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Morales, David Gil A.


G.R. No. 187485 February 12, 2013
707 SCRA 66 Supreme Court En Banc

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.

WON San Roque is entitled to tax refund? NO.

No. 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 taxpayers 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 Roques 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 Roques 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 Roques 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.