G.R. No. 205185 . September 26, 2018.
KEPCO ILIJAN CORPORATION, PETITIONER, VS. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

FACTS

Kepco Ilijan Corporation, a domestic independent power producer, filed an administrative claim for refund of unutilized input Value-Added Tax (VAT) for taxable year 2002 on April 13, 2004. It filed its judicial claim via a petition for review with the Court of Tax Appeals (CTA) on April 22, 2004, merely nine days later. The CTA Division initially granted a partial refund but, upon reconsideration, dismissed the entire petition for lack of jurisdiction. It ruled the judicial claim was prematurely filed for non-compliance with the mandatory 120-day waiting period under Section 112(C) of the National Internal Revenue Code (NIRC), citing the rulings in Mirant and Aichi. The CTA En Banc affirmed this dismissal.
The core dispute centered on the proper application of the periods for filing VAT refund claims. Kepco argued that under the prevailing jurisprudence at the time of filing (Atlas Consolidated), the two-year prescriptive period was reckoned from the filing of the quarterly VAT return, and the 120-day waiting period was not considered mandatory and jurisdictional. The Commissioner of Internal Revenue maintained that the judicial claim was filed prematurely for not awaiting the Commissioner’s action within the 120-day period prescribed by law.

ISSUE

Whether the Court of Tax Appeals acquired jurisdiction over Kepco Ilijan’s judicial claim for VAT refund filed only nine days after its administrative claim, thereby not observing the 120-day waiting period under Section 112(C) of the NIRC.

RULING

Yes, the CTA acquired jurisdiction. The Supreme Court partly granted the petition, reversing the CTA En Banc. The Court applied its landmark ruling in Commissioner of Internal Revenue v. San Roque Power Corporation, which established that the 120-day waiting period is mandatory and jurisdictional, but recognized an equitable exception. Claims filed from December 10, 2003 (the date of the Mirant decision, which first declared the 120-day period as mandatory) until October 6, 2010 (the date of the finality of the Aichi decision, which clarified the rule) are exempt from strict adherence to this rule if the taxpayer relied on the previous interpretation in Atlas Consolidated.
Kepco Ilijan filed its judicial claim on April 22, 2004, which falls squarely within this recognized exemption period. Therefore, even though it filed its judicial claim only nine days after its administrative claim, the CTA validly acquired jurisdiction. The premature filing was excused due to the prevailing confusion in jurisprudence at that time. Consequently, the case was remanded to the CTA Division for further proceedings to substantively evaluate the merits of Kepco’s refund claim for the second, third, and fourth quarters of 2002. The claim for the first quarter was correctly denied for being filed beyond the two-year prescriptive period.