G.R. No. 181276 , November 11, 2013
The Commissioner of Internal Revenue vs. Visayas Geothermal Power Company, Inc.

FACTS

Respondent Visayas Geothermal Power Company, Inc. (VGPCI) is engaged in the generation and sale of electricity. Following the enactment of the Electric Power Industry Reform Act (EPIRA), its sales of generated power became zero-rated for Value-Added Tax (VAT) purposes. Consequently, VGPCI incurred unutilized input VAT on its domestic purchases and importations for the third and fourth quarters of 2001 and for 2002. It filed administrative claims for refund with the Bureau of Internal Revenue (BIR) on June 26, 2003, and December 18, 2003.
For failure of the BIR to act, VGPCI filed separate petitions for review before the Court of Tax Appeals (CTA) on September 30, 2003, and December 19, 2003, seeking a refund or tax credit certificate. The CTA First Division partially granted the petitions. The CTA En Banc affirmed, dismissing the Commissioner of Internal Revenue’s (CIR) petition. The CIR argued that VGPCI’s judicial claims were prematurely filed as they were initiated before the lapse of the 120-day period given to the CIR to decide the administrative claims under Section 112(D) of the National Internal Revenue Code (NIRC).

ISSUE

Whether VGPCI’s filing of its judicial claims for refund before the CTA was premature for being filed prior to the lapse of the 120-day period granted to the CIR to decide the administrative claims.

RULING

The Supreme Court ruled that the filing was premature. The Court abandoned the previous doctrine established in cases like Gibbs v. Collector and College of Oral & Dental Surgery v. CTA, which allowed a taxpayer to file a judicial claim either after the 120-day period or within the two-year prescriptive period if the latter was about to lapse. The Court, applying the principle of statutory construction that a special provision prevails over a general one, held that Section 112(D) of the NIRC is the specific provision governing VAT refunds.
The legal logic is clear: Section 112(D) explicitly mandates a two-tiered process. First, the taxpayer must file an administrative claim with the CIR. Second, the CIR has 120 days to decide. Only upon the denial of the claim by the CIR or the expiration of the 120-day period without action may the taxpayer elevate the matter to the CTA via a petition for review. This 120-day period is a mandatory and jurisdictional condition precedent for filing a judicial claim. Therefore, VGPCI’s judicial claim for the third quarter of 2001 (CTA Case No. 6790), filed a mere 96 days after its administrative claim, was filed out of time and was correctly denied. However, for the subsequent claim (CTA Case No. 6838), the Court remanded the case to the CTA for proper determination, as the judicial filing occurred after the 120-day period had lapsed.