G.R. No.

193301 March 11, 2013

MINDANAO II GEOTHERMAL PARTNERSHIP, Petitioner,

vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.

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G.R. No. 194637

MINDANAO I GEOTHERMAL PARTNERSHIP, Petitioner,

vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.

FACTS:

Mindanao I and II Geothermal Partnership are VAT taxpayers, accredited by DOE.

They entered into a Built-operate contract with PROC-EDC in which, Mindanao
converts steam supplied to it by PRO-EDC to electricity and then delivers the
electricity to NPC in behalf in behalf of PROC-EDC.

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 claims for tax refund credit for been filed out of time.

ISSUES: (1) whether or not the reckoning date for counting the two-year
prescriptive period should be counted from the end of the taxable quarter when the
sales were made or the date of filing the return.

(2) whether or not an isolated transaction can be an incidental transaction for the
purposes of VAT liability.

RULING:

1) 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 years after the close of the taxable quarter when the sales were
made. Mindanao I and II administrative claims for first quarter of 2003 had
prescribed, but their claims for the second, third and fourth quarters of 2003
were filed on time.
2) Yes, just because a transaction is said to be an isolated one, it does not
follow that it cannot be an incidental transaction. Mindanao II’s business is to
convert the steam supplied to it by PROC-EDC into electricity and to deliver
the electricity to NPC. In the course of the business, Mindanao II bought and
eventually sold a Nissan Patrol. Prior to the sale, the Nissan Patrol was part
of Mindanao II’s property, plant and equipment. Therefore, sale of the Nissan
Patrol is an incidental transaction made in the course of business which
should be liable for VAT.