CIR vs Mindanao II Geothermal Partnership
Case Digest GR 191498 Jan 15 2014
Facts:
Mindanao II is a registered taxpayer whose sales to NAPOCOR are all zero-rated pursuant to the EPIRA Law. On Oct 6 2005, it filed with the BIR an application for the refund or credit of accumulated unutilized creditable input taxes for the second, third, and fourth taxable quarters of the taxable year 2004. The administrative claim was not acted upon until Feb 3 2006, or 120 days after Oct 6 2005. Believing that a judicial claim must be filed within the 2-year prescriptive period provided under Sec 112 (A) and that it must be reckoned from the date of filing of its VAT returns, Mindanao filed on July 26 2006 a petition for review before the CTA claiming inaction on the part of the CIR.
On Aug 12 2008, the CTA Division granted Mindanao II's claim for refund/credit and held that its judicial claim was timely filed within the 2-year prescriptive period. The CIR opposed the rulings claiming that prescription had already set in when Mindanao II filed its judicial claim beyond the 30-day period fixed in Section 112 (C).
CTA En Banc's Contentions
Issue 1: W/N Mindanao II's administrative claim for refund/credit was timely filed
Yes. Pursuant to Section 112 (A) of the 1997 Tax Code, it is only the administrative claim which is to be filed within the two-year prescriptive period, and the two-year prescriptive period begins to run from the close of the taxable quarter when the sales were made. Here, Mindanao II filed its claim for refund/credit for the second, third, and fourth quarters of 2004 on Oct 6 2005. Such date is well within the two-year prescriptive period which runs from June 30 2004 (2nd Quarter), Sept 30 2004 (3rd Quarter) and Dec 31 2004 (4th Quarter).
[The Atlas and Mirant rulings are simply not applicable in this case because Mindanao II's application for refund/credit on Oct 6 2005 was filed before their promulgation. The Atlas ruling is held to be applicable only on cases filed from June 8 2007, the date of its promulgation, and up to Sept 12 2008, the date when the Mirant case was promulgated.
In Atlas, the court laid down a rule that the 2-year prescriptive period is reckoned from the date of filing of the return and payment of taxes. In Mirant, such rule was abandoned. Following the verba legis doctrine, Mirant held that in administrative claims for refund/credit of unutilized input VAT, the 2-year prescriptive period begins to run from the close of taxable quarter when the relevant sales were made. This rule, which is obviously consistent with the plain wordings of Section 112 (A), was also affirmed in the recent case of San Roque.]
Issue 2: W/N Mindanao II's judicial claim for refund/credit was timely filed
No. Under Section 112 (C), the judicial claim must be filed by the taxpayer within 30 days after the 120-day waiting period if its administrative claim was not acted upon by CIR. Here, Mindanao II filed its application for refund on Oct 6 2005. When it was not acted upon, it filed a judicial claim but only on July 21 2006, or 138 days after the lapse of the 30-day period on 5 March 2006. Its petition for review before the CTA was therefore filed late.
Contrary to the erroneous contentions of the CTA En Banc, the correct interpretation of Section 112, as held in San Roque, is that the 30-day period applies not only to instances of actual denial by the CIR of the claim for refund or tax credit, but to cases of inaction by the CIR as well. Also, following the verba legis doctrine, the 30-day period to appeal is both mandatory and jurisdictional. Section 112 (C) is clear, plain and unequivocal in expressly providing that the taxpayer has a 30-day period to appeal the decision or inaction of the Commissioner. ##
***When reading the full text of this case, please note the difference in letterings of Section 112 particularly Section 112 (C) and (D) of the NIRC as amended by RA 9337 of 2005. In this digested version, Section 112 (C) is used to refer to Section 112 (D) of the old NIRC. ***
Summary of Rules on Prescriptive Periods for Claiming Refund or Credit of Input Tax
Two-Year Prescriptive Period
It is only the administrative claim that must be filed within the two-year prescriptive period. (Aichi)
The proper reckoning date for the two-year prescriptive period is the close of the taxable quarter when the relevant sales were made. (San Roque)
The only other rule is the Atlas ruling, which applied only from 8 June 2007 to12 September 2008. Atlas states that the two-year prescriptive period for filing a claim for tax refund or credit of unutilized input VAT payments should be counted from the date of filing of the VAT return and payment of the tax. (San Roque)
120 + 30 Day Period
The taxpayer can file an appeal in one of two ways:
(1) file the judicial claim within thirty days after the Commissioner denies the claim within the 120-day period, or
(2) file the judicial claim within thirty days from the expiration of the 120-day period if the Commissioner does not act within the 120-day period.
The 30-day period always applies, whether there is a denial or inaction on the part of the CIR.
As a general rule, the 30-day period to appeal is both mandatory and jurisdictional. (Aichi and San Roque)
As an exception to the general rule, premature filing is allowed only if filed between 10 December 2003 and 5 October 2010, when BIR Ruling No. DA-489-03 was still in force. (San Roque)
Late filing is absolutely prohibited, even during the time when BIR Ruling No. DA-489-03 was in force. (San Roque)
