) (Date filed) April 25, 2006 December 28, 2007 July 25, 2006 March 31, 2008 April 18, 2008 May 7, 2008 ,July 21, 2008 3 Docket, CTA Case No. 7771, Vol. 1, Joint Stipulation of Facts and Issues (JSFI)-Facts Admitted, Pars. 5 and 9, pp. 231-232. 4 Docket, CTA Case No. 7771, Vol. 1, ,JSFI Facts Admitted, Par. 11, pp. 232 233. s Docket, CTA Case No. 7771, Vol. 1, ,JSFI Facts Admitted, Pars. 7 8, pp. 231 232.

AM.E:NDED DJ:<:CISION CTJ\ Case Nos. 7771 and 7814 Petitioner's Amended Quarterly VAT Returns for the four quarters of 2006 reported the following input tax credits:6 Input Tax Credits for the period January 1 to December 31, 2006 2006 Domesti~"~Jimport~tl~~-~ Servi�c���e--~s����-�T-���T��-o�t~a..l.-ln.-p...u.. t��� Taxable Quarter i Purchases of II of Goods Purchase of Rendered by Tax Credits � Goods Other Other than Services Non- exceeding than Capital Capital Residents P1Million Goods I Goods . 1,199,547.36 10,704,981.94 1 ~ -~, -'-~~'~'-"'''~"~- if-r~-~--~,--~~ 10,921,541.86 1 302,627.14 I 16,458,560.8 ---~--~����-"����---.,~~-��1����-��-~���~~-�-�-��t�~---~~�~ 86,528.36 \ 1,608,644.90 12,814,984.35 ! Also, the Amended Quarterly VAT returns for 2006 reported zero-rated sales as follows:'/ ~ Zero-Rated Sales for the period January 1 to December 31, 2006 -���-~~���-������~-�~-.,.---~"""'"~'~-���"-'"'"""'-''''�w��" ��������-�---������-��~ 2006 Taxable Quarter Zero-Rated Sales/ Receipts ---- 1,583,390,407.46 1,648, 748,033.50 1,599,882,354.64 -- -� -- ------------ --- --------~----- 1,547,858,529.27 -- --------------- "----------! TOTAL -�-�-� ��������������������������--~~~?.~~.!Z.~:-~~!:.~.?J Out of the reported total input tax for the period January 1 to December 31, 2006, amounting to P49,347,433.70, petitioner is seeking issuance ofTCCs in the amount of P43,806,549.72 (i.e. ?7,559,943.44 for CTA Case No. 7771, and P36,216,606.28 for CTA Case No. 7811) On March 31, 2008, petitioner filed an administrative claims with the UIR. Revenue District Office (RDO) No. 55 of Laguna for the issuance of a TCC in the total amount of P7,559,943.44, allegedly representing its unutilized input taxes for the period v January 1, 2006 to March 31, 2006, pursuant to Section 112 (A) of the NIRC of 1997, as amended by H.A. 9337.9 6 Exhibits "H-1" to "H-10" Facts 1\dmiitcd, Par. 12, p. 235. 7 Supra Note 5. 8 Exhibit "1\" 9 Docket, CTJ\ Case No. 7771, Vol. 1, ,JSFI

AMENDED DB~CISION CTA Case Nos. 7771 and 7814 Petitioner filed on April 23, 2008 a Petition for ~eview1o with the CTJ\, docketed as CTJ\ Case No. 7771, alleging inaction of respondent on its administrative claim.11 On July 23, 2008, petitioner filed another administrative claim12 with the BIR RDO No. 55 of Laguna for the issuance of a TCC in the amount of P36,246,606.28, allegedly representing its unutilized input. taxes for the period April 1, 2006 to December 31, 2006, pursuant to Section 112 (1\) of the NI~C of 1997, as amended hy N./L 9337.13 The following day, July 24, 2008, petitioner filed a Petition for ~eview1 4 with the CTJ\, docketed as CTJ\ Case No. 7814, involving its tax credit claim in the amount of P36,246,606.28.15 The CTA Former Third Division resolved t.o consolidate CTJ\ Case Nos. 7771 and 7814 on November 27, 2008. Petitioner presented and offered its pieces of evidence and witnesses during trial, while respondent rested its case without presenting any evidence or witnesses. On December 3, 2010, the CTJ\ Former Third Division dismissed the consolidated Petitions for Review for having been prematurely filed 16 applying the Supreme Court Decision in Commissioner of Internal ~evenue vs. 1\ichi Forging Company of 1\sia, Inc. (Aichz) dated October 6, 2010.1�1 Petitioner's Motion for Reconsideration was denied for lack of merit on April 7, 20 11. Petitioner appealed the above decision with the CTJ\ En lJanc by way of a Petition for ~eview docketed as EB Case No. 758. r On October 4, 2012, the CTJ\ En lJanc denied the Petition for lack of merit.. 18 The Court Rn Ranc 10 Supra, Note 1. 11Docket, CTA Case No. 7771, Vol. 1, JSFI- Facts Admitted, Par. 11, p. 235. 12 Exhibit "B" 13 Docket, CTA Case No. 7771, Vol. 1, JSFI- Facts Admitted, Par. 13, p. 235. 14 Supra, Note 2. 15 Docket, CTA Case No. 7771, Vol. 1, JSFI- Facts Admitted, Par. 11, p. 235 16 Docket, CTA Case No. 7771, Vol. 1, pp. tJ20-tJtJ6. 17 G.R. No. 184823, October 6, 2010. 18 Docket, CTA EB Case No. 758.

AMENDED DECISION CTA Case Nos. 7771 and 7814 likewise denied Petitioner's Motion for Reconsideration for lack of merit on January 15, 2013.19 Petitioner challenged the denial of its claim by filing before the Supreme Court a Petition for Review on Certiorari docketed as G .R. No. 205353,20 consolidated with another Petition for Review on Certiorari docketed as G.R. No. 20206621. Meanwhile, on February 12, 2013, the Supreme Court issued its decision on the consolidated cases of Commissioner of Internal Revenue vs. San Roque Power Corporation; Taganito Mining Corporation vs. Commissioner of Internal Revenue; and Philex Mining Corporation vs. Commissioner of Internal Revenue,22 (San Roque) wherein it affirmed with qualification the decision in the Aichi case. The Supreme Court held therein that compliance with the 120-day and the 30-day periods under Section 112 of the National Internal Revenue Code of 1997 (1 997 NIRC) is mandatory and jurisdictional, save for those VAT refund cases that were prematurely filed (i.e., before the lapse of the 120-day period) with the CTA between December 10, 2003 (when the BIR Ruling No. DA- 489-03 was issued) and October 6, 2010. Effectively, the San Roque case created a window period (i.e., from December 10, 2003 to October 6, 2010), where judicial claims that did not comply with the mandatory 120- day period, but still within the 2-year prescriptive period, shall be entertained. Since the instant judicial claims were filed within the window created in San Roque, the Supreme Court issued a Decision on September 30, 20 14, remanding the above- captioned consolidated cases to the CTA, the dispositive portion of which reads: "WHEREFORE, the petitions docketed as G.R. Nos. 202066 and 205353 are GRANTED. 1\ccordingly, the Court of Tax Appeals En Bane's February 1, 2012 decision and v May 24, 2012 resolution assailed in the petition docketed as G.R No. 202066 and the Court of Tax Appeals En l3anc's October 4, 2012 decision and January 15, 2013 resolution 19 Docket, CTA EB Case No. 758. 20 Docket, CTA Case No. 7771, Vol. 2, pp. 959-1011. 21 Pertaining to CTA Case No. 7887 (CTA :EB Case No. 760). 22 G.R. No. 187485, 196113 and 197156, February 12,2013.

AMENDJ:<~D DECISION CTA Case Nos. 7771 and 7814 assailed in the petition docketed as G.R. No. 205353 are REVERSED and SET ASIDE. The consolidated cases arc REMANDED to the Court of Tax Appeals for the determination and computation of the amounts valid for refund or the issuance of a tax credit certificate."23 On March 24, 2015, this Court received an Entry of Judgment. issued by the Supreme Court. stating that. the September 30, 2014 Decision in the cases docketed as G.R. No. 202066 and 205353 has become final and executory on November 4, 2014. On ~January 22, 2016, this Court directed the parties to submit. a manifestation informing this Court. of any supervening event which may have transpired that would affect the disposition of the consolidated cases; and whether there is a need to conduct further proceedings.2'1Petitioncr filed its Manifest.at.ion25 on February 1 1, 2016. Respondent. failed t.o file her Manifestation. 26 Hence, the consolidated cases docketed as CTA Case Nos. 7771 and 7814 were submiUed anew for decision on February 23, 2016, in compliance with the ruling of the Supreme Court dated September 30, 2014 in G.R. No. 205353 remanding the above-captioned cases t.o the CTA for the determination and computation of the amounts valid for refund or the issuance of a t.ax credit. certificate. ISSUE Whether petitioner is ent.it.led t.o the issuance of a TCC in the total amount of P43,806,549.72, representing unutilized input. VAT on local purchases and/or importation of goods and v services and payments for services rendered by non-residents and purchases of capital goods aUribut.able t.o its zero-rated sales for the period ,January 1, 2006 to December 31, 2006. 23 Docket, CTA Case No. 7771, Vol. 2, pp. 1223-1221. 24 Docket, CTA Case No. 7771, Vol. 2, pp. 1228-1230. ~5 Docket, CTA Case No. 7771, Vol. 2, pp. 1231 1239. 26 Docket, CTA Case No. 7771, Vol. 2, p. 1241.

/\MENDED DECISION CTA Case Nos. 7771 and 7814 RULING OF THE COURT Under Section 112(A) of the National Internal Revenue Code of 1997, as amended by R.A. 9337, and numerous jurisprudence, following arc the requisites for tax refund or issuance of TCC for unutilized input VAT provided: (1) the taxpayer is VAT registered; (2) the taxpayer is engaged in zero-rated or effectively zero-rated sales; (3) the input taxes were incurred or paid; (4) the input taxes have not been applied against output taxes during and in the succeeding quarters; (5) the input taxes claimed are attributable to zero-rated or effectively zero-rated sales; (6) the claim is filed within the prescriptive period. The sixth requisite pertaining to the timeliness of petitioner's input VAT claims shall no longer be discussed in view of the ruling of the Supreme Court finding the instant petitions to have been filed within the window created in San Roque, and thus, exempted from the strict application of the 120-day mandatory period under Section 112 of the 1997 NTRC. Anent the first requisite, it is undisputed that, as agreed by the parties in their ~Joint Stipulation of Facts and Tssues27 which was approved by this Court on February 9, 2009, petitioner is registered as a value-added tax entity with TIN/VAT No. 205-760-474 in accordance with the NTRC of 1997, as amended, and was issued BTR Certificate of Registration OCN 1RC0000050243 dated April 10, 2000 by the BIR Revenue District Office No. 55 (San Pablo City, Laguna), which was updated on May 11, 2005, and as a consequence, v petitioner was issued BIR Certificate of Registration OCN TRCOOOO 195405. 27 Docket, pp. 229 238.

AMENDED DJ:<-:CISION CTA Case Nos. 7771 and 7814 With regard to the second requisite, pertinent is the prov1s1on under Section 108(B)(7) of the NIRC of 1997, as amended by Republic Act 9337 (R.A. 9337), which provides that. sale of power generated through sources or energy is among the transactions subject to zero percent (Oo/o) VAT rate, t.o wit.: "(7) Sale of power or fuel generated through renewable sources of energy such as, but not limited to, biomass, solar, wind, hydropower, geothermal, ocean energy, and other emerging energy sources using technologies such as fuel cells and hydrogen fuels. Also, Section 4.1 08-5(b)(7) of Revenue Regulations No. 16-2005, which implements the above-quoted provisions, qualified the applicability of such zero-rating as follows: SEC.4.108-5. Zero-Rated Sale of Services XXX (b) Transactions Subject to Zero Percent (0%) VAT Rate. - The following services performed in the Philippines by a V./\T-registered person shall be subject to zero percent (0%) V.1\T rate: XXX (7) Sale of power or fuel generated through renewable sources of energy such as, but not limited to, biomass, solar, wind, hydropower, geothermal and steam, ocean energy, and other emerging sources using technologies such as fuel cells and hydrogen fuels; Provided, however, that zero-rating shall apply strictly to the sale of power or fuel generated through sources of energy, and shall not extend to the sale of services related to the maintenance or operation of plants generating said power. The parties have settled in their ~Joint Stipulation of Facts and lssucs28 that: petitioner is a special purpose entity, the sole purpose of which is t.o engage in all aspects of (a) the design, financing, construction, testing, commissioning, operation, maintenance, management. and ownership of Kalayaan II pumped-storage hydroelectric power plant, the new Caliraya Spillway, and other assets located in the Province of Laguna, and (b) the rehabilitation, upgrade, expansion, testing, commissioning, operation, maintenance and management of the Caliraya, Botocan and Kalayaan I hydroelectric power plants and their related facilities located~ ).8 Docket, pp. 229 238

AMENDr:D DECISION CTA Case Nos. 7771 and 7814 in the Province of Laguna, as shown by petitioner's SEC Registration and Amended Articles of Partnership29; the Energy Regulatory Commission (ERC) issued Certificates of Compliance to petitioner as a generation company pursuant to the Implementing Rules and Regulations of R.A. 9136, otherwise known as the "Electric Power Industry Reform Act of 2007" (EPIRA)30; the respondent BIR issued BIR Ruling No. DA- 146-2006 confirming that the billings of the petitioner, an entity engaged in hydropower generation, to National Power Corporation (NPC) for the sale of electricity generated through hydropower, are subject to VAT at zero percent (0�/o) under Section 108(B)(7) of the NIRC of 1997, as amended by R.A. 9337, viz:31 "From the foregoing circumstances, there is no dispute that Cl3K is primarily organized to engage in power generation business, specifically in hydropower generation, i.e., generating/ supplying electric power generated through hydropower, a renewable source of energy. This is fortified by the Certificate of Compliance issued by the Energy Regulatory Commission (ERC) that CRK is indeed a hydropower generation company. Thus, the billings of CUK for its sale of electricity to NPC, designated under the l3ROT Agreement as Capital Recovery Fees and O&M Fees, arc subject to zero percent (0%) V/\T." There is no doubt that petitioner qualifies as a taxpayer engaged in zero-rated or effectively zero-rated sales pursuant to Section 108(B)(7) of the NIRC of 1997, as amended by R.A. 9337. In its Original and Amended Quarterly VAT Rcturns32 for the four quarters of taxable year 2006, petitioner reported zero-rated sales/receipts of P6,379,879,324.87. As verified from the supporting Schedules of Sales33 to and Collections34 from NPC and the corresponding VAT zero-rated sales invoices35 and official receipts36 (ORs), petitioner's zero-rated v sales/receipts of P6,379,879,324.87 were duly substantiated, hence, the amount of input VAT attributable to the entire zero-rated sales shall be considered for refund. 29 Par. 5, Facts Admitted, JSFI, docket, p. 231 30 Par. 10, Facts Admitted, JSFI, docket, p. 232 31 Par. 11, Facts Admitted, JSFI, docket, p. 232 32 Exhibits "H-1" to "H-10". 33 Exhibit "I". 34 ICPA Report, Exhibit "Y", Annex 5. 35 Exhibit '\J 1" to ",J 234". 36 Exhibit "K 1" to "K 214".

AMENDED D~~CISION CTA Case Nos. 7771 and 7814 Per its Amended Quarterly VAT Returns for the four quarters of 2006, petitioner reflected input VAT in the total amount of P44,005, 101.83, broken down as follows: Particulars 1st Quarter 2"d Quarter 3'd Quarter 4th Quarter Total (Exhibit H-3) (Exhibit H-5) (Exhibit H-7) (Exhibit H-10) Input Tax Deferred on Capital Goods Exceeding P1M from Previous Quarter (Line 200} p 1,746,591.87 p 3,447,878.52 p 4,560,382.07 p 7,170,871.97 p 16,925,724.43 Add: Input Tax on Purchases of ------- ------------- ----------------------------- - - - - - - - - - - - - - - - Capital Goods Exceeding 1'1M (Line 210) 1,870,700. 70 1,346,348.83 2,998,466.11 344,377.46 6,559,893.10 Total 1' 3,617,292.57 1' 4,794,227.35 1' 7,558,848.18 1' 7,515,249.43 1' 23,485,617.53 Less: Input Tax on Purchases of Capital Goods exceeding 1'1M deferred for the succeeding period (Line 2311} 3,447,878.52 4,560,382.07 7,170,871.97 7,088,923. 74 22,268,056.30 r-------------------- ----- -- -- --- Amortization of Input tax on Purchases of Capital Goods exceeding PlM p 169,414.05 p 233,845.28 p 387,976.21 p 426,325.69 p 1,217,561.23 Add: Input taxes on Current Purchases Domestic Purchases of Goods Other than Capital Goods __(Li'!e2_1!)__ _ _ ______________1,821,3_?~._38___ 1,~09,055.08 1,425,019. 73 1,620,670.63 6,076,104.82 Importation of Goods Other --- -------------------------- t-----t-h-a-n--Ca--p-ita-�l -G- --o� od�--s--(-L�-i-n-e--2--1--H-)-- ---- - ---5-56-,-8--1--6--.0--0-- ----- --1--,-1-5-2-,4-2--4-.-0--0-- ---------8-1-0-,-90---6-.-0-0-- -- --------6--5--4--,-7-6--3..0....0. - 3,174,909.00 Domestic Purchases of Services (Line 21J} 4,151,387.81 5,797,606.67 10,921,541.86 8,586,528.36 29,457,064.70 --�--- -----~-- ��-�-�--�------�- -------------------- -------------- ------------------- - - -- ------------------------------ - - - - - - - - - - - - - - Services rendered by Non- residents (Line 21L)-- 968,642.68 1,199,547.36 --3-0--2-,-6-2--7.1-4-- ------1-,-6-0--8-,6--4-4-.-9-0- t-----4--,0-7--9-,4-6--2-.0--8- ------------- ------------------ Total Input Tax on current purchases P7,498,205.87 P9,358,633.11 P13,460,094.73 P12,470,606.89 P42, 787,540.60 _ __ !~~~6~619.9_2 P9,592,478.39 P13,848,070.94 --------------------------- - -- ---- -�-- - ���-- -- -- ----- ---�-- ---- - Totallnpu_t"f_a)(!()rth_epe_ri_()~_ P12,896,932.58 P44,005,101.83 As regards the third requisite, petitioner submitted various suppliers' invoices, official receipts, and other related documcnts37 to prove that it incurred/paid the aforementioned input VAT. Upon examination of the said documents, the Court-commissioned Independent CPA (ICPA), Constantino Guadalquiver & Co. through its partner, Mr. Edwin F. Ramos, noted the following cxccptions:38 Amount of Input Reference Findings VAT (ICPA Report) A. Exceptions on input VAT on current purchases of goods/services other than capital goods Domestic purchases of goods and services Annex 1-1Q-C-1; 1 supported by VAT invoice/OR with ~ Annex 1-2Q-C-1; incorrect/incomplete/erased TIN 108,111.88 Annex 1-3Q-C-1; ---- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- Annex 1-4Q-C-1 -- - --- --------------------- 37 Exhibits "W-lQ-1" to "W-lQ-773", "W-2Q-l" to "W-2Q-708", "W-3Q-1" to "W-3Q-760" & "W 4Q 1" to "W 4Q 878". 38 Exhibit "Y", pp. 14 18 & 21 22.

AMENDED DECISION CTA Case Nos. 7771 and 7814 Domestic purchases of goods and services Annex 1-10-C-2; 2 supported by VAT invoices/DRs with erasure on 5,958.49 Annex 1-30-C-2; the date/name/address Annex 1-40-C-2 Domestic purchases of goods supported by 3 Annex 1-10-C-3; documents other than VAT invoices Annex 1-20-C-2; 62,181.50 Annex 1-30-C-3; Annex 1-40-C-3 Annex 1-10-C-4; Domestic purchases of goods supported by VAT Annex 1-20-C-3; 4 120,925.38 invoices but not the original copy Annex 1-30-C-4; -- Annex 1-40-C-4 -------~-- Domestic purchases of goods supported by VAT Annex 1-10-C-5; 5 invoices issued in the name of CBK, CBK-New Annex 1-20-C-4; Spillway, CBK-PCL 220,266.58 Annex 1-30-C-5; Annex 1-40-C-5 Annex 1-10-C-6; Domestic purchases of services supported by Annex 1-20-C-5; 6 documents other than VAT ORs 1,676,677.11 Annex 1-30-C-6; Annex 1-40-C-6 Domestic purchases of services supported by VAT Annex 1-10-C-7; 7 4,856.58 ORs but not the original copy Annex 1-40-C-7 Annex 1-10-C-8; Domestic purchases of services supported by VAT Annex 1-20-C-6; 8 ORs not issued in the Company's name 8,473.18 c--- --- --- ---------- --- -- -- -- -- -- Annex 1-30-C-7; Domestic purchases of services supported by VAT Annex 1-40-C-8 9 ORs issued in the name of CBK, CBK-New Spillway, -------- - - - - - - - - - - - - - - - - - - - - - - - - -----~---- CBK-PCL Annex 1-10-C-9; Annex 1-20-C-7; 1,108,041.97 Annex 1-30-C-8; -- - -- -- Annex 1-40-C-9 ------- ---- - --- - Domestic purchases of services supported by tape Annex 1-20-C-8; 10 30,381.63 Annex 1-30-C-9; receipts without the Company's name and/or TIN Annex 1-40-C-10 Importations of goods supported by documents 275,131.00 Annex 1-10-C-10 11 other than the original copy of IEIRDs Domestic purchases of goods supported by TIN# 54,306.62 Annex 1-10-C-11; 12 only, TIN-V;TAN-V;TAN-VAT;TIN-NV/NON VAT; Annex 1-20-C-9; Annex 1-30-C-10; stamped/handwritten TIN-V/VAT invoices Annex 1-40-C-11 13 Domestic purchases of goods supported by tape 38,088.61 Annex 1-40-C-12 receipts without the Company's name and/or TIN . �- ... �- --- ------ �-�� -- ------ �-�� .. - -��� ��-��- - - ---- -- .. ---- -------- -- ---- 14 Domestic purchases of goods supported by VAT 5,703.97 Annex 1-10-C-12 invoices but without invoice date -- -- ---- -- -- - - - - - - - - - - - - - - - - - - - - - - - - Domestic purchases of goods supported by VAT Annex 1-10-C-13; 15 80,330.08 Annex 1-30-C-11; invoices but not dated within the VAT-taxable year Annex 1-40-C-13 --- ------------------------------ --------------------- -- -- 16 Domestic purchase of goods supported by VAT 48.21 Annex 1-20-C-10 invoice but is not ATP registered Domestic purchases of services supported by TIN# 390,608.61 Annex 1-10-C-14; 17 only, TIN-V;TAN-V;TAN-VAT;TIN-NV/NON VAT ORs; Annex 1-20-C-11; Annex 1-30-C-12; stamped/handwritten TIN-V/VAT Annex 1-40-C-14 18 Domestic purchases of services supported by VAT 152,606.56 Annex 1-10-C-15

AMENDED DECISION CTA Case Nos. 7771 and 7814 ORs but without OR date Domestic purchases of services supported by VAT Annex 1-30-C-13; 19 40,209.94 ORs not dated within the VAT-taxable year Annex 1-4Q-C-15 Domestic purchases of services supported by VAT 20 ORs with alterations in the name of the Company 5,160.00 Annex 1-4Q-C-16 without countersignature Annex 1-10-C-16; Domestic purchases of services supported by VAT Annex 1-20-C-12; 21 110,845.61 Annex 1-30-C-14; ORs but is not ATP registered --- --- -- -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ------- --- ----- Annex 1-40-C-17 -------- Importations of goods supported by originaiiEIRDs 22 and/or original BOC ORs and/or original LBP ORs 73,785.00 Annex 1-10-C-17 but with no date indicated ------ -- -- -- ------------------------------ Annex 1-1Q-C-18; Overclaimed input tax on domestic purchases of Annex 1-2Q-C-13; 23 10,034.66 goods/services due to erroneous computation Annex 1-30-C-15; Annex 1-40-C-18 Foreign exchange on foreign currency 101,839.59 Annex 1-10-C-19; 24 denominated purchases of goods and services- Annex 1-20-C-14; Annex 1-30-C-16; overstatement Annex 1-4Q-C-19 Domestic purchases of goods supported by VAT Annex 1-1Q-C-20; 25 invoices with alteration in the amount written in 32,496.98 Annex 1-2Q-C-15; 2,588.68 the invoices Annex 1-3Q-C-17; ----. Annex 1-40-C-20 . ----------------------------- ----------- -------------------- -- �- Domestic purchases of goods supported by VAT Annex 1-1Q-C-21; Annex 1-4Q-C-21 26 invoices with alteration in the date written in the invoices --�� -------------- ---- ------- --- ------------- -- 27 Domestic purchases of services supported by VAT 66,875.61 Annex 1-1Q-C-22 -- ORs with alteration in the date written in the ORs ---- ------ ------------ -------------------------------- ------ Domestic purchases of goods supported by VAT 4,687.49 Annex 1-40-C-22 28 invoices not issued in the Company's name Domestic purchases of goods supported by VAT 570,580.32 Annex 1-10-C-23; 29 invoices issued in the Company's name without its Annex 1-20-C-16; Annex 1-30-C-18; TIN and/or address Annex 1-4Q-C-23 Domestic purchases of services supported by VAT 4,176,615.84 Annex 1-10-C-24; 30 ORs issued in the Company's name without its TIN Annex 1-2Q-C-17; Annex 1-3Q-C-19; and/or address Annex 1-4Q-C-24 Annex 1-1Q-C-25; - -- --1-� ----- Unclaimed input VAT on domestic purchases of Annex 1-2Q-C-18; 31 198,552.10 Annex 1-3Q-C-20; goods and services ------ -- Annex 1-4Q-C-25 Annex 1-10-C-26; 32 Supporting documents not available Annex 1-20-C-19; 445,141.74 Annex 1-3Q-C-21; Annex 1-40-C-26 Total p 10,182,111.52 B. Exceptions on input VAT on current purchases of capital goods exceeding P1M --- - -v ----------- ------------ -- ---- -- - -- ------------ ---------- ----------- �--

AM~:NDED DECISION CTA Case Nos. 7771 and 7814 Domestic purchases of capital goods supported by 225,637.11 Annex 2-3Q-C-1 1 documents other than VAT invoices Domestic purchases of capital goods supported by Annex 2-1Q-C-1; 2 622,155.68 VAT invoices but not the original copy Annex 2-3Q-C-2 3 Domestic purchases of goods supported by 25,689.76 Annex 2-2Q-C-1 documents other than VAT ORs -- - - --------------- - - - - - - - - - - - - - - - ------- --- -- ------------------- ----------- ------~-- 4 Domestic purchases of capital goods supported by 38,640.00 Annex 2-3Q-C-3 VAT ORs without OR dates --- --- ---------------- ----------- ------- 1----t---------------- - -- --- Domestic purchases of capital goods whose input 5 VAT is claimed in the quarter ahead of the actual 51,428.58 Annex 2-3Q-C-4 quarter the OR is dated �- ---- r------------------- -- - Domestic purchases of capital goods supported by 1,416,697.00 Annex 2-1Q-C-2; 6 VAT invoices issued in the Company's name Annex 2-2Q-C-2; Annex 2-3Q-C-5; without TIN and/or address Annex 2-4Q-C-1 Domestic purchases of capital goods supported by 2,449,121.50 Annex 2-1Q-C-3; 7 VAT ORs issued in the Company's name without Annex 2-2Q-C-3; Annex 2-3Q-C-6; TIN and/or address Annex 2-4Q-C-2 Overclaimed input tax on domestic purchases of 1.60 Annex 2-1Q-C-4 8 r- c--a-p--i-ta---l- g--oo-ds---d-u- e to e-rroneo---us co-� m---p-uta--t-io- n-- -- -- --- ---- --- ----- Effect of foreign exchange difference on foreign Annex 2-1Q-C-5; Annex 2-2Q-C-4 9 currency denominated purchases of capital goods- 22,132.77 ------------------ overstatement - ---- --- -------- --- ----------------------------------------- - - - - - - - - - - - - - - - - - -1-0- - r -S-u- -p-p-o- -r-tin- -g- -d-o- -c- u- -m e n t-s- -n- -o t --a--v--ailabl-e- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -4-8- ,-2- -1-4- -.2- -9- - - - - -A- -n-n- -e-x- -2- ---4-Q- ---C---3- Total p 4,899,718.29 The Court subscribes to the exceptions found by the ICPA on the input VAT on current purchases of goods/ services other than capital goods (item A above) in the amount of P1 0, 182,111.52 for non-compliance with the substantiation requirements prescribed under Sections 11 O(A), 113(A) and (B), 237 and 238 of the NIRC of 1997, as amended, in relation to Sections 4.110-1, 4.110-2, 4.110-8 and 4.113-1 of RR No. 16-05. With respect to the P4,899,718.29 exceptions on input VAT on current purchases of capital goods exceeding P1M, the ovcrclaimcd input VAT due to erroneous computation of Pl.60 (item B.8 above) shall be disallowed instantaneously. As to the remaining amount of P4,899,716.69, only the amortized portion for 2006 in the amount of P617 ,032.24 shall be disallowed from petitioner's claim pursuant to Section 11 O(A) of the NIRC of 1997, as amended, and as implemented by Section 4.110-3 of RR No. 16-2005. Below is the breakdown of v the P617 ,032.24 amortized input VAT from items B. 1 to B. 7 & B.9 to B.1 0 above:

/\MIDNDED DECISION CT/\ Case Nos. 7771 and 7814 Findings Input VAT Amortized Amount Input VAT39 8.1 Domestic purchases of capital goods supported ~ 225,637.11 ~ 22,563.71 by documents other than VAT invoices r------ -------- --- - - - - - - -- - - - - - - - - -~--~--- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - . ---- ------ Domestic purchases of capital goods supported 622,155.68 96,240.50 2 -- - ------------ by VAT invoice but not the original copy ------- --------- -- ---- ---- ----------------------------- 3 Domestic purchase of goods supported by 25,689.76 2,997.14 documents other than VAT OR ------- .. 1 - - ----- � - - - - - - - - - - - - - - - - - - - - - - - - - - - - -� ------------------------ -- ----------------------- Domestic purchase of capital goods supported 38,640.00 3,220.00 4 by VAT OR without OR date Domestic purchase of capital goods whose input 5 VAT is claimed in the quarter ahead of the actual 51,428.58 3,428.57 quarter the OR is dated Domestic purchase of capital goods supported 6 by VAT invoice issued in the Company's name 1,416,697.00 144,706.54 without TIN and/or address Domestic purchase of capital goods supported 7 by VAT OR issued in the Company's name 2,449,121.50 338,565.41 without TIN and/or address --- - - - - - - - - - - ---- - - - - - - - - - - - - - - - - - - - - ----- ----------- ---- -------- --- --- ------- - ----------- -- - Effect of foreign exchange difference on foreign 9 currency denominated purchases of capital 22,132.77 3,703.23 goods-overstatement --- -- ------- ----- - - - - - - - - - - - - - - - - - - - - - - --- -- ----------------------- --- ------------------- -------- 10 Supporting documents not available 48,214.29 1,607.14 -- ---------------------- --- --------------- --------------------- ------- -- -- Total P4,899,716.69 p 617,032.24 In addition, the following input VAT claim in the amount of Pl ,726,336.53 (Pl ,359,061.58 plus P367,274.95) shall�also be disallowed for petitioner's failure to meet the substantiation requirements prescribed under the above-mentioned laws and regulations: Exhibit~]____ -- - --------- -r- 1OR/Jn\loic OR/Invoice)---- - --~�w-" ~- __ ___ ___ Ven~~_-'"_1\l_a_n'l_e____ _ __ e No. _ j_____ _p_ate________ll1j:)ll_tYAT 1} Input VAT supported by VAT invoices and ORS wherein the VAT amount was not separately indicated ------------ ----- - - - - - - - - - - - - - - ------------- ----- ------------------------------------------------ __10-148 __ G_LL.JC?_~u-~_n~s~ E_n_!_erprise~_ ___ . _ ______ 9_3_()_4: _ ...... 3[!6/?_Q06 ~ 2,0_0_6_-?_9 ____1q-}_�_4 _ High _�rip A_uto Ce~te_r_______ _____ _ _ 2736 .. _ _!J/7/2006 ______ 56_5.71_ 10-243 Molina General Builders - 701 - 1/31/2006 5,910.29 ------------------ -- --------------------- - - - - - - - - - - - - - -------------~ ------------- 10-244 Molina General Builders 702 1/31/2006 12,769.85 -- ---------------- ---- - -- ---- --------------------- 10-245 Molina General Builders 703 2/16/2006 5,493.78 - -- --- � - - - - - - - - - - - -- --- -��---�--- ------------------------------- ---------------- ----- -------- ------------ --�-�----- -- - ------------- 10-744 Top-rigid ll'ld_Sa_f~tyS~pply Inc 12764 1/~(){~()_o_~- .. __3__�_,13__�_]_~_ T\,Vin V Te~~ Systemsg,.s~rvices_ ____ ____ ___g~-4_ 2/10/2006 ... 1~~30().'��_ . _ ~_9le_c:J~n _l:_ngine~ril'lg_____ __ __ 0001 �--!~17/~00?__ _ __J~~oo._oo _ -~CI_g_l~~~!_l_n~_~ales <:_()~P___ ~-------- 24473 12/_?j20_D__�__ _ 9,852.00 -~Q-2?_1___ !nd~~!r_!_aJ S()~~n_s_~Te~hnical services Corp 0682 12/15/2006 8,Q~_o_._qg__ subtotal 104,675.24 39 See Annex 1\ of this Decision for the detailed computation.

AMENDED DECISION CTA Case Nos. 7771 and 7814 1Q-428 & Rich Hope Enterprises 0611 1/11/2006 770.00 1Q-717 1Q-437 & Royal Star Appliance Marketing Inc 10146 1/17/2006 2,763.64 1Q-724 1Q-480 & VMA home Appliance, Co. 18344 1/18/2006 2,448.18 1Q-752 1Q-481 & VMA home Appliance, Co. 18663 2/15/2006 231.43 1Q-753 1Q-406 & R. Ong Shell gasoline Station various various 9,875.20 1Q-706 2Q-248 & Novee Merchandise 137799 5/8/2006 428.57 2Q-598 2Q-373 & Reign-NAN Sales Industry 3742 4/11/2006 9,000.00 2Q-639 2Q-374 & 3741 4/10/2006 12,780.00 Reign-NAN Sales Industry 2Q-640 2Q-441 & Velphram Distributors 1058 4/21/2006 1,056.36 2Q-676 2Q-442 & Velphram Distributors 1964 4/5/2006 720.00 2Q-676 2Q-443 & Velphram Distributors 1069 5/10/2006 948.64 2Q-677 2Q-444 & VMA home Appliance, Co. 18947 4/21/2006 964.29 2Q-678 2Q-365 & R. Ong Shell gasoline Station various 7/3/2006 8,652.59 2Q-630 2Q-367 & R. Ong Shell gasoline Station various 6/16/2006 5,614.43 2Q-631 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ------- - - - - - - - ----- - - - ------------ - ---- -- --- - 2Q-368 & R. Ong Shell gasoline Station various 6/22/2006 7,014.44 2Q-632 -- - - - - - - - - - - - - ---- -� - ---- -- - -------------------------- --- -- ----- - - - - - - - - - - ----- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- 2Q-29 & Bien Venue General Supplies & Contractors 13707 3/28/2006 28,313.34 2Q-472 --� -��� --- - ----------- - -------�--------------- ---------------- - ------ --- ---------------- --------------- -- -------- 3Q-175 & Holland Blooms Flower Shops, Inc 17741 8/15/2006 267.86 3Q-627 ------- -- -- -- -------- - --- ----------- ---------- --- ---- ---- - --------- 4Q-284 & Modern Supreme Smart Shop Inc 25042 10/17/2006 253.93 4Q-772 --------- �- ----- - - - - - - - - - - - - - - - - - ---- -- f - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - --------------- 4Q-355 & Novee Merchandise 141598 9/11/2006 216.00 4Q-787 --- - - - - - - - - - - - - - - - - --- --- � - - -- -- --- --- --------- ------------ - - - - - - - - - - - - - - - ------------------ ---- -- ----- 4Q-356 & 143682 11/6/2006 996.00 Novee Merchandise - . ----------� -- - - -1 - - - - - - - - - - - - - - 4Q-788 ------ - ------------------- --- ----------- - ----- --- -- 4Q-357 & Novee Merchandise 145871 10/9/2006 549.00 4Q-788 ---- -- --- ------------------- - --- - - ------------------- --------------- -------------- - ------- 4Q-659 & VMA Home Appliance, Co. 20381 11/24/2006 407.14 4Q-859 ---�- - - -- --- --- -- � - - - - ------ ------ - - - - - - - - - - - - - - ---------------��- -------------- ------------------------- -- ----- ----- -------- 4Q-391 & P.l General Merchandise 29448 10/27/2006 669.64 4Q-801 . -------- -- ------ - ____,_- ---- --- - - - - - - - - - - - - - -.. ------------------ ------ - - - ---- ---- --- - 4Q-393 & P.l General Merchandise 5529 12/7/2016 669.64 4Q-802 ------------ ----------- --- ---- -------- --- ---- ------- ---- - ----- - ---- ------ --- ----- ---------- --------------- -- ------ --- -- 4Q-654 & Velphram Distributors 2166 10/17/2006 145.72 4Q-857 --- -- -.- �----- -- --------------- - ---- ----------- ---------------- 4Q-655 Velphram Distributors 2172 11/8/2006 4,261.61 c----------- -- --- - - - - - - - - - - - - - - - - - - - - - --- - - - - various various -- 4Q-486 & R. Ong Shell gasoline Station 8,335.17 4Q-871 ------------ -- ----------- - - - - - - - --------------------------- - - - - --------- ---- - ----------------- - - - - - - - - - - - - - - - - - - - 4Q-487 & R. Ong Shell gasoline Station various various 10,568.97 4Q-872 --------------------------------------- - -. - -�- -- -- -�------- -- --��� ---- �- --�--- ----- 4Q-498 & R. Ong Shell gasoline Station various various 8,401.70 - --�------- -- --------------------- - --- - --�- --

AMENDED DECISION CTA Case Nos. 7771 and 7814 4Q-874 I I subtotal 138,425.24 3) Input VAT on domestic purchases of services supported by VAT ORs issued not in the name of petitioner --- ----------------------------- .. -�� ... --- ---------------------- ------------------------------------ -- -- -------------- --- -- ---------- ---------~~---- 1Q-34 & Best travel 36186 3/14/2006 6,105.00 1Q-509 - - - - - - - - ------------ ------ ------- -- -- -- 1Q-63 & City Service Corporation 146107 3/6/2006 38,280.52 1Q-519 1Q-82 & Donna Carlos Fashions & collections 1583 3/7/2006 17,475.00 1Q-524 1Q-119 & 119107 2/24/2006 1,567.28 Functional Inc 1Q-556 1Q-152 & 304 2/9/2006 6,455.06 Harty Incorporated Philippines 1Q-577 1Q-157 & Hearth & hastings Philippines Inc 3384 1/13/2006 1,909.08 1Q-578 1Q-186 & 2865 2/27/2006 98,832.24 Infinity Security & Investigation Services 1Q-598 1Q-203 & 6792 1/5/2006 6,266.18 KPI Elevators Inc 1Q-613 1Q-204 & 6795 1/5/2006 12,532.36 KPI Elevators Inc 1Q-614 1Q-296 & 9371 2/17/2006 1,909.09 Nu-print Philippines printer and Trader 1Q-680 1Q-297 & 9622 3/29/2006 1,665.28 Nu-print Philippines printer and Trader 1Q-681 1Q-431 & 0363 3/29/2006 612.86 Rizalnet Enterprises 1Q-721 1Q-441 & 0087 3/31/2006 96,695.94 Sards Construction 1Q-726 1Q-439 & 0084 3/17/2006 27,452.57 Sards Construction 1Q-727 1Q-440 & 86 3/23/2006 32,451.43 Sards Construction 1Q-728 2Q-27 & Best travel 36705 5/24/2006 3,086.20 2Q-471 2Q-400 & 0010 5/31/2006 8,099.99 Sards Construction 2Q-655 2Q-404 & 0208 5/24/2006 37,440.00 Sards Construction 2Q-656 2Q-401 & 0012 7/6/2006 65,520.00 Sards Construction 2Q-657 3Q-29 & Best travel 37581 9/14/2006 3,035.66 3Q-574 4Q-33 & Best travel 38363 12/14/2006 107.04 4Q-688 4Q-358 & 9333 10/13/2006 192.00 Nu-print Philippines printer and Trader 4Q-790 4Q-359 & 1034 10/20/2006 135.00 Nu-print Philippines printer and Trader 4Q-791 4Q-361 & 0571 12/21/2006 171.00 Nu-print Philippines printer and Trader 4Q-792 4Q-362 & 0572 12/21/2006 214.00 Nu-print Philippines printer and Trader 4Q-793 4Q-516 & 3212 12/14/2006 40,714.29 Reign-NAN Sales Industry 4Q-821

AMENDED D.ECISION CTA Case Nos. 7771 and 7814 40-545 & Sards Construction 0089 10/12/2006 18,381.59 40-833 Sards Construction 0024 10/20/2006 18,381.59 40-546 & Sards Construction 0026 10/27/2006 40-834 Sards Construction 0027 11/10/2006 6,321.43 40-547 & Sards Construction 0034 11/23/2006 10,221.43 40-835 Sards Construction 0035 11/29/2006 126,321.43 40-548 & 40,714.29 40-836 40-549 & 40-836 40-550 & 40-837 40-551 & Sards Construction 0036 11/29/2006 9,107.14 40-837 40-552 & Sards Construction 0032 11/16/2006 40,714.29 40-839 40-553 & Sards Construction 0037 12/20/2006 294,750.00 40-840 40-2 & Airfreight 2100 Inc 103058 11/3/2006 19.66 40-687 40-3 & Airfreight 2100 Inc 103081 11/16/2006 9.78 40-688 40-396 & Pagsanjan Medical Clinic 329845 10/13/2006 26.79 40-803 40-22 & Banahaw Telephone Corp 34946 12/24/2006 235.71 40-692 40-23 & Banahaw Telephone Corp 34798 11/28/2006 235.71 40-693 - -- ----------- -- --------------- ------------- -- ----- - - - - - - - - - --- --- ~~- " - - - - - - - - - - - - - - - --~------ ~- 40-386 & P.C Magpily Eng'g. Enterprises 2492 10/31/2006 1,607.14 40-800 ------------- - ~~~- - - - - - - --~-------- ~~ --~ ~~~-- ~ ----~-- ~- 40-515 & Reign-NAN Sales Industry 3163 10/13/2006 8,672.34 4Q-822 t-------- ----s-u- b--t-o-t-al - - -~~~~----- -~---~- ----------- ~- - - - - - - ----- --- - - - - - - - - - --~ 1,084,645.39 ~-~ ~~-~------------------ 4} Input VAT on domestic purchase of service supported by VAT OR without OR date 10-435 & 31,315.71 _ Rodier Engineering & Supplies 0266 31,315.71 10 722 - - - - - - - -------- - -�� subtotal Grand Total p 1,359,061.58 Amortized Input VAT on Capital Goods exceeding P1M purchased in 2005 without supporting documents 1st Quater 2nd Quater 3rd Quater 4th Quater Date H-3, H-5, H-7, H-10, Description Purchased pp. 5-6 pp. 5-6 pp. 5-6 p. 3 Total �---------------- ---------- - -- ~ ~- -----+-----~---- ~-~-~ ---------- -�--- ------ -- - ----- ----- ----------------- 11/5/2005 p 996.41 p 996.42 p 996.39 Platform p 996.42 p 3,985.64 Insulation Resistence Tester 11/10/2005 1,355.49 1,355.49 1,355.49 1,355.49 5,421.96 -- - - - - - - - - - 1,138.91 1,375.74 Ducter Megger 11/10/2005 1,138.92 1,138.92 1,138.89 4,555.64 - - - - - - - - - - - - - - - ---- -- ----- -- --- ----------- - ~~~ --~-- ---- -- ------ ---- - --- --- 295.50 RoofCover 11/22/2005 1,375.74- 1,375.74 1,375.74 1,375.74 5,502.96 -- - --------- -- ---- -------------- - . -- ----------- -------- -------- ------------- Garage 12/7/2005 295.50 2,663.64 295.50 295.50 !_,!_~2_.0( - - -- - ~~~- 2,210.04 ~-- ~~- -------~------ --- - - - - - - - - - ---~-- 2,727.27 Garage 11/20/2005 1,375.74 1,375.74 1,375.74 5,502.96 ---�-- - - - - - --� ---- ------ ---- ------ --�--�-- --------------- Office softwares 11/3/2005 2,663.64 2,663.64 2,663.64 10,654.56 ----------- ��-��----------- -------- - -------- ------------------- ~--------------~~----~ ~~---~---~--~ Local Area network 11/24/2005 2,210.04 2,210.04 2,210.04 8,840.16 . ----�-------------- �- ------------------ ---- --------~-- - - - - - - - - - - -- -- ~-~--~ ~---~--- -------~--- -~ 1\ll~talf~ber gl~_ss _____ -~1/23/2005 2,727.27 2,727.27 ---- 2,72?._?7_~- --- ~0,909.08 ~

AMENDED DECISION CTA Case Nos. 7771 and 7814 enclosure Rainwise Weather station 12/6/2005 612.03 612.03 612.03 612.03 2,448.12 Engineering service 11/17/2005 3,661.71 3,661.71 3,661.71 3,661.71 14,646.84 Computer 11/12/2005 1,016.67 1,016.67 1,016.67 1,016.67 4,066.68 Slope Protection 11/18/2005 6,316.02 6,316.02 6,316.02 6,316.02 25,264.08 Gantry Crane 11/18/2005 496.68 496.68 496.68 496.68 1,986.72 Earthing and Lighting Protection 11/18/2005 170.25 170.25 170.25 170.25 681.00 Cable tray 11/18/2005 627.57 627.57 627.57 627.57 2,510.28 Lumot Morning Glory Fence 11/18/2005 95.52 95.52 95.52 95.52 382.08 Emergency saddle spillway road 11/18/2005 620.58 620.58 620.58 620.61 2,482.35 Perimeter Fence 12/9/2005 12,525.42 12,525.42 12,525.42 12,525.42 50,101.68 Emergency saddle spillway road 12/8/2005 867.90 867.90 867.90 867.90 3,471.60 Computers 12/28/2005 4,861.89 4,861.89 4,861.89 4,861.89 19,447.56 Retention 12/21/2005 36,116.49 36,116.49 36,116.49 36,116.49 144,465.96 Guesthouse 11/22/2005 6,493.56 6,493.56 6,493.56 6,493.56 25,974.24 Garage 11/14/2005 371.58 371.58 371.58 371.58 1,486.32 Garage 12/5/2005 371.94 371.94 371.94 371.94 1,487.76 Axial Blower 11/3/2005 1,897.83 1,897.83 1,897.83 1,897.83 7,591.32 multi Gas Detector 11/7/2005 556.35 556.35 556.35 556.35 2,225.40 - - - - - - - - ~-- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- --- ����- -�-� �-- �-� ------------ " --�---------- -�� ------------------------- ----- TOTAL P91,818.75 P91,818.73 P91,818.75 P91,818.72 P367,274.95 Accordingly, out of petitioner's reported input VAT of P44,005, 101 .83 for 2006, only the amount of P31 ,479,619.94 represents petitioner's valid input VAT, computed as follows: Input VAT per Returns p 44,005,101.83 Less: Disallowances 12,525,481.89 --- - - - - - - - - - - - - - - -- p 31,479,619.94 ------------- Per ICPA Report (P10,182,111.52+P1.60) P10,182,113.12 Per Court's further verification - 617,032.24 ----------- ---------�� 1,726,336.53 - ------ --------- Amortized input VAT on current _____ p~~ch~ses_o_f ~(l_pit<l_l_~~~~exceeding_!_~l\,ll____ _ __ Additional disallowances Substantiated Input VAT Proceeding to the fourth and fifth requisites, since petitioner's reported sales for 2006 were all zero-rated, there is no output VAT to speak of. Thus, the substantiated input VAT of P31,479,619.94 is entirely attributable thereto. Furthermore, the claimed unutilized input VAT for taxable year 2006 in the amounts of P7,559,943.441JO for the first quarter and P36,246,606.2841 for the last three quarters were not carried over to the succeeding taxable quarters since the same were deducted as "VAT Refund/TCC claimed" in the First and Fourth Quarterly VAT Returns of 2006, respectively.v 40 Exhibit "H 3", Line 23D. 41 Exhibit "H 10", Line 23D.

AMENDED DECISION CTA Case Nos. 7771 and 7814 In sum, pet.it.ioner has sufficiently proven compliance with the requisites for the refund of unutilizcd input VAT at.tribut.able t.o it.s zero-rat.ed sales for t.he period January 1, 2006 to December 31, 2006, but only to the extent of P31,479,619.94 out of the total claimed input VAT of P43,806,549. 72. WHEREFORE, premises considered, the instant Petition for Review is PARTIALLY GRANTED. Accordingly, respondent. Commissioner of Internal Revenue is ORDERED TO ISSUE A TAX CREDIT CERTIFICATE in favor of pet.it.ioner CBK Power Company Limited in t.he amount. of P31 ,479,619.94 representing petitioner's unut.ilized input. VAT at.tribut.able t.o its zero-rated sales for the period <January 1, 2006 to December 31, 2006. SO ORDERED. ~ ~ ;./(..-.. ...,/~ AMELIA R. COTANGCO-MANALASTAS Associate <J usticc I CONCUR: / LOVELL R. BAUTISTA Associate Justice

AMI<~NDED DECISION CTA Case Nos. 7771 and 7814 ATTESTATION I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. LOVELL ~UTISTA Associate Justice Chairperson CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. ~~d;: ~. QJ-~ot..~ Ci JiJANITO C. CASTANEJ1A, JR. Acting Presiding Justice

Annex A CBK POWER COMPANY LIMITED vs CIR CTA CASE NOS. 7771 & 7814 Schedule of amortized input VAT on current purchases of capital goods exceeding PlM No. of Est. life in months Amortized Input VAT for Date Input VAT months amortized 2006 (A/B*C) Purchased Amount (A) Description (B) (C) Reference 225,637.11 Annex 2-3Q-C-1; 160 000.00 B.1 7/11/2006 Dehumidifier 145,714.00 60 6 22,563.71 Exh. H-7, p. 4 of 8 subtotal 102,428.40 22,563.71 2 1/25/2006 Service Vehicle 22,227.28 191,786.00 Annex 2-1Q-C-1; 3/17/2006 Service Vehicle 25,689.76 60 12 32,000.00 Exh. H-3, p. 4 of 7 3/16/2006 Service Vehicle Annex 2-1Q-C-1; 38,640.00 3/6/2006 SCADA Network 60 10 24,285.70 Exh. H-3, p. 4 of 7 51,428.58 7/18/2006 Service Vehicle Annex 2-1Q-C-1; subtotal 37,127.79 11,677.66 60 10 17,071.70 Exh. H-3, p. 4 of 7 111,554.64 26,196.43 Annex 2-1Q-C-1; 37,127.79 1,090,262.69 60 10 3,704.50 Exh. H-3, p. 4 of 7 102,750.00 Annex 2-3Q-C-2; 64,956.76 60 6 19,178.60 Exh. H-7 p. 4 of 8 44,050.18 99,542.67 '!:lb1 .L4U.:::tU 205,265.45 256,443.58 Annex 2-2Q-C-1; 131,841.48 3 6/27/2006 Wave Breaker 76,517.95 60 7 2,997.14 Exh. H-5, p. 4 of 7 subtotal 41,557.18 2,997.14 112,103.97 286,141.58 Annex 2-3Q-C-3; 4 8/1/2006 Power Supply 60 5 3,220.00 Exh. H-7, p. 4 of 8 subtotal 3,220.00 Annex 2-3Q-C-4; 5 9/26/2006 Load Weights 60 4 3,428.57 Exh. H-7, p. 4 of 8 subtotal ;j,42H.:,/ Annex 2-1Q-C-2; 6 3/22/2006 SCADA Network 60 10 6,187.96 Exh. H-3, p. 4 of 7 Annex 2-1Q-C-2; 3/17/2006 SCADA Network 60 10 1,946.28 Exh. H-3, p. 4 of 7 Annex 2-2Q-C-2; 4/27/2006 Wave Breaker 60 9 16,733.20 Exh. H-5, p. 4 of 7 Annex 2-2Q-C-2; 6/27/2006 SCADA Network 60 7 3,056.25 Exh. H-5, p. 4 of 7 Annex 2-2Q-C-2; 6/28/2006 SCADA Network 60 7 4,331.58 Exh. H-5, p. 4 of 7 Annex 2-3Q-C-5; 7/17/2006 Caliraya Spillway 60 6 109,026.27 Exh. H-7, p. 4 of 8 Annex 2-4Q-C-1; 11/20/2006 Service Vehicle 60 2 3,425.00 Exh. H-10, p. 3 of 4 subtotal 144,706.54 Annex 2-1Q-C-3; 7 1/16/2006 Perimeter Fence 60 12 12,991.35 Exh. H-3, p. 4 of 7 Annex 2-1Q-C-3; 1/23/2006 Perimeter Fence 60 12 8,810.04 Exh. H-3, p. 4 of 7 Annex 2-1Q-C-3; 1/6/2006 Perimeter Fence 60 12 19,908.53 Exh. H-3, p. 4 of 7 Annex 2-1Q-C-3; 1/11/2006 Thrust Bearing 60 12 41,053.09 Exh. H-3, p. 4 of 7 Annex 2-1Q-C-3; 1/19/2006 Slope Protection 60 12 51,288.72 Exh. H-3, p. 4 of 7 Annex 2-1Q-C-3; 1/6/2006 Repair of Leak 60 12 26,368.30 Exh. H-3, p. 4 of 7 Annex 2-1Q-C-3; 3/15/2006 Wave Breaker 60 10 12,752.99 Exh. H-3, p. 4 of 7 Annex 2-2Q-C-3; 5/19/2006 Wave Breaker 60 8 5,540.96 Exh. H-5, p. 4 of 7 Annex 2-2Q-C-3; 5/17/2006 Slope Protection 60 8 14,947.20 Exh. H-5, p. 4 of 7 Annex 2-2Q-C-3; 5/5/2006 Plugging and concreting 60 8 38,152.21 Exh. H-5, p. 4 of 7

Annex A CBK POWER COMPANY LIMITED vs CIR CTA CASE NOS. 7771 & 7814 Schedule of amortized input VAT on current purchases of capital goods exceeding P1M No. of Est. life in months Amortized Date Input VAT months amortized Input VAT for Purchased Amount (A) Description (B) (C) 2006 (A/B*C) Reference Annex 2-2Q-C-3; 6/14/2006 Communication Equip 135,359.40 60 7 15,791.93 Exh. H-5, p. 4 of 7 Annex 2-2Q-C-3; 6/14/2006 Communication Equip 136,620.31 60 7 15,939.04 Exh. H-5, p. 4 of 7 Annex 2-2Q-C-3; 6/27/2006 Plugging and concreting 301,930.83 60 7 35,225.26 Exh. H-5, p. 4 of 7 Annex 2-3Q-C-6; 8/10/2006 Load Weights 205,714.29 60 5 17,142.86 Exh. H-7, p. 4 of 8 Annex 2-3Q-C-6; 9/6/2006 Guesthouse 21,157.69 60 4 1,410.51 Exh. H-7, p. 4 of 8 Annex 2-3Q-C-6; 9/11/2006 Dehumidifier 180,509.69 60 4 12,033.98 Exh. H-7, p. 4 of 8 Annex 2-3Q-C-6; 9/4/2006 Garage 31,178.57 60 4 2,078.57 Exh. H-7, p. 4 of 8 Annex 2-3Q-C-6; 9/13/2006 Cable Anchor 73,102.50 60 4 4,873.50 Exh. H-7, p. 4 of 8 Annex 2-4Q-C-2; 10/27/2006 Dehumidifier 45,127.42 60 3 2,256.37 Exh. H-10, p. 3 of 4 subtotal 338,565.41 Annex 2-1Q-C-5; 9 1/16/2006 Perimeter Fence 2,020.45 60 12 404.09 Exh. H-3, p. 4 of 7 Annex 2-1Q-C-5; 1/23/2006 Perimeter Fence 30.19 60 12 6.04 Exh. H-3, p. 4 of 7 Annex 2-1Q-C-5; 1/6/2006 Perimeter Fence 878.23 60 12 175.65 Exh. H-3, p. 4 of 7 Annex 2-1Q-C-5; 3/15/2006 Wave Breaker 907.56 60 10 151.26 Exh. H-3, p. 4 of 7 Annex 2-1Q-C-5; 1/6/2006 Repair of Leak 5,570.76 60 12 1,114.15 Exh. H-3, p. 4 of 7 Annex 2-1Q-C-5; 1/19/2006 Slope Protection 4,408.64 60 12 881.73 Exh. H-3, p. 4 of 7 Annex 2-2Q-C-4; 6/14/2006 Communication Equip 8,316.94 60 7 970.31 Exh. H-5, p. 4 of 7 subtotal 3,703.23 Annex 2-4Q-C-3; 10 11/16/2006 Load Weights 48,214.29 60 2 1,607.14 Exh. H-10, p. 3 of 4 subtotal brana Iota� 1,607.14 blJ',U::SL.L4