G.R. No. 197525 - Visayas Geothermal Power Co. vs. Commissioner of Internal Revenue

The petitioner, Visayas Geothermal Power Company (VGPC), is a special limited partnership engaged in power generation through geothermal energy and the sale of generated power to the Philippine National Oil Company pursuant to an Energy Conversion Agreement.
VGPC filed its Original Quarterly VAT Returns for the four quarters of taxable year 2005 and subsequently claimed a refund for unutilized input VAT, asserting entitlement under Republic Act No. 9136 which provided for a zero percent VAT rate on sales of generated power starting June 26, 2001.

On December 6, 2006, VGPC filed an administrative claim for a refund amounting to P14,160,807.95 with the Bureau of Internal Revenue (BIR) District Office No. 89 in Ormoc City.
While the administrative claim was still pending, the petitioner filed its judicial claim via a petition for review with the Court of Tax Appeals (CTA) on January 3, 2007, seeking either a refund or the issuance of a tax credit certificate for the same amount.

The CTA Second Division rendered a decision on April 17, 2009, which partially granted VGPC’s petition by awarding a refund (or tax credit) of P7,699,366.37 – the amount substantiated by the evidence presented concerning unutilized input VAT.
Subsequent to the Second Division’s ruling, a separate Resolution on October 29, 2009, denied motions for partial reconsideration filed by both parties, leading VGPC and the Commissioner of Internal Revenue (CIR) to elevate the matter to the CTA En Banc.

In its February 7, 2011 Decision, the CTA En Banc reversed and set aside the Second Division’s Decision and Resolution, dismissing one petition for review as being filed prematurely.
The En Banc Court determined that although VGPC’s administrative claim was filed within the prescribed two-year period, its simultaneous filing of the judicial claim (28 days after filing the administrative claim) did not wait for the expiration of the 120-day period prescribed under Section 112(D) of the NIRC, rendering the judicial claim premature.

VGPC filed a motion for reconsideration with the CTA En Banc, which was denied in the June 27, 2011 Resolution for lack of merit.
In the subsequent petition, VGPC raised several assignments of errors, including arguments that:

The mandatory 120-day (plus 30-day appeal period) requirement in Section 112(D) should be interpreted with reference to the two-year prescriptive period in Section 229 of the Tax Code.
The precedent in Aichi Forging Company of Asia, Inc. should not override the Atlas doctrine regarding the two-year period.
The CIR, having participated in earlier proceedings, should be estopped from questioning the CTA’s jurisdiction.
The novel interpretation in Aichi should not be retrospectively applied, asserting that Aichi be applied prospectively.

Whether VGPC’s judicial claim, filed 28 days after its administrative claim, was premature for not waiting for the expiration of the mandatory 120-day period in which the BIR should act on the administrative claim.
Whether the exception provided by BIR Ruling No. DA-489-03 (which allowed filing before the lapse of the 120-day period) applies in this case.

Whether the CTA en Banc erred in treating the 120-day period (plus the subsequent 30 days for appeal) as jurisdictional and mandatory.
The implications of adhering to this timeline vis-à-vis claims for refund or tax credit of unutilized input VAT.

Whether the CTA en Banc improperly applied the ruling in Aichi against the backdrop of the Atlas doctrine, which previously emphasized the two-year prescriptive period under Section 229.
Whether Aichi’s interpretation should be applied prospectively or retrospectively in assessing the timeliness of filing judicial claims for VAT refunds.

Whether the CIR should be estopped from questioning the CTA’s jurisdiction based on its earlier participation and actions during the proceedings in the CTA Second Division.