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Mindanao I Geothermal vs CIR

G.R. No. 197519

Nov. 8, 2017
Mindanao I (M1) enter into Build-Operate-Transfer [BOT] contract with the
Philippine National Oil Company-Energy Development Corporation (PNOC-EDC) to
construct and supply 47-megawatt electricity to National Power Corporation (NPC) for
and in behalf of M1 and PNOC-EDC.
M1 filed its 2nd, 3rd and 4th quarterly VAT Return of taxable year 2004 on (July 27,
2004, Oct. 22, 2004, and Jan 25, 2005 respectively). An amended return for 2 nd to 4th
quarter was filed on June 22, 2005.
On August 16, 2005, M1 filed a letter-request for the issuance of Tax Clearance
Certificate [TCC] with the BIR for the excess and unutilized creditable input taxes for the
1st to 4th quarter in the amount of 9.4M. However, said application was not acted upon by
CIR within 120 days.
On July 21, 2006, M1 filed its Petition for Review with CTA first division, praying
for the issuance of a TCC in the reduced amount of 6.1M which covers merely the second
to fourth quarters of taxable year 2004.
On Sept. 18, 2006, CIR filed its answer interposing, among others, the following
arguments: 1) the claim is subject to administrative investigation by the Bureau; 2) In an
action for refund, the burden of proof is on the taxpayer to establish its right to refund,
and failure to sustain the burden is fatal to the claim for refund; and 3) Claims for refund
are construed strictly against the claimant for the same partake the nature of exemption
of taxation.
On May 12, 2009 CTA 1st Division rendered its decision which partially grant M1
claim for unutilized input VAT in a reduced amount of 2.2M covering only 3 rd and 4th
quarter, but the 2nd quarter claim was denied for being filed out of time.
Both parties filed Motion for Partial Reconsideration (MPR). M1 contends that the
two (2)-year prescriptive period should have been reckoned from the filing of the relevant
Quarterly VAT Returns (citing the case of Atlas vs CIR). On the other hand, CIR
interposed by citing Sec 112(C) as mandatory and jurisdictional requirement that taxpayer
has 30 days to file judicial claim from the receipt of denial or expiration of CIR’s period to
act, failure to comply precludes the CTA from assuming jurisdiction over judicial claim.
The CTA, in its amended decision granted MPR of M1 and denied MPR of CIR.
CIR elevate the case to CTA En Banc through petition for review which reversed
and set aside ruling of CTA first division. M1 filed a motion for reconsideration but the
same was denied. Hence, M1 files this petition for certiorari under rule 45 with SC.

Whether the CTA En Banc erred when it dismissed M1's judicial claim for being
filed out of time.
NO, the CTA en banc is correct when it dismissed the judicial claim. Section 112
of NIRC provides the procedure for filing claims for VAT refunds, and prescribes the
corresponding periods therefor.
To summarize the rule under Sec. 112, any VAT registered person may, within 2
years after the close of taxable quarter when the zero rated or effectively zero-rated sales
were made, to file for a tax refund/credit of any unutilized creditable input tax. The
Commissioner shall act to the application within 120 days from the receipt of complete
documents. In case of Full or Partial denial, the taxpayer aggrieved may within 30 days
appeal or file its judicial claim with the CTA reckoned from receipt of denial or the
expiration of CIR’s period to act.
In the case of Aichi, the Court also clarified that the two (2)-year period only applies
to administrative claims, and does not extend to judicial claims. Anent judicial claims, the
Court held that the one hundred twenty (120) and thirty (30)-day periods under Section
112(C) are mandatory and jurisdictional.
Proceeding therefrom, it becomes clear that M1's judicial claim for the 2nd,3rd and
4th quarters of 2004 were filed out of time. Since the amended administrative claim was
filed on June 22, 2005, 120 days (or 4 months thereafter) is on Oct. 20, 2005 is the period
which the CIR should act on the application. 30 days thereafter, the Taxpayer had until
Nov. 20, 2005 to file its judicial claim.
Although the administrative claim was filed on time, Taxpayer (M1) judicial claim
filed on July 21, 2006 (7months after the lapse of 120+30 day rule) is now barred for being
filed out of time.
In the case of San Roque, an exception to the 120+30-day rule is the BIR Ruling
No. DA-489-03, which the Court does not apply in this present case because said ruling
only constitutes a valid claim for equitable estoppel with respect to premature judicial
claims, and not those filed beyond the 120+30-day periods under Section 112(C)