MINDANAO II GEOTHERMAL PARTNERSHIP v.

COMMISSIONER OF INTERNAL REVENUE

MINDANAO I GEOTHERMAL PARTNERSHIP v. COMMISSIONER OF INTERNAL REVENUE
G.R. Nos. 193301, 194637
March 11, 2013
Carpio, J.
Petition for Review
DOCTRINE: SUMMARY OF RULES ON PRESCRIPTIVE PERIODS INVOLVING VAT
(1) An administrative claim must be filed with the CIR within two years after the close of the taxable quarter when
the zero-rated or effectively zero-rated sales were made.
(2) The CIR has 120 days from the date of submission of complete documents in support of the administrative claim
within which to decide whether to grant a refund or issue a tax credit certificate. The 120-day period may extend
beyond the two-year period from the filing of the administrative claim if the claim is filed in the later part of the
two-year period. If the 120-day period expires without any decision from the CIR, then the administrative claim may
be considered denied by inaction
(3) A judicial claim must be filed with the CTA within 30 days from the receipt of the CIRs decision denying the
administrative claim, or from the expiration of the 120-day period without any action from the CIR.
(4) All taxpayers, however, can rely on BIR Ruling No. DA-489-03 from the time of its issuance on 10 December
2003 up to its reversal by this Court in Aichi on 6 October 2010, as an exception to the mandatory and jurisdictional
120+30 day periods.

FACTS: Mindanao I and II (Mindanao) are value-added taxpayers, and Block Power Production Facilities accredited by
the Department of Energy. They had a Build-Operate-Transfer contract with the Philippine National Oil Corporation
Energy Development Company (PNOC-EDC), whereby Mindanao converts steam supplied to it by PNOC-EDC into
electricity, and then delivers the electricity to the National Power Corporation (NPC) in behalf of PNOC-EDC.
The Electric Power Industry Reform Act of 2000 (EPIRA, RA 9136), amended the Tax Reform Act of 1997 (RA 8424),
when it decreed that sales of power by generation companies shall be subjected to a zero rate of VAT. Pursuant to
EPIRA, Mindanao I and II filed their claims for the issuance of tax credit certificates on unutilized or excess input
taxes from their sales of generated power and delivery of electric capacity and energy to NPC.
The CTA En Banc denied Mindanao IIs claims for refund tax credit for the first and second quarters of 2003, and
Mindanao Is claims for refund/tax credit for the first, second, third, and fourth quarters of 2003, for being filed out
of time.
The following are relevant dates:
CTA Case No.

Period Covered by VAT Sales in 2003

Close of

quarter
when sales
were
made

Last day for filing application

of tax refund / tax credit

certificate with the CIR

Actual date of filing application for tax refund /

credit (admin claim)

Last day for

filing case
with CTA Actual Date
of filing case with CTA (judicial

claim)
MINDANAO II
7227

1st Quarter

31 March 2003

31 March 2005

13 April 2005

12 Sept 2005

22 April 2005

7287

2nd Quarter

30 June 2003

30 June 2005

13 April 2005

12 Sept 2005

7 July 2005

7317
2005

3rd and 4th Quarters

31 Dec. 2003

30 Sept 2003

30 Sept 2005

13 April 2005

12 Sept 2005

Sept

2 Jan. 2006 (31 Dec. 2005 being a Saturday)

MINDANAO I
7228
1st Quarter

31 March 2003

31 March 2005

4 April 2005

1 Sept 2005

22 April 2005

7286

2nd Quarter

30 June 2003

30 June 2005

4 April 2005

1 Sept 2005

7 July 2005

7318

3rd and 4th

30 Sept 2005

4 April 2005

1 Sept 2005

9 Sept 2005

Quarters 30 Sept 2003

31 Dec. 2003

2 January 2006

(31 Dec. 2005 being a Saturday)

CTA (En Banc):
Mindanao IIs judicial claims were filed beyond the period allowed in Sec. 112(A), by which the reckoning of the twoyear prescriptive period for filing the application for refund or credit of input VAT attributable to zero-rated sales or
effectively zero-rated sales shall be counted from the close of the taxable quarter when the sales were made
(regardless of whether the tax was actually paid), according to CIR v. Mirant Pagbilao Corporation (Mirant). Also, the
sale of the fully-depreciated Nissan Patrol is incidental to Mindanao IIs VAT zero-rated transactions and is VATable
pursuant to Sec. 105.
Mindanao Is claims for the first, second, third and fourth quarters of 2003 were filed out of time. Section 229 is
inapplicable in light of Mirant. Moreover, the procedure prescribed under Section 112(C) should be followed first
before the CTA En Banc can act on Mindanao Is claim.
Mindanao I and II went up to the Supreme Court arguing that their claims were timely filed pursuant to the case of
Atlas, which was then the controlling ruling at the time of the filing. The Mirant case, which uses the close of the
taxable quarter when the sales were made as the reckoning date in counting the two-year prescriptive period,
cannot be applied retroactively to their prejudice.

[1] ISSUE: Whether the reckoning date for counting the two-year prescriptive period in Section 112 should be
counted from the end of the taxable quarter when the sales were made (Mirant) or the date of filing the return
(Atlas)?

HELD: Neither Atlas nor Mirant applies, because when Mindanao II and Mindanao I filed their respective
administrative and judicial claims in 2005, neither case had been promulgated. Atlas was promulgated on 8 June
2007, Mirant on 12 September 2008. Besides, Atlas merely stated that the two-year prescriptive period should be
counted from the date of payment of the output VAT, not from the close of the taxable quarter when the sales
involving the input VAT were made. The Atlas doctrine did not interpret, expressly or impliedly, the 120+30 day
periods.
Prescriptive Period for the Filing of Administrative Claims
Section 112(A) of the 1997 Tax Code was the applicable law at the time of filing of the claims in issue, therefore the
claims needed to have been filed within two (2) years after the close of the taxable quarter when the sales were
made. Mindanao I and IIs administrative claims for the first quarter of 2003 had prescribed, but their claims for the
second, third and fourth quarters of 2003 were filed on time.

Prescriptive Period for the Filing of Judicial Claims

In determining whether the claims for the second, third and fourth quarters of 2003 had been properly appealed,
there is still see no need to refer to either Atlas or Mirant, or even to Sec. 229. The second paragraph of Sect.
112(C) is clear that the taxpayer can appeal to the CTA within thirty (30) days from the receipt of the decision
denying the claim or after the expiration of the one hundred twenty day-period.
The 120+30 day periods are mandatory and jurisdictional. The taxpayer cannot simply file a petition with the CTA
without waiting for the Commissioners decision within the 120-day period, because otherwise there would be no
decision or deemed a denial decision for the CTA to review. Moreover, Sec. 112(C) expressly grants a 30-day
period to appeal to the CTA, and this period need not necessarily fall within the two-year prescriptive period, as long
as the administrative claim is filed within such time. The said prescriptive period does not refer to the filing of the
judicial claim with the CTA, but to the administrative claim with the Commissioner.
San Roque: Recognition of BIR Ruling No. DA-489-03
BIR Ruling No. DA-489-03 provided that the taxpayer-claimant need not wait for the lapse of the 120-day period
before it could seek judicial relief with the CTA. In the consolidated cases of CIR v. San Roque, however, the
Supreme Court En Banc held that the taxpayer cannot simply file a petition with the CTA without waiting for the
Commissioners decision within the 120-day jurisdictional period. Notwithstanding, the Court also held in San Roque
that BIR Ruling No. DA-489-03 constitutes equitable estoppel in favor of taxpayers. Being a general interpretative
rule, it can be relied on by all taxpayers from the time of its issuance on 10 December 2003 up to its reversal by the
Court in Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc. (Aichi) on 6 October 2010, where
this Court held that the 120+30 day periods are mandatory and jurisdictional.
Mindanao II filed its administrative claims for the second, third, and fourth quarters of 2003 on
Counting 120 days after filing of the administrative claim (11 August 2005) and 30 days after the
inaction, the last day for filing a judicial claim with the CTA for the second, third, and fourth quarters
12 September 2005. However, the judicial claim could not be filed earlier than 11 August 2005,
expiration of the 120-day period for the Commissioner to act.

13 April 2005.
CIRs denial by
of 2003 was on
which was the

Mindanao II filed its judicial claim for the second quarter before the expiration of the 120-day period; it was thus
prematurely filed. However, pursuant to San Roque, the claim qualifies under the exception to the strict application
of the 120+30 day periods. Its judicial claims for the third quarter and fourth quarter of 2003 were filed on time.
Mindanao I filed its administrative claims for the second, third, and fourth quarters of 2003 on 4 April 2005.
Counting 120 days after filing of the administrative claim with the CIR (2 August 2005) and 30 days after the CIRs
denial by inaction, the last day for filing a judicial claim was on 1 September 2005. However, the judicial claim
cannot be filed earlier than 2 August 2005, which is the expiration of the 120-day period for the Commissioner to
act on the claim. Mindanao I prematurely filed its judicial claim for the second quarter of 2003 but claim qualifies
under the exception in San Roque. Its judicial claims for the third and fourth quarters of 2003, however, were filed
after the prescriptive period.

[2] ISSUE: Whether the sale of the fully-depreciated Nissan Patrol is a one-time transaction not incidental to the VAT
zero-rated operation of Mindanao II, thus not VATable?
Mindanao II asserts that the sale of a fully depreciated Nissan Patrol is not an incidental transaction in the course of
its business but an isolated transaction that should not have been subject to 10% VAT. It does not follow that an
isolated transaction cannot be an incidental transaction for purposes of VAT liability. Indeed, a reading of Section
105 would show that a transaction in the course of trade or business includes transactions incidental thereto. In
the course of its business, Mindanao II bought and eventually sold a Nissan Patrol. Prior to the sale, the Nissan
Patrol was part of Mindanao IIs property, plant, and equipment. Therefore, the sale of the Nissan Patrol is an
incidental transaction made in the course of Mindanao IIs business which should be liable for VAT.
DISPOSITION: Petitions partially granted. The claim of Mindanao II for the first quarter of 2003 is DENIED, while its
claims for the second, third, and fourth quarters of 2003 are GRANTED. The claims of Mindanao I for the first, third,
and fourth quarters of 2003 are DENIED while its claim for the second quarter of 2003 is GRANTED.
Digest by Cristina Madarieta

FORT BONIFACIO DEVELOPMENT vs. CIR- Transitional Input VAT

Value Added Tax

inShare1
FORT BONIFACIO DEVELOPMENT CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE- Transitional Input Value
Added Tax

FACTS:
Petitioner was a real estate developer that bought from the national government a parcel of land that used to be
the Fort Bonifacio military reservation. At the time of the said sale there was as yet no VAT imposed so Petitioner did
not pay any VAT on its purchase. Subsequently, Petitioner sold two parcels of land to Metro Pacific Corp. In reporting
the said sale for VAT purposes (because the VAT had already been imposed in the interim), Petitioner claimed
transitional input VAT corresponding to its inventory of land. The BIR disallowed the claim of presumptive input VAT
and thereby assessed Petitioner for deficiency VAT.

ISSUE:
Is Petitioner entitled to claim the transitional input VAT on its sale of real properties given its nature as a real estate
dealer and if so (i) is the transitional input VAT applied only to the improvements on the real property or is it applied
on the value of the entire real property and (ii) should there have been a previous tax payment for the transitional
input VAT to be creditable?

HELD:
YES. Petitioner is entitled to claim transitional input VAT based on the value of not only the improvements but on the
value of the entire real property and regardless of whether there was in fact actual payment on the purchase of the
real property or not.
The amendments to the VAT law do not show any intention to make those in the real estate business subject to a
different treatment from those engaged in the sale of other goods or properties or in any other commercial trade or
business. On the scope of the basis for determining the available transitional input VAT, the CIR has no power to
limit the meaning and coverage of the term "goods" in Section 105 of the Tax Code without statutory authority or
basis. The transitional input tax credit operates to benefit newly VAT-registered persons, whether or not they
previously paid taxes in the acquisition of their beginning inventory of goods, materials and supplies.