VISAYAS GEOTHERMAL POWER COMPANY v. COMMISSIONER OF INTERNAL REVENUE

RE PUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION VISAYAS GEOTHERMAL POWER CTA Case No. 7889 COMPANY, Members: Petitioner, UY, and - versus - FABON-VICTORINO, JJ. COMMISSIONER OF INTERNAL Promulgated: REVENUE, -II ! ~ fc..-. Respondent. x- - - - - - - - - - - - - - - - - - - - - - - - AMENDED DECISION Fabon - Victorino, J.: This case has been remanded by the Supreme Court per its Resolution 1 dated April 26, 2017 in G.R. No. 205279 entitled Visayas Geothermal Power Company vs. Commissioner of Internal Revenue, for this Court to determine petitioner Visayas Geotherma l Power Company's entitlement to the tax refund sought. First, a brief narration of the factual antecedents. Petitioner is a special purpose limited partnership established primarily to "invest in, acquire, finance, complete, construct, develop, improve, operate, maintain and hold that certain partially constructed power production geothermal electrical generating facility in Malitbog, Leyte Province, Philippines (the ~~Project"), and other property incidental thereto, for the production and sale of electricity from geothermal resources, to sell or otherwise dispose of 1 Docket, pp. 1477-1481. v

AMENDED DECISION CTA Case No. 7889 the Project and such other property."2 It is registered with the Bureau of Internal Revenue (BIR) as a Value-Added Tax (VAT) taxpayer with Taxpayer Identification No. 003-832- 538-000. 3 On February 13, 2009, petitioner filed with the BIR an administrative claim for refund of unutilized input VAT covering the taxable year 2007 in the amount of P11,902,576.07. 4 Claiming inaction, petitioner then proceeded to file its Petition for Review before this Court on March 30, 2009. In his Answer5 filed on April 14, 2009, respondent mainly assailed the Court's jurisdiction, claiming that the petition was prematurely filed. During the trial only petitioner presented evidence in support of its claim. In its Decision67 promulgated on October 19, 2011, the Court sustained respondent's position and denied the Petition for Review for being prematurely filed. The Court explained that under Section 112(C) of the 1997 NIRC, the Commissioner of Internal Revenue (CIR) has 120 days from submission of complete supporting documents, within which to act on the application for refund or tax credit. Since the administrative claim for refund was filed on February 13, 2009, the CIR had until June 13, 2009 to decide on the claim. However, the Petition for Review was filed on March 30, 2009, or merely 45 days from the filing of the administrative claim with the Bureau of Internal Revenue, hence, prematurely filed. Petitioner moved for reconsideration but the same was denied in the Resolution8 dated January 16, 2012, prompting 2 Exhibit A. V' 3 Exhibit C. 4 Exhibit M. s Docket, pp. 147-152. 6 Docket, pp. 629-648. 7 Docket, pp. 629-648. 8 Docket, pp. 722-729.

AMENDED DECISION CTA Case No. 7889 petitioner to appeal its case to the Court En Bane. The appeal was docketed as CTA EB Case No. 864. The CTA En Bane affirmed the ruling of this Court in its Decision9 dated October 8, 2012. Petitioner moved for reconsideration, but it was denied in the Resolution 10 dated January 7, 2013. Petitioner elevated its case to the Supreme Court via a Petition for Review on CertiorarP 1 entitled Visayas Geothermal Power Company vs. Commissioner of Internal Revenue, docketed as No. G.R. No. 205279. In its Resolution12 dated April 26, 2017, the Supreme Court partly granted petitioner's Petition for Review on Certiorari. The Supreme Court ruled that the Tax Court erred in ruling that petitioner's judicial claim was prematurely filed considering that the 120+30-day mandatory periods admit of an exception. Citing its previous ruling in the case of CIR vs. San Roque Power Corporation 13 , the Final Arbiter declared that "strict compliance with the 120+30-day periods is necessary for such a claim to prosper, whether before, during, or after the effectivity of the Atlas doctrine, except for the period from the issuance of BIR Ruling No. DA-489-03 on 10 December 2003 to 6 October 2010 when the Aichi doctrine was adopted, which again reinstated the 120+30-day periods as mandatory and jurisdictional". In other words, petitioner seasonably filed its claim for refund/tax credit, hence, this Court has the competence to determine its case. Considering however that no ruling was made on the merits of petitioner's claim for tax refund, the case was remanded to this Court for disposition on the matter. The decretal portion of the Resolution dated April 26, 2017 reads: WHEREFORE, the petition is PARTLY GRANTED. The Decision dated October 8, 2012 and Resolution dated January 7, 2013 9 Docket, pp. 919-942. V' 10 Docket, pp. 978-981. 11 Docket, pp. 983-1015. "Docket, pp.1477-1481. " 703 Phil.310 (2013).

AMENDED DECISION CTA Case No. 7889 of the Court of Tax Appeals en bane in CTA EB Case No. 864 are REVERSED and SET ASIDE. The case is REMANDED to the Court of Tax Appeals, which is DIRECTED to determine petitioner Visayas Geothermal Power Company's entitlement to a tax refund. SO ORDERED. The Resolution of April 26, 2017 in G.R. No. 205279 became final and executory on July 7, 2017 when Entry of Judgment14 was issued by the Supreme Court. On July 25, 018, the Court En Bane issued a Resolution15 the dispositive portion of which reads: WHEREFORE, premises considered, in compliance with the above Supreme Court Resolution dated April 26, 2017, CTA Case No. 7889 entitled Visayas Geothermal Power Company vs. Commissioner of Internal Revenue is hereby REMANDED to the CTA-Former First Division for determination of petitioner's entitlement to a tax refund. SO ORDERED. Hence, this Amended Decision. THE ISSUES Per stipulation, the following issues were submitted by the parties for the resolution of the Court, to wit: 1. Whether or not petitioner's unutilized input VAT for the period from the 1st quarter to the 4th quarter of CY 2007 amounting to Pl1,902,576.07 is substantiated by ,. Docket, pp.l484. "Docket, pp. 1497-1499. J

AMENDED DECISION CTA Case No. 7889 documentary evidence in the form of invoices and official receipts; 2. Whether or not petitioner's unutilized input VAT for the period from the pt quarter to the 4th quarter of CY 2007 amounting to P11,902,576.07 was applied or credited against any output VAT of the petitioner in the subsequent quarter or quarters; 3. Whether or not petitioner is entitled to a refund of and/or issuance of a tax credit certificate (TCC) for its unutilized input VAT amounting to P11,902,576.07, which input VAT: (i) arose from petitioner's domestic purchases of non- capital goods and services, services rendered by non-residents and importation on non- capital goods; and (ii) are all attributable to petitioner's zero-rated sales of generated power to Energy Development Corporation (EDC) [formerly Philippine National Oil Company- Energy Development Corporation]; and 4. Whether or not this Honorable Court has jurisdiction to act on the instant Petition for Review. THE COURT'S RULING Petitioner anchors its claim for tax refund/tax credit under Section 112(A) and (C) of the National Internal Revenue Code (NIRC) of 1997, as amended, which reads: 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 .,/

AMENDED DECISION CTA Case No. 7889 creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales under Section 106(A)(2)(a)(1), (2) and (b) and Section 108(8)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the 8angko Sentral ng Pilipinas (8SP): Provided, further, That where the taxpayer is engaged in zero- rated or effectively zero-rated sales and also in taxable or exempt sale of goods or properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales: Provided, finally, That for a person making sales that are zero-rated under Section 108(8)(6), the input taxes shall be allocated ratably between his zero-rated and nonzero-rated sales. XXX XXX XXX (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. ~

AMENDED DECISION CTA Case No. 7889 Thus, to be entitled to a refund/tax credit of excess input VAT attributable to zero-rated or effectively zero-rated sales, the following requisites must be satisfied: 1) the taxpayer is VAT-registered; 2) there must be zero-rated or effectively zero- rated sales; 3) input taxes were incurred or paid; 4) such input taxes are attributable to zero-rated or effectively zero-rated sales; 5) the said input taxes were not applied against any output VAT liability; and 6) the claim was filed within the prescribed periods both in the administrative and judicial levels. The Court shall determine first the last requisite which is the timeliness of filing of the administrative and judicial claims. Petitioner's administrative and judicial claims were timely filed In accordance with Section 112(A) of the NIRC of 1997, as amended, the administrative claim for the issuance of a tax credit certificate or refund of input VAT must be filed with BIR within two (2) years after the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made. Considering that the subject claim is for the first, second, third and fourth quarters of CY 2007, the administrative claim must be filed on or before March 31, 2009, June 30, 2009, September 30, 2009 and December 31, 2009, respectively. Thus, petitioner timely filed its ,;

AMENDED DECISION CTA Case No. 7889 administrative claim for the subject periods on February 13, 2009. 16 Anent the timeliness of petitioner's judicial claim, the same has been put to rest when the Final Arbiter declared in its Resolution dated April 26, 2017 that petitioner's case falls under the exception in the observance of the 120+30-day periods under Section 112 of the NIRC of 1997, as amended, hence, the Court has jurisdiction over the case. Petitioner is a VAT taxpayer and had zero- rated sales/receipts during the subject periods It has been established that petitioner is a VAT- registered taxpayer as evidenced by its BIR Certificate of Registration No. 9RC0000232420 dated January 1, 1996.17 On the second requisite, i.e., the existence of zero- rated sales/receipts, Section 108(8)(7) of the NIRC of 1997, as amended by Republic Act (R.A.) No. 9337, provides that sale of power generated through renewable sources of energy is among the transactions subject to zero percent (0%) VAT rate, to 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. Further, Section 4.108-5 (b) (7) of Revenue Regulations (RR) No. 16-05, which implements the foregoing provision, qualified the applicability of such zero-rating as follows: 16 Par. 3, Admitted Facts, JSFI , Docket, p. 184; Exhibit M, Docket, pp. 387-388. " Exhibit C, Docket, p. 357. 4/

AMENDED DECISION CTA Case No. 7889 (b) Transactions Subject to Zero Percent (0%) VAT Rate. - The following services performed in the Philippines by a VAT-registered person shall be subject to zero percent (0%) VAT rate: XXX XXX 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 renewable sources of energy, and shall not extend to the sale of services related to the maintenance or operation of plants generating said power. Corollarily, Section 4.108-3(f) of the RR No. 16-05 provides: SEC. 4.108-3. Definitions and Specific Rates on Selected Services.- XXX XXX XXX (f) Sale of electricity by generation, transmission, and distribution companies shall be subject to 10% VAT on their gross receipts: Provided, That 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 shall be subject to 0% VAT. "Generation companies" refers to persons or entities authorized by the Energy Regulatory Commission (ERC) to operate facilities used in the generation of electricity. For this purpose, generation of V'

AMENDED DECISION CTA Case No. 7889 electricity refers to the production of electricity by a generation company or a co- generation facility pursuant to the provisions of the R.A. No. 9136 (EPIRA). They shall include all Independent Power Producers (IPPs) and NPC/Power Sector Assets and Liabilities Management Corporation (PSALM)-owned generation facilities. Thus, to qualify for VAT zero-rating, petitioner must prove by sufficient evidence that its sales/receipts were derived from the sale of power or fuel generated through renewable sources of energy. Per its Amended Articles of Partnership 18, petitioner's business purpose is "to invest in, acquire, finance, complete, construct, develop, improve, operate, maintain and hold that certain partially constructed power production geothermal electrical generating facility in Malitbog, Leyte Province, Philippines (the "Project"), and other property incidental thereto, for the production and sale of electricity from geothermal resources, to sell or otherwise dispose of the Project and such other property, and to engage in any other activities related or incidental hereto". Petitioner's 216-megawatt geothermal power plant located in Malitbog, Leyte Province has been accredited by the Department of Energy as a Block Power Production Facility under the Implementing Rules and Regulations of Executive Order No. 215, as amended. 19 The said power plant was likewise issued with Certificate of Compliance20 by the Energy Regulatory Commission. By virtue of the Energy Conversion Agreement ("ECA")21 entered into between Energy Development Corporation ("EDC") [formerly Philippine National Oil Company - Energy Development Corporation] and petitioner's predecessor-in-interest, Magma Power Company, 1" Exhibit A, Docket, pp. 350-355. 19 Exhibit B, Docket, p. 356. 2o Exhibit Z, Docket, p. 476. 21 Exhibit D. J

AMENDED DECISION CTA Case No. 7889 petitioner generates power and subsequently sells it only to ED C. For the period covering January 1, 2007 to December 31, 2007, petitioner's gross receipts from sales of power generation services to EDC amounted to P1,981,657,214.27, as evidenced by VAT zero-rated official receipts22 and invoices23 issued by petitioner to EDC for the same period. Such sales of electricity generated through a renewable source of energy, particularly, geothermal energy, qualify for VAT zero-rating pursuant to Section 108(B)(7) of the NIRC of 1997, as amended by R.A. No. 9337, and as implemented by Section 4.108-5 (b) (7) of RR No. 16-05. The table below shows the breakdown of the zero-rated sales/receipts of P1,981,657,214.27: Paid In US$ OR Date Paid in Pesos Amount Forex Peso Equivalent Withholding Total Exhibit No. 34 812 502.59 4 186 973.04 48.65 203 696 238.40 Tax 35 522 961.83 7 556 740.80 710 459.24 T-4.1 533 02-Jan-07 4 186 973.04 48.45 202 858 843.79 154 219.20 7 710 960.00 34 741 092.33 4 187 499.65 48.10 201418 733.17 207 853 304.52 T-4.2 534 02-Jan-07 7 556 740.80 4 187 499.65 47.40 198 487 483.41 4 157 066.12 2 234 400.00 4 187 499.65 45.90 192 206 233.94 709 001.88 35 450 094.21 T-4.3 535 02-Feb-07 8 003 620.80 4 174 297.40 45.50 189 930 531.70 154 219.20 7 710 960.00 34 602 308.67 4 176 805.77 45.30 189 209 301.38 45 600.00 2 280 000.00 T-4.4 536 02-Feb-07 163 339.20 8 166 960.00 34 375 814.51 T-4.5 537 02-Feb-07 8 003 620.80 - 34 602 308.67 206 998 820.22 T-4.6 538 02-Mar-07 33 875 542.78 4 139 976.43 35,077 361.74 8 003 620.80 701 547.23 T-4.7 539 02-Mar-07 163 339.20 8 166 960.00 32 803 531.94 205 529 319.72 T-4.8 540 02-Mar-07 8 003 620.80 4 110 586.56 691 337.61 34 566 880.39 T-4.9 541 02-Mar-07 32 415 141.50 163 339.20 8 166 960.00 7 656 887.17 T-4.10 542 03-Apr-07 4 050 765.13 202 538 248.54 7 882 948.37 669 459.83 33 472 991.77 T-4.11 543 03-Apr-07 32 292 050.44 163 339.20 8 166 960.00 T-4.12 544 03-Apr-07 7 831 845.72 3 922 576.36 196 128 810.30 32 637 311.00 661 533.50 33 076 675.00 T-4.13 545 03-Mav-07 156 263.00 7 813 150.17 T-4.14 546 03-Mav-07 3 876 133.17 193 806 664.87 T-4.15 547 03-Mav-07 - 7 882 948.37 - 32 292 050.44 T-4.16 548 01-Jun-07 193 070 715.51 3 861414.13 T-4.17 549 01-lun-07 7 831 845.72 - 32 637 311.00 T-4.18 550 01-Jun-07 79 819 ;)1.28 3 902 699.72 115,315,200.00 T-4.19 551 02-Jul-07 ~ T-4.20 552 02-Jul-07 T-4.21 553 02-lul-07 T-4.22 554 02-Aug-07 T-4.23 555 02-Auq-07 T-4.24 556 02-Auq-07 T-4.25 557 04-Sep-07 T-4.26 558 04-Sep-07 T-4.27 559 04-Sep-07 1,643,227.09 46.20 75,917,091.56 22 Exhibits T-4.1 to T-4.27. 23 Exhibits T-2.1 to T-2.8.

AMENDED DECISION CTA Case No. 7889 II 375 289 341.82 115,315,200.00 1 453 724 457.33 152 643 200.00 !.!111!,657,214.27 Total per Official ReceiDts However, a comparison of the substantiated zero-rated� sales/receipts of P1,981,657,214.27 with that reflected in petitioner's Quarterly VAT Returns for the four quarters of CY 2007 disclosed a discrepancy in the amount of P2,338,260.67, computed as follows: PerCY 2007 Quarter VAT Returns 1st Quarter (Exh. ''E-2") p 546 988,419.76 2nd Quarter (Exh. "F-1"} 731,814,492.47 3rd Quarter (Exh. "G-1") 705 192 562.71 4th Quarter (Exh. ''H-1") - Pl 983,995,474.94 1 981,657,214.27 Per Supporting Official Receipts p 2,338,260.67 Discrepancy For being unsupported by VAT zero-rated official receipts, the amount of P2,338,260.67 shall be denied VAT zero-rating. With the finding that petitioner has VAT zero-rated sales/receipts for the subject periods in the total amount of P1,981,657,214.27, the Court shall now determine whether petitioner incurred input taxes in connection therewith and whether the said input taxes were not applied against any output VAT liability of petitioner. Petitioner incurred/paid input taxes attributable to zero-rated sales/receipts which were not applied against any output VAT liability In its Quarterly VAT Returns for CY 2007, petitioner reported the following input taxes in the total amount of P11,902,576.07 arising from its domestic purchases and importation of goods other than capital goods, domestic purchases of services, and services rendered by non- residents, broken down as follows: J

AMENDED DECISION CTA Case No. 7889 1st 2nd 3rd 4th CY 2007 Quarter Quarter Quarter Quarter (Exh. "E-2") (Exh. "F-1") (Exh. "G-1") (Exh. "H-1") Domestic Purchases of p 680 514.19 p 1 034 965.28 p 592 237.04 p 113 437.87 p 2 421154.38 Goods other than capital Goods 497 875.15 169 177.56 279 294.92 114 999.00 1,061,346.63 Importation of Goods other than caoital Goods 2 869 268.38 2 654 665.21 2 098 020.51 272 555.86 7 894 509.96 Domestic Purchases of Services 77 537.69 388 342.52 59 684.89 - 525 565.10 - Services Rendered by Non-Residents P4 125 195.41 P4 247 150.57 P3 029 237.36 p 500 992.73 Pll 902 576.07 Total In support of these input taxes, petitioner presented its Schedule of Input VAT for CY 200724 and the corresponding suppliers' invoices, official receipts, Bureau of Customs ("BOC") Import Entry and Internal Revenue Declarations (IEIRDs) and BIR Form Nos. 160025, which were all examined by the Court-commissioned Independent Certified Public Accountant (!CPA), Katherine 0. Constantino. In her report, the total input tax of Pll,902,576.07 was accounted as follows: 26 Findings Reference to Amount of Input VAT Prop_erly Substantiated ICPA Report Input VAT 1. Domestic purchase of goods and services properly (Exh. "T") p 8 607,072.90 supported by VAT invoices and OR Annex 2-1Q-1, 1 534 755.46 2. Importation of goods and services properly Annex 2-2Q-1, supported by IEIRDs/BOC O.R. Form 1600 Annex 2-3Q-1, 494,801.50 Annex 2-4Q-1 42,022.90 3. Domestic purchase of goods properly supported by a Annex 2-1Q-2, VAT invoice not dated within the VAT-taxable Annex 2-2Q-2, quarter but within the VAT-taxable year. (The ICPA Annex 2-3Q-2, ascertained that the input VAT on the purchase of Annex 2-40-2 goods were not claimed twice during the taxable year.) Annex 2-2Q-3, Annex 2-3Q-3, 4. Domestic purchase of services properly supported by Annex 2-4Q-3 a VAT OR not dated within the taxable quarter but within the VAT-taxable year. (The !CPA ascertained Annex 2-2Q-4, that the input VAT on the purchase of qoods were Annex 2-3Q-4 24 Exhibits T-5-1Q.1 to T-5-1Q.3, T-5-2Q.1 to T-5-2Q.3, T-5-3Q.1 to T-5-3Q.3, and T-5-4Q.1 to T-5-4Q.2. 25 Exhibits T-6-V-1Q-00001 to T-6-V-1Q-00461, T-6-V-1Q-00462 to T-6-V-1Q-00994, T-6-V- 2Q-00001 to T-6-V-2Q-00530, T-6-V-2Q-00534 to T-6-V-2Q-01148, T-6-V-3Q-000001 toT- 6-V-3Q-000603, and T-6-V-4Q-1 to T-6-V-4Q-148 (With excluded Exhibits as indicated in Petitioner's Formal Offer of Evidence) 26 Exhibit T, pp. 9-13. J

AMENDED DECISION CTA Case No. 7889 not claimed twice during the taxable year.) 5. Importation of goods supported by original BOC OR Annex 2-1Q-3, 8,696.00 and/or LBP OR only Annex 2-2Q-5, 1'10,687,348.76 Annex 2-3Q-5 Subtotal Other Findings Annex 2-1Q-4, p 290 778.85 1. Domestic purchase of goods/services supported by Annex 2-2Q-6, Annex 2-3Q-6 230,520.81 VAT invoice/OR with countersigned changes by supplier, as represented by the Petitioner. (The Annex 2-1Q-5, p S21,299.66 ICPA ascertained from the additional supporting Annex 2-2Q-7, documentation (i.e. VAT invoice for services/OR for Annex 2-3Q-7 goods) that input VAT was passed on to the Petitioner. 2. Domestic purchase of goods/services supported by a VAT invoice/OR with countersigned changes in the Company's name and or TIN by the supplier as represented by the Petitioner. Subtotal Other Findings Annex 2-1Q-6, 27,600.66 1. Domestic purchase of goods supported by a VAT Annex 2-4Q-4 p 23,179.09 50,738.83 Invoice issued in the Company's name but without Annex 2-1Q-7, or with wrong Company's TIN and/or address Annex 2-4Q-5 7,709.95 2. Domestic purchase of services supported by a VAT Annex 2-1Q-8, 11,127.69 OR issued in the Company's name but without or Annex 2-2Q-10, with wronq Company's TIN Annex 2-4Q-6 4,909.03 3. Domestic purchase of goods/service supported by a Annex 2-1Q-9, 7,869.43 VAT Invoice/OR wherein VAT was not shown Annex 2-2Q-11, 8,601.43 separately Annex 2-4Q-7 111,860.28 Annex 2-1Q-10, 4. Domestic purchase of goods supported by Annex 2-20-12 7,124.76 documents other than a VAT invoice Annex 2-1Q-11, Annex 2-2Q-13, 5. Domestic purchase of goods supported by a VAT Annex 2-3Q-10 invoice but not an oriqinal copy Annex 2-4Q-12 6. Domestic purchase of goods supported by a VAT Annex 2-1Q-12, invoice not issued in the name of the Company Annex 2-2Q-17 Annex 2-1Q-13, 7. Domestic purchase of services supported by a VAT Annex 2-2Q-18 OR not issued in the name of Company Annex 2-1Q-14, Annex 2-2Q-19, 8. Domestic purchase of goods supported by TIN-V Annex 2-3Q-12, invoice Annex 2-40-9 9. Domestic purchase of goods supported by a VAT invoice not dated within the VAT-taxable year 10. Domestic purchase of goods supported by a VAT invoice with changes in the name and TIN of the Company without countersiqn J

AMENDED DECISION CTA Case No. 7889 11. Domestic purchase of goods supported by a VAT Annex 2-4Q-10 1,458.70 OR with changes in the name and TIN of the 790.09 Com_pany_ without countersigned Annex 2-1Q-15 110.14 12. Domestic purchase of goods supported by TIN # Annex 2-4Q-12 157,801.40 Annex 2-1Q-16, 1L896.86 only; TAN V; TAN-VAT; TIN NV/NON VAT OR; Annex 2-2Q-20, stamped/handwritten TIN-V/VAT Tape Receipt Annex 2-3Q-13, 32,103.20 Annex 2-4Q-11 37,315.23 13. Domestic purchase of services supported by TIN # Annex 2-1Q-17, Annex 2-30-14 415.74 only; TAN V; TAN-vAT'TIN NV/NON VAT OR; 36L523.44 stamped/handwritten TIN-vjVAT Tape Receipt Annex 2-3Q-15 Annex 2-1Q-18, 840.00 14. Domestic purchase of services supported by Annex 2-2Q-21, 27,991.92 documents other than a VAT OR Annex 2-3Q-16 6L492.77 15. Domestic purchase of services supported by a VAT Annex 2-30-17 OR but not an original copy Annex 2-1Q-19, 56,197.42 Annex 2-2Q-23, 3,295.93 16. Domestic purchase of services supported by a VAT Annex 2-3Q-18 321.15 OR not issued in the name of the Company 237.88 Annex 2-4Q-8 1L620.00 17. Domestic purchase of services supported by TIN # Annex 2-3Q-19 12,387.02 only; TAN-V; TAN-VAT; TIN-NV/NON VAT OR; stamped/handwritten TIN-V/VAT OR Annex 2-2Q-8, J 18. Domestic purchase of services supported by a Annex 2-30-8 Zero-rated VAT OR Annex 2-2Q-9, 19. Domestic purchase of services supported by a VAT Annex 2-3Q-9 OR not dated within the VAT-taxable_year Annex 2-2Q-14, 20. Domestic purchase of goods supported by a Zero- Annex 2-3Q-11 rated VAT invoice Annex 2-2Q-15 21. Importation of goods supported by documents other than an original copy of the IEIRD Annex 2-2Q-16 22. Domestic purchase of goods supported by a VAT Annex 2-20-22 invoice issued in the Company's name but without the Company's TIN and/or address or with TIN Annex 2-2Q-24 and/or address changed/added on the support but without countersign 23. Domestic purchase of services supported by a VAT OR issued in the Company's name but without the Company's TIN and/or address or TIN and/or address changed/added on the support but without countersign 24. Domestic purchase of goods supported by TIN # only; TAN-V; TAN-VAT; TIN-NV/NON VAT OR; stamped/handwritten TIN-V/VAT invoice 25. Domestic purchase of goods supported by tape receipt without the Corl}Qany's name and/or TIN 26. Domestic purchase of goods supported by a VAT invoice but without invoice date 27. Domestic purchase of services supported by a TIN- VOR 28. Domestic purchase of services supported by a VAT OR but is not SIR-registered

AMENDED DECISION Annex 2-1Q-20, 3,819.12 CTA Case No. 7889 Annex 2-2Q-25, Page 16 of 19 Annex 2-3Q-20, 29 654.66 Annex 2-4_Q-114 29. Over-claimed input tax on domestic/importation Annex 2-1Q-21, 21,934.12 purchases of goods/services due to erroneous Annex 2-2Q-26, (0.29) computation (i.e.,arithmetical error) Annex 2-3Q-21, Annex 2-40-15 693,927.65 30. Effect of forex on foreign currency denominated Annex 2-1Q-22, purchases of qoods and services - overstatement Annex 2-2Q-27, Annex 2-3Q-22, 31. Supporting documents not available Annex 2-4Q-16 32. Rounding difference Subtotal p Total Input VAT accounted for by the ICPA I P11,902,576.07 The Court finds the !CPA report in order. The input VAT in the total amount of P693,927.65 under the second "Other Findings" must be disallowed from petitioner's claim as it was not properly substantiated by VAT invoices or official receipts as prescribed under Sections 110 (A) and (B), 237, and 238 of the NIRC of 1997, as amended, in relation to Sections 4.110-1, 4.110-8, and 4.113-1 of RR No. 16-05, as amended. In addition, the following input VAT in the total amount of P116,232.98 shall likewise be disallowed for the following reasons: Reference to Exhibit ICPA R~ort Vendor Name Date Amount Importation ofGoods supported by IEIRD but without machine validation For payment ofduties and taxes (including VAT) or corresponding SOC official receipt or any other proofof VATpayment in violation ofSection 4.110-8 ofRR No. 16-05, as amended ABB Automation, 16-Feb-17 p 13,503.75 T-6-V-10-00979 Annex 2-lQ-2 Inc. T-6-V-3Q- 000506 Annex 2-3Q-2 Siemens LTDA 12-Jul-07 100,974.50 Subtotal , 114_478.25 Supported by documents which were denied admission by the Court for lack of authentication27 Reference to Exhibit ICPA Report Vendor Name Amount 27 Resolution dated September 9, 2010, Docket, p. 498. /

AMENDED DECISION CTA Case No. 7889 T-6-V-2Q-00206 Annex 2-2Q-3 Codillas Petron Super Service Station p 230.33 T-6-V-2Q-00207 Annex 2-2Q-3 T-6-V-2Q-00208 Annex 2-2Q-3 Codillas Petron Super Service Station 319.01 T-6-V-20-00210 Annex 2-2Q_-3 T-6-V-2Q-00213 Annex 2-2Q-3 Codillas Petron Super Service Station 146.67 T-6-V-2Q-00214 Annex 2-2Q-3 T-6-V-2Q-00598 Annex 2-2Q-1 Codillas Petron Super Service Station 408.26 T-6-V-20-00599 Annex 2-20-1 T-6-V-1Q-000067 Annex 2-3Q-3 Codillas Petron Super Service Station 14.04 Subtotal Codillas Petron Super Service Station 150.56 Total Mercury Druq Corporation 202.86 Mercury Dri.J9 Corporation 52.43 Codillas Petron Super Service Station 230.57 p 1JS4.73 P116,232.98 Thus, out of the Pl1,902,576.07 input VAT claim for the four quarters of CY 2007, only the amount of Pl1,092,415.44 represents petitioner's valid input VAT, as computed below: Total I11Q_ut VAT claim p 11~02,576.07 Less: Disallowances p 693,927.65 Per ICPA Report Per this Court's further verification 116 232.98 810 160.63 Valid Input VAT P11,092,415.44 Petitioner had no output tax liability against which the input VAT of Pll,092,415.44 may be applied or credited, since it had no other sales/receipts but zero-rated sales/receipts for the four quarters of CY 2007. Moreover, the input VAT of Pl1,092,415.44 is attributable to the entire declared zero-rated sales/receipts of P1,983,995,474.94. However, only the input VAT of Pll,079,342.33 is attributable to the properly substantiated zero-rated sales/receipts of P1,981,657,214.27, computed as follows: Valid Input VAT p 11,092,415.44 Less: Output tax due Excess Inl'_ut VAT - Divided by Total Declared Zero-Rated Sales Multiply by Valid Zero-Rated Sales p 11,092,415.44 Excess Input VAT attributable to Valid Zero-Rated Sales[Receipts 71,983,995,474.94 x1,981,657 214.27 p 11,079,342.33 Although the claimed input VAT was carried-over by petitioner in its succeeding Quarterly VAT Returns28, the W 28 Exhibits I, J, K, and L (1'' to 4th Quarters of CY 2008), Docket, pp. 382-386; and Exhibit R / (1" Quarter of CY 2009), Docket, pp. 421-422.

AMENDED DECISION CTA Case No. 7889 same remained unutilized until it was deducted as "VAT Refund/TCC Claimed"29 in its Quarterly VAT Return for the first quarter of CY 2009. Therefore, the subject claim no longer formed part of the excess input VAT of P2,659,463.39 30 as of the end of the first quarter of CY 2009 that was to be carried over/applied to the succeeding taxable quarters rendering the possibility of the present claim being applied to future output VAT liability nil. In fine, petitioner was able to sufficiently establish its entitlement to the refund/tax credit in the amount of P11,079,342.33, representing its unutilized excess input VAT for the four taxable quarters of CY 2007 which is attributable to its zero-rated sales/receipts for the same period. WHEREFORE, the instant Petition for Review is hereby PARTIALLY GRANTED. Accordingly, respondent is ORDERED TO REFUND OR TO ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner Visayas Geothermal Power Company in the amount of P11,079,342.33, representing petitioner's unutilized input VAT for the four quarters of CY 2007 attributable to its zero-rated sales for the same taxable period. SO ORDERED. .. R. FASON-VICTORINO Associate Justice I CONCUR: ER~P.UY Associate Justice 29 Exhibit R, Line 23D, Docket, p. 421. 30 Exhibit R, Line 29, Docket, p. 421.

AMENDED DECISION CTA Case No. 7889 ATTESTATION I attest that the conclusions in the above Amended Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. ER~.UY Associate Justice Acting Chairperson CERTIFICATION Pursuant to Section 13 of Article VIII of the Constitution, and the Acting Division Chairperson's Attestation, it is hereby certified that the conclusions in the above Amended Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. ROMAN G. DEL ROSARIO Presiding Justice