COMMISSIONER OF INTERNAL REVENUE vs. SAN ROQUE POWER CORP.

G.R. No. 187485, February 12, 2013

707 SCRA 66

Wisdom of the Court:

Compliance with the 120-day waiting period is mandatory and jurisdictional, under RA 8424 or
the Tax Reform Act of 1997. Failure to comply renders the petition void.
Section 112(D) of the 1997 Tax Code is clear, unequivocal, and categorical that the CIR has 120
days to act on an administrative claim. The taxpayer can file the judicial claim:
(1) Only within 30 days after the CIR partially or fully denies the claim within the 120- day
period, or
(2) only within 30 days from the expiration of the 120- day period if the CIR does not act within
the 120-day period.

Procedural History:
San Roque filed a Petition for Review assailing the Decision promulgated on 25 March 2009 as
well as the Resolution promulgated on 24 April 2009 by the Court of Tax Appeals En Banc (CTA EB) in
CTA EB No. 408. The CTA EB affirmed the 29 November 2007 Amended Decision as well as the 11
July 2008 Resolution of the Second Division of the Court of Tax Appeals (CTA Second Division) in CTA
Case No. 6647. The CTA Second Division ordered the Commissioner of Internal Revenue
(Commissioner) to refund or issue a tax credit for P483,797,599.65 to San Roque Power Corporation (San
Roque) for unutilized input value-added tax (VAT) on purchases of capital goods and services for the
taxable year 2001.

FACTS:
On October 11, 1997, San Roque Power Corporation (San Roque) entered into a Power Purchase
Agreement (PPA) with the National Power Corporation (NPC) by building the San Roque Multi-Purpose
Project in San Manuel, Pangasinan. The San Roque Multi-Purpose Project allegedly incurred, excess
input VAT in the amount of P559,709,337.54 for taxable year 2001 which it declared in its Quarterly
VAT Returns filed for the same year. San Roque duly filed with the BIR separate claims for refund,
amounting to P559,709,337.54, representing unutilized input taxes as declared in its VAT returns for
taxable year 2001. However, on March 28, 2003, San Roque filed amended Quarterly VAT Returns for
the year 2001 since it increased its unutilized input VAT to the amount of P560,200,283.14. San Roque
filed with the BIR on the same date, separate amended claims for refund in the aggregate amount of
P560,200,283.14. On April 10, 2003, a mere 13 days after it filed its amended administrative claim with
the CIR on March 28, 2003, San Roque filed a Petition for Review with the CTA. CIR alleged that the
claim by San Roque was prematurely filed with the CTA.
ISSUE:
 WON San Roque is entitled to tax refund? – NO.
HELD:
No, Petition Denied. San Roque is not entitled to a tax refund because it failed to comply with the
mandatory and jurisdictional requirement of waiting 120 days before filing its judicial claim. On April 10,
2003, a mere 13 days after it filed its amended administrative claim with the CIR on March 28, 2003, San
Roque filed a Petition for Review with the CTA, which showed that San Roque did not wait for the 120-
day period to lapse before filing its judicial claim. Compliance with the 120-day waiting period is
mandatory and jurisdictional, under RA 8424 or the Tax Reform Act of 1997. Failure to comply renders
the petition void. It violates the doctrine of exhaustion of administrative remedies and renders the petition
premature and without a cause of action, with the effect that the CTA does not acquire jurisdiction over
the taxpayer’s petition. Article 5 of the Civil Code provides, "Acts executed against provisions of
mandatory or prohibitory laws shall be void, except when the law itself authorizes their validity." Thus,
San Roque’s petition with the CTA is a mere scrap of paper. Well-settled is the rule that tax refunds or
credits, just like tax exemptions, are strictly construed against the taxpayer. Whether the Atlas doctrine or
the Mirant doctrine is applied to San Roque is immaterial because what is at issue in the present case is
San Roque’s non-compliance with the 120-day mandatory and jurisdictional period, which is counted
from the date it filed its administrative claim with the CIR. The 120-day period may extend beyond the
two-year prescriptive period, as long as the administrative claim is filed within the two-year prescriptive
period. However, San Roque’s fatal mistake is that it did not wait for the CIR to decide within the 120-
day period, a mandatory period whether the Atlas or the Mirant doctrine is applied. Section 112(D) of the
1997 Tax Code is clear, unequivocal, and categorical that the CIR has 120 days to act on an
administrative claim. The taxpayer can file the judicial claim (1) Only within 30 days after the CIR
partially or fully denies the claim within the 120- day period, or (2) only within 30 days from the
expiration of the 120- day period if the CIR does not act within the 120-day period. Even if, contrary to
all principles of statutory construction as well as plain common sense, we gratuitously apply now Section
4.106-2(c) of Revenue Regulations No. 7-95, still San Roque cannot recover any refund or credit because
San Roque did not wait for the 60-day period to lapse, contrary to the express requirement in Section
4.106-2(c). SC granted the petition of CIR to deny the tax refund or credit claim of San Roque.

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