Case Summary (G.R. No. 193301)
Petitioners
• Mindanao II Geothermal Partnership (G.R. No. 193301) – sought refund or tax credit for unutilized input VAT for four quarters of 2003.
• Mindanao I Geothermal Partnership (G.R. No. 194637) – sought similar relief for the same periods.
Respondent
• Commissioner of Internal Revenue – denied or failed to act on administrative claims, prompting CTA appeals.
Key Dates
• Built-Operate-Transfer contracts entered: Mindanao I (December 1994), Mindanao II (March 1997).
• VAT returns filed for 2003 quarters and amended returns in 2004.
• Administrative claims filed April 2005; by operation of law CIR’s inaction deemed denial after 120 days.
• Judicial claims filed April–September 2005.
• Superseding jurisprudence: Atlas (June 2007), Mirant (September 2008), Aichi (October 2010), San Roque (February 2013).
• Supreme Court decision: March 11, 2013.
Applicable Law
• 1987 Constitution – fiscal and taxation powers, nonretroactivity.
• National Internal Revenue Code of 1997 (1997 Tax Code), as amended by EPIRA (Republic Act No. 9136).
• Section 112 – input VAT refund or credit:
– (A) Two-year prescriptive period from close of taxable quarter.
– (C) CIR has 120 days to act; 30-day CTA appeal period from denial or lapse of 120 days.
• BIR Ruling No. DA-489-03 (Dec. 10, 2003) – allowed premature filing of CTA petition before expiration of 120-day period.
Procedural History
- Mindanao I and II filed zero-rating claims with CIR (April 2005); no CIR action within 120 days, deemed denied.
- Mindanao II appealed to CTA First Division in three consolidated cases (CTA Nos. 7227, 7287, 7317). Mindanao I appealed to CTA Second Division in CTA Nos. 7228, 7286, 7318.
- CTA Divisions granted partial relief on certain quarters, denied others for prescription, exhaustion, or substantiation failures.
- CTA En Banc affirmed First Division against Mindanao II (March and July 2010) and initially affirmed Second Division in favor of Mindanao I (May 2010), later reversed Mindanao I relief in amended En Banc decision (November 2010).
- Petitions for review consolidated by Supreme Court (December 2011).
Issues Presented
- Whether administrative claims for first quarter 2003 were filed within the two-year prescriptive period of Section 112(A).
- Whether judicial claims for second, third, and fourth quarters complied with Section 112(C)’s 120-day wait and 30-day appeal periods.
- Whether BIR Ruling No. DA-489-03 excuses premature judicial filing before 120 days.
- Whether sale of a fully depreciated Nissan Patrol by Mindanao II is incidental to its VAT-zero-rated business and subject to zero-rating.
- Whether Mindanao II complied with invoicing and substantiation requirements for certain disallowed input taxes.
Determination of Administrative Claims
• Section 112(A) unambiguously requires filing within two years after the close of the taxable quarter.
• First quarter 2003 claims: last day to file was March 31, 2005. Mindanao II filed April 13, 2005; Mindanao I filed April 4, 2005 – both beyond deadline → prescribed.
• Second quarter: deadline June 30, 2005; both filed April 2005 → timely.
• Third quarter: deadline September 30, 2005; both filed April 2005 → timely.
• Fourth quarter: deadline January 2, 2006 (December 31 2005 a Saturday); both filed April 2005 → timely.
Determination of Judicial Claims
• Section 112(C) mandates CIR decision within 120 days of complete submission; if no action, deemed denial; thereafter taxpayer has 30 days to appeal to CTA.
• Mindanao II’s second-quarter judicial claim (filed July 7, 2005) preceded the 120-day lapse (August 11 2005) → premature.
• Mindanao I’s second-quarter judicial claim (filed July 7, 2005) likewise premature.
• Third- and fourth-quarter judicial claims for both petitioners (filed September 9, 2005) fall within the 30-day period after the 120-day lapse (Mindanao II) or beyond (Mindanao I).
Effect of BIR Ruling No. DA-489-03
• Recognized in San Roque (Feb. 2013) as a general interpretative rule shielding taxpayers who prematurely filed CTA petitions before expiration of the 120-day period, from December 10, 2003 until its reversal in Aichi (Oct. 6, 2010).
• Mindanao I and II may thus benefit despite premature second-quarter CTA petitions.
Application to Mindanao II (G.R. No. 193301)
• 1st Quarter 2003: administrative claim untimely → denied.
• 2nd Quarter 2003: administrative timely; judicial premature but BIR Ruling exception → granted.
• 3rd & 4th Quarters 2003: both administrative and judicial timely → granted.
Application to Mindanao I (G.R. No. 194637)
• 1st Quarter 2003: administrative u
Case Syllabus (G.R. No. 193301)
Parties and Procedural Posture
- Two consolidated petitions: G.R. No. 193301 (Mindanao II Geothermal Partnership) and G.R. No. 194637 (Mindanao I Geothermal Partnership) vs. Commissioner of Internal Revenue (CIR).
- Both partnerships are SEC-registered, VAT taxpayers and DOE-accredited power producers.
- Claims arise from alleged excess or unutilized input VAT credits for each quarter of 2003 after EPIRA zero-rating.
- CTA First Division and CTA En Banc decisions issued between 2008 and 2010 in CTA Cases Nos. 7227, 7287, 7317 (Mindanao II) and 7228, 7286, 7318 (Mindanao I).
- Supreme Court consolidated the two petitions to resolve conflicting rulings on prescriptive periods and administrative exhaustion.
Factual Background
- Mindanao II (48.25 MW) and Mindanao I (47 MW) entered into BOT contracts with PNOC-EDC to build, operate and transfer geothermal plants.
- Steam supplied free by PNOC-EDC; electricity generated delivered to NPC on behalf of PNOC-EDC.
- EPIRA (RA 9136, 2001) zero-rated VAT on sales of power by generation companies, amending the 1997 Tax Code.
- Both partnerships filed quarterly VAT returns for 2003 applying zero-rating, accumulating unutilized input VAT credits.
- Administrative claims for refund/tax credit filed with BIR between April 4 and April 13, 2005 for all four quarters.
- No action by CIR within 120 days; judicial claims filed with CTA on varying dates in 2005.
CTA First Division Rulings
- Mindanao II (22 Sept 2008 Decision; Amended 26 June 2009):
• Held Mindanao II met zero-rating requirements (generation company, power sales).
• Applied Atlas doctrine: prescriptive period reckoned from filing date of VAT return.
• Granted refund of P7.7 million minus P522,059.91 disallowed input VAT and P18,181.82 adjustment on Nissan Patrol sale.
• Amended decision disallowed Q1 & Q2 claims as prescribed under Sec. 229; maintai