Commissioner of Internal Revenue vs. Visayas
Geothermal Power Company, Inc. – G.R. No. 181276, November 11, 2013
Facts:
Respondent Visayas Geothermal Power Company, Inc.
(VGPCI) is engaged in the business of generation and sale of electricity. Due
to Republic Act No. 9136, effective June 26, 2001, VGPCI’s sales of generated
power becamse zero-rated and were no longer subject to VAT at 10%.
On June 26, 2003, VGPCI filed before the BIR Revenue
District No. 89 of Ormoc City a claim for refund of unutilized input VAT
payment in the amount of P1,142,666.32 for the third quarter of 2001. On
December 18, 2003, another claim was filed in the amount of P19,070,378.18 for
the last quarter of 2001 and the four quarters of 2002. For failure of the BIR
to act on the claims, VGPCI filed separate petitions of review before the CTA
on September 30, 2003 and December 19, 2003, praying for a refund or the
issuance of a tax credit certificate on the abovementioned taxes covering the
period from July to September 2001 and for the period from October 2001 to
December 2002.
(My
Own Note: There are two claims for refund before the BIR. There were also two petitions
for review before the CTA. Both petitions for review before the CTA were filed
before the expiration of the 120-day period under Section 112(D). The petition
for review before the CTA for the refund of unutilized input taxes for the last
quarter of 2001 and the entire 2002 was filed on December 19, 2003 or one
day after the second administrative claim for refund was filed before the
BIR.)
The CIR contends that the CTA did not have
jurisdiction over VGPCI’s petition for review because it was filed before the
expiration of the 120-day period wherein which the CIR should act on the
taxpayer’s administrative claim for a refund or tax credit of unutilized input
taxes.
VGPCI contends that the petitions
before the CTA were filed correctly because both the administrative and the
judicial claims for refund must be filed within the two-year prescriptive
period, regardless of the length of time during which the administrative claim
has been pending with the CIR. VGPCI cites Section 229 of the NIRC and the
cases of Gibbs v. Collector of Internal Revenue and College of Oral & Dental Surgery v. Court of Tax
Appeals, both cases of which state
that the taxpayer need not wait for the decision of the BIR because the filing
of a judicial claim BEYOND the two-year period bars recovery of the tax paid.
The First Division of the CTA partially granted
VGPCI’s petition and ordered the CIR to issue refund or issue a tax credit
certificate to VGPCI in the amount of P16,355,749.74 representing unutilized
input VAT from Sept. 1, 2001 to Dec. 31, 2002. The CTA En Banc affirmed the
decision of the First Division of the CTA.
ISSUE:
Whether VGPCI failed to observe the proper
prescriptive period required by law for the filing of an appeal before the CTA
because it filed its petition before the end of the 120-day period granted to
the CIR to decide its claim for refund under Section 112(D) of the National
Internal Revenue Code (NIRC).
RULING:
VGPCI’s judicial claim filed on September 30, 2003
was prematurely filed. However, the judicial claim filed on December 19, 2003
was properly filed because of the exception brought about by BIR Ruling
DA-489-03.
VGPCI’s reliance on Gibbs
and College of Oral & Dental Surgery is misplaced. At the time that
both cases were decided, there was no provision yet in the NIRC in force
similar to Section 112.
VGPCI is also
mistaken to argue that Section 229 is the more relevant provision of law.
Section 229 applies only to taxes erroneously or illegally collected.
The applicable provision of the NIRC is undoubtedly Section 112, which deals specifically
with creditable input tax.
The Court relied on
the cases of Commissioner vs. Mirant, G.R. 172129, Commissioner vs. Aichi
Forging, G.R. 184823, and Commissioner vs. San Roque Power, G.R. No. 187485 to
state that the appropriate period for claiming a refund or a tax credit for
unutilized input VAT is Section 112(A), and not Section 229 of the NIRC.
Further, input VAT is not “excessively” collected as understood under Section
229 because at the time the input VAT is collected, the amount paid is correct
and proper.
The 120-day period under
Section 112(D) is crucial in filing an appeal with the CTA.
The application of
the 30-day period from receipt of the decision of the CIR or from the lapse of
the 120-day period (the “120+30 day period”) given to the taxpayer within which
to file a petition for review with the CTA is mandatory and jurisdictional.
However, the court
took notice of the issuance by the BIR of Ruling No. DA-489-03 dated December
10, 2003 which allowed for the filing of a judicial claim without waiting for
the end of the 120-day period granted to the CIR to decide on the application
for refund. Therefore, although the 120+30 day period in Section 112(D) is mandatory
and jurisdictional and must be applied from the effectivity of the 1997 Tax
Code on January 1, 1998, an exception shall be made for judicial claims
filed from the issuance of BIR Ruling No. DA 489-03 on December 10, 2003 until
the promulgation of Commissioner vs. Aichi on October 6, 2010.
Hence, the judicial
claim filed on September 30, 2003 was prematurely filed and cannot be taken
cognizance of. However, the judicial claim filed on December 19, 2003 can be
considered by the CTA because of the exception brought about by the BIR Ruling.
(Disclaimer: Although most of this digest is copied from the actual
decision, they are not identical. Copy at your own risk for your pleadings or
for classroom purposes. Also, I provided the emphasis on some text.)
Happy reading!
