FIRST DIVISION

G.R. No. 200841-42, August 26, 2015

CE LUZON GEOTHERMAL POWER COMPANY, INC., Petitioner, v. COMMISSIONER

OF INTERNAL REVENUE, Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certlorari1 are the Decision2 dated October 4, 2011
and the Resolution3 dated February 22, 2012 of the Court of Tax Appeals (CTA) En
Banc in CTA EB Case Nos. 591 and 628, which set aside the Amended Decision4 dated
January 19, 2010 of the CTA Former Second Division (CTA Division) in C.T.A. Case No.
7558 and dismissed petitioner CE Luzon Geothermal Power Company, Inc.'s (CE Luzon)
claim for refund of unutilized input value-added tax (VAT) for being prematurely filed.

The Facts

CE Luzon is a domestic corporation duly organized and existing under Philippine laws
engaged in the business of power generation. It is a VAT-registered entity with Tax
Identification No. 003-924-356-000.5 As such, it filed its quarterly VAT returns for the
year 2005 on April 25, 2005, July 25, 2005, October 25, 2005, and January 25, 2006,
which reflected an overpayment of P20,546,004.87. CE Luzon maintained that its
overpayment was due to its domestic purchases of non-capital goods and services,
services rendered by non-residents, and importation of non-capital goods.6 chanroblesvirtuallawlibrary

On November 30, 2006, CE Luzon filed an administrative claim for refund of its
unutilized input VAT in the amount of P20,546,004.87 before the Bureau of Internal
Revenue (BIR). Thereafter, or on January 3, 2007, it filed a judicial claim for refund,
by way of a petition for review, before the CTA, docketed as CTA Case No. 7558.7

For its part, respondent Commissioner of Internal Revenue (CIR) claimed, inter alia,
that the amount being claimed by CE Luzon as unutilized input VAT was not properly
documented and that the filing of its petition for review was premature and, hence,
should be denied.8

The CTA Division Ruling

In a Decision9 dated June 24, 2009 (June 24, 2009 Decision), the CTA Division partially
granted CE Luzon's claim for tax refund, and thereby ordered the CIR to issue a tax
credit certificate in the reduced amount of P14,879,312.65, representing its unutilized
input VAT which was attributable to its VAT zero-rated sales for the year 2005.10 It
found that while CE Luzon timely filed its administrative and judicial claims within the
two (2)-year prescriptive period, it, however, failed to duly substantiate the remainder
of its claim for unutilized input VAT, resulting in the partial denial thereof.11

Dissatisfied, both parties moved for partial reconsideration.12 The CIR maintained

that CE Luzon failed to show that its purchases were made in the regular course of its
trade and business, and that they were not supported by VAT invoices and official
receipts. Meanwhile, CE Luzon-claimed that the CTA Division erred in disallowing the
rest of its refund claim.13

In an Amended Decision14 dated January 19, 2010 (January 19, 2010 Amended

Decision), the CTA Division partially granted CE Luzon's motion for reconsideration, and
consequently directed the CIR to issue a tax credit certificate in the reduced amount of
P17,277,938.47,15 finding that CE Luzon has sufficiently proven that it is entitled to an
additional input VAT in the amount of P2,398,625.82.16 On the other hand, the CTA
Division denied the CIR's motion for reconsideration for lack of merit.17

The CIR again moved for partial reconsideration,18 which was, however, denied in a
Resolution19 dated April 22, 2010.

Thereafter, CE Luzon and the CIR respectively appealed to the CTA En Banc, docketed
as CTA EB No. 59120 and CTA EB No. 628,21 which were ordered consolidated in a
Resolution22 dated May 20, 2010 for having common questions of fact and law.23

The CTA  En Banc Ruling

In a Decision24 dated October 4, 2011, the CTA En Banc set aside the CTA Division's
findings, holding that CE Luzon's premature filing of its claim divested the CTA of
jurisdiction. It ruled that the filing of a judicial claim must be made within thirty (30)
days to be computed from either: (a) the receipt of the CIR's decision; or (b) after the
expiration of the 120-day period for the CIR to act. It noted that CE Luzon's petition
was filed on January 3, 2007, or only after the lapse of 34 days from the time it filed its
administrative claim with the BIR on November 30, 2006. Thus, considering that CE
Luzon hastily filed its petition, its judicial claim must be dismissed for being filed
prematurely.25 cralawred

Aggrieved, CE Luzon moved for reconsideration26 which was denied in a

Resolution27 dated February 22, 2012; hence the instant petition.

The Issue Before the Court

The core issue in this case is whether or not the CTA En Banc correctly ordered the
outright dismissal of CE Luzon's claims for tax refund of unutilized input VAT on the
ground of prematurity.

The Court's Ruling

The petition is partly meritorious.

I.
At the outset, the Court deems it proper to address CE Luzon's claim that the CIR filed
a "second" motion for reconsideration of the CTA Division's January 19, 2010 Amended
Decision. Considering that a second motion for reconsideration is a prohibited pleading
and, thus, did not toll the period to file an appeal, CE Luzon maintained that the June
24, 2009 Decision had long become final and executory.28

Under Section 3, Rule 14 of the Revised Rules of the Court of Tax Appeals, an amended
decision is issued when there is any action modifying or reversing a decision of the
CTA En Banc  or in Division. Pursuant to these parameters, it is clear that the CIR's
motions for partial reconsideration - i.e., (a) motion for partial reconsideration29 of the
June 24, 2009 Decision; and (b) motion for partial reconsideration30 of the January 19,
2010 Amended Decision - assailed separate and distinct decisions that were rendered
by the CTA Division. Notably, its amended decision modified and increased CE
Luzon's entitlement to a refund or tax credit certificate in the amount of
P17,277,938.47. Essentially, it was therefore a different decision and, hence, the
proper subject of a motion for reconsideration anew on the part of the CIR. Thus, CE
Luzon's procedural objection must fail.

II.

On the substantive aspect, it should be first pointed out that the rule governing a
taxpayer's claim for refund of unutilized input VAT is found in Section 112 of the
National Internal Revenue Code (NIRC), as amended by Republic Act No. 9337,31 the
pertinent portion of which reads: cralawlawlibrary

SEC. 112. Refunds or Tax Credits of Input Tax. -

(A) Zero-rated or Effectively Zero-rated Sales. - any VAT-registered person, whose

sales are zero-rated or effectively zero-rated may, within two (2) years after the
close of the taxable quarter when the sales were made, apply for the issuance of
a tax credit certificate or refund of creditable input tax due or paid attributable to such
sales, except transitional input tax, to the extent that such input tax has not been
applied against output tax: x x x.

xxxx

(C) Period within which Refund or Tax Credit of Input Taxes shall be Made. - In proper
cases, the Commissioner shall grant a refund or issue the tax credit certificate for
creditable input taxes within one hundred twenty (120) days from the date of
submission of complete documents in support of the application filed in accordance
with Subsection (A) hereof.

In case of full or partial denial of the claim for tax refund or tax credit, or the failure on
the part of the Commissioner to act on the application within the period prescribed
above, the taxpayer affected may, within thirty (30) days from the receipt of the
decision denying the claim or after the expiration of the one hundred twenty
day-period, appeal the decision or the unacted claim with the Court of Tax
Appeals.
x x x x (Emphases and underscoring supplied)
In the case of CIR v. Aichi Forging Company of Asia, Inc. (Aichi),32 it was held that the
observance of the 120-day period is a mandatory and jurisdictional requisite to the
filing of a judicial claim for refund before the CTA. As such, its non-observance would
warrant the dismissal of the judicial claim for lack of jurisdiction. Withal, it was clarified
in Aichi that the two (2)-year prescriptive period is only applicable to administrative
claims, and not to judicial claims.33 Accordingly, once the administrative claim is filed
within the two (2)-year prescriptive period, the taxpayer-claimant must wait for the
lapse of the 120-day period and, thereafter, he has a 30-day period within which to file
his judicial claim before the CTA, even if said 120-day and 30-day periods would exceed
the aforementioned two (2)-year prescriptive period.34

Nevertheless, the Court, in the seminal case of CIR v. San Roque Power
Corporation (San Roque),35 recognized an exception to the mandatory and jurisdictional
nature of the 120-day period. San Roque enunciated that BIR Ruling No. DA-489-03
dated December 10, 2003 - which expressly declared that the "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"36 - provided a valid claim for equitable estoppel
under Section 24637 of the NIRC.

In the more recent case of Taganito Mining Corporation v. CIR,38 the Court reconciled
the pronouncements in Aichi and San Roque, holding that from December 10, 2003
to October 6, 2010 which refers to the interregnum when BIR Ruling No. DA-489-03
was issued until the date of promulgation of Aichi, taxpayer-claimants need not observe
the stringent 120-day period; but before and after said window period, the mandatory
and jurisdictional nature of the 120-day period remained in force, viz.: cralawlawlibrary

Reconciling the pronouncements in the Aichi  and San Roque cases, the rule must

therefore, be that 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-dav period is mandatory and jurisdictional to the
filing of such claim.39 (Emphases and underscoring supplied)

Here, records show that CE Luzon's administrative and judicial claims were filed on
November 30, 2006 and January 3, 2007, respectively, or during the period of
effectivity of BIR Ruling No. DA-489-03 and, thus, fell within the window period
stated in San Roque, i.e., when taxpayer-claimants need not wait for the expiration of
the 120-day period before seeking judicial relief. Verily, the CTA En Banc erred when it
outrightly dismissed CE Luzon's petition on the ground of prematurity.

This notwithstanding, the Court is not wont to instantly grant CE Luzon's refund claim in
the amount of P20,546,004.87 which allegedly represented unutilized input VAT for the
year 2005. This is because the determination of CE Luzon's entitlement to such claim, if
any, would necessarily involve factual issues and, thus, are evidentiary in nature which
are beyond the pale of judicial review under a Rule 45 petition where only pure
questions of law, not of fact, may be resolved.40 Accordingly, the prudent course of
action is to remand the case to the CTA En Banc for resolution on the merits, consistent
with the Court's ruling in Panay Power Corporation v. CIR.41chanroblesvirtuallawlibrary

WHEREFORE, the petition is PARTLY GRANTED. Accordingly, the Decision dated

October 4, 2011 and the Resolution dated February 22, 2012 of the Court of Tax
Appeals En Banc in CTA EB Case Nos. 591 and 628 are hereby SET ASIDE. The case
is REMANDED to the CTA En Banc for its resolution on the merits as stated in this
Decision.

SO ORDERED. chanroblesvirtuallawlibrary

Sereno, C.J., (Chairperson), Leonardo-De Castro, Bersamin, and Perez, JJ., concur.

Endnotes:

1
Rollo, pp. 20-81.

2
 Id. at 155-176. Penned by Associate Justice Cielito N. Mindaro-Grulla with Associate
Justices Juanito C. Castaneda, Jr., Erlinda P.  Uy, Caesar A. Casanova, and Olga
Palanca-Enriquez concurring; Presiding Justice Ernesto D. Acosta and Associate Justices
Esperanza R. Fabon-Victorino and Amelia R. Cotangco-Manalastas concurring and
dissenting; and Associate Justice Lovell R. Bautista with Separate Opinion.

3
 Id. at 196-203. Penned by Associate Justice Cielito N. Mindaro-Grulla with Associate
Justices Juanito C. Castaneda, Jr., Erlinda P.  Uy, Caesar A. Casanova, and Olga
Palanca-Enriquez concurring; Presiding Justice Ernesto D. Acosta and Associate Justices
Esperanza R. Fabon-Victorino concurring and dissenting; and Associate Justice Lovell R.
Bautista with Separate Opinion. Associate Justice Amelia R. Cotangco-Manalastas on
wellness leave.

4
 Id. at 117-135. Penned by Associate Justice Olga Palanca-Enriquez with Associate
Justices Juanito C. Castaneda, Jr. and Erlina P. Uy concurring.

5
 See id. at 90-91.

6
 Id. at 91.

7
 See id. at 92.

8
 See id. at 92-94.

9
 Id. at 89-113.

10
 Id. at 111-112.

11
 See id. at 101-111.

12
 See the CIR's motion for reconsideration dated July  14, 2009; id. at 207-225. CE
Luzon tiled its motion for reconsideration (not attached to the rollo) on July 16, 2009;
see id. at 117.

13
 See Id. at 118-119 and 131-132.

14
 Id. at 117-135.

15
 Id. at 134.

16
 See Id. at 130-131.

17
 Id. at 134.

18
 Dated February 9, 2010. Id. at 227-245.

19
 Not attached in the rollo.  See Id. at 136.

20
 Not attached to the rollo. See Id. at 29.

21
 See petition for review dated May 11, 2010; id. at 136-152C.

22
 Not attached in the rollo. See id. at 29.

23
 Id.

24
 Id. at 155-176.

25
 See id. at 165-175.

26
 Not attached to the rollo.

27
 Id. at 196-203.

28
 See id. at 32-40.

29
 Id. at 207-225.

30
 Id. at 227-245.

31
 Entitled "AN ACT AMENDING SECTIONs 27, 28, 34, 106, 107, 108, 109, 110, 111,
112, 113, 114, 116, 117, 119, 121, 148,  151, 236, 237 AND 288 OF THE NATIONAL
INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES." Its
effectivity clause provides that it shall take effect on July 1, 2005 but due to a
Temporary Restraining Order filed by some taxpayers, the law took effect on November
1, 2005 when the TRO was finally lifted by the Court. (Republic of the Philippines,
Bureau of Internal Revenue: Tax Code [visited August 18 2015].)

32
 646 Phil. 710(2010).

33
 See id. at 713-714 and 723-732.
34
 See id.

35
 G.R. Nos. 187485, 196113, and 197156, February 12, 2013, 690 SCRA 336.

36
 Id. at 401.

37
 Section 246 of the NIRC provides: cralawlawlibrary

SEC. 246. Non-Retroactivity of Rulings.  - Any revocation, modification or reversal of

any of the rules and regulations promulgated in accordance with the preceding Sections
or any of the rulings or circulars promulgated by the Commissioner shall not be given
retroactive application if the revocation, modification or reversal will be prejudicial to
the taxpayers, except in the following cases: chanRoblesvirtualLawlibrary

(a) Where the taxpayer deliberately misstates or omits material facts from his return or
any document required of him by the Bureau of Internal Revenue;
(b) Where the facts  subsequently gathered by the  Bureau of Internal  Revenue are
materially different from the facts on which the ruling is based; or
(c) Where the taxpayer acted in bad faith. (Emphases and underscoring supplied)
38
 G.R. No. 197591, June 18, 2014, 726 SCRA 637.

39
 Id. at 648.

40
 See Atlas Consolidated Mining and Dev't Corp. v. CIR, 655 Phil. 499, 5 120-511
(2011), citing Atlas Consolidated Mining and Dev't Corp. v. CIR, 551 Phil. 519, 558-560
(2007).

41
 In said case, an amended decision was likewise issued by the CTA Special First
Division dismissing Panay Power Corporation's (PPC) claim for refund for being
prematurely filed. Considering, however, that PPC filed its administrative and judicial
claims during the effectivity of BIR Ruling No. DA-489-03, i.e., the exemption window
period, the Court, thus, ordered the remand of the case to the CTA Special First
Division to determine PPC's entitlement, if any, to a tax refund since this matter
involves questions of fact. (See G.R. No. 203351, January 21, 2015).