MINDANAO II GEOTHERMAL PARTNERSHIP, Petitioner,

vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent
G.R. No. 193301 March 11, 2013
CARPIO, J.:

Topic/DOCTRINE: Prescriptive Period for Filing a VAT Refund Claim

FACTS:

Pursuant to Republic Act No. 9136, or the Electric Power Industry Reform Act of 2000
(EPIRA), Mindanao I and II filed with the CIR claims for refund or tax credit of
accumulated unutilized and/or excess input taxes due to VAT zero-rated sales in 2003.
Mindanao I and II filed their claims in 2005 which was denied by the CTA en banc on the
ground that the claim for refund of unutilized input VAT must be filed within 2 years after
the close of the taxable quarter when such sales were made. Under the Atlas doctrine
(Atlas Consolidated Mining and Development Corporation v.CIR), the two-year
prescriptive period for filing a VAT refund claim should not be counted from the close of
the quarter but from the date of the filing of the VAT return. VAT liability or entitlement to
a refund can only be determined upon the filing of the quarterly VAT return. While under
the Mirant doctrine (CIR v. Mirant Pagbilao Corporation), unutilized input VAT payments
must be claimed within two years reckoned from the close of the taxable quarter when
the relevant sales were made regardless of whether said tax was paid.

ISSUE:

1. Whether or not the Atlas or Mirant doctrine is applicable in this case

2. What is the prescriptive period for the Filing of Judicial Claims?

HELD:

1. When Mindanao II and Mindanao I filed their respective administrative and judicial
claims in 2005, neither Atlas nor Mirant has been promulgated. Atlas was promulgated
on 8 June 2007, while Mirant was promulgated on 12 September 2008. The 1997 Tax
Code, which took effect on 1 January 1998, was the applicable law at the time of filing
of the claims in issue. Section 112(A) of the 1997 Tax Code provides that any VAT-
registered person, whose sales are zero-rated or effectively zero-rated may, within two
(2) years after the close of the taxable quarter when the sales were made, apply for the
issuance of a tax credit certificate or refund of creditable input tax due or paid
attributable to such sales. Pursuant to Section 112(A) of the 1997 Tax Code, Mindanao I
and IIs administrative claims for the first have prescribed while their claims for the
second third, and fourth quarters were filed on time.

2. The taxpayer may, if he wishes, appeal the decision of the Commissioner to the CTA
within 30 days from receipt of the Commissioners decision, or if the Commissioner
does not act on the taxpayers claim within the 120-day period, the taxpayer may appeal
to the CTA within 30 days from the expiration of the 120-day period. The second
paragraph of Section 112(C) of the 1997 Tax Code provides that in case of full or partial
denial of the claim for tax refund or tax credit, or the failure on the part of the
Commissioner to act on the application within the
period prescribed above, the taxpayer affected may, within thirty (30) days from the
receipt of the decision denying the claim or after the expiration of the one hundred
twenty day-period, appeal the decision or the unacted claim with the Court of Tax
Appeals.

Mindanao II filed its administrative claims for the second, third, and fourth quarters of
2003 on 13 April 2005. Counting 120 days after filing of the administrative claim with the
CIR (11 August 2005) and 30 days after the CIRs denial by inaction, the last day for
filing a judicial claim with the CTA for the second, third, and fourth quarters of 2003 was
on 12 September 2005. However, the judicial claim cannot be filed earlier than 11
August 2005, which is the expiration of the 120-day period for the Commissioner to act
on the claim.
Mindanao I filed its administrative claims for the second, third, and fourth quarters of
2003 on 4 April 2005. Counting 120 days after filing of the administrative claim with the
CIR (2 August 2005) and 30 days after the CIRs denial by inaction,52 the last day for
filing a judicial claim with the CTA for the second, third, and fourth quarters of 2003 was
on 1 September 2005. However, the judicial claim cannot be filed earlier than 2 August
2005, which is the expiration of the 120-day period for the Commissioner to act on the
claim.

Notes:
Summary of rules on the determination of the prescriptive period for filing a tax refund
or credit of unutilized input VAT as provided in Section 112 of the 1997 Tax Code:
(1) An administrative claim must be filed with the CIR within two years after the close of
the taxable quarter when the zero-rated or effectively zero-rated sales were made.
(2) The CIR has 120 days from the date of submission of complete documents in
support of the administrative claim within which to decide whether to grant a refund or
issue a tax credit certificate. The 120-day period may extend beyond the two-year
period from the filing of the administrative claim if the claim is filed in the later part of the
two-year period. If the 120-day period expires without any decision from the CIR, then
the administrative claim may be considered to be denied by inaction.
(3) A judicial claim must be filed with the CTA within 30 days from the receipt of the
CIRs decision denying the administrative claim or from the expiration of the 120-day
period without any action from the CIR.
(4) All taxpayers, however, can rely on BIR Ruling No. DA-489-03 from the time of its
issuance on 10 December 2003 up to its reversal by this Court in Aichi on 6 October
2010, as an exception to the mandatory and jurisdictional 120+30 day periods.