Commissioner of Internal Revenue v. Mindanao II Geothermal Partnership
REITERATIONFacts
The Antecedents: Respondent Mindanao II Geothermal Partnership, a VAT-registered entity, engaged in zero-rated sales for the taxable year 2002, amounting to P769,384,702.23. During the same period, it incurred P7,427,965.37 in input VAT on domestic purchases of goods and services. Procedural History: On May 30, 2003, the respondent filed an administrative claim for a refund or Tax Credit Certificate (TCC) for its unutilized input VAT with the Bureau of Internal Revenue (BIR). Following the BIR's inaction, the respondent filed a Petition for Review with the Court of Tax Appeals (CTA) First Division on March 31, 2004. The CTA First Division partially granted the claim, ordering the issuance of a TCC for P689,313.37. This decision was affirmed by the CTA En Banc on May 29, 2009. Subsequently, the Commissioner of Internal Revenue (CIR) filed a Motion for Reconsideration with the CTA En Banc, raising the issue of prescription for the first time, which was denied on September 4, 2009. The Petition: The petitioner, the Commissioner of Internal Revenue, seeks review of the CTA En Banc's decision and resolution through a petition for certiorari under Rule 45 of the Rules of Court. The core issue presented is whether the CTA En Banc erred in allowing the issue of prescription to be raised for the first time on appeal. The petitioner argues that prescription can be raised at any stage if evident from the records, and that the respondent's judicial claim was filed beyond the mandatory 120+30 day period prescribed by Section 112(C) of the National Internal Revenue Code.
Issue(s)
Whether the Court of Tax Appeals En Banc erred in not considering the issue of prescription raised for the first time in its Motion for Reconsideration; specifically, whether the issue of prescription, being a matter of jurisdiction, could be considered despite not being raised in the lower court. Whether the respondent's judicial claim for tax refund or tax credit was filed within the mandatory and jurisdictional periods provided in Section 112(C) of the National Internal Revenue Code of 1997; specifically, whether the 120+30 day period is mandatory and jurisdictional, and whether the judicial claim was filed prematurely.
Ruling
The petition is granted. The Decision and Resolution of the CTA En Banc are set aside, and CTA Case No. 6909 is dismissed for being filed out of time. Consequently, TCC No. 200600003060 is revoked/cancelled.
Ratio Decidendi
On the issue of prescription raised for the first time: While generally, issues not raised in the lower court cannot be raised for the first time on appeal, the Supreme Court found that the issue of prescription, being a matter of jurisdiction, could be considered. The Court noted that the CTA En Banc's dismissal of the petition for lack of merit was based on the merits of the claim, not on procedural grounds. However, the Supreme Court ultimately ruled on the merits of the prescription issue. On the timeliness of the judicial claim: The Supreme Court held that the respondent's judicial claim for tax refund or tax credit was filed beyond the mandatory and jurisdictional periods provided in Section 112(C) of the National Internal Revenue Code (NIRC) of 1997. Section 112(C) clearly states that after the 120-day period for the CIR to act on the claim, the taxpayer has 30 days to appeal to the CTA. In this case, the respondent filed its administrative claim on May 30, 2003. The CIR had until September 27, 2003, to decide. If the CIR failed to act, the respondent had until October 27, 2003, to file its judicial claim. However, the respondent filed its judicial claim with the CTA only on March 31, 2004, which was 155 days late. The Court reiterated the ruling in Commissioner of Internal Revenue v. San Roque Power Corporation that the 120+30 day period is mandatory and jurisdictional. The Court emphasized that the two-year period under Section 112(A) refers only to the filing of the administrative claim with the BIR, not to the appeal to the CTA. The filing of the judicial claim prematurely, before the lapse of the 120-day period or receipt of the CIR's decision, renders the claim invalid. The right to appeal to the CTA is a statutory privilege that requires strict compliance with the conditions set by law. The respondent failed to comply with these conditions, thus its claim prescribed.
Main Doctrine
The 30-day period to appeal to the Court of Tax Appeals (CTA) from the decision or inaction of the Commissioner of Internal Revenue (CIR) on a claim for tax refund or credit is mandatory and jurisdictional. Failure to file the judicial claim within this period, even if the administrative claim was filed within the two-year prescriptive period, warrants dismissal.