Page 1 of 12

CIR (Commissioner of Internal Revenue) vs. SAN ROQUE

*see pp. 5-10 for the application of OPERATIVE FACT DOCTRINE

G.R. No. 187485 is a petition for review assailing the decision and resolution
promulgated by the CTA EB affirming the decision and resolution of CTA 2nd
Division. The CTA 2nd Division ordered the CIR to refund or issue a tax credit 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:
The CTA EBs narration of the pertinent facts is as follows: [CIR] is
the duly appointed Commissioner of Internal Revenue, empowered,
among others, to act upon and approve claims for refund or tax credit,
with office at the Bureau of Internal Revenue (BIR) National Office
Building, Diliman, Quezon City. [San Roque] is a domestic corporation duly
organized and existing under and by virtue of the laws of the Philippines
with principal office at Barangay San Roque, San Manuel, Pangasinan. It
was incorporated in October 1997 to design, construct, erect, assemble,
own, commission and
operate power-generating plants and related
facilities pursuant to and under contract with the Government of the
Republic of the Philippines, or any subdivision, instrumentality or agency
thereof, or any government owned or controlled corporation, or other
entity engaged in the development, supply, or distribution of energy. As a
seller of services, [San Roque] is duly registered with the BIR with TIN/VAT
No. 005-017-501. It is likewise registered with the Board of Investments
(BOI) on a preferred pioneer status, to engage in the design,
construction, erection, assembly, as well as to own, commission, and
operate electric power-generating plants and related activities, for which it
was issued Certificate of Registration No. 97-356 on February 11, 1998. On
October 11, 1997, [San Roque] entered into a Power Purchase Agreement
(PPA) with the National Power Corporation (NPC) to develop hydropotential of the Lower Agno River and generate additional power and
energy for the Luzon Power Grid, by building the San Roque Multi-Purpose
Project located in San Manuel, Pangasinan. The PPA provides, among
others, that [San Roque] shall be responsible for the design, construction,
installation, completion, testing and commissioning of the Power Station
and shall operate and maintain the same, subject to NPC instructions.
During the cooperation period of twenty-five (25) years commencing from
the completion date of the Power Station, NPC will take and pay for all
electricity available from the Power Station. On the construction and
development of the San Roque Multipurpose Project which comprises of
the dam, spillway and power plant, [San Roque] allegedly incurred, excess
input VAT in the amount of 559,709,337.54 for taxable year 2001 which
it declared in its Quarterly VAT Returns filed for the same year. [San

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Roque] duly filed with the BIR separate claims for refund, in the total
amount of 559,709,337.54, 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
560,200,283.14. Consequently, [San Roque] filed with the BIR on even
date, separate amended claims for refund in the aggregate amount of
560,200,283.14. [CIRs] inaction on the subject claims led to the filing by
[San Roque] of the Petition for Review with the Court [of Tax Appeals] in
Division on April 10, 2003.
Trial of the case ensued and on July 20, 2005, the case was submitted for
decision.
The Court of Tax Appeals Ruling: Division
The CTA Second Division initially denied San Roques claim. In its
Decision16 dated 8 March 2006, it cited the following as bases for the
denial of San Roques claim: lack of recorded zero-rated or effectively
zero-rated sales; failure to submit documents specifically identifying the
purchased goods/services related to the claimed input VAT which were
included in its Property, Plant and Equipment account; and failure to prove
that the related construction costs were capitalized in its books of account
and subjected to depreciation.
The CTA Second Division required San Roque to show that it
complied with the following requirements of Section 112(B) of Republic
Act No. 8424 (RA 8424) to be entitled to a tax refund or credit of input VAT
attributable to capital goods imported or locally purchased: (1) it is a VATregistered entity; (2) its input taxes claimed were paid on capital goods
duly supported by VAT invoices and/or official receipts; (3) it did not offset
or apply the claimed input VAT payments on capital goods against any
output VAT liability; and (4) its claim for refund was filed within the two
year prescriptive period both in the administrative and judicial levels. The
CTA Second Division found that San Roque complied with the first, third,
and fourth requirements, thus: The fact that [San Roque] is a VAT
registered entity is admitted (par. 4, Facts Admitted, Joint Stipulation of
Facts, Records, p. 157). It was also established that the instant claim of
560,200,823.14 is already net of the 11,509.09 output tax declared by
[San Roque] in its amended VAT return for the first quarter of 2001.
Moreover, the entire amount of 560,200,823.14 was deducted by [San
Roque] from the total available input tax reflected in its amended VAT
returns for the last two quarters of 2001 and first two quarters of 2002
(Exhibits M-6, O-6, OO-1 & QQ-1). This means that the claimed input taxes
of 560,200,823.14 did not form part of the excess input taxes of
83,692,257.83, as of the second quarter of 2002 that was to be carriedover to the succeeding quarters. Further, [San Roques] claim for
refund/tax credit certificate of excess input VAT was filed within the two-

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year prescriptive period reckoned from the dates of filing of the

corresponding quarterly VAT returns.
For the first, second, third, and fourth quarters of 2001, [San Roque]
filed its VAT returns on April 25, 2001, July 25, 2001, October 23, 2001 and
January 24, 2002, respectively (Exhibits H, J, L, and N). These returns
were all subsequently amended on March 28, 2003 (Exhibits I, K, M, and
O). On the other hand, [San Roque] originally filed its separate claims for
refund on July 10, 2001, October 10, 2001, February 21, 2002, and May 9,
2002 for the first, second, third, and fourth quarters of 2001, respectively,
(Exhibits EE, FF, GG, and HH) and subsequently filed amended claims for
all quarters on March 28, 2003 (Exhibits II, JJ, KK, and LL). Moreover, the
Petition for Review was filed on April 10, 2003. Counting from the
respective dates when [San Roque] originally filed its VAT returns for the
first, second, third and fourth quarters of 2001, the administrative claims
for refund (original and amended) and the Petition for Review fall within
the two-year prescriptive period.
San Roque filed a Motion for New Trial and/or Reconsideration on 7
April 2006. In its 29 November 2007 Amended Decision, the CTA Second
Division found legal basis to partially grant San Roques claim. The CTA
Second Division ordered the Commissioner to refund or issue a tax credit
in favor of San Roque in the amount of 483,797,599.65, which represents
San Roques unutilized input VAT on its purchases of capital goods and
services for the taxable year 2001. The CTA based the adjustment in the
amount on the findings of the independent certified public accountant.
The following reasons were cited for the disallowed claims: erroneous
computation; failure to ascertain whether the related purchases are in the
nature of capital goods; and the purchases pertain to capital goods.
Moreover, the reduction of claims was based on the following: the
difference between San Roques claim and that appearing on its books;
the official receipts covering the claimed input VAT on purchases of local
services are not within the period of the claim; and the amount of VAT
cannot be determined from the submitted official receipts and invoices.
The CTA Second Division denied San Roques claim for refund or tax credit
of its unutilized input VAT attributable to its zero-rated or effectively zerorated sales because San Roque had no record of such sales for the four
quarters of 2001. The dispositive portion of the CTA Second Divisions 29
November 2007 Amended Decision reads:
WHEREFORE, [San Roques] Motion for New Trial and/or
Reconsideration is hereby PARTIALLY GRANTED and this Courts Decision
promulgated on March 8, 2006 in the instant case is hereby MODIFIED.
Accordingly, [the CIR] is hereby ORDERED to REFUND or in the
alternative, to ISSUE A TAX CREDIT CERTIFICATE in favor of [San Roque] in
the reduced amount of Four Hundred Eighty Three Million Seven Hundred
Ninety Seven Thousand Five Hundred Ninety Nine Pesos and Sixty Five

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Centavos (483,797,599.65) representing unutilized input VAT on

purchases of capital goods and services for the taxable year 2001. SO
ORDERED.
The Commissioner filed a Motion for Partial Reconsideration on 20
December 2007. The CTA Second Division issued a Resolution dated 11
July 2008 which denied the CIRs motion for lack of merit.
The Court of Tax Appeals Ruling: En Banc
The Commissioner filed a Petition for Review before the CTA EB
praying for the denial of San Roques claim for refund or tax credit in its
entirety as well as for the setting aside of the 29 November 2007
Amended Decision and the 11 July 2008 Resolution in CTA Case No. 6647.
The CTA EB dismissed the CIRs petition for review and affirmed the
challenged decision and resolution. The CTA EB cited Commissioner of
Internal Revenue v. Toledo Power, Inc. and Revenue Memorandum Circular
No. 49-03, as its bases for ruling that San Roques judicial claim was not
prematurely filed. The pertinent portions of the Decision state: More
importantly, the Court En Banc has squarely and exhaustively ruled on
this issue in this wise: It is true that Section 112(D) of the
abovementioned provision applies to the present case. However, what the
petitioner failed to consider is Section 112(A) of the same provision. The
respondent is also covered by the two (2) year prescriptive period. We
have repeatedly held that the claim for refund with the BIR and the
subsequent appeal to the Court of Tax Appeals must be filed within the
two-year period.
Accordingly, the Supreme Court held in the case of Atlas
Consolidated Mining and Development Corporation vs. Commissioner of
Internal Revenue that the two-year prescriptive period for filing a claim for
input tax is reckoned from the date of the filing of the quarterly VAT return
and payment of the tax due. If the said period is about to expire but the
BIR has not yet acted on the application for refund, the taxpayer may
interpose a petition for review with this Court within the two year period.
In the case of Gibbs vs. Collector, the Supreme Court held that if,
however, the Collector (now Commissioner) takes time in deciding the
claim, and the period of two years is about to end, the suit or proceeding
must be started in the Court of Tax Appeals before the end of the two-year
period without awaiting the decision of the Collector. Furthermore, in the
case of Commissioner of Customs and Commissioner of Internal Revenue
vs. The Honorable Court of Tax Appeals and Planters Products, Inc., the
Supreme Court held that the taxpayer need not wait indefinitely for a
decision or ruling which may or may not be forthcoming and which he has
no legal right to expect. It is disheartening enough to a taxpayer to keep
him waiting for an indefinite period of time for a ruling or decision of the
Collector (now Commissioner) of Internal Revenue on his claim for refund.
It would make matters more exasperating for the taxpayer if we were to

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close the doors of the courts of justice for such a relief until after the
Collector (now Commissioner) of Internal Revenue, would have, at his
personal convenience, given his go signal. This Court ruled in several
cases that once the petition is filed, the Court has already acquired
jurisdiction over the claims and the Court is not bound to wait indefinitely
for no reason for whatever action respondent (herein petitioner) may take.
At stake are claims for refund and unlike disputed assessments, no
decision of respondent (herein petitioner) is required before one can go to
this Court. (Emphasis supplied and citations omitted) Lastly, it is apparent
from the following provisions of Revenue Memorandum Circular No. 49-03
dated August 18, 2003, that [the CIR] knows that claims for VAT refund or
tax credit filed with the Court [of Tax Appeals] can proceed simultaneously
with the ones filed with the BIR and that taxpayers need not wait for the
lapse of the subject 120-day period, to wit: In response to [the] request of
selected taxpayers for adoption of procedures in handling refund cases
that are aligned to the statutory requirements that refund cases should be
elevated to the Court of Tax Appeals before the lapse of the period
prescribed by law, certain provisions of RMC No. 42-2003 are hereby
amended and new provisions are added thereto. In consonance therewith,
the following amendments are being introduced to RMC No. 42-2003, to
wit: I.) A-17 of Revenue Memorandum Circular No. 42-2003 is hereby
revised to read as follows: In cases where the taxpayer has filed a
Petition for Review with the Court of Tax Appeals involving a claim for
refund/TCC that is pending at the administrative agency (Bureau of
Internal Revenue or OSS-DOF), the administrative agency and the tax
court may act on the case separately. While the case is pending in the tax
court and at the same time is still under process by the administrative
agency, the litigation lawyer of the BIR, upon receipt of the summons from
the tax court, shall request from the head of the investigating/processing
office for the docket containing certified true copies of all the documents
pertinent to the claim. The docket shall be presented to the court as
evidence for the BIR in its defense on the tax credit/refund case filed by
the taxpayer. In the meantime, the investigating/processing office of the
administrative agency shall continue processing the refund/TCC case until
such time that a final decision has been reached by either the CTA or the
administrative agency. If the CTA is able to release its decision ahead of
the evaluation of the administrative agency, the latter shall cease from
processing the claim. On the other hand, if the administrative agency is
able to process the claim of the taxpayer ahead of the CTA and the
taxpayer is amenable to the findings thereof, the concerned taxpayer
must file a motion to withdraw the claim with the CTA. (Emphasis
supplied)

****

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This Resolution resolves the Motion for Reconsideration and the

Supplemental Motion for Reconsideration filed by San Roque Power
Corporation (San Roque) in G.R. No. 187485, the Comment to the Motion
for Reconsideration filed by the Commissioner of Internal Revenue (CIR) in
G.R. No. 187485, the Motion for Reconsideration filed by the CIR in G.R.No.
196113, and the Comment to the Motion for Reconsideration filed by
Taganito Mining Corporation (Taganito) in G.R. No. 196113.
San Roque prays that the rule established in our 12 February 2013
Decision be given only a prospective effect, arguing that "the manner by
which the Bureau of Internal Revenue (BIR) and the Court of Tax
Appeals(CTA) actually treated the 120 + 30 day periods constitutes an
operative fact the effects and consequences of which cannot be erased or
undone."1
The CIR, on the other hand, asserts that Taganito Mining Corporation's
(Taganito) judicial claim for tax credit or refund was prematurely filed
before the CTA and should be disallowed because BIR Ruling No. DA-48903 was issued by a Deputy Commissioner, not by the Commissioner of
Internal Revenue.
We deny both motions.
The Doctrine of Operative Fact
The general rule is that a void law or administrative act cannot be the
source of legal rights or duties. Article 7 of the Civil Code enunciates this
general rule, as well as its exception: "Laws are repealed only by
subsequent ones, and their violation or non-observance shall not be
excused by disuse, or custom or practice to the contrary. When the courts
declared a law to be inconsistent with the Constitution, the former shall be
void and the latter shall govern. Administrative or executive acts, orders
and regulations shall be valid only when they are not contrary to the laws
or the Constitution."
The doctrine of operative fact is an exception to the general rule, such
that a judicial declaration of invalidity may not necessarily obliterate all
the effects and consequences of a void act prior to such declaration.2 In
Serrano de Agbayani v. Philippine National Bank,3 the application of the
doctrine of operative fact was discussed as follows:
The decision now on appeal reflects the orthodox view that an
unconstitutional act, for that matter an executive order or a municipal
ordinance likewise suffering from that infirmity, cannot be the source of
any legal rights or duties. Nor can it justify any official act taken under it.

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Its repugnancy to the fundamental law once judicially declared results in

its being to all intents and purposes a mere scrap of paper. As the new
Civil Code puts it: "When the courts declare a law to be inconsistent with
the Constitution, the former shall be void and the latter shall govern.
Administrative or executive acts, orders and regulations shall be valid only
when they are not contrary to the laws of the Constitution." It is
understandable why it should be so, the Constitution being supreme and
paramount. Any legislative or executive act contrary to its terms cannot
survive.
Such a view has support in logic and possesses the merit of simplicity. It
may not however be sufficiently realistic. It does not admit of doubt that
prior to the declaration of nullity such challenged legislative or executive
act must have been in force and had to be complied with. This is so as
until after the judiciary, in an appropriate case, declares its invalidity, it is
entitled to obedience and respect. Parties may have acted under it and
may have changed their positions. What could be more fitting than that in
a subsequent litigation regard be had to what has been done while such
legislative or executive act was in operation and presumed to be valid in
all respects. It is now accepted as a doctrine that prior to its being
nullified, its existence as a fact must be reckoned with. This is merely to
reflect awareness that precisely because the judiciary is the governmental
organ which has the final say on whether or not a legislative or executive
measure is valid, a period of time may have elapsed before it can exercise
the power of judicial review that may lead to a declaration of nullity. It
would be to deprive the law of its quality of fairness and justice then, if
there be no recognition of what had transpired prior to such adjudication.
In the language of an American Supreme Court decision: "The actual
existence of a statute, prior to such a determination of unconstitutionality,
is an operative fact and may have consequences which cannot justly be
ignored. The past cannot always be erased by a new judicial declaration.
The effect of the subsequent ruling as to invalidity may have to be
considered in various aspects, with respect to particular relations,
individual and corporate, and particular conduct, private and official." This
language has been quoted with approval in a resolution in Araneta v. Hill
and the decision in Manila Motor Co., Inc. v. Flores. An even more recent
instance is the opinion of Justice Zaldivar speaking for the Court in
Fernandez v. Cuerva and Co. (Boldfacing and italicization supplied)
Clearly, for the operative fact doctrine to apply, there must be a
"legislative or executive measure," meaning a law or executive issuance,
that is invalidated by the court. From the passage of such law or
promulgation of such executive issuance until its invalidation by the court,
the effects of the law or executive issuance, when relied upon by the
public in good faith, may have to be recognized as valid. In the present

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case, however, there is no such law or executive issuance that has been
invalidated by the Court except BIR Ruling No. DA-489-03.
To justify the application of the doctrine of operative fact as an exemption,
San Roque asserts that "the BIR and the CTA in actual practice did not
observe and did not require refund seekers to comply with the120+30 day
periods."4 This is glaring error because an administrative practice is
neither a law nor an executive issuance. Moreover, in the present case,
there is even no such administrative practice by the BIR as claimed by
San Roque.
In BIR Ruling No. DA-489-03 dated 10 December 2003, the Department of
Finances One-Stop Shop Inter-Agency Tax Credit and Duty Drawback
Center (DOF-OSS) asked the BIR to rule on the propriety of the actions
taken by Lazi Bay Resources Development, Inc. (LBRDI). LBRDI filed an
administrative claim for refund for alleged input VAT for the four quarters
of 1998. Before the lapse of 120 days from the filing of its administrative
claim, LBRDI also filed a judicial claim with the CTA on 28March 2000 as
well as a supplemental judicial claim on 29 September 2000.In its
Memorandum dated 13 August 2002 before the BIR, the DOF-OSS pointed
out that LBRDI is "not yet on the right forum in violation of the provision of
Section 112(D) of the NIRC" when it sought judicial relief before the CTA.
Section 112(D) provides for the 120+30 day periods for claiming tax
refunds.
The DOF-OSS itself alerted the BIR that LBRDI did not follow the120+30
day periods. In BIR Ruling No. DA-489-03, Deputy Commissioner Jose
Mario C. Buag ruled that "a taxpayer-claimant need not wait for the lapse
of the 120-day period before it could seek judicial relief with the CTA by
way of Petition for Review." Deputy Commissioner Buag, citing the
7February 2002 decision of the Court of Appeals (CA) in Commissioner of
Internal Revenue v. Hitachi Computer Products (Asia)
Corporation5 (Hitachi), stated that the claim for refund with the
Commissioner could be pending simultaneously with a suit for refund filed
before the CTA.
Before the issuance of BIR Ruling No. DA-489-03 on 10 December 2003,
there was no administrative practice by the BIR that supported
simultaneous filing of claims. Prior to BIR Ruling No. DA-489-03, the BIR
considered the 120+30 day periods mandatory and jurisdictional.
Thus, prior to BIR Ruling No. DA-489-03, the BIRs actual administrative
practice was to contest simultaneous filing of claims at the administrative
and judicial levels, until the CA declared in Hitachi that the BIRs position
was wrong. The CAs Hitachi decision is the basis of BIR Ruling No. DA489-03 dated 10 December 2003 allowing simultaneous filing. From then

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on taxpayers could rely in good faith on BIR Ruling No. DA-489-03 even
though it was erroneous as this Court subsequently decided in Aichi that
the 120+30 day periods were mandatory and jurisdictional.
We reiterate our pronouncements in our Decision as follows:
At the time San Roque filed its petition for review with the CTA, the
120+30 day mandatory periods were already in the law. Section112(C)
expressly grants the Commissioner 120 days within which to decide the
taxpayers claim. The law is clear, plain, and unequivocal: "x x x the
Commissioner shall grant a refund or issue the tax credit certificate for
creditable input taxes within one hundred twenty (120) days from the date
of submission of complete documents." Following the verbalegis doctrine,
this law must be applied exactly as worded since it is clear, plain, and
unequivocal. The taxpayer cannot simply file a petition with the CTA
without waiting for the Commissioners decision within the 120daymandatory and jurisdictional period. The CTA will have no jurisdiction
because there will be no "decision" or "deemed a denial" decision of the
Commissioner for the CTA to review. In San Roques case, it filed its
petition with the CTA a mere 13 days after it filed its administrative claim
with the Commissioner. Indisputably, San Roque knowingly violated the
mandatory 120-day period, and it cannot blame anyone but itself.
Section 112(C) also expressly grants the taxpayer a 30-day period to
appeal to the CTA the decision or inaction of the Commissioner x x x.
xxxx
To repeat, a claim for tax refund or credit, like a claim for tax exemption, is
construed strictly against the taxpayer.1wphi1 One of the conditions for
a judicial claim of refund or credit under the VAT System is compliance
with the 120+30 day mandatory and jurisdictional periods. Thus, strict
compliance with the 120+30 day periods is necessary for such a claim to
prosper, whether before, during, or after the effectivity of the Atlas
doctrine, except for the period from the issuance of BIR Ruling No. DA489-03 on 10 December 2003 to 6 October 2010 when the Aichi doctrine
was adopted, which again reinstated the 120+30 day periods as
mandatory and jurisdictional.6
San Roques argument must, therefore, fail. The doctrine of operative fact
is an argument for the application of equity and fair play. In the present
case, we applied the doctrine of operative fact when we recognized
simultaneous filing during the period between 10 December 2003, when
BIR Ruling No. DA-489-03 was issued, and 6 October 2010, when this
Court promulgated Aichi declaring the 120+30 day periods mandatory
and jurisdictional, thus reversing BIR Ruling No. DA-489-03.

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The doctrine of operative fact is in fact incorporated in Section 246 of the

Tax Code, which provides:
SEC. 246. Non-Retroactivity of Rulings. - Any revocation, modification or
reversal of any of the rules and regulations promulgated in accordance
with the preceding Sections or any of the rulings or circulars promulgated
by the Commissioner shall not be given retroactive application if the
revocation, modification or reversal will be prejudicial to the taxpayers,
except in the following cases:
(a) Where the taxpayer deliberately misstates or omits material
facts from his return or any document required of him by the Bureau
of Internal Revenue;
(b) Where the facts subsequently gathered by the Bureau of Internal
Revenue are materially different from the facts on which the ruling
is based; or
(c) Where the taxpayer acted in bad faith. (Emphasis supplied)
Under Section 246, taxpayers may rely upon a rule or ruling issued by the
Commissioner from the time the rule or ruling is issued up to its reversal
by the Commissioner or this Court. The reversal is not given retroactive
effect. This, in essence, is the doctrine of operative fact. There must,
however, be a rule or ruling issued by the Commissioner that is relied
upon by the taxpayer in good faith. A mere administrative practice, not
formalized into a rule or ruling, will not suffice because such a mere
administrative practice may not be uniformly and consistently applied. An
administrative practice, if not formalized as a rule or ruling, will not be
known to the general public and can be availed of only by those within
formal contacts with the government agency.
Since the law has already prescribed in Section 246 of the Tax Code how
the doctrine of operative fact should be applied, there can be no
invocation of the doctrine of operative fact other than what the law has
specifically provided in Section 246. In the present case, the rule or ruling
subject of the operative fact doctrine is BIR Ruling No. DA-489-03 dated 10
December 2003. Prior to this date, there is no such rule or ruling calling
for the application of the operative fact doctrine in Section 246.
Section246, being an exemption to statutory taxation, must be applied
strictly against the taxpayer claiming such exemption.
San Roque insists that this Court should not decide the present case in
violation of the rulings of the CTA; otherwise, there will be adverse effects
on the national economy. In effect, San Roques doomsday scenario is a
protest against this Courts power of appellate review. San Roque cites

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cases decided by the CTA to underscore that the CTA did not treat the
120+30 day periods as mandatory and jurisdictional. However, CTA or CA
rulings are not the executive issuances covered by Section 246 of the Tax
Code, which adopts the operative fact doctrine. CTA or CA decisions are
specific rulings applicable only to the parties to the case and not to the
general public. CTA or CA decisions, unlike those of this Court, do not form
part of the law of the land. Decisions of lower courts do not have any
value as precedents. Obviously, decisions of lower courts are not binding
on this Court. To hold that CTA or CA decisions, even if reversed by this
Court, should still prevail is to turn upside down our legal system and
hierarchy of courts, with adverse effects far worse than the dubious
doomsday scenario San Roque has conjured.
San Roque cited cases7 in its Supplemental Motion for Reconsideration to
support its position that retroactive application of the doctrine in the
present case will violate San Roques right to equal protection of the law.
However, San Roque itself admits that the cited cases never mentioned
the issue of premature or simultaneous filing, nor of compliance with the
120+30 day period requirement. We reiterate that "any issue, whether
raised or not by the parties, but not passed upon by the Court, does not
have any value as precedent."8 Therefore, the cases cited by San Roque to
bolster its claim against the application of the 120+30 day period
requirement do not have any value as precedents in the present case.
Authority of the Commissioner to Delegate Power
In asking this Court to disallow Taganitos claim for tax refund or credit,
the CIR repudiates the validity of the issuance of its own BIR Ruling No.
DA-489-03. "Taganito cannot rely on the pronouncements in BIR Ruling No.
DA-489-03, being a mere issuance of a Deputy Commissioner."9
Although Section 4 of the 1997 Tax Code provides that the "power to
interpret the provisions of this Code and other tax laws shall be under the
exclusive and original jurisdiction of the Commissioner, subject to review
by the Secretary of Finance," Section 7 of the same Code does not prohibit
the delegation of such power. Thus, "the Commissioner may delegate the
powers vested in him under the pertinent provisions of this Code to any or
such subordinate officials with the rank equivalent to a division chief or
higher, subject to such limitations and restrictions as may be imposed
under rules and regulations to be promulgated by the Secretary of
Finance, upon recommendation of the Commissioner."
WHEREFORE, we DENY with FINALITY the Motions for Reconsideration filed
by San Roque Power Corporation in G.R. No. 187485,

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