Supreme Court Shocker: Renewable Energy Developers No Longer Need DOE Endorsement for VAT Refunds!

In a groundbreaking decision, the Supreme Court has declared that renewable energy developers do not require an endorsement from the Department of Energy to claim VAT refunds. This ruling came after the court’s Third Division reviewed a case brought by Maibarara Geothermal, Inc., which sought a refund exceeding PHP80 million for the year 2013. The court found that the DOE’s additional certification requirement for VAT zero-rating under the Renewable Energy Act was not supported by the law itself. The decision highlighted that the National Internal Revenue Code already allows zero-rated sales of renewable power or fuel, entitling taxpayers to refunds or credits. Although the Renewable Energy Act mandates registration with the DOE, the court ruled that the Implementing Rules and Regulations overstepped by requiring a Certificate of Endorsement. Senate records further supported the court’s view that VAT zero-rating should not require additional certifications. In a significant move, the DOE in 2021 also removed the endorsement requirement for most incentives under the Renewable Energy Act. However, despite this favorable ruling on the certification issue, the Supreme Court denied Maibarara Geothermal, Inc.’s specific refund claim due to insufficient proof of zero-rated sales in 2013.