G.R. No. 197525 June 4, 2014
FACTS
Petitioner VGPC is a special limited partnership
principally engaged in the business of power generation through geothermal
energy and the sale of generated power to the Philippine National Oil Company, pursuant
to the Energy Conversion Agreement. VGPC filed with the BIR its Original
Quarterly VAT Returns for the first to fourth quarters of taxable year 2005. On
2006, it filed an administrative claim for refund for the amount of
14,160,807.95 with the BIR District Office of Ormoc City on the ground that it
was entitled to recover excess and unutilized input VAT payments for the four
quarters of taxable year 2005, pursuant to Republic Act R.A. No. 9136, which
treated sales of generated power subject to VAT to a 0%. Nearly one month
later, while its administrative claim was pending, VGPC filed its judicial
claim via a petition for review with the CTA praying for a refund or the
issuance of a tax credit certificate covering the 4 quarters of taxable year
2005. In its order, the CTA Second Division found that only the amount of
7,699,366.37 was duly substantiated by the required evidence. Both VGPC and the
CIR appealed to the CTA En Banc. The CTA En Banc reversed and set aside the
decision and resolution of the CTA Second Division, and dismissed the original
petition for review for having been filed prematurely. Petitioner argues that
the CIR should have been estopped from questioning the jurisdiction of the CTA
after actively participating in the proceedings before the CTA Second Division.
ISSUE
Whether or not the CIR
should have been estopped from questioning the jurisdiction of the CTA.
RULING
No. It is a
well-settled rule that the government cannot be estopped by the mistakes,
errors or omissions of its agents. It
has been specifically held that estoppel does not apply to the government,
especially on matters of taxation. Taxes are the nation’s lifeblood through
which government agencies continue to operate and with which the State
discharges its functions for the welfare of its constituents. Thus, the government cannot be
estopped from collecting taxes by the mistake, negligence, or omission of its
agents. Upon taxation depends the ability of the government to serve the people
for whose benefit taxes are collected. To safeguard such interest, neglect or
omission of government officials entrusted with the collection of taxes should
not be allowed to bring harm or detriment to the people.
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