G.R. No. 197526/G.R. No. 199676-77 July 26, 2017
CE LUZON GEOTHERMAL POWER COMPANY, INC., Petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, Respondent; REPUBLIC OF THE PHILIPPINES, represented by the BUREAU OF INTERNAL REVENUE, Petitioner, vs. CE LUZON GEOTHERMAL POWER COMPANY, INC., Respondent.

FACTS

CE Luzon Geothermal Power Company, Inc. (CE Luzon), a VAT-registered corporation engaged in zero-rated power generation, filed administrative claims with the Bureau of Internal Revenue (BIR) for refund of unutilized creditable input VAT for the four quarters of taxable year 2003. The administrative claims were filed on various dates from January to June 2005. Without waiting for the Commissioner of Internal Revenue (CIR) to decide or for the 120-day period to lapse, CE Luzon prematurely filed a judicial claim with the Court of Tax Appeals (CTA) for the first quarter on March 30, 2005. For the second quarter, it received a denial from the CIR on June 24, 2005, and subsequently filed a judicial claim for the second to fourth quarters on June 30, 2005.
The CTA Division partially granted the refund. On appeal, the CTA En Banc initially ruled in favor of CE Luzon but later issued an Amended Decision dismissing the claims, ruling that the judicial claims were filed in violation of the mandatory 120-day waiting period under Section 112(C) of the National Internal Revenue Code (NIRC). The CTA En Banc subsequently issued a second Amended Decision, partially granting the claim only for the second quarter, applying the doctrine from the Aichi case which was prevailing at the time of filing.

ISSUE

Whether CE Luzon’s judicial claims for refund of unutilized creditable input VAT were filed in accordance with the mandatory periods prescribed under Section 112(C) of the NIRC.

RULING

No. The Supreme Court denied CE Luzon’s petition and granted the Republic’s petition, dismissing all judicial claims for refund. The Court reiterated that the 120-day period for the CIR to act on an administrative claim and the subsequent 30-day period to appeal an inaction or denial are both mandatory and jurisdictional. Non-compliance renders the judicial claim premature and deprives the CTA of jurisdiction.
The Court applied the definitive rules established in Commissioner of Internal Revenue v. San Roque Power Corporation. It held that the 120-day waiting period is a mandatory precondition for filing a judicial claim. CE Luzon’s filing for the first, third, and fourth quarters was indisputably premature, as it was filed before the expiration of 120 days from the filing of the administrative claims. For the second quarter, while CE Luzon received a denial from the CIR, its judicial claim was filed on June 30, 2005, which was beyond the 30-day period from its receipt of the denial on June 24, 2005. Consequently, this claim was filed out of time.
The Court rejected CE Luzon’s argument for the application of the Aichi doctrine, which it claimed was the prevailing rule at the time of filing. The Court clarified that while Aichi declared the 120-day period mandatory, the San Roque ruling explicitly stated that the strict application of this period is not prospective. Therefore, taxpayers could not rely on Aichi to excuse non-compliance. The periods are strict jurisdictional requirements, and CE Luzon’s failure to observe them for all quarters was fatal to its claims.