Commissioner of Internal Revenue versus

CE Luzon Geothermal Power Company, Inc.

G.R. No. 190198, September 17, 2014
First Division, Perlas Bernabe, J.

Facts: CE Luzon is a registered corporation engaged in business of power

generation. CE Luzon treated the delivery and supply of electric energy to the
Philippine National Oil Company-Energy Development Corporation (PNOC-
EDC) as zero rated VAT, pursuant to RA 9136. CE Luzon filed its VAT returns for
the third quarter and fourth quarter in 2001and all quarters of 2002 where it
declared an unutilized input VAT. CE Luzon thus filed for an administrative claim
for refund of unulitlized input VAT before the Bureau of Internal Revenue (BIR.)
Alleging inaction against CIR, it filed a judicial claim for refund before the Court
of Tax Appeals (CTA.) The CTA ordered the CIR to issue a tax credit certificate
to CE Luzon, to which was affirmed by the CTA En banc. The CIR now files a
petition for review on certiorari to the Supreme Court assailing the CTA En banc
decision. The CIR contends that CE Luzon filed its judicial claims prematurely in
violation of Section 112.

Issue(s): Whether the CTA En Banc correctly ruled that CE Luzon did not
prematurely file its judicial claims for refund.

Decision: Partly, in CTA Case 6792 pertaining to CE Luzon’s administrative claim

for the third quarter of 2001, and its corresponding judicial claim, the Court
finds that the CTA should have dismissed the case on the ground of lack of
jurisdiction for being prematurely filed. In CTA Case 6837 which was the claim
filed during the period BIR Ruling No. DA-489-03 took effect, CE Luzon’s claim
must be given way. CTA en banc affirmed with modification. The law
applicable to claims of VAT refund for unutilized express input VAT in the case
is RA 8424, provides it must be applied for within 2 years after the close of the
taxable quarter when the sales were made, and that the CIR shall grant the
tax credit certificate within 120 days from the date of submission of complete
documents in support of the application. In case of inaction after the 120 days
or denial of the claim, the tax payer is given 30 days to appeal the decision
with the CTA. There were two conflicting decisions of the Court on whether the
claimant must wait for the lapse of 120-day period befire seeking judicial relief
with the CTA by way of petition for review, this was reconciled by Taganito
Mining Corporation v. CIR: during the period December 10, 2003 (when BIR
Ruling No. DA-489-03 was issued) to October 6, 2010 (when the Aichi case was
promulgated), taxpayers-claimants need not observe the 120-day period
before it could file a judicial claim for refund of excess input VAT before the
CTA. Before and after the aforementioned period (i.e., December 10, 2003 to
October 6, 2010), the observance of the 120-day period is mandatory and
jurisdictional to the filing of such claim.

Page 6 of 30