Case Summary (G.R. No. 250479)
Procedural History
MGI filed quarterly VAT returns for 2011 and administrative refund claims for unutilized input VAT for each quarter. The CIR’s inaction prompted four petitions to the CTA (CTA Cases 8699, 8732, 8771, 8811). The CTA First Division denied relief on August 18, 2017. The CTA En Banc affirmed on March 14, 2019 and denied reconsideration on November 15, 2019. MGI then elevated the matter to the Supreme Court.
Facts of Registration and Claims
MGI holds VAT Certificate No. OCN3RC0000483772 and is a Renewable Energy Developer under Department of Energy GRESC 2011‐01‐025 and BOI No. 2011‐06. It filed VAT returns for Q1–Q4 2011 and on respective dates in 2013 submitted administrative claims for refund of unutilized input VAT amounting to ₱10,095,979.46; ₱3,134,942.99; ₱1,534,692.20; and ₱1,023,598.99. The CIR failed to act.
Issue Presented
Whether MGI is entitled to refund or credit of its unutilized input VAT for the first through fourth quarters of taxable year 2011.
VAT as Indirect Tax and Liability
Under Section 105, NIRC, VAT is an indirect tax shifted to the buyer. A VAT‐registered person pays input tax on purchases and output tax on sales (Sec. 110A(3)). Excess input tax may be carried over or, if attributable to zero‐rated sales, refunded or credited (Sec. 110B).
Zero-Rated Sales and Refund Mechanism
Exports are zero‐rated under Sec. 106(2) in accordance with the destination principle. Zero‐rated sales generate no output tax, so input taxes attributable to such sales qualify for refund or tax credit under Sec. 112(A), subject to BSP accounting rules and two‐year filing period.
Requirements for Input VAT Refund (Section 112(A))
San Roque Power v. CIR establishes nine criteria: (1) VAT registration; (2) engagement in zero‐rated sales; (3) input taxes due or paid; (4) non–transitional input taxes; (5) input taxes unapplied against output taxes; (6) attribution to zero‐rated sales; (7) BSP‐accounted foreign currency proceeds; (8) proportional allocation if mixed transactions; and (9) claim filed within two years from the close of the quarter when the zero‐rated sales were made.
Petitioner’s Prescriptive-Period Argument
MGI contended, citing Mirant Pagbilao, that the two‐year period should run from the date of purchases incurring input VAT rather than from the date of its zero‐rated sales.
Attributability and Plain Reading of Section 112(A)
The Court rejects MGI’s argument. Luzon Hydro and Seagate Technology confirm the refund entitlement is strictly limited to input VAT directly attributable to the taxpayer’s zero‐rated sales. The phrase “when the relevant sales were made” in Mirant refers to zero‐rated sales, not to purchases by the taxpayer or its suppliers.
Application to MGI’s 2011 Quarters
MGI admitted it had no sales, domestic or export, during the first to fourth quarters of 2011 and only commenced sales in 2014. Consequently, there were no zero‐r
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Background and Corporate Profile
- Maibarara Geothermal, Inc. (MGI) is a Philippine corporation engaged in geothermal energy exploration, extraction, power generation, and distribution.
- MGI holds BIR VAT Registration No. OCN3RC0000483772 and TIN 007-843-328-000.
- It is also a DOE‐ and BOI‐registered Renewable Energy Developer for a 20 MW Maibarara Geothermal Power Generation Project under Certificates GRESC 2011-01-025 and 2011-06.
- MGI filed quarterly VAT returns for all four quarters of taxable year 2011 within the prescribed deadlines.
Administrative Claims for Refund
- March 22, 2013: Filed first administrative claim for unutilized input VAT of ₱10,095,979.46 (Q1 2011).
- June 24, 2013: Filed second administrative claim for ₱3,134,942.99 (Q2 2011).
- September 26, 2013: Filed third administrative claim for ₱1,534,692.20 (Q3 2011).
- December 13, 2013: Filed fourth administrative claim for ₱1,023,598.99 (Q4 2011).
- The Commissioner of Internal Revenue did not act on any of these claims, prompting judicial recourse.
Judicial Proceedings
- August 16, 2013 to April 30, 2014: MGI filed four consolidated Petitions for Review before the CTA (Cases 8699, 8732, 8771, 8811).
- August 18, 2017: CTA First Division denied the consolidated petitions for lack of merit.
- January 3, 2018: CTA First Division denied MGI’s motion for reconsideration.
- March 14, 2019: CTA En Banc affirmed the First Division’s decision, denying the petition.
- November 15, 2019: CTA En Banc denied MGI’s motion for reconsideration.
- July 18, 2022: Supreme Court resolved the Petition for Review on Certiorari in G.R. No. 250479.
Issue
- Whether Maibarara Geothermal, Inc. is entitled to refund or tax cred