G.R. No. 205282 , January 14, 2019
STEAG STATE POWER, INC. (FORMERLY STATE POWER DEVELOPMENT CORPORATION), Petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, Respondent.

FACTS

Steag State Power, Inc., a power generation company, filed administrative claims with the Bureau of Internal Revenue (BIR) for refund or tax credit of unutilized input VAT on capital goods for the periods covering January 2004 to October 2005. Due to the inaction of the Commissioner of Internal Revenue, Steag filed judicial claims before the Court of Tax Appeals (CTA) in April 2006 (for 2004 claims) and December 2006 (for 2005 claims). The CTA First Division initially denied the petitions on evidentiary grounds but later, upon reconsideration, allowed the presentation of supplemental evidence. Subsequently, the CTA Special First Division, in an amended decision, dismissed the consolidated cases for lack of jurisdiction, a ruling affirmed by the CTA En Banc. The CTA En Banc held that the judicial claims were filed out of time, applying the 120+30 day periods mandated under Section 112 of the National Internal Revenue Code (NIRC).

ISSUE

Whether the Court of Tax Appeals correctly dismissed Steag State Power’s judicial claims for refund for having been filed beyond the mandatory 120+30 day periods prescribed under Section 112 of the NIRC.

RULING

Yes, the Supreme Court denied the Motion for Reconsideration and affirmed the dismissal. The Court reiterated the mandatory and jurisdictional nature of the periods outlined in Section 112 of the NIRC. A taxpayer must file an administrative claim with the BIR within two years from the close of the taxable quarter when the sales were made. The Commissioner then has 120 days to act on the claim. If the Commissioner denies the claim or fails to act within the 120-day period, the taxpayer has 30 days from the expiration of the 120-day period or from receipt of the denial to appeal to the CTA. Failure to observe this 120+30 day timeline deprives the CTA of jurisdiction. The Court applied the doctrine established in Commissioner of Internal Revenue v. San Roque Power Corporation, which clarified that the 30-day period for judicial appeal is counted from the expiration of the 120-day period, not from the filing of the administrative claim. The Court found that Steag’s judicial claims were filed either prematurely (before the expiration of the 120-day period for the BIR to act) or late (beyond the 30-day period after the 120 days lapsed). Its argument that filing within the two-year prescriptive period under Section 229 of the NIRC was sufficient was rejected, as Section 112 provides the specific and mandatory procedure for VAT refunds. Thus, the CTA correctly dismissed the petitions for lack of jurisdiction due to non-compliance with these mandatory periods.