G.R. No. 205279. April 26, 2017
VISAYAS GEOTHERMAL POWER COMPANY, PETITIONER, V. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

FACTS

Visayas Geothermal Power Company, a VAT-registered entity engaged in power generation, filed an administrative claim for refund of unutilized input VAT for the year 2007 with the Bureau of Internal Revenue (BIR) on February 13, 2009. Citing provisions of the Electric Power Industry Reform Act and the Tax Code, it claimed entitlement to a zero-rated VAT status for its sales of power generated from renewable sources. Without awaiting the Commissioner’s decision, the petitioner filed a judicial claim for refund via a petition for review with the Court of Tax Appeals (CTA) on March 30, 2009, asserting that the BIR failed to act on its claim and that immediate filing was necessary to comply with the two-year prescriptive period.
The CTA First Division dismissed the petition for being prematurely filed. It held that under Section 112(C) of the 1997 National Internal Revenue Code, the Commissioner has 120 days from the submission of complete documents to decide on a refund claim. Since the administrative claim was filed on February 13, 2009, the 120-day period would lapse on June 13, 2009. The judicial filing on March 30, 2009, only 45 days later, was therefore premature. The CTA en banc affirmed this dismissal, applying the strict compliance rule established in CIR v. Aichi Forging Company of Asia, Inc.

ISSUE

Whether the Court of Tax Appeals correctly dismissed the judicial claim for refund of unutilized input VAT on the sole ground of premature filing.

RULING

The Supreme Court partly granted the petition, reversing the CTA en banc. The Court held that the judicial claim was not prematurely filed based on the exception established in CIR v. San Roque Power Corporation. In San Roque, the Court recognized that BIR Ruling No. DA-489-03, issued on December 10, 2003, erroneously advised taxpayers that they need not wait for the lapse of the 120-day period before seeking judicial relief. The Court ruled that taxpayers who relied on this erroneous ruling filed between its issuance on December 10, 2003, and its reversal in the Aichi case on October 6, 2010, are exempt from strict compliance with the 120-day waiting period as a matter of equity.
The petitioner’s judicial claim was filed on March 30, 2009, which falls squarely within the protective period from December 10, 2003, to October 6, 2010. Therefore, its filing was valid notwithstanding the non-lapse of the 120-day period. The CTA erred in dismissing the case solely on procedural grounds without reaching the merits. Consequently, the Supreme Court remanded the case to the CTA First Division for a proper determination of the petitioner’s substantive entitlement to the tax refund or credit, based on the evidence already presented.