G.R. No. 247918 . February 01, 2023
CBK POWER COMPANY LIMITED, PETITIONER, VS. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

FACTS

CBK Power Company Limited (CBK) is a VAT-registered partnership engaged in the rehabilitation, construction, operation, and maintenance of hydroelectric power plants under a Build-Rehabilitate-Operate-Transfer (BROT) Agreement with the National Power Corporation (NPC). For the period January 1 to December 31, 2012, CBK filed amended quarterly VAT returns and, on November 18, 2013, filed an administrative claim for refund of unutilized input VAT amounting to PHP 50,060,766.08, attributing these to its zero-rated sales of electricity. The BIR did not act on the claim, prompting CBK to file a Petition for Review before the Court of Tax Appeals (CTA) Special First Division. The CIR opposed the claim, arguing CBK failed to substantiate it and that the administrative claim was pro forma. The CTA Special First Division, while finding CBK’s claims timely filed and its sales zero-rated under the NIRC, denied the refund. It held that CBK, as a renewable energy developer, is entitled to zero-rated VAT on its purchases under Section 15 of Republic Act No. 9513 (Renewable Energy Act of 2008), meaning its suppliers should not have shifted any output VAT to CBK; thus, CBK could not have paid input VAT eligible for refund. The CTA En Banc affirmed this decision. CBK appealed, arguing that the applicability of RA 9513 was not litigated below and that it is not a DOE-registered RE Developer entitled to the Act’s incentives.

ISSUE

Whether CBK is entitled to a refund or credit of its alleged unutilized input VAT for the taxable year 2012.

RULING

No. The Supreme Court reversed and remanded the case. The Court held that the CTA En Banc and CTA Special First Division erred in applying RA 9513 to deny CBK’s claim without a factual basis. The incentives under Section 15 of RA 9513, including zero-rating of purchases, are expressly available only to RE Developers that are “registered with the DOE.” The CIR did not allege, and the tax courts did not find, that CBK was registered with the DOE. CBK itself represented it was not so registered. Therefore, the legal presumption is that CBK is not entitled to the VAT incentives under RA 9513. The tax courts’ denial of the refund based on RA 9513 was grounded on a misapprehension of facts. The case was remanded to the CTA Special First Division to determine whether CBK complied with the requisites for a tax refund under the NIRC (including substantiation of its input VAT payments and their direct attribution to zero-rated sales) and, if so, the refundable amount.