CE LUZON GEOTHERMAL POWER COMPANY, INC. vs.

COMMISIONER OF INTERNAL REVENUE

G.R. NO. 197526, JULY 26, 2017

FACTS : Filed before the Court two (2) consolidated petitions for review concerning the prescriptive
period in filing judicial claims for unutilized creditable input tax or input Value Added Tax (VAT).
Petitioner CE Luzon, a domestic corporation engaged in energy industry which owns CE Geothermal
Power Plant is a VAT-registered tax payer. Under Section 6 of R.A. No. 9136, the sale of generated
power by generation companies is a zero-rated transaction.
In the course of its operations, CE Luzon incurred unutilized creditable input tax amounting to
P26,574,389.99 for taxable year 2003. It filed before the BIR an administrative claim for its refund.
However, without waiting for the Commissioner of Internal Revenue to act on its claim, or for the
expiration of 120 days, CE Luzon instituted before the Court of Tax Appeals a judicial claim for refund of
its 1st quarter unutilized creditable input tax on March 30, 2005 in the amount of 4,785,234.70.
Meanwhile, on June 24, 2005, CE Luzon received the CIR’s decision denying its claim for refund
of creditable input tax for the 2nd quarter year 2003. CTA second division disallowed refund of
3,084,874.35 but granted petitioner’s refund of 22,647,638.45 on July 20, 2010. Upon Luzon and CIR’s
petitions for review, the CTA En Banc ordered CIR to issue a tax credit certificate or to refund CE Luzon
the amount of 23,489,514.64 representing its substantiated creditable input tax for taxable year 2003.
However, on November 22, 2010 the CTA En Banc rendered an Amended Decision setting aside its
decision dated July 20, 2010 citing CE Luzon’s failure to observe the 120-day period under Section 112(C)
of the NIR Code. Hence, CE Luzon was barred from claiming a refund of its input VAT for taxable year
2003. CTA En Banc held that CE Luzon’s judicial claims were prematurely filed and that it should have
waited either for the CIR to render a decision or for the 120-day period to expire before instituting its
judicial claim for refund. CE Luzon moved for partial reconsideration thus on June 27, 2011, CTA En
Banc rendered a second Amended Decision, partially granting its claim for unutilized creditable tax for
the 2nd quarter of taxable year 2003 in the amount of 3,764,386.47. CTA En Banc found that CE Luzon’s
judicial claim particularly for said refund was timely filed.
CE Luzon and CIR on separate dates, filed a petition for review on certiorari before the SC
questioning the CTA’s decision. CE Luzon asserts that since the prescriptive periods in Sec. 112 (C) of the
NIRC are merely permissive, it should yield to Sec. 229. On the other hand, CIR argues that Sec. 112(C)
and Sec. 229 need not be harmonized because they are clear and explicit.

ISSUES: (1) Whether CE Luzon’s judicial claims for refund of input VAT for taxable year 2003 were filed
within the prescriptive period;
(2) Whether CE Luzon is entitled to the refund;
(3) Whether it has substantiated this claim.

RULING: (1) No. However, despite its non compliance with Sec. 112 (C) of the NIRC, it is shielded by BIR
Ruling DA-489-03 (effective Dec. 10, 2003 – Oct. 6, 2010) which express that a taxpayer-claimant need
not wait for the lapse of the 120-day period before it could seek judicial relief with the CTA by way of
petition for review.
(2) Yes, but since it is not a question of law, SC remands the case to CTA for its determination.
(3) Again, it is not a question of law but a question of fact so the SC remands it to CTA for
determination.

Digested and submitted by: Dex