Kepco Philippines Corporation v. Revenue

MENDOZA, J.:

This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure assailing the May 17, 2007 Decision1 of the Court of Tax Appeals En Banc (CTA), in C.T.A. E.B. No. 186 entitled "KEPCO Philippines Corporation v. Commissioner of Internal Revenue ," which denied petitioner's claim for refund or issuance of tax credit certificate for the unapplied input value-added taxes attributable to zero-rated sales of services for taxable year 1999, as well as its Resolution, dated September 28, 2007, which denied the motion for reconsideration of the said decision. THE FACTS Petitioner Kepco Philippines Corporation (Kepco) is a domestic corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines.

It is a value-added tax (VAT) registered taxpayer engaged in the production and sale of electricity as an independent power producer. It sells its electricity to the National Power Corporation (NPC). Kepco filed with respondent Commissioner of Internal Revenue (CIR) an application for effective zero-rating of its sales of electricity to the NPC.

Kepco alleged that for the taxable year 1999, it incurred input VAT in the amount of ₱10,527,202.54 on its domestic purchases of goods and services that were used in its production and sale of electricity to NPC for the same period. In its 1999 quarterly VAT returns filed with the Bureau of Internal Revenue (BIR) on March 30, 2000, Kepco declared the said input VAT as follows: INPUT TAX Exhibit 1999 Carried-over from This quarter Carried over previous quarter to next quarter A 1st qtr 100,564,209.14 4,804,974.70 105,369,183.84 B 2nd qtr 105,369,183.84 1,461,960.38 106,831,144.22 C 3rd qtr 106,831,144.22 2,563,288.00 109,394,432.22 D 4th qtr 109,394,432.22 1,696,979.46 111,091,411.68 TOTAL