G.R. No. 212727 . February 01, 2023
COMMISSIONER OF INTERNAL REVENUE, PETITIONER, VS. CE CASECNAN WATER AND ENERGY COMPANY, INC., RESPONDENT.

FACTS

Respondent CE Casecnan Water and Energy Company, Inc. is a domestic corporation engaged in designing, developing, constructing, and operating a combined irrigation and hydro-electric power project. It is an accredited Private Sector Generation Facility by the Department of Energy. For the taxable year 2008, respondent filed its Quarterly VAT Returns and corresponding amendments. It filed administrative claims for refund or tax credit with the BIR for unutilized input VAT attributable to its zero-rated sales to the National Irrigation Administration (NIA), totaling PHP 20,063,676.24. As its claims were not acted upon, respondent filed two separate petitions for review with the Court of Tax Appeals (CTA) Division, which were later consolidated. The CTA Division partially granted the claim, ordering a refund or tax credit certificate in the amount of PHP 19,219,165.31. The CTA En Banc affirmed this decision. The Commissioner of Internal Revenue appealed, arguing that the 120-day period for the BIR to act on the claim under Section 112(C) of the Tax Code had not commenced due to insufficient supporting documents, rendering one judicial petition premature, and that respondent did not rely on a relevant BIR ruling.

ISSUE

1. Whether the petition for review suffers from a technical defect warranting its outright dismissal.
2. Whether the CTA En Banc committed a reversible error in affirming the CTA Division’s grant of the tax refund/credit.

RULING

1. The petition does not suffer from a technical defect. It sufficiently complied with procedural rules by indicating the timeliness of its filing, including the dates of receipt of the CTA En Banc decision and resolution and the timely filing of the petition for review.
2. The CTA En Banc did not commit an error. The Court upheld the following findings:
a. Respondent’s sales of generated power to NIA are VAT zero-rated under Section 108(B)(7) of the National Internal Revenue Code.
b. Respondent substantiated its claim for unutilized input VAT attributable to these zero-rated sales. The CTA Division correctly allowed the refund of PHP 19,219,165.31 out of the claimed amount, based on substantiated evidence.
c. Respondent’s administrative and judicial claims were filed within the prescriptive periods. The 120-day period under Section 112(C) commenced upon the filing of the complete administrative claim, and the judicial claims were timely filed after the expiration of the 120-day period without action from the Commissioner. The Court cited the doctrine in Commissioner of Internal Revenue v. San Roque, which allows a judicial claim filed before the expiration of the 120-day period if filed from December 10, 2003 to October 6, 2010, a period which includes the filing of respondent’s petition.
d. The completeness of the documents for an administrative claim is determined by the taxpayer at the time of filing, and the Commissioner cannot delay the 120-day period by later asserting incompleteness without having required additional documents.
The Petition was denied for lack of merit, and the CTA En Banc’s decision was affirmed.