Mindanao II Geothermal Partnership v. Commissioner of Internal Revenue
REITERATIONFacts
1. The Antecedents: Mindanao II Geothermal Partnership (petitioner), a VAT-registered entity engaged in electricity generation, entered into a Build-Operate-Transfer Contract with Philippine National Oil Company-Energy Development Corporation (PNOC-EDC). Under this contract, PNOC-EDC supplied steam at no cost, and the petitioner converted it into electric capacity and energy, delivering it to the National Power Corporation. The petitioner's geothermal power plant was accredited as a Block Power Production Facility. 2. Procedural History: The petitioner filed its quarterly VAT returns for 2008, reflecting P6,149,256.25 as unutilized/excess input VAT. An administrative claim for refund was filed with the Bureau of Internal Revenue (BIR) on December 28, 2009. Subsequently, judicial claims for refund were filed with the Court of Tax Appeals (CTA): P1,624,603.33 for the first quarter of 2008 on March 30, 2010 (CTA Case No. 8082), and P4,524,652.92 for the second to fourth quarters of 2008 on May 27, 2010 (CTA Case No. 8106). These cases were consolidated. The Commissioner of Internal Revenue (CIR) moved to dismiss CTA Case No. 8082 for being prematurely filed, citing the failure to observe the 120-day period for the CIR to act on the administrative claim before filing a judicial claim. The CTA Division granted the motion, and the CTA En Banc affirmed this dismissal. 3. The Petition: The petitioner seeks review of the CTA En Banc's decision affirming the dismissal of its judicial claim for refund. The petition argues that the CTA erred in dismissing the claim for prematurity. The petitioner contends that its judicial claim was filed during the period (December 10, 2003 to October 6, 2010) when BIR Ruling No. DA-489-03 was in effect, which allowed taxpayers to file judicial claims without waiting for the 120-day period to lapse. The petitioner filed its administrative and judicial claims within this period. The Supreme Court, while finding the petition meritorious and reversing the CTA's decision, remanded the case to the CTA Division for resolution on the merits, as the determination of entitlement to the refund involves questions of fact not suitable for Supreme Court review under Rule 45.
Issue(s)
Whether the Court of Tax Appeals En Banc correctly affirmed the dismissal of petitioner's judicial claim for refund/credit of input VAT for being prematurely filed; specifically, whether the filing was premature given the jurisprudence surrounding the 120-day waiting period. Whether compliance with the 120-day period is a mandatory and jurisdictional requisite for filing a judicial claim for refund/credit of input VAT, considering the impact of BIR Ruling No. DA-489-03 and subsequent jurisprudence.
Ruling
The petition is meritorious. The Decision dated July 5, 2012 and the Resolution dated November 29, 2012 of the Court of Tax Appeals (CTA) En Banc in CTA EB Case No. 750 are REVERSED and SET ASIDE. Accordingly, CTA Case No. 8082 is REMANDED to the CTA Second Division for its resolution on the merits.
Ratio Decidendi
On the issue of prematurity and the 120-day period: The Court held that while the case of CIR v. Aichi Forging Company of Asia, Inc. established the 120-day period as a mandatory and jurisdictional requisite for filing a judicial claim for refund/credit of input VAT, subsequent jurisprudence, particularly CIR v. San Roque Power Corporation, recognized an exception based on equitable estoppel under Section 246 of the NIRC, stemming from BIR Ruling No. DA-489-03. This ruling stated that taxpayers need not wait for the lapse of the 120-day period before seeking judicial relief. The Court reconciled these pronouncements in Taganito Mining Corporation v. CIR, establishing a specific period from December 10, 2003, to October 6, 2010, during which the 120-day period was not mandatory for filing judicial claims. Since petitioner filed its administrative and judicial claims within this period (December 28, 2009, and March 30, 2010, respectively), it was not required to wait for the 120-day period to expire before filing its judicial claim. Therefore, the dismissal of its claim on the ground of prematurity by both the CTA Division and the CTA En Banc was erroneous. The Court clarified that the two-year prescriptive period applies only to administrative claims, and once an administrative claim is filed within this period, the taxpayer must wait for the 120-day period to end, and thereafter has 30 days to file a judicial claim, even if these periods exceed the two-year prescriptive period. However, this rule was modified by BIR Ruling No. DA-489-03 and subsequent jurisprudence for the period between December 10, 2003, and October 6, 2010.
Main Doctrine
Taxpayers who filed their administrative and judicial claims for refund/credit of input VAT during the period from December 10, 2003 (when BIR Ruling No. DA-489-03 was issued) to October 6, 2010 (when the Aichi case was promulgated) need not wait for the expiration of the 120-day period before filing their judicial claim before the Court of Tax Appeals, as the observance of the 120-day period is not mandatory and jurisdictional during this specific period.