GR 190928; (January, 2014) (Digest)
G.R. No. 190928 ; January 13, 2014
TEAM ENERGY CORPORATION (formerly MIRANT PAGBILAO CORP.), Petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, Respondent.
FACTS
Petitioner Team Energy Corporation, engaged in power generation, filed its quarterly VAT returns for 2002. On December 22, 2003, it filed an administrative claim for refund of unutilized input VAT amounting to ₱79,918,002.95 attributable to its effectively zero-rated sales to the National Power Corporation. Due to the inaction of the Commissioner of Internal Revenue, petitioner filed a judicial claim with the Court of Tax Appeals (CTA) First Division on April 22, 2004.
The CTA First Division partially granted the petition, ordering a refund of ₱69,618,971.19. Respondent Commissioner appealed to the CTA En Banc, which affirmed the decision but reduced the refundable amount to ₱51,134,951.40. The reduction was based on the disallowance of claims for the first quarter of 2002, as the judicial claim was filed beyond the 30-day period from the expiration of the 120-day period for the Commissioner to act, following the interpretation of Section 112 of the Tax Code prior to the San Roque ruling.
ISSUE
Whether the CTA En Banc erred in reducing the refundable amount by disallowing the claim for the first quarter of 2002 based on the timing of the judicial claim.
RULING
The Supreme Court reversed the CTA En Banc’s reduction and reinstated the refund amount of ₱69,618,971.19 as determined by the CTA First Division. The Court applied its landmark ruling in Commissioner of Internal Revenue v. San Roque Power Corporation, which established that the 30-day period for filing a judicial claim under Section 112 of the Tax Code is not jurisdictional but merely procedural. The San Roque doctrine clarified that while the 120-day period for the Commissioner to decide is mandatory, the 30-day period for filing the judicial claim is only directory. A judicial claim filed after the 120-day period but before the two-year prescriptive period lapses is deemed timely.
In this case, petitioner’s administrative claim was filed within the two-year prescriptive period. Its judicial claim, filed on April 22, 2004, was made after the 120-day period had lapsed but was still within the two-year prescriptive period. Therefore, the claim for the first quarter of 2002 was timely. The Court emphasized that strict adherence to the now-abandoned interpretation of the 30-day rule would result in injustice, as petitioner had relied on prevailing jurisprudence at the time of filing. Consequently, the total refundable input VAT for 2002 was reinstated in full.