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Updated 25th February 2025
Commissioner of Internal Revenue vs. San Roque Power Corporation
The Supreme Court resolved whether taxpayers must strictly comply with the mandatory 120+30-day periods for filing judicial claims for VAT refunds under the Tax Code, addressing exceptions based on BIR Ruling No. DA-489-03 (2003–2010) and the doctrine of operative fact.

Primary Holding

The 120+30-day periods under Section 112(C) of the Tax Code are mandatory and jurisdictional, except for claims filed between December 10, 2003 (issuance of BIR Ruling DA-489-03) and October 6, 2010 (promulgation of Aichi), where taxpayers could rely on the erroneous ruling in good faith.

Background

San Roque Power Corporation filed a judicial claim for VAT refund 13 days after its administrative claim, violating the 120-day waiting period. The Court of Tax Appeals granted the refund, but the Supreme Court reversed, emphasizing strict compliance with procedural timelines.

History

  • March 28, 2003: San Roque filed an administrative claim for VAT refund.

  • April 10, 2003: San Roque prematurely filed a judicial claim with the CTA.

  • 2007–2008: CTA Division and En Banc granted the refund.

  • February 12, 2013: Supreme Court reversed CTA decisions.

  • October 8, 2013: Motions for reconsideration denied with finality.

Facts

  • 1. San Roque sought a VAT refund but filed its judicial claim with the CTA 13 days after its administrative claim, bypassing the mandatory 120-day period. The CTA granted the refund, but the Supreme Court ruled the premature filing deprived the CTA of jurisdiction.

Arguments of the Petitioners

  • 1. San Roque’s judicial claim was premature and violated Section 112(C).
  • 2. BIR Ruling DA-489-03 (allowing simultaneous filing) was invalid as it was issued by a Deputy Commissioner, not the Commissioner.

Arguments of the Respondents

  • 1. Reliance on BIR Ruling DA-489-03 and administrative practice justified non-compliance.
  • 2. Retroactive application of the Aichi doctrine (strict 120+30-day rule) violated the doctrine of operative fact and due process.

Issues

  • 1. Are the 120+30-day periods mandatory?
  • 2. Is BIR Ruling DA-489-03 valid?
  • 3. Should the Aichi doctrine apply retroactively?

Ruling

  • 1. The 120+30-day periods are mandatory except during December 10, 2003–October 6, 2010, when taxpayers could rely on BIR Ruling DA-489-03.
  • 2. BIR Ruling DA-489-03 was invalid as it contravened the Tax Code.
  • 3. The doctrine of operative fact applies only to formal BIR rulings, not administrative practices.

Rationale

  • 1. Doctrine of Operative Fact: Invalidated laws/acts may have legal effects prior to judicial nullification.
  • 2. Strict Construction Against Tax Refunds: Tax refunds require strict compliance with statutory conditions.

Doctrines

  • 1. Doctrine of Operative Fact: Invalidated laws/acts may have legal effects prior to judicial nullification.
  • 2. Strict Construction Against Tax Refunds: Tax refunds require strict compliance with statutory conditions.

Key Excerpts

  • 1. “Taxpayers should not be prejudiced by an erroneous interpretation by the Commissioner, particularly on a difficult question of law.”
  • 2. “The doctrine of operative fact is an argument for the application of equity and fair play.”

Precedents Cited

  • 1. Commissioner v. Aichi (2010): Established the 120+30-day periods as mandatory.
  • 2. Mirant Pagbilao Corp. v. Commissioner (2006): Reinforced jurisdictional compliance for VAT refunds.

Statutory and Constitutional Provisions

  • 1. Section 112(C), NIRC: Mandates 120-day administrative processing and 30-day judicial appeal.
  • 2. Section 246, NIRC: Prohibits retroactive revocation of favorable BIR rulings unless exceptions apply.