G.R. No. 193625 . August 30, 2017.
AICHI FORGING COMPANY OF ASIA, INC., PETITIONER, VS. COURT OF TAX APPEALS – EN BANC AND COMMISSIONER OF INTERNAL REVENUE, RESPONDENTS.

FACTS

Petitioner Aichi Forging Company of Asia, Inc. (AICHI) filed an administrative claim for refund/credit of unutilized input Value Added Tax (VAT) with the Bureau of Internal Revenue (BIR) on September 26, 2002. To prevent the claim from prescribing, AICHI simultaneously filed a judicial Petition for Review before the Court of Tax Appeals (CTA) on September 30, 2002, while the Commissioner of Internal Revenue (CIR) had yet to act on the administrative claim. The CTA Division partially granted AICHI’s claim. The CIR appealed to the CTA En Banc, arguing the CTA lacked jurisdiction because AICHI filed its judicial claim prematurely, before the expiration of the 120-day period given to the CIR to decide the administrative claim and the subsequent 30-day period to appeal.
The CTA En Banc affirmed the Division’s decision, ruling that simultaneous filing of administrative and judicial claims was permissible as long as both were filed within the two-year prescriptive period. The CIR elevated the case to the Supreme Court via a petition for certiorari under Rule 65, contending that the CTA En Banc committed grave abuse of discretion in affirming the grant of the refund despite a jurisdictional defect.

ISSUE

Whether the CTA acquired jurisdiction over AICHI’s judicial claim for tax refund/credit despite it being filed before the expiration of the 120-day period mandated under Section 112(D) of the National Internal Revenue Code.

RULING

No. The Supreme Court granted the CIR’s petition and dismissed AICHI’s judicial claim for lack of jurisdiction. The Court reiterated the doctrine established in Commissioner of Internal Revenue v. San Roque Power Corporation, which holds that the 120-day period for the CIR to act on an administrative claim for VAT refund, and the subsequent 30-day period to appeal in case of inaction or denial, are both mandatory and jurisdictional. A taxpayer must await the lapse of the 120-day period before filing an appeal with the CTA. Filing a judicial claim prematurely, before the CIR decides or before the 120 days lapse, deprives the CTA of jurisdiction over the appeal. The Court clarified that the two-year prescriptive period for filing a claim is distinct from these procedural periods for appeal. Since AICHI filed its Petition for Review with the CTA a mere four days after its administrative claim, it did not comply with the mandatory 120+30 day rule. Consequently, the CTA never validly acquired jurisdiction over the case, and its decision granting a partial refund was void. The Court emphasized that strict adherence to these periods is crucial to ensure orderly procedure and respect for the CIR’s statutory period to evaluate claims.