G.R. No. 202066 and G.R. No. 205353, September 30, 2014.
CBK POWER COMPANY LIMITED, Petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, Respondent.

FACTS

CBK Power Company Limited, a VAT-registered domestic partnership engaged in hydropower generation with zero-rated sales, filed two separate judicial claims for tax credit/refund of unutilized input VAT before the Court of Tax Appeals (CTA). The first claim ( G.R. No. 202066 ) was for ₱58,802,851.18 for the period January 1 to December 31, 2007. It filed its administrative claim on March 26, 2009, and its judicial petition the very next day, March 27, 2009. The second claim (G.R. No. 205353) was for ₱43,806,549.72 for the year 2006. It filed administrative claims on March 31, 2008 (for Q1 2006) and July 23, 2008 (for Q2-Q4 2006), and filed corresponding judicial petitions on April 23, 2008, and July 24, 2008, respectively. The CTA Division and En Banc dismissed both claims for having been filed prematurely, ruling that the judicial claims were filed before the lapse of the 120-day period given to the Commissioner of Internal Revenue to act on the administrative claims, as required under Section 112(C) of the Tax Code. Petitioner argued that the 120-day period was merely directory, that the two-year prescriptive period under Section 229 should control, and that the strict interpretation from the case of Commissioner of Internal Revenue v. Aichi Forging Company of Asia should not be retroactively applied.

ISSUE

Whether the Court of Tax Appeals correctly dismissed petitioner’s judicial claims for tax credit/refund for having been filed prematurely for non-compliance with the 120+30 day periods mandated under Section 112 of the National Internal Revenue Code.

RULING

Yes. The Supreme Court denied the petitions and affirmed the CTA’s dismissal. The Court, applying the doctrine established in Commissioner of Internal Revenue v. San Roque Power Corporation, held that compliance with the 120-day waiting period is mandatory and jurisdictional before a taxpayer can file a judicial claim with the CTA. The taxpayer must wait for either the Commissioner’s decision or the expiration of the 120-day period. Filing a judicial claim within the 120-day period is premature and warrants dismissal. The Court rejected petitioner’s arguments. It ruled that the Aichi doctrine, which clarified the mandatory nature of the 120+30 day periods, is not a new law but a correct interpretation of Section 112; thus, it applies to claims filed even before the Aichi decision was promulgated. The Court also found that none of the exceptions outlined in San Roque applied to petitioner’s case. Petitioner did not rely on any claim that the 120-day period was not mandatory, nor did it file its claim during the period from December 10, 2003 (when BIR Ruling No. DA-489-03 was issued) to October 6, 2010 (when Aichi was promulgated), where the Commissioner was estopped from questioning non-compliance. Consequently, the premature filing of the judicial claims was fatal.