G.R. No. 183880; January 20, 2014
COMMISSIONER OF INTERNAL REVENUE, Petitioner, vs. TOLEDO POWER, INC., Respondent.

FACTS

Toledo Power, Inc. (TPI), a power generation company, filed administrative claims for refund or tax credit certificates for its unutilized input Value-Added Tax (VAT) for the third and fourth quarters of 2001. TPI’s sales were zero-rated under the National Internal Revenue Code (NIRC). It filed its administrative claim for refund on September 30, 2003. Subsequently, TPI filed two separate judicial petitions with the Court of Tax Appeals (CTA) to toll the two-year prescriptive period: one on October 24, 2003 (for the third quarter) and another on January 22, 2004 (for the fourth quarter). The CTA First Division partially granted the claim, but the CTA En Banc denied the refund for the third quarter, ruling the judicial claim was filed prematurely as it was made before the expiration of the 120-day period given to the Commissioner of Internal Revenue (CIR) to act on the administrative claim.

ISSUE

Whether TPI’s judicial claim for refund of unutilized input VAT for the third quarter of 2001 was filed within the prescriptive period under Section 112 of the NIRC.

RULING

The Supreme Court partially granted the CIR’s petition, affirming the denial of the refund for the third quarter but ordering a recomputation for the fourth quarter. The Court applied the doctrine established in Commissioner of Internal Revenue v. San Roque Power Corporation, which mandates strict compliance with the 120+30 day periods under Section 112 of the NIRC. The law requires the taxpayer to wait for the expiration of 120 days from the filing of the administrative claim before filing a judicial appeal, or file within 30 days after the CIR denies the claim. TPI filed its judicial claim for the third quarter on October 24, 2003, which was only 24 days after its administrative filing on September 30, 2003. This was a premature filing, violating the mandatory 120-day waiting period and thus falling outside the two-year prescriptive period. Consequently, the claim for the third quarter was correctly denied. However, for the fourth quarter, the judicial claim filed on January 22, 2004, was within the prescriptive period as it was filed after the 120-day period had lapsed. The Court remanded the case to the CTA for the proper computation of the refundable amount for the fourth quarter only. The decision underscores the mandatory and jurisdictional nature of the 120-day waiting period as a claim-processing rule, non-compliance with which results in the denial of the refund.