G.R. No. 190021 October 22, 2014
COMMISSIONER OF INTERNAL REVENUE, Petitioner, vs. BURMEISTER AND WAIN SCANDINAVIAN CONTRACTOR MINDANAO, INC., Respondent.

FACTS

Respondent Burmeister and Wain Scandinavian Contractor Mindanao, Inc. is a VAT-registered corporation engaged in constructing and operating power-generating plants. It subcontracted the operation and maintenance of power barges owned by the National Power Corporation, services subject to 0% VAT. For the fourth quarter of 1998, respondent filed its Quarterly VAT Return on January 21, 1999, indicating zero-rated sales and input VAT paid. On July 21, 1999, it filed an Application for Tax Credit/Refund of VAT Paid for July to December 1998, which the CIR did not act upon. Respondent filed a judicial claim via a petition for review before the CTA on January 9, 2001. The CTA First Division, after a remand from the CA for reception of evidence, granted a refund in a reduced amount. The CIR appealed to the CTA En Banc, arguing for the first time that the judicial claim was filed beyond the prescriptive period under Section 112 of the Tax Reform Act of 1997. The CTA En Banc dismissed the petition, ruling the CIR could not belatedly raise the issue of prescription.

ISSUE

Whether or not the CTA En Banc correctly dismissed the petition on the ground that the issue of prescription was belatedly raised.

RULING

No. The Supreme Court granted the petition, ruling that the issue of prescription, being a jurisdictional matter, may be raised at any stage of the proceedings. The Court held that compliance with the 120+30 day periods under Section 112(D) is mandatory and jurisdictional. The respondent’s judicial claim, filed on January 9, 2001, was filed beyond the 30-day period from the expiration of the CIR’s 120-day period to act on the administrative claim (filed July 21, 1999). The 120-day period ended on November 18, 1999, and the 30-day period to appeal ended on December 18, 1999. Therefore, the judicial claim filed on January 9, 2001, was filed out of time. The Court clarified that the two-year prescriptive period under Section 112(A) applies only to the filing of the administrative claim with the CIR, not the judicial claim with the CTA. The respondent’s administrative claim filed on July 21, 1999, was timely as it was within two years from the close of the taxable quarter (December 31, 1998). However, the judicial claim was not filed within the 30-day period after the expiration of the CIR’s 120-day period, thus depriving the CTA of jurisdiction. The case was remanded to the CTA First Division to dismiss the petition for review for having been filed out of time.