Case Summary (G.R. No. 198729-30)
Petitioner and Respondent
Petitioner: CBK Power Company Limited
Respondent: Commissioner of Internal Revenue (CIR)
Key Dates
• Zero-rate application filed: December 29, 2004
• Effectively zero-rated sales period: January 1–October 31, 2005
• Administrative claims filed: June 30, September 15, and October 28, 2005
• Judicial claim filed: April 18, 2007
• CTA Special Division decision: March 3, 2010
• CTA En Banc decision: June 27, 2011
• Supreme Court decision: January 15, 2014
Applicable Law
• 1987 Philippine Constitution (decision rendered 2014)
• National Internal Revenue Code of 1997, as amended (Sections 108(B)(3), 112(A), 112(D))
• 1997 Rules of Civil Procedure, Rule 45
• Jurisprudence: Mirant Pagbilao Corp., Aichi Forging Co., San Roque consolidated cases
Facts
Petitioner’s electricity sales to NPC were declared effectively zero-rated by the BIR. Petitioner then sought issuance of tax credit certificates for unutilized input VAT on local purchases attributable to those sales for the first three quarters of 2005.
Zero-Rating Application and Approval
Pursuant to Section 108(B)(3) of the 1997 NIRC, petitioner applied on December 29, 2004 for zero-rating of its NPC sales. The BIR approved the application, confirming zero-percent VAT from January through October 2005.
Administrative Claims
Under Section 112(A), petitioner filed administrative claims for unutilized input VAT within two years after each quarter’s end:
• 1st quarter claim: filed June 30, 2005 (due by March 31, 2007)
• 2nd quarter claim: filed September 15, 2005 (due by June 30, 2007)
• 3rd quarter claim: filed October 28, 2005 (due by September 30, 2007)
CTA Special Second Division Decision
Applying Mirant, the Special Division held that petitioner’s administrative claims were timely but its judicial claim for the first quarter (filed April 18, 2007) was out of the 30-day period following the 120-day inaction window. It granted tax credit certificates for the second and third quarters in reduced amount.
CTA En Banc Decision
Relying on Aichi, the En Banc ruled that all judicial claims—including for the second and third quarters—were belated. It reversed the Special Division, dismissed the petition, and denied reconsideration.
Issue on Prescriptive Period
Whether petitioner complied with the mandatory prescriptive periods under Section 112 for filing administrative claims (two-year rule) and judicial claims (120-day BIR action plus 30-day appeal).
Court’s Analysis on Administrative Claim
Section 112(A) prescribes a two-year period from each quarter’s close to file for refund or tax credit of input VAT on zero-rated sales. Petitioner’s administrative claims were filed well within these two-year periods. The Court declined to apply Mirant prospectively to shorten or alter this reckoning.
Court’s Analysis on Judicial Claim
Section 112(D) requires the CIR to act within 120 days of complete filing; failure to act is deemed denial, triggering a 30-day appeal period to the Court of Tax Appea
...continue readingCase Syllabus (G.R. No. 198729-30)
Procedural History
- CBK Power Company Limited filed a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure.
- The petition assailed:
- CTA Special Second Division Decision dated 3 March 2010 (C.T.A. Case No. 7621) and its Resolution of 6 July 2010, which partly granted tax credit certificates for Q2–Q3 2005 and denied the Q1 2005 claim.
- CTA En Banc Decision dated 27 June 2011 and Resolution dated 16 September 2011 (C.T.A. EB Nos. 658 & 659), which reversed the Special Division and dismissed all claims.
- CBK then elevated the matter to the Supreme Court via Rule 45 petition, challenging the En Banc’s dismissal.
Facts
- Petitioner operates and maintains Kalayaan II pumped-storage and Caliraya and Kalayaan I hydroelectric power plants in Laguna.
- On 29 December 2004, it applied for zero-rating of its sales of electricity to the National Power Corporation (NPC) under Section 108(B)(3), NIRC of 1997, as amended. The BIR approved the application.
- Petitioner’s sales to NPC from 1 January to 31 October 2005 were declared effectively zero-rated.
- Petitioner filed administrative claims for issuance of tax credit certificates for unutilized input VAT attributable to those zero-rated sales:
- 1st quarter 2005 claim filed on 30 June 2005
- 2nd quarter 2005 claim filed on 15 September 2005
- 3rd quarter 2005 claim filed on 28 October 2005
- Alleging BIR inaction beyond 120 days, petitioner filed a Petition for Review with the CTA on 18 April 2007.
Issue
- What is the applicable prescriptive period for the administrative and judicial claims for refund or tax credit of unutilized input VAT on effectively zero-rated sales for the first to third quarters of 2005?
Relevant Statutory Provisions and Jurisprudence
- NIRC 1997, Sec. 112(A): A VAT-registered person w