GR 253003; (January, 2024) (Digest)
G.R. No. 253003 , January 24, 2024
Commissioner of Internal Revenue, Petitioner, vs. Mindanao II Geothermal Partnership, Respondent.
FACTS
Respondent Mindanao II Geothermal Partnership (M2GP) was engaged in generating and distributing electricity. For taxable year 2008, M2GP filed its quarterly VAT returns and, on December 28, 2009, lodged an administrative claim for refund or issuance of a tax credit certificate for its unutilized input VAT in the amount of PHP 6,149,256.25. M2GP was dissolved on March 29, 2010. On April 15, 2010, and May 27, 2010, M2GP filed petitions for review with the Court of Tax Appeals (CTA) appealing its administrative claim, which were consolidated. The CTA Second Division initially dismissed one petition for prematurity, but upon elevation, the Supreme Court remanded the case for resolution on the merits. The CTA Second Division subsequently rendered a Decision partially granting M2GP’s claim for refund in the amount of PHP 220,700.89. Both parties moved for reconsideration, which were denied. The CTA En Banc affirmed the CTA Division’s ruling. The Commissioner of Internal Revenue (CIR) filed the present Petition for Review.
ISSUE
Whether or not input tax is required to be directly attributable to zero-rated sales in claims for refund or issuance of a tax credit certificate.
RULING
No. The Supreme Court denied the CIR’s petition and affirmed the CTA En Banc’s decision. The Court held that Section 112(A) of the National Internal Revenue Code (Tax Code) does not require direct attributability of input taxes to zero-rated sales for a claim for refund or tax credit. The provision only requires that the input taxes be attributable to such sales, with the exception of input taxes from capital goods, which must be directly attributable. The Court found that M2GP, a zero-rated VAT taxpayer, sufficiently established its claim through VAT-compliant invoices and receipts, and that the claimed input taxes were attributable to its zero-rated sales. The Court also noted that the doctrine of strictissimi juris in tax refunds does not preclude the granting of the claim based on preponderance of evidence, and that the CIR’s reliance on previous Atlas Consolidated Mining cases was misplaced as the legal landscape had evolved with subsequent amendments to the Tax Code and regulations.