VISAYAS GEOTHERMAL v. CIR

VISAYAS GEOTHERMAL POWER COMPANY vs COMMISSIONER OF INTERNAL REVENUE

G.R. No. 205279

April 26, 2017

FACTS

On February 13, 2009, the petitioner filed with the BIR an administrative claim for refund of unutilized input VAT covering the taxable year 2007 in the amount of P11,902,576.07.  On March 30, 2009, it proceeded to immediately file a petition for review with the CTA, as it claimed that the BIR failed to act upon the claim for refund.

To substantiate its clam for refund, the petitioner cited, among other laws, Sec 6 of RA 9136, otherwise known as the Electric Power Industry Reform Act of 2001,” which provides in part that “pursuant to the objective of lowering electricity rate to end-users, sales of generated power by generation companies shall be VAT zero-rated.” It also referred to the 1997 National Internal Revenue Code (NIRC), as amended by RA 9337, which imposes a zero percent VAT rate on sale of power generated through renewable sources of energy.

On October 19, 2011, the CTA First Division rendered its decision denying the instant petition for Review for being prematurely filed.

Cited in this decision is Section 112 © of the 1997 NIRC, which provides that the Commissioner of Internal revenue (CIR) has 120 days within which to decide on an application for refund of tax credit, to be reckoned from the date of admission of complete documents in support of the application. Since the administrative claim for refund was filed on February 13, 2009, the CIR had until June 13, 2009 within which to act on the claim.

The petition for review, however, was prematurely filed on March 30, 2009, or a mere 45 days from the filing of the administrative claim with the BIR. The dismissal of the case was based solely on this ground, as the tax court found it needless to still address the petitioner’s compliance with the requisites for entitlement to tax refund or credit.

The petitioner’s motion for reconsideration was still denied by the CTA First Division via a resolution, prompting the petitioner to elevate the case to the CTA en banc.

The CTA en banc, in its decision, affirmed in toto the rulings of the CTA First Division.

ISSUES

• Whether or not the CTA en banc erred in affirming the decision of the CTA First Division.
• Whether or not the CIR should grant the refund or tax credit certificate being applied for.

HELD

The petition is partly granted. The CTA erred in ruling that the petitioner’s judicial claim was prematurely filed. However, considering that the tax court had not made a disposition on the merits of the claim for tax refund, the case needs to be remanded to the CTA First Division, so that it may decide on the issue.

In a line of cases, the Court has underscored the need to strictly comply with the 120+30-day periods provided in Section 112 of the 1997 NIRC.

With the current rule that gives a taxpayer 30 days to file the judicial claim even if the CIR fails to act within the 120-day period, the remedy of a judicial claim for refund or credit is always available to a taxpayer.

As the petitioner correctly pointed out, this general rule that calls for a strict compliance with the 120+30-day mandatory period admits of an exception.

The BIR ruling No. DA-489-03 referred to in the exception was recognized by the court to be a general interpretative rule applicable to all taxpayers, as it was a response to a query made, not by a particular taxpayer but by a government agency tasked with processing refunds and credits.

It is material that both administrative and judicial claims in the present case were filed by the petitioner in 2009. The CTA en banc’s reliance on the general rule enunciated by the Court in San Roque is misplaced. Notwithstanding the fact that the petitioner failed to wait for the expiration of the 120-day mandatory period, the CTA could still take cognizance of the petition for review.

Given the Court’s ruling that the CTA should have taken cognizance of the petitioner’s claim, the Court finds it necessary to remand the case to the CTA, which shall determine and rule on the entitlement of the petitioner to the claimed tax refund. Even the CTA en banc affirmed the dismissal on the same sole ground.

Petition is partly granted. The decision of the CTA en banc are reversed and set aside. The case is remanded to the CTA, which is directed to determine petitioner Visayas Geothermal Power
Company’s entitlement to a tax refund.

JLD