Hedcor Sibulan, Inc. v. Commissioner of Internal Revenue
REITERATIONFacts
1. The Antecedents: Petitioner Hedcor Sibulan, Inc. is a domestic corporation engaged in hydroelectric power generation and the sale of such power. It is a VAT-registered entity. For the second quarter of 2008, the petitioner filed an amended VAT return and subsequently filed an administrative claim with the Bureau of Internal Revenue (BIR) for a refund or tax credit certificate amounting to P29,299,077.37, representing unutilized input VAT on purchases attributable to zero-rated sales. 2. Procedural History: The petitioner filed its administrative claim for refund on June 25, 2010. Four days later, on June 29, 2010, it filed a petition for review with the Court of Tax Appeals (CTA) Third Division, seeking the refund or tax credit. The Commissioner of Internal Revenue (CIR) moved for dismissal, arguing the petition was premature as it was filed before the lapse of the mandatory 120-day period for the CIR to act on the administrative claim. The CTA Third Division granted the motion and dismissed the petition. The CTA En Banc affirmed this dismissal, holding that the premature filing violated the doctrine of exhaustion of administrative remedies. 3. The Petition: The petitioner filed a Petition for Review with this Court, assailing the CTA En Banc's decision. It argues that its judicial claim was not prematurely filed, citing BIR Ruling No. DA-489-03, which allowed taxpayers to seek judicial relief without waiting for the 120-day period to lapse. This ruling, it contends, created an equitable estoppel. The petitioner asserts that its filing on June 29, 2010, fell within the period from December 10, 2003 (issuance of BIR Ruling No. DA-489-03) to October 6, 2010 (promulgation of Commissioner of Internal Revenue v. Aichi Forging Co. of Asia, Inc.), during which taxpayers could rely on the exception to the mandatory 120-day period.
Issue(s)
Whether petitioner's judicial claim for refund or tax credit of unutilized input VAT was prematurely filed; specifically, whether the CTA En Banc erred in affirming the dismissal of petitioner's judicial claim on the ground of prematurity.
Ruling
The petition is impressed with merit. The March 14, 2012 Decision and the May 29, 2012 Resolution of the Court of Tax Appeals En Banc are REVERSED and SET ASIDE. The case is REMANDED to the Court of Tax Appeals Third Division for the proper determination of the refundable or creditable amount due to petitioner Hedcor Sibulan, Inc., if any.
Ratio Decidendi
On the issue of prematurity of the judicial claim: The Supreme Court held that the petition for review for judicial claim filed by petitioner before the CTA was not prematurely filed. Section 112(C) of the National Internal Revenue Code (NIRC), as amended, mandates that the CIR has 120 days from the submission of complete documents to rule on an administrative claim for refund or tax credit. In case of denial or failure to act within the period, the taxpayer may appeal to the CTA within 30 days. The 120-day period is considered mandatory and jurisdictional. However, the Court recognized two exceptions to this rule: (1) if the CIR, through a specific ruling, misleads a taxpayer to prematurely file a judicial claim, and (2) if the CIR issued a general interpretative rule that misleads all taxpayers into prematurely filing judicial claims, where equitable estoppel sets in under Section 246 of the Tax Code. BIR Ruling No. DA-489-03, issued on December 10, 2003, expressly provided that a taxpayer-claimant could seek judicial relief with the CTA without waiting for the 120-day period to lapse. This ruling was recognized in Commissioner of Internal Revenue v. San Roque Power Corp. as creating an equitable estoppel in favor of taxpayers. The Court, in Taganito Mining Corp. v. Commissioner of Internal Revenue, reconciled Aichi and San Roque, holding that taxpayers could rely on BIR Ruling No. DA-489-03 from its issuance on December 10, 2003, until its reversal by the Supreme Court in Aichi on October 6, 2010. In the present case, the administrative claim was filed on June 25, 2010, and the judicial claim was filed on June 29, 2010. This filing occurred well within the period covered by BIR Ruling No. DA-489-03, before it was invalidated by Aichi. Therefore, petitioner's immediate filing of its petition for review before the CTA without waiting for the prescribed 120-day period to lapse was permissible. Consequently, the CTA En Banc erred in affirming the dismissal of petitioner's judicial claim on the ground of prematurity.
Main Doctrine
A judicial claim for refund or tax credit of unutilized input VAT filed before the Court of Tax Appeals (CTA) is not prematurely filed if it is within the period covered by BIR Ruling No. DA-489-03 (December 10, 2003 to October 6, 2010), which allowed taxpayers to file a judicial claim without waiting for the 120-day period to lapse, as this ruling created an equitable estoppel in favor of taxpayers.