G.R. No. 197760 ; January 13, 2014
TEAM ENERGY CORPORATION (Formerly MIRANT PAGBILAO CORPORATION), Petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, Respondent.

FACTS

Petitioner Team Energy Corporation, engaged in power generation under a Build-Operate-Transfer scheme with the National Power Corporation (NPC), filed Value-Added Tax (VAT) returns for the first three quarters and October 2005, reflecting zero-rated sales to NPC and creditable input VAT. On December 20, 2006, it filed an administrative claim for refund or tax credit of unutilized input VAT amounting to ₱80,136,251.60. Without waiting for the Commissioner of Internal Revenue to act on its claim within the 120-day period mandated by Section 112(C) of the National Internal Revenue Code (NIRC), petitioner filed a judicial claim before the Court of Tax Appeals (CTA) on April 18, 2007.
The CTA Special First Division initially partially granted the claim. However, the CTA En Banc subsequently reversed this, dismissing the petition for being filed prematurely, as the judicial claim was instituted before the expiration of the 120-day period given to the Commissioner to decide the administrative claim. The CTA En Banc held that compliance with this 120-day period is mandatory and jurisdictional.

ISSUE

Whether the CTA correctly dismissed petitioner’s judicial claim for tax refund for being filed prematurely, without waiting for the lapse of the 120-day period under Section 112(C) of the NIRC.

RULING

The Supreme Court reversed the CTA En Banc and reinstated the CTA Special First Division’s decision to grant the refund, subject to determination of the exact amount. The Court applied the doctrine established in Commissioner of Internal Revenue v. San Roque Power Corporation, which recognized a specific exception to the strict application of the 120+30-day jurisdictional periods.
The legal logic is anchored on the principle of equitable estoppel against the government. The Court held that from December 10, 2003 (the date of BIR Ruling No. DA-489-03, which erroneously stated the 120-day period was not mandatory) until October 6, 2010 (the date of the finality of the Aichi ruling, which correctly declared the periods mandatory), taxpayers were misled into believing premature judicial claims were permissible. During this interim period, the government is estopped from asserting the jurisdictional nature of the 120-day period to the prejudice of taxpayers who relied in good faith on the official but erroneous BIR ruling. Since petitioner filed its judicial claim on April 18, 2007—a date falling squarely within this recognized interim period—its premature filing is excused. The claim was therefore timely, and the CTA retains jurisdiction to hear the case on its merits for proper computation of the refundable input VAT.