G.R. No. 189440 June 18, 2014
COMMISSIONER OF INTERNAL REVENUE, Petitioner, vs. MINDANAO II GEOTHERMAL PARTNERSHIP, Respondent.

FACTS

Respondent Mindanao II Geothermal Partnership filed its Quarterly VAT Returns for 2002, declaring zero-rated sales of ₱769,384,702.23 and input VAT of ₱7,427,965.37. On May 30, 2003, it filed an administrative claim for refund or issuance of a Tax Credit Certificate (TCC) for this unutilized input VAT. The petitioner failed to act on the claim. Consequently, on March 31, 2004, the respondent filed a Petition for Review with the CTA First Division (CTA Case No. 6909). Pending resolution, the petitioner issued TCC No. 200600003060 for ₱6,251,065.74, partially granting the claim. The CTA First Division, on June 4, 2008, partially granted the petition and ordered the petitioner to issue a TCC for the balance of ₱689,313.37. The petitioner’s motion for reconsideration was denied. The petitioner then filed a Petition for Review with the CTA En Banc, which dismissed it for lack of merit on May 29, 2009. In its Motion for Reconsideration before the CTA En Banc, the petitioner raised for the first time the issue that the respondent’s judicial claim had prescribed under Section 112(D) [now Section 112(C)] of the National Internal Revenue Code (NIRC). The CTA En Banc denied the motion, ruling that issues raised for the first time on appeal cannot be entertained.

ISSUE

Whether the Court of Tax Appeals En Banc decided a question of substance not in accord with law and jurisprudence, specifically regarding the prescriptive period for filing a judicial claim for tax refund/credit and the propriety of raising the issue of prescription for the first time on appeal.

RULING

The Supreme Court granted the petition. It ruled that the respondent’s judicial claim was filed beyond the mandatory and jurisdictional period prescribed under Section 112(C) of the NIRC. The Court clarified that the two-year prescriptive period under Section 112(A) refers only to the filing of the administrative claim with the BIR. The judicial claim must be filed within 30 days from receipt of the Commissioner’s decision or from the expiration of the 120-day period for the Commissioner to act. The respondent filed its judicial claim on March 31, 2004. Counting 120 days from the filing of its complete administrative claim on May 30, 2003, the 120-day period ended on September 27, 2003. The respondent then had 30 days, or until October 27, 2003, to file its judicial appeal. Since it filed on March 31, 2004, the appeal was filed out of time. The Court further held that the issue of prescription, being jurisdictional, may be raised at any stage of the proceedings, even for the first time on appeal. The CTA En Banc therefore erred in not considering the issue. The respondent’s judicial claim was dismissed for having been filed beyond the reglementary period.