VISAYAS GEOTHERMAL POWER COMPANY v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QU EZON CITY EN BANC VI SAYAS GEOTHERMAL POWER COMPANY, CTA EB No . 761 (CTA Case No. 7737) Petitioner, - versus- Present : Aco st a, EL Cast ane da, Jr., Bauti st a, Uy, Casa nova, Palanca- Enriqu ez, Fa bon - Victorino, M ind aro-Grull a, and Cot angco- M analasta s, JJ. COMMISSIONER OF INTERNAL REVENUE, Promulgat ed : /!,AAJ..v,~~ Re s p o n d e n t . JUL 11 2012 V"' ''1/:d o/'' ~ , X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X DECISION COTANGCO- MANALASTAS, !..:_ : This is an appea l by way of a Petition for Review 1 of th e Am ended Decision? and Resolution3 promu lgat ed by the Former Second Division on January 31, 2011 and April 5, 2011, res pectively, fi led by petition er Vi sa yas Geothermal Power Company V on M ay 9, 2011 pursuant to Section 18 of Republic Act (R .A.) No. 1125, as amended 1 Rollo, pp . 6 S2. 2 Rollo, pp. 60 69, Amended Decision d<Jted J<Jnu<Jry 31, 2011 penned by Associ<Jte Ju stice Ju<Jnito C. C<JstJned<J , Jr., in the c<Jse ent itled Visayas Geothermal Power Company vs. Commissioner of Int ernal Revenue, docketed as CTA Case No. 7737. 1 Rollo, pp. 70-76, Reso lution dated April 5, 2011 penned by Associa te Justice Juanita C. Cast aneda, Jr., in the case entitl ed Visayas Geotherm al Power Company vs. Commissioner of Internal Revenu e, CTA (<Jse No. 7737.

DECISION Page 2 of 19 CTA EB No . 7Gl (CTA Case No . 7737 ) Visayas Geothermal Power Company vs. Commissioner of Internal Revenue by Section 11 of R.A. No. 9282, and Section 3{b}, Rule 8 of the 2005 Revised Rules of the Court of Tax Appeals (RRCTA) . Quoted hereunder are the pertinent portions of the challenged Decision and Resolution : Amended Decision dated January 31, 2011 : " WHEREFORE, premises considered, respondent's Motion for Reco nsid era tion is hereby GRANTED. Accord ingly, the assa il ed Decision is here by SET ASID E and REVERSED. Petitioner's claim for refund or issuance of tax credit ce rtificate for its unutili ze d input VAT attributable to petit ioner's ze ro -rated sa les for the four quarters of taxable year 2006 is hereby DISMISSED for bein g fil ed out of time. SO ORDERED ." Resolution dated April 5, 2011: " WHEREFORE, premises cons id ered, petitioner's Motion for Reconsideration is DENIED for la ck of merit. SO ORDERED ." Petitioner see ks the reversal of the above-quoted Amended Decision and Resolution and the grant in g of its claim for refund or issuance of a tax credit certificate (TCC) in the total amount of Nin etee n Million Five Hundred Sixty Nine Thousand Six Hundred Eighty Three and 63/100 (Php19,569,683.63) allegedly representing its unutilized input value-added tax (VAT) attributable to Lero-rated V sales for the four quarters of calendar year (CY) 2006.

DEC ISION Page 3 of 19 CTA EB No. 761 {CTA Case No . 7737 ) Visayas Geo th erm al Power Company vs. Commissioner of Internal Revenue ANTECEDENT FACTS Th e fact s of th e ca se, as narrated by th e Form er Second Divi sion of thi s Court in its original D e ci s ion ~ dated Jun e 23, 2010, ar e as follow s: "Visayas Geoth ermal Power Company (P etition er) is a special purpo se limited partn ership duly orga ni ze d and existin g und er Philippin e law s, with prin cipal offi ce at Orm oc City, Leyte. Petition er w as es tabli shed on November 4, 1994. Th e busin ess purpo se of petition er is to " invest in, acquire, fin ance, comp lete, con stru ct , develop, improve, opera t e, maintain and hold th at ce rtain parti ally con stru ct ed pow er produ ction geoth erm al elec t rica l ge neratin g facili ty in M alitbog, Leyte Prov in ce, Philippin es (th e 'Project'), and oth er propert y incid enta l t heret o, fo r t he produ ct io n and sa le of electri city from geot hermal resources, to se ll or ot herwi se dispo se of th e Project and such oth er prop erty," and to engage in any oth er re lated or incid ental activiti es. Petition er has bee n accre dited and ce rtifi ed as such by th e Departm ent of Energy (DO E), as evid ence d by its DO E Certificate of Acc reditation (OSAC94-13 ) iss ued on Jun e 15, 1994. Petiti oner is also reg ist ered with th e Bu rea u of Intern al Revenu e (BIR) as a VAT tax payer, with Tax payer Id entifi ca ti on No . 003-832 -538-VAT. Respond ent, on th e oth er hand , is t he duly appoin te d Commissioner of th e Bureau of Intern al Revenu e empow ered to perfo rm th e duties of sa id office in cludi ng, among others, th e po w er to deci de, ap prove, and grant refund s o r t ax cre di ts of erroneo usly or excess ively paid taxes. He ho ld s offi ce at th e BIR National Offi ce Buildin g, BIR Road, Dilima n, Qu ezo n City . Petiti oner fil ed with th e BIR its Qu arte rly VAT Returns for th e fir st to fourth qu arters of ta xa bl e year 200 6 on th e fo ll owin g dat es: Taxa bl e Quart er Ori gi nal Return V Am end ed Return " Origi nal Dec ision dat ed Jun e 23, 2010 penned by Associate Justice Juanit a C. Ci:lst C:Inedi:l, Jr., in the case enti tl ed Visayas Gf'o t hf'rm al Powf'r Company vs . Commissioner of Internal Rf'Vf' nUf', docket ed i:IS CTA Case No. 7737.

DEC ISION Page 4 of 19 CTA EB No . 761 {CTA Ci:!Sf' No . 7737) Visayas Geothermal Power Company vs. Commissioner of Internal Revenue First April 20, 2006 Second July 25, 2006 Third October 25, 2006 June 21, 2007 Fourth January 25, 2007 June 21, 2007 Petitioner's Origina l Quarterly VAT Returns for the first and second quarters of taxab le year 2006 and Amended Quarterly VAT Returns for the third and fourth quarters of taxable year 2006 reflected the zero-rated sales, domestic purchases of non-capital goods and services, services rendered by non - resident, importation of non -capital goods, and the related excess or unutilized input VAT arising from the same transactions; which are detai led as fol lows: Current I ransactions 2006 Zf'ro-rilted Domestic lmportiltion- Dompstic Services I axa bl e Sales l'u rc hases Kendered by Quarter (I') l'urchases Goods Services Non (P) Residents Goods Other Other I han (I') Cilpitill Goods Goods (I') (I') 1st 76t1 , 2<.J1,788.0 :~ 3,7'12,60 :~.17 2,61tl ,<.Jt16.67 :~<.J,7<.J1 , <.J<.JS.8S 0.00 1J4, IJ8. IJ /nd 801,9J3,0J6. 16 J,881 ,34J.6 I J88,9/J.OO 14,894,431 .83 791,001.08 1J,860, 178. IJ 12,22<.J ,7s:~ . oo 3rd 807,J 49 ,369.6J 13,868,44J.00 7,60J,446.6 I :~<.J , 716 ,871.<.)2 tlth <.J7S,063,1<.J7.67 ll,<.JS<.J,288 .23 2,77S,316.67 Iota I 3,343,8J 1,417.11 3J,4J 1,687 .0 I 8,J84,68J.01 11 0,763,478 .3J 1/,G IJ,J 17 .83 I xcess/Unutilited VI\ I Credits Domestic Dompstic Services lmportiltion- Totill Goods Other (I') 7006 l'urchases Pu rchases Kendered by I han Capi tal Goods J,093, 164.38 I axab le Goods Serv ices Non (I') 7,J6J, 101.80 Ouilrter Other (P) Residents 764,9J0 .00 ?-- :~,<.J11,261 . 6<.J 10,6 I 1.00 I han Ca pital (I') :~O<.J,:~2S.OO Goods (P) 1st 389,6 18.41 4,438,J9J.9 I 0 .00 1,/19,761.11 18,J ll.OJ /nd 696,J98.04 1,<.J03 ,21S.t1S :~tl , <.J20.B :~rd 1,66 :~ , 801.11

DEC ISION P[)gC S of 19 CTA EB No . 761 (CTA Case No . 7737) Visayas Geo th ermal Power Company vs. Commissioner of Internal Revenue 1\t.h 1 , 11 :~ :~ , s :~2.77 1\ ,766 , 00!\.6 :~ 1,11 67,S7(U 6 :~ :B , (H!\.00 !\, 000,11\9 .76 IOL<JI 4, 183,JJ0 .33 17,881,081./6 1,J71 ,061.J4 9 I 1,990 .00 19,J69,683 .63 On July 4, 2007, petition er fil ed an admin istrat ive claim for refund of the abov e-m en tion ed unutili zed input VAT with the BIR Revenu e Di strict Offi ce No . 89. Since petition er has yet to receive a favorab le response from respondent and before it co uld be barred by prescription, petition er filed thi s in stant Petition for Review on March 14, 2008, pursuant to Sections 112 and 229 of the National Internal Revenue Cod e (NIRC) of 1997. In th e Answ er filed on May 30, 2008, respon den t allege d th e following Sp ecial and Affirmative Defense: "PETITIONER'S JUD ICIAL CLAIM WAS FILED BEYOND TH E PERIOD PRESCRIBED BY LAW, HENCE, TH E HONORABLE COURT HAS NO JURISDICTION TO TAK E COGNI ZANC E OF TH E INSTANT CASE ." XXX XXX XXX On August 28, 2009, th e case was ordered submitted for decisio n after petitioner and respondent filed their memoranda on August 24, 2009 and July 30, 2009, respectively. The issu es, as jointly stipulated by th e parties, are the followin g: "1. Wh eth er or not th e Honorab le Court has jurisdict ion over the in sta nt petition . 2. Wh ether or not the alleged unutilized input VAT of the Petitioner for the 1st to 4th quarters of CY 2006 amountin g to P1 9,569,683.63 is substantiated by docum entary evidence in the form of invoices and official receipts. 3. Whether or not th e alleged unutili zed input VAT cre dits of the Petitioner for the 1st to 4th quarters of CY 2006 in the total amount of P19,569,683.63 w as applied against any output VAT of the Petition er in t he V subsequen t quarters.

DECISION Page 6 of 19 CTA EB No. 761 (CTA Case No. 7737) Visayas Geothermal Power Company vs. Commissioner oj Internal Revenu e 4. Wheth er or not such alleged input VAT were erron eous ly or illegally co ll ected by Respondent. 5. Wh ether or not the Petitioner is entitled to a refund and/or issuance of tax credit certificate in the total amount of P19,569,683.63, representing its alleged unutilized input VAT from domestic purchases and importation of goods and services for the 1st to 4th quarters of CY 2006 . 6. Whether or not Petitioner incurred the input VAT on its alleged domestic purchases and importation of goods and services for the 1st to 4th quarters of CY 2006. 7. Wh ether or not Petitioner's claim for refund of unutilized input VAT was filed within the period prescribed by law ." The foregoing issues can be summarized as follows: "Whether or not petition er is entit led to the refund or issuance of tax credit certificate in the amount of P19,569,683 .63, representing unutilized input VAT from its domestic purchases of non-capita l and cap ital goods and services, services rendered by non-residents, and importation of capita l and non-capita l goods for the four quarters of taxable year 2006." In the ori ginal Deci sion dated June 23, 2010, the Court a quo partially gra nted petitioner its claim for refund or issuance of TC C in the reduced amount of P18,664, 110.07 . On January 31, 2011 an Amended Decision�'' wa s issued by the Court a qua reversing and setting aside its original Decision dated June 23, 2010 and declarin g petitioner's claim for refund or iss uance of tax credit certificate for its unutili zed input VAT attributable to petitioner' s zero- rated sa les for the four quarters of taxable V year 2006 DISMISSED for being filed out of time . The Court a quo found merit in r, Supra, Note 2 .

DECISION PCJgc 7 of 19 CTA EB No. 7G1 (CTA Ca se No. 7737 ) Visoyos Geot herm al Power Com pany vs. Co m missioner oj Internal Revenu e res pond ent's contention that petitioner fil ed its judi cial claim beyond t he thirty (30)- day period followin g th e 120 days given to res pond ent to decid e on t he claim for refund or iss uance of t ax credit certific at e. The Court a qua deni ed for lack of m erit petition er's motion for recon sid eration of th e above Amended Decision6 in a resolution dated on April 5, 20 11 . Hence, th e filin g of th e in st ant Pe tition f or Revie w 7 by petition er Vi sa yas Geothermal Power Company. In a Resolution8 dat ed Jun e 3, 2011, res pond ent w as ord ered to comm ent on t he subj ect petition. Res ponden t fil ed her Comme n t9 on Jun e 21, 2011 . On July 7, 2011, the Court En Ban e resolved t o give due course to the in stant Petit ion for Revi ew and required th e part ies t o submit t heir res pectiv e M emorand a wit hin t hirt y (30) days from not ice . Res pond ent f il ed a Man ifestation10 statin g t hat she is adoptin g the argum ents in her Comme n t dated Jun e 21, 2011 as her m emorandum in thi s ca se; similarly, petition er t im ely fil ed its Me morandum11 on Au gust 18, 2011 . Con siderin g th e Manifesta tion fil ed by th e res pond ent and t he Memo randum of petition er, th e in st ant Petition for Revi ew w as submitted for V deci sion on Sept emb er 6, 2011. G Supra . 7 Supra Note L 8 Rollo, pp . 94-95. 9 Rollo, pp. 9G-102. 10 Ro llo, pp.107-108. 11 Rollo, pp . 111 181.

DECISION PtJgc 8 of 19 CTA EB No. 761 (CTA Case No. 7737) Visayas Geothermal Power Company vs. Commissioner oj Internal Revenue ISSUES Petitioner interposed the followin g iss ue s: A. THE CTA-D IVISION VALIDLY ACQUIR ED JURISDICTION OF PETITION ER'S JUDICIAL CLAIM FOR REF UND . B. AICHI 17 SHOULD NOT BE APPLI ED INDISCRIMINATELY TO ALL CLAIMS FOR VAT REF UND . C. THE PROSPECTIVE APPLICATION OF THE AICHI INTE RPR ETATION ON THE OBS ERVANC E OF THE 120-DAY RULE IS LEGALLY EQUI TABLY IMP ER ATIV E. D. PETITIONER IS ENTITLED TO THE REFUND OF ITS CLAIMED INPUT VAT FOR THE FOUR QUARTERS OF CY 2006. Arguments of Petitioner Pet ition er su bmits that the Court in Divisio n validly acquired juri sdiction of petitioner's judicial claim for refund arguing t hat its administrative claim for refund with th e Bll~ on July 4, 2007 and Petition for Review with this Court on M arch 14, 2008 were filed in accord ance with the prevailing laws and rules relative to th e filing of administrative an d judici al claims for refund at the tim e of filin g, i.e., [i] the 30-day period to appeal to th e Court of Tax Appeals (CTA} following th e expiration of th e V 120-day period under Section 112 (C) of the 1997 Tax Code is neither mandatory nor 17 Commissioner of Internal Revenue vs. Aichi Forqinq Company of Asia, Inc., G.R. No . 1R4R23, October 6, 2010.

DECISION Pa ge 9 of 19 CTA EB No. 76 1 (CTA Case No. 7737) Visoyos Geothe rmal Power Company vs. Commissioner of Internal Revenue compulsory, and may be dispensed with as long as both are filed within the 2-year prescriptive period provided under Section 229 of the sam e code; [ii} Section 229 of th e 1997 Tax Code, which provides that a taxpayer has two years from th e date of payment of tax within which to file both th e administrative and judicial claims for refund, applies to claims for input VAT refund; and [iii} th e ruling of the Supreme Court in th e case of Atlas Consolidated Mining and Development Corp., vs. CIR, G.R. No . 1411 04 & 148763, Jun e 8, 200 7, declaring that both administrative and judicial claims for input VAT refund must be filed within two years from th e date of filing of th e return and payment of th e tax du e. Furth er, pet ition er avers that: Section 112 (C) of the 1997 Tax Code is directory as it neither compels not demand s t he taxpayer to ob se rv e the period s provided therein; unlike Section 229 of the 1997 Tax Code, Section 112 (C) of the sa m e code is silent on the legal con sequ ences of the taxpayer's failure to comply with the state d periods; the mandatory lan guage of Section 229 of the 1997 Tax Code indi cates the legislative intent to apply this provi sion to all cases of recovery of erron eou sly, illega lly and excessively collected internal revenu e taxes, includin g VAT, which is an internal revenue tax. Petition er argues that prior to Aichi 13 , no jurisprudence mandated the application of th e 120/30-day rule; numerou s cases decid ed by the Supreme Court did not apply th e 120/30-day rule . Moreover, petitioner insists that : the Aichi case should not be applied V indiscriminately to all claims for VAT refund as it did not provide sufficient legal basis n Commissioner of Internal Revenue vs. Aichi Forging Company of Asia, In c., G.R. No . 184823, October 6, 2010 .

DECISION P<Jgc 10 of 19 CTA EB No . 761 (CTA Case No. 7737) Visoyos Geothermal Power Company vs. Commissioner of Internal Revenue for the CTA-Divi sion to divest itse lf of juri sd iction over the case; Aichi did not overturn the Supreme Court's doctrinal ruling in Atlas and as all other Supreme Court cases ado pting the same vi ew and do es not provide th e le ga l ba sis for th e courts to indiscriminately di smi ss, for lack of juri sdiction, cases which failed to strictly comply with the 120-day period under Section 112 (C) of the 1997 Tax Code; reliance on th e Aichi case is misplaced, sa id case was prem ise d on the prematurity of the filing of th e judicial claim unlike in thi s case wher e petitioner allowed the 120- day period to lapse and availed of the full two-year pre sc riptive period before it filed its judicial appeal; violation of th e 120/30-day period can not be equated to lack of juri sdiction , if at all, it is a mere violation of the doctrine of exhaustion of administrative remedies. Nonetheless, petitioner manifests that respondent is deemed to have waived her ri ght to invoke petitio ner's alleged violation of the 120/30-day rule when she issued re gulation s and circulars that demon strated her acqui esce nce to the earlier deci si on s of this Co urt that the taxpayer need not wait for the lapse of the 120-day period before filing a petition for review with the CTA- Division, i.e., Section 4. 104-2, Reve nue Reg ulations (RR) No. 7-95, Revenue Memorandum Circular (RMC} No. 42-99, RMC No . 42-2003 as amended by RMC No . 49-2003, RMC No . 29-2009; and that res pond ent has actively taken part in all the stage s of the proceedings by filing all the necessa ry pleadings and taking part in the tri al of th e case . Fi nally, petition er contends th at th e prospective application of the Aichi interpretation on the observance of the 120-day rule is legally equitably imperative. V Petitioner submits th at even assum in g that th e Aichi decision validly overruled th e

DEC ISION PJgc 11 of 19 CTA EB No. 7Gl (CTA Case No. 7737) Visayas Geothermal Power Co mpany vs. Commissioner of Internal Revenue doctrine laid down in the Atlas case, the Aichi case shou ld not be made to app ly to judicial claims for refund that were f il ed before its promulgation, such as this case. Arguments of Respondent Respondent counters that the doctrine in the Atlas case only app lies to the National Internal Revenue Code (NIRC} of 1977 and not to the NIRC of 1997. There have been significan t changes from the 1977 to 1997 version of the NI RC; unlike in th e NIRC of 1977, the 1997 version clearly shows that there are specific requirements in f iling a judicial claim for refund. Further, respondent maintains that the cause of action of petitioner had already prescribed, hence this Court never acquired juri sdiction over the case . Lastly, re spondent stresses the supremacy of the decision of the Supreme Court in the Aichi ca se. THE RULING OF THE COURT EN BANC This Court ho lds t hat t he di sposition of the Court a quo dismi ss ing petitioner's claim for refund or issuance of TCC for its unut ili zed in put VAT is fu lly ju stified in law and in reason. No new matters or iss ues have been raised , and all the V grounds re lied upon by petitioner in thi s Petition for Re vie w have been extensively

DECISION Page 12 of 19 CTA EB No . 761 (CTA Case No . 7737) Visayas Geo thermal Power Company vs. Commissioner of Internal Revenue discu sse d and passed upon in the Amende d Oecision14 and Res olution1-"s ought to be reconsidered. Petitioner's s tatutory right to appe al has already prescrib ed, and thus, this Court has not acquired jurisdiction over the instant claim for the refund or issuance of TCC for unutilized input VAT for th e four quarters of 2006 Petitioner's judicial claim for refund or iss uance of TCC for its unutilized input VAT for the four quarters of 2006 wa s appropriately di smissed by the Court in Divi sion on the ground th at th e same wa s filed beyond the 30-day period prescribed under Section 112(C) of the NIRC of 1997, as amended . Under Section 112(C) of th e NIRC of 1997, as amended, the Commi ss ioner of Internal Revenue (CIR} has "120 days from th e date of the submission of th e complete documents in support of the application [for tax refund/credit], " within wh ich to grant or deny the claim . In case of full or partial denial by the CIR, the taxpayer's recourse is to file an appeal before the CTA within 30 days from receipt of the decision of the CIR. However, if after t he 120-day period the CIR fails to act on the application for tax refund/credit, the remedy of the taxpayer is to appeal the V inaction of the CIR to the CTA within 30 days. 16 1 ~ Supra, Note 2. ,, Supra, Note 3. 16 Commissioner of Internal Revenue vs. Aichi Forging Company of Asia, Inc., G.R. No. 184823, October 6, 2010 .

DECISION Pilge 13 of 19 CTA EB No . 761 (CTA Case No. 7737) Visoyos Geo th ermal Power Company vs. Commissioner of Int erna l Revenue Record s show that petitioner fil ed its admini strative claim for refund for the four quarters of 2006 on July 4, 2007 . Under Section 112 (C) of the NIR C of 1997, as amended, CIR had 120 days or until Novemb er 1, 2007 within which to decid e the claim for refund or iss uance of TCC; however, since November 1 and 2 were declared holidays, the end of th e 120-day fell on November 5, 2007, the next working day. Con se qu ently, petitioner is given a period of 30 days from Novemb er 5, 2007 or until December 5, 2007 within which to ap peal. Petitioner filed its Petition for Review on March 14, 2008, 100 days lat e or beyond the 30-day period provided under Section 112(C) of the NIRC of 1997, as amended. Hence, petitioner's statutory ri ght to appeal has already presc ribed , and thus, this Co urt ha s not acquired juri sdiction over t he in sta nt claim for the refund or iss uance of TCC for unutilized input VAT for the four quarters of 2006 . Perfection of an appeal in the manner and within the period laid down by law is not only mandatory but also jur i sd i c tio nal 1 1 . It is significant to note that in the recent case of Commissioner of Internal Revenue vs. Fort Bonifacio Developm ent Corporation / 8 although it does not mainly pertain to the 30-day period to file petition or appeal und er Sec. 112(C) of the NIRC of 1997, as amended by RA 9337, th e Supreme Court reaffirmed the principle that V th e right to app eal is not a natural right, but merely a statutory privilege exercised 17 Commissioner of Internal Revenue vs. Fort [Jonijocio Developmen t Corporation, G.R. No . 167606, /\ugusl11, 2010. lH G.R. No. 167606, August 11, 2010 citing Neypes v. Court of Appeals, 506 Phil. 613, 621 (2005); Nunez v. GSIS Family Bank, G. R. No. 163988, Novem ber 17, 2005, 475 SCRA 305, 320; Republic v. Court of Appeals, 379 Phil. 92, 100-101 (2000) ; In th e matter of th e Heirship (Intestate Esta tes) of th e lat e Hermogen es Rodriqu ez v. Robles, G.R. No. 182645, December 4, 2009, 607 SC R/\ 770 .

DECISION P<Jgc 14 o f 19 CTA EB No. 761 (CTA Case No. 7737) Visayas Geothermal Power Company vs. Commissioner of Internal Revenue only in the manner and in accordance with the provi sion s of law. In varyin g but con sist ent lan gua ge, th e Supreme Court ha s empha size d that "th e ri ght to appeal is not a natural ri ght or a part of du e process, it is m erely a st atutory privilege, and m ay be exe rci se d only in the manner and in accord ance with th e provi sion s of th e law. The party who see ks to avail of th e sa m e mu st comply with th e requirem ents of th e rul es. Fa ilin g to do so, th e ri ght to app ea l is lo st. xxx " [R]ul es of procedure, es pecially tho se prescribing the time within whi ch certain acts mu st be don e, have oft been held as absolutely indi spensa bl e to th e prevention of nee dl ess delays and to th e ord erly and speedy di scharge of bu sin ess. xxx Thu s, w e have held that th e failure t o perfect an app eal within t he prescribed reglem entary period is not a m ere te chni cality, but j ur i sdi c tion al " . 1 l ' Neith er could petition er plead leni ency in th e applicat ion of th e rul es presc ribin g t he period to appeal con sid erin g t hat t he sam e is presc rib ed not only by t he RR CTA bu t also by statut e, part icul arly Section 112(C) of t he NIRC of 1997, as am end ed . "Th e perfection of an app eal in th e m ann er and within th e period prescrib ed by law is not only mand atory but jurisdiction al, and f ailure to perfect an app ea l has th e effect of rendering the judgment final and exe cutory. Public policy and sound pract ice dem and th at jud gm ents of co urts should beco me f ina l and irrevocabl e at som e definit e dat e fixed by law. " 70 ~ 19 Producers Bank of the Philippines vs. CA, G.R. No . 126620, April 17, 2002 citing Ortiz vs. Court of Appea ls, 299 SCRA 708 (1998). 20 Supra, No te 18.

DECISION Page 15 of El CTA EB No. 761 (CTA C<1se No. 7737) Visoyos Geolhermol Power Company vs. Commissioner of In lerna I Revenue As to p et itioner's argume nt t h at the 120/30-day ru le is not mandatory and may be dispensed with as lon g as both the admini strative and judicial claims are filed within th e two -year pre scriptive period under Section 229 of the NIRC of 1997, as amended, the Supreme Court, in th e Aichi case, ratiocinated in thi s wi se: XXX "Respondent's assertion that the non-observance of the 120-day period is not fatal to the filing of a judicial claim as long as both the administrative and the judicial claims are fil ed within the two-year prescriptive period has no legal basis. XXX In fact, applying the two-year period to judicial claims would render nugatory Section 112(0) of the NIRC, which already provides for a specific period within which a taxpayer should appeal the decision or inaction of the CIR. The second paragraph of Section 112(0) of the NIRC envisions two scena rios: (1) when a decision is issued by the CIR before the lapse of the 120-day period; and (2) when no decision is made after the 120-day period. In both instances, the taxpayer has 30 days within which to file an appea l with the CTA. As we see it then, the 120-day period is crucial in filing an appea l with the CTA. With regard to Commissioner of Internal Revenue v. Victorias Milling, Co., Inc. re lied upon by respondent, we find the same inapplicable as the tax provision involved in that case is Section 306, now Section 229 of the NIRC. And as already discussed, Section 229 does not apply to refunds/credits of input VAT, such as the V instant case.

DECISION Page 16 of 19 CTA EB No. 761 (CTA Ca se No. 7737} Visoyos Geo th ermal Power Company vs. Commissioner of In l erna! Revenue The Aichi case is a 'to the letter' application of Section 112 {A} and (C) of the NIRC of 1997, hence their applications must be from the time th e 1997 NIRC took effect and not from the promulgation of the cases. We find apropos the ruling of the Court in Divi sion as to the outright application of the literal terms of Section 112 (A) and (C) of the NIRC of 1997. Quoted here under is the pertinent portion ofthe challenged Resolution21 : "The law takes effect from the time of its effectivity and not from th e time of the promulgation of th e decision app lying the law . As held by th e Suprem e Court in the case of Philippin e Constitution Association vs. Enriquez: "The Court's interpretation of the law is part of that law as of the date of its enactment since th e court's interpret ation merely estab li shes the contemporary leg islative intent that the co nstru ed law purports to carry into eflecl." Th e Aichi case merely mad e an outright app lication of the litera l terms of Section 112 (A) and (D) of the Nationa l Interna l Revenue Code (NIRC) of 1997, as amended, and cons id ering that the applicable law here is th e National Internal Revenu e Cod e (NIRC ) of 1997, whi ch took effect on January 1, 1998, then, there is no reason not to app ly t he ru ling of the V Supreme Court in the Ai chi case." 21 Supra, Note 3.

DECISION PCJgc 17 of 19 CTA EB No. 761 {CTA Cise No . 77 37 ) Visayas Geothermal Power Company vs . Commiss ioner oj Internal Revenue It is well to remember that "jud icia l interpretation of a statute constitutes part of the law as of the date it wa s originally passed, since th e Court's construction merely establi shes the contemporaneous legislative intent that th e int erpreted law carried into effect. Such judicial doctrin e do es not amount to th e pa ssage of a new law, but consists merely of a construction or interpretation of a pre- ex isting one. " n "The law take s effect from th e time it becomes effectiv e and not from th e tim e of th e promulgation of a deci si on applying th e law. Considering that the applicab le law here is the NIR C of 1997 wh ich took effect on 1 January 1998, petition er' s claim fall s within its coverage. Notably, it is only upon th e effectivity of the statute that legal rights and obligation s become available to those entitled by the language of the statute. The validity and obligatory force of a law proceed from t he V fact that it ha s first bee n promul gated." 23 22 /l.ir Liquide Philippines, Inc. , vs. Commissioner of lnternol Revenu e, CT!\ E8 CCJ sc No . 704, FcbruCJry 27, 2012 23 /l.ir Liquide Philippines, Inc., vs. Commissioner of lnternol Revenu e, CT!\ E8 CCJ SC No. 704, FcbruCJry 27, 201 2 citing Commission er of Internal Revenue vs. Michel J. Lhuiller Pawnshop, Inc. , G.R . No . 15094 7, July 15, 2003, 406 SCRA 178 citing the ca se of GS IS v s. Court o f Appeal s, 33 4 Phil. 163, 17 5, 266 SCRA 187 (199 7 ); Abakada Guro Party List vs. Purisima , G.R. No . 166715, Augu st 14, 2008, 56 2 SCRA 251; Mighty Corpora Lion vs. E & J Gallo Win ery, G.R. No . 15434 2, July 14, 2004, 4 34 SCR/\ 473 .

DECISION Pugc 18 of 19 CTA EB No . 761 (CTA Case No . 7737) Visayas Geothermal Power Company vs. Commissioner of Internal Revenue WHEREFORE, premises considered, the in sta nt Pet ition for Review is hereby DISMISSED . According ly, the Amended Decisio n24 and Reso lu tion 2 dated January 31, ,.' 2011 and April 5, 2011, res pectively, of th e Court in Division are hereby AFF IRM ED. Petitioner's cl aim for refund in th e am ount of P19,569,683.63 is DENI ED on th e ground th at th e judicial claim for the four quart ers 2006 w as fil ed beyond the 30-day period presc ribed under Section 112(C) of th e NIRC of 1997, as am end ed. SO ORDERED . pr~_i._,/ft- WE CONCUR: AMELIA R. COTANGCO-MANALASTAS Ass ociate Ju stice w-"'. OL--Y1- ERNEsro D. ACOSTA Pres idin g Ju stice <2~~c-~~~ '1. Ass oc ate Ju st ice 'fuANIT-0 C. CASTANEDA, J~. ' Ass ociate Ju st ice E~. UY ~ Ass oci at e Ju stice CAESAR A. CASANOVA ice ~~~R;&UEZ Ass ociate Ju stice r.:. ~ N. M ""~- c~ 't'f'EliTo N. MINDARO-GRULLA As soci ate Ju stice )~ Supra, Note 2. 2s Supra, Note 3 .

DECISION P<Jgc 19 of 19 CTA EB No. 7Gl (CTA Case No. 7737) Visoyos Geothermal Power Company vs. Commissioner oj Internal Revenue CERTIFICATION Pursuant to Section 13, Arti cle VIII of th e Con stitution , it is hereby ce rtifi ed th at th e conclu sion s in th e above Decisi on w ere reac hed in co ns ult ation with th e m emb ers of th e Co urt En Ban e bef ore th e ca se w as assign ed to th e wri t er of t he o pi nion of th e Court . Cl~.cz . ~ ERNESTO D. ACOSTA Pres idin g Ju stice

REPUBLIC OF THE PHILIPPINES Court ofTax Appeals QUEZON CITY En Bane VISAYAS GEOTHERMAL POWER CTA EB CASE NO. 761 COMPANY, (CTA Case No. 7737) Petitioner, Present: -versus- Acosta, P.J. Castaneda, Jr., Bautista, Uy, Casanova, Palanca-Enriquez, Fabon- Victorino, Mindaro-Grulla, and Cotangco-Manalastas, JJ. COMMISSIONER OF INTERNAL Promulgated: REVENUE, JUL 11 Z01Z ~/# ;~-.~H ,Pr/1~ '\ , Respondent. x----------------------------------------------------------------------------------------------------x DISSENTING OPINION BAUTISTA,[.: Where there has been justifiable reliance on Our decisions, and those who have so relied may be substantially harmed if retroactive effect is given, where the purpose of the new rule can be adequately effectuated without giving it retroactive operation, or where retroactive operation might greatly burden the administration of justice, then it is Our duty to apply the new rule prospectively.1 I Magtoto v. Manguera, et al., G.R. Nos. L-37201-02, L-37424, and L-38929, March 3, 1975, 63 SCRA 4, Concurring ! Opinio~ penned by Justice Felix Q. Antonio, with Justices Antonio P. Barredo and Cecilia Mufioz-Palma' J concunmg.

DISSENTING OPINION CTA EB CASE No. 761 (CTA Case No. 7737) With the foregoing principle in mind, the factual circumstances present in the case at bench should support the application of the then prevailing jurisprudence at the time the claim was made. The rulings in the cases of Commissioner of Internal Revenue v . Mirant Pagbilao Corporation [Formerly Southern Energy Quezon, Inc.],2 and Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc.,3 are more in accordance with the letter and spirit of Section 112 of the 1997 National Internal Revenue Code, as amended; nonetheless, it would be the height of injustice to impose a new ruling wherein after a taxpayer-claimant had faithfully relied and complied therein, this Court will only nullify the same on the basis of the so-called " adherence to precedence." It is true that this Court has the duty to obey the decisions of the Supreme Court and render obeisance to its status as the apex of the hierarchy of courts.4 Still, this Court should not decide a case by merely adhering to precedence; idolatrous reverence for precedent, simply as precedent, no longer holds true.s Therefore, this Court cannot merely impose a ruling that was yet to be enunciated at the time a claim was lodged in Our forum. As the Supreme Court aptly ruled, "the final authority of this Court rests upon public respect for its decisions; that public respect is based upon an image which represents this Court as 2 G.R. No. 172129, September 12, 2008, 565 SCRA 154. 3 G.R. No. 184823, October 6, 2010. 4 Commission on Higher Education v. Atty. Felina S. Dasig, G.R. No. 172776, December 17, 2008, 574 SCRA 2 2 7 , y citing Albert v. Court of Firs t Instance of Manila, No. L-26364, May 29, 1968, 23 SCRA 948, 961. s Philippine Trust Company and Smith, Bell and Co. v. Mitchell, 59 Phil. 30, 36. '

DISSENTING OPINION CfA EB CASE No. 761 (CfA Case No. 7737) declaring legal principles with an authority and certainty that the people may place upon it their bona fide reliance and reasonable expectations."6 Hence, prior determinations deemed to have finality and acted upon accordingly, demands examination. The effect of a subsequent ruling as to invalidity may have to be considered in various aspects. It may have consequences which cannot just be ignored.? Even the taxpayer-claimant itself could not have foreseen that after it had filed its claims before the administrative and judicial fora, a subsequent ruling, either modifying or overruling a previous one, would be issued that would put to naught its claims. Therefore, when petitioner filed its administrative claim on July 4, 2007, and the subsequent judicial claim before this Court on March 14, 2008, the then prevailing doctrine, is that the reckoning of the two (2)-year prescriptive period is from the filing of the pertinent return;8 not from the close of the quarter;9 and not even within thirty (30) days from receipt of the decision denying the claim, or after the one hundred twenty (120)-day period given to the Commissioner to act thereon.1o Based on the records of the case, petitioner filed its relevant returns for the taxable year 2006 on the following dates: April 20, 2006, July 25, 2006, October 25, 6 Supra, note 1. 7 Albino S. Co v. Court of Appeals, et al., G.R. No. 100776, October 28, 1993, 277 SCRA 444, citing Chicot CounhJ Drainage District v. Baxter States Bank, 308 US 371,374/ 1940/. s Atlas Consolidated Mining and Development Corpora tion v. Commissioner of Internal Revenue, G.R. Nos. 141104 & 148763, June 8, 2007, 524 SCRA 73. 9 Commissioner of Internal Revenue v. Mirant Pagbilao Corpora tion [Forn1erly Souiliern Energy Quezon, Inc.], Akhi A''- 2010y G.R. No. 172129, September 12, 2008, 565 SCRA 154. " Co="'ione< of Intem� l Revenue v. Fo<ging Comp~y of In<., G.R. No. 184823, O<tobe< 6,

DISSENTING OPINION CTA EB CASE No. 761 (CTA Case No. 7737) 2006, and January 25, 2007. Petitioner, thus, had until two (2) years from the aforementioned dates, within which to file both its administrative and judicial claims. Albeit in the Decision dated June 23, 2010, the Former Second Division of the Court found that the claims were filed in accordance with the two (2)-year prescriptive period from the close of the relevant taxable quarter, I still vote to apply the ruling in force at the time the action was made. In sum, I find the administrative and judicial claims filed within the prescribed two (2)-year period. Accordingly, I vote that the Petition for Review be GRANTED. The Decision dated June 23, 2010 of the Former Second Division of the Court should be REINSTATED .