San Roque Power Corp. v. Commissioner
REITERATIONFacts
The Antecedents: San Roque Power Corporation (petitioner), a VAT-registered taxpayer, was granted zero-rating on its electricity sales to the National Power Corporation (NPC) for 2004. Petitioner filed two administrative claims for refund of unutilized input tax for the periods January 1, 2004 to March 31, 2004, and April 1, 2004 to December 31, 2004, on December 22, 2005, and February 27, 2006, respectively. Due to the inaction of the Commissioner of Internal Revenue (CIR), petitioner filed petitions for review before the Court of Tax Appeals (CTA) Second Division on March 30, 2006, and June 20, 2006, respectively. Procedural History: The CTA Second Division partially granted the refund claims, ordering the CIR to refund or issue a tax credit certificate in the amount of ₱29,931,505.18. The CIR moved for reconsideration, which was denied. The CIR then filed a petition for review with the CTA En Banc, questioning the judicial recourse to the CTA as premature due to non-compliance with the 120-day and 30-day periods prescribed in Section 112(D) of the National Internal Revenue Code (NIRC). The CTA En Banc granted the CIR's petition and dismissed petitioner's judicial claims on the ground of prematurity. The Petition: Petitioner argues that at the time of filing its judicial claims, there was no Supreme Court ruling on the 120-day and 30-day periods, and that CTA decisions at the time allowed such premature filings. Petitioner also asserts that the CTA En Banc erred in applying the Aichi ruling retroactively, impairing vested rights and violating the ex post facto rule.
Issue(s)
Whether the CTA En Banc erred in dismissing the petitioner's judicial claims on the ground of prematurity, considering potential exceptions to the mandatory waiting period. Whether the ruling in Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc. should be applied retroactively to the petitioner's case, and the effect of CTA decisions as precedents. Whether BIR Ruling No. DA-489-03 constitutes an exception to the mandatory and jurisdictional nature of the 120+30-day period for filing judicial claims for VAT refund, and its applicability to the petitioner's case.
Ruling
The petition is GRANTED. The Decision and Resolution of the CTA En Banc are REVERSED and SET ASIDE. The Decision and Resolution of the CTA Former Second Division are REINSTATED, ordering the Commissioner of Internal Revenue to refund or issue a tax credit certificate in favor of the petitioner in the total sum of ₱29,931,505.18.
Ratio Decidendi
On the prematurity of the judicial claims: The Court reiterated that the 120-day period for the Commissioner to act on an administrative claim for refund or tax credit of input VAT, and the subsequent 30-day period to appeal to the CTA, are mandatory and jurisdictional. The petitioner filed its judicial claims prematurely. However, the CTA En Banc erred in not considering the exception created by BIR Ruling No. DA-489-03. On the retroactive application of the Aichi ruling: The Court clarified that the Aichi ruling did not lay down a new rule of procedure but merely interpreted Section 112(D) of the NIRC, and therefore did not have retroactive effect. The Court also emphasized that decisions of the CTA do not constitute binding precedents, unlike Supreme Court decisions. The petitioner's reliance on alleged prevailing CTA interpretations prior to Aichi was deemed misplaced. On BIR Ruling No. DA-489-03 as an exception: The Court held that BIR Ruling No. DA-489-03, which stated that a taxpayer need not wait for the 120-day period to lapse before seeking judicial relief, constitutes an exception to the mandatory and jurisdictional nature of the 120+30-day period. This ruling created a "window period" until October 6, 2010. Since the petitioner's judicial claims were filed within this window period, the CTA has jurisdiction over the case.
Main Doctrine
The 120-day period granted to the Commissioner of Internal Revenue to act on a claim for refund or tax credit of input VAT, and the subsequent 30-day period to appeal to the Court of Tax Appeals (CTA) in case of denial or inaction, are mandatory and jurisdictional. However, taxpayers who relied on BIR Ruling No. DA-489-03, issued on December 10, 2003, until its reversal in Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc. (Aichi) on October 6, 2010, are an exception and are shielded from the vice of prematurity, even if they did not specifically invoke the said ruling.