G.R. No. 190198 September 17, 2014.
COMMISSIONER OF INTERNAL REVENUE, Petitioner, vs. CE LUZON GEOTHERMAL POWER COMPANY, INC., Respondent.

FACTS

Respondent CE Luzon Geothermal Power Company, Inc. (CE Luzon), a power generation company, treated its sales of electric energy as VAT zero-rated under the Electric Power Industry Reform Act of 2001. It filed VAT returns for the third and fourth quarters of 2001 and all quarters of 2002, declaring unutilized input VAT. On September 26, 2003, CE Luzon filed an administrative claim for refund for the third quarter of 2001 with the BIR and, alleging inaction, filed a judicial claim with the Court of Tax Appeals (CTA) on September 30, 2003 (C.T.A. Case No. 6792). On December 18, 2003, it filed an administrative claim for refund for the fourth quarter of 2001 and all quarters of 2002 and filed the corresponding judicial claim on December 19, 2003 (C.T.A. Case No. 6837). The CTA Second Division partially granted the claims, ordering a refund of ₱13,926,697.51. The CIR appealed to the CTA En Banc, arguing that the administrative claims were pro forma for incomplete documentation and that the judicial claims were prematurely filed in violation of Section 112(D) of the National Internal Revenue Code (NIRC), which requires waiting for the Commissioner to act on the administrative claim within 120 days or for the denial thereof before seeking judicial relief. The CTA En Banc affirmed the Division’s ruling, holding that the non-submission of complete documents at the administrative level did not render the claims pro forma and that the judicial claims were not prematurely filed, interpreting the 30-day period to appeal after the 120-day period as directory. The CIR elevated the case to the Supreme Court.

ISSUE

Whether or not the CTA En Banc correctly ruled that CE Luzon did not prematurely file its judicial claims for refund.

RULING

The petition is partly meritorious. The Supreme Court ruled that the observance of the 120-day period under Section 112(D) of the NIRC is a mandatory and jurisdictional prerequisite for filing a judicial claim for refund, citing Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc. However, the Court recognized an exception based on the doctrine of equitable estoppel arising from BIR Ruling No. DA-489-03 dated December 10, 2003, which stated that a taxpayer need not wait for the lapse of the 120-day period before seeking judicial relief. This ruling was in effect from December 10, 2003, to October 6, 2010. Applying this, the Court held that CE Luzon’s judicial claim in C.T.A. Case No. 6792 (filed on September 30, 2003) was prematurely filed four days after its administrative claim and must be dismissed for lack of jurisdiction, as it was filed before the effectivity of BIR Ruling No. DA-489-03. In contrast, the judicial claim in C.T.A. Case No. 6837 (filed on December 19, 2003) was filed during the period when BIR Ruling No. DA-489-03 was operative; thus, the equitable estoppel exception applied, and the claim was not jurisdictionally defective.