G.R. No. 173241, March 25, 2015
SILICON PHILIPPINES, INC. (FORMERLY INTEL PHILIPPINES MANUFACTURING, INC.), Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.
D E C I S I O N
LEONARDO-DE CASTRO, J.:
Before the Court is a Petition for Review on Certiorari filed by petitioner Silicon Philippines, Inc. (SPI) seeking the reversal and setting aside of the following: (1) the Decision1 dated January 27, 2006 of the Court of Tax Appeals (CTA) en banc in CTA EB Case No. 24, which affirmed the Decision2 dated November 24, 2003 and Resolution3 dated August 10, 2004 of the CTA Division in CTA Case No. 6170; and (2) Resolution4 dated June 26, 2006 of the CTA en banc also in CTA EB Case No. 24, which denied the Motion for Reconsideration of SPI. The CTA Division only granted the claim of SPI for tax credit/refund of input Value-Added Tax (VAT) on its purchases of capital goods, but not the input VAT attributable to its zero-rated sales.
SPI, formerly known as Intel Philippines Manufacturing, Inc., is a corporation duly organized and existing under Philippine laws, and engaged in the business of designing, developing, manufacturing, and exporting advance and large-scale integrated circuit components, commonly referred to in the industry as Integrated Circuits or “ICs.” It is registered with the Bureau of Internal Revenue (BIR) as a VAT taxpayer and with the Board of Investments as a preferred pioneer enterprise enjoying a six-year income holiday, in accordance with the provisions of the Omnibus Investments Code.
SPI filed on May 6, 1999 with the One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center of the Department of Finance an Application for Tax Credit/Refund of Value-Added Tax Paid covering the Third Quarter of 1998.5 SPI sought the tax credit/refund of input VAT for the said tax period in the sum of P25,531,312.83, broken down as follows:
A m o u n t Tax paid on Imported/Locally Purchased Capital Equipment P 2,425,764.00 Total VAT Paid on Purchases per Invoices Received
During the Period for which this Application is Filed
23,105,548.83 Amount of Tax Credit/Refund Applied For P 25,531,312.83
WHEREFORE, in view of the foregoing, the instant petition for review is hereby PARTIALLY GRANTED. [CIR] is ORDERED to ISSUE A TAX CREDIT CERTIFICATE in favor of SPI in the amount of P2,425,764.00 representing input VAT on importation of capital goods. However, the claim for refund of input VAT attributable to [SPI’s] alleged zero-rated sales in the amount of P23,105,548.83 is hereby DENIED for lack of merit.6
WHEREFORE, the instant motion of [SPI] is hereby DENIED for lack of merit. The pronouncement in the assailed decision is REITERATED.7
WHEREFORE, the instant Petition is hereby DENIED DUE COURSE and DISMISSED for lack of merit.8
THE HONORABLE COURT OF TAX APPEALS EN BANC ERRED IN DENYING [SPI’S] CLAIM FOR REFUND ON THE GROUNDS THAT [SPI] FAILED TO IMPRINT [CIR’S] BUREAU’S PERMIT TO PRINT NUMBER AND THE WORDS “ZERO-RATED” ON ITS SALES INVOICES THAT WERE PRESENTED AND FORMALLY OFFERED IN EVIDENCE[.]
THE HONORABLE COURT OF TAX APPEALS EN BANC ERRED IN DISREGARDING THE ENTIRE EVIDENCE OF [SPI] IN PROVING ITS CLAIM FOR TAX CREDIT/REFUND[.]
THE HONORABLE COURT OF TAX APPEALS EN BANC ERRED IN NOT GRANTING THE WHOLE CLAIM OF [SPI] FOR REFUND OF ITS EXCESS AND UNUTILIZED INPUT VAT FOR THE PERIOD JULY 1, 1998 TO SEPTEMBER 30, 1998 IN THE TOTAL AMOUNT OF PhP25,531,312.83 BY DENYING ITS CLAIM ATTRIBUTABLE TO ZERO-RATED EXPORT SALES IN THE AMOUNT OF PHP23,105,548.83[.]9
SEC. 110. Tax Credits. –
x x x x
(B) Excess Output or Input Tax. – If at the end of any taxable quarter the output tax exceeds the input tax, the excess shall be paid by the VAT-registered person. If the input tax exceeds the output tax, the excess shall be carried over to the succeeding quarter or quarters. Any input tax attributable to the purchase of capital goods or to zero-rated sales by a VAT-registered person may at his option be refunded or credited against other internal revenue taxes, subject to the provisions of Section 112.
SEC. 112. Refunds or Tax Credits of Input Tax. –
(A) Zero-Rated or Effectively Zero-Rated Sales. – Any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales under Section 106(A)(2)(a)(1), (2) and (B) and Section 108(B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods or properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales.
(B) Capital Goods. – A VAT-registered person may apply for the issuance of a tax credit certificate or refund of input taxes paid on capital goods imported or locally purchased, to the extent that such input taxes have not been applied against output taxes. The application may be made only within two (2) years after the close of the taxable quarter when the importation or purchase was made.
x x x x
(D) Period Within Which Refund or Tax Credit of Input Taxes Shall be Made. – In proper cases, 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 in support of the application filed in accordance with Subsections (A) and (B) hereof.
In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty day-period, appeal the decision or the unacted claim with the Court of Tax Appeals. (Emphases supplied.)
At the time San Roque filed its petition for review with the CTA, the 120+30 day mandatory periods were already in the law. Section 112(C) expressly grants the Commissioner 120 days within which to decide the taxpayer’s 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 verba legis 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 Commissioner’s decision within the 120-day mandatory 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 Roque’s 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, thus:x x x the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty day-period, appeal the decision or the unacted claim with the Court of Tax Appeals.This law is clear, plain, and unequivocal. Following the well-settled verba legis doctrine, this law should be applied exactly as worded since it is clear, plain, and unequivocal. As this law states, the taxpayer may, if he wishes, appeal the decision of the Commissioner to the CTA within 30 days from receipt of the Commissioner’s decision, or if the Commissioner does not act on the taxpayer’s claim within the 120-day period, the taxpayer may appeal to the CTA within 30 days from the expiration of the 120-day period.
x x x x
Section 112(A) and (C) must be interpreted according to its clear, plain, and unequivocal language. The taxpayer can file his administrative claim for refund or credit at anytime within the two-year prescriptive period. If he files his claim on the last day of the two-year prescriptive period, his claim is still filed on time. The Commissioner will have 120 days from such filing to decide the claim. If the Commissioner decides the claim on the 120th day, or does not decide it on that day, the taxpayer still has 30 days to file his judicial claim with the CTA. This is not only the plain meaning but also the only logical interpretation of Section 112(A) and (C).
x x x x
The Atlas doctrine, which held that claims for refund or credit of input VAT must comply with the two-year prescriptive period under Section 229, should be effective only from its promulgation on 8 June 2007 until its abandonment on 12 September 2008 in Mirant. The Atlas doctrine was limited to the reckoning of the two-year prescriptive period from the date of payment of the output VAT. Prior to the Atlas doctrine, the two-year prescriptive period for claiming refund or credit of input VAT should be governed by Section 112(A) following the verba legis rule. The Mirant ruling, which abandoned the Atlas doctrine, adopted the verba legis rule, thus applying Section 112(A) in computing the two-year prescriptive period in claiming refund or credit of input VAT.
x x x x
When Section 112(C) states that “the taxpayer affected may, within thirty (30) days from receipt of the decision denying the claim or after the expiration of the one hundred twenty-day period, appeal the decision or the unacted claim with the Court of Tax Appeals,” the law does not make the 120+30 day periods optional just because the law uses the word “may.” The word “may” simply means that the taxpayer may or may not appeal the decision of the Commissioner within 30 days from receipt of the decision, or within 30 days from the expiration of the 120-day period. x x x.
x x x x
To repeat, a claim for tax refund or credit, like a claim for tax exemption, is construed strictly against the taxpayer. 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. DA-489-03 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.
x x x x
BIR Ruling No. DA-489-03 does provide a valid claim for equitable estoppel under Section 246 of the Tax Code. BIR Ruling No. DA-489-03 expressly states that the “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.” Prior to this ruling, the BIR held, as shown by its position in the Court of Appeals, that the expiration of the 120-day period is mandatory and jurisdictional before a judicial claim can be filed.
x x x x
Clearly, BIR Ruling No. DA-489-03 is a general interpretative rule. Thus, all taxpayers can rely on BIR Ruling No. DA-489-03 from the time of its issuance on 10 December 2003 up to its reversal by this Court in Aichi on 6 October 2010, where this Court held that the 120+30 day periods are mandatory and jurisdictional.12 (Emphasis supplied, citations omitted.)
SUMMARY OF RULES ON PRESCRIPTIVE PERIODS FOR
CLAIMING REFUND OR CREDIT OF INPUT VAT
The lessons of this case may be summed up as follows:
A. Two-Year Prescriptive Period
- It is only the administrative claim that must be filed within the two-year prescriptive period. (Aichi)
- The proper reckoning date for the two-year prescriptive period is the close of the taxable quarter when the relevant sales were made. (San Roque)
- The only other rule is the Atlas ruling, which applied only from 8 June 2007 to 12 September 2008. Atlas states that the two-year prescriptive period for filing a claim for tax refund or credit of unutilized input VAT payments should be counted from the date of filing of the VAT return and payment of the tax. (San Roque)
B. 120+30 Day Period
- The taxpayer can file an appeal in one of two ways: (1) file the judicial claim within thirty days after the Commissioner denies the claim within the 120-day period, or (2) file the judicial claim within thirty days from the expiration of the 120-day period if the Commissioner does not act within the 120-day period.
- The 30-day period always applies, whether there is a denial or inaction on the part of the CIR.
- As a general rule, the 30-day period to appeal is both mandatory and jurisdictional. (Aichi and San Roque)
- As an exception to the general rule, premature filing is allowed only if filed between 10 December 2003 and 5 October 2010, when BIR Ruling No. DA-489-03 was still in force. (San Roque)
- Late filing is absolutely prohibited, even during the time when BIR Ruling No. DA-489-03 was in force. (San Roque)
End of 120-Day
Period for CIR
End of 30-day
Period to File
Date of Actual
No. of Days:
End of 120-day
Period to Filing of Judicial
May 6, 1999
September 3, 1999
October 4, 199914
September 29, 2000
Philex timely filed its administrative claim on 20 March 2006, within the two-year prescriptive period. Even if the two-year prescriptive period is computed from the date of payment of the output VAT under Section 229, Philex still filed its administrative claim on time. Thus, the Atlas doctrine is immaterial in this case. The Commissioner had until 17 July 2006, the last day of the 120-day period, to decide Philex’s claim. Since the Commissioner did not act on Philex’s claim on or before 17 July 2006, Philex had until 17 August 2006, the last day of the 30-day period, to file its judicial claim. The CTA EB held that 17 August 2006 was indeed the last day for Philex to file its judicial claim. However, Philex filed its Petition for Review with the CTA only on 17 October 2007, or four hundred twenty-six (426) days after the last day of filing. In short, Philex was late by one year and 61 days in filing its judicial claim. As the CTA EB correctly found:Evidently, the Petition for Review in C.T.A. Case No. 7687 was filed 426 days late. Thus, the Petition for Review in C.T.A. Case No. 7687 should have been dismissed on the ground that the Petition for Review was filed way beyond the 30-day prescribed period; thus, no jurisdiction was acquired by the CTA Division; x x x.
Unlike San Roque and Taganito, Philex’s case is not one of premature filing but of late filing. Philex did not file any petition with the CTA within the 120-day period. Philex did not also file any petition with the CTA within 30 days after the expiration of the 120-day period. Philex filed its judicial claim long after the expiration of the 120-day period, in fact 426 days after the lapse of the 120-day period. In any event, whether governed by jurisprudence before, during, or after the Atlas case, Philex’s judicial claim will have to be rejected because of late filing. Whether the two-year prescriptive period is counted from the date of payment of the output VAT following the Atlas doctrine, or from the close of the taxable quarter when the sales attributable to the input VAT were made following the Mirant and Aichi doctrines, Philex’s judicial claim was indisputably filed late.
The Atlas doctrine cannot save Philex from the late filing of its judicial claim. The inaction of the Commissioner on Philex’s claim during the 120-day period is, by express provision of law, “deemed a denial” of Philex’s claim. Philex had 30 days from the expiration of the 120-day period to file its judicial claim with the CTA. Philex’s failure to do so rendered the “deemed a denial” decision of the Commissioner final and inappealable. The right to appeal to the CTA from a decision or “deemed a denial” decision of the Commissioner is merely a statutory privilege, not a constitutional right. The exercise of such statutory privilege requires strict compliance with the conditions attached by the statute for its exercise. Philex failed to comply with the statutory conditions and must thus bear the consequences.15 (Emphases supplied, citations omitted.)
Courts are bound by prior decisions. Thus, once a case has been decided one way, courts have no choice but to resolve subsequent cases involving the same issue in the same manner.
As this Court has repeatedly emphasized, a tax credit or refund, like tax exemption, is strictly construed against the taxpayer. The taxpayer claiming the tax credit or refund has the burden of proving that he is entitled to the refund by showing that he has strictly complied with the conditions for the grant of the tax refund or credit. Strict compliance with the mandatory and jurisdictional conditions prescribed by law to claim such tax refund or credit is essential and necessary for such claim to prosper. Noncompliance with the mandatory periods, nonobservance of the prescriptive periods, and nonadherence to exhaustion of administrative remedies bar a taxpayer’s claim for tax refund or credit, whether or not the CIR questions the numerical correctness of the claim of the taxpayer. For failure of Silicon to comply with the provisions of Section 112(C) of the NIRC, its judicial claims for tax refund or credit should have been dismissed by the CTA for lack of jurisdiction.17 (Citations omitted.)
SECTION 1. Defenses and objections not pleaded. – Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or the evidence on record that the court has no jurisdiction over the subject matter, that there is another action pending between the same parties for the same cause, or that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss the claim.
1Rollo, pp. 12-30; penned by Associate Justice Caesar A. Casanova with Associate Justices Juanito C. Castañeda, Jr., Lovell R. Bautista, Erlinda P. Uy, and Olga Palanca-Enriquez, concurring, and Presiding Justice Ernesto D. Acosta, concurring and dissenting.
2 Id. at 121-131; penned by Associate Justice Lovell R. Bautista with Presiding Justice Ernesto D. Acosta and Associate Justice Juanito C. Castañeda, Jr., concurring.
3 Id. at 171-185; approved by Associate Justices Lovell R. Bautista and Juanito C. Castañeda, Jr. with Presiding Justice Ernesto D. Acosta, dissenting.
4 Id. at 31-37; approved by Associate Justices Juanito C. Castañeda, Jr., Lovell R. Bautista, Erlinda P. Uy, and Caesar A. Casanova with Presiding Justice Ernesto D. Acosta and Associate Justice Olga Palanca-Enriquez, on leave.
5 Id. at 113.
6 Id. at 130.
7 Id. at 175.
8 Id. at 23.
9 Id. at 52.
10 G.R. Nos. 187485, 196113 and 197156, February 12, 2013, 690 SCRA 336.
11 Prior to the amendments introduced by Republic Act No. 9337 (which took effect on November 1, 2005) and Republic Act No. 9361 (which took effect on November 28, 2006).
12Commissioner of Internal Revenue v. San Roque Power Corporation, supra note 10 at 387-404.
13 G.R. No. 191498, January 15, 2014, 713 SCRA 645, 676-677.
14 The thirty (30)-day period actually ends on September 3, 1999 which was a Sunday. SPI had until the next working day, September 4, 1999, Monday, to file its Petition for Review with the CTA.
15 Commissioner of Internal Revenue v. San Roque Power Corporation, supra note 10 at 389-390.
16 Id. at 399.
17Silicon Philippines, Inc. (formerly Intel Philippines Manufacturing, Inc.) v. Commissioner of Internal Revenue, G.R. Nos. 184360, 184361 and 184384, February 19, 2014, 717 SCRA 30, 50-51.
18Nippon Express (Philippines) Corporation v. Commissioner of Internal Revenue, G.R. No. 196907, March 13, 2013, 693 SCRA 456, 465.
19Silicon Philippines, Inc. (formerly Intel Philippines Manufacturing, Inc.) v. Commissioner of Internal Revenue, supra note 17 at 43.
20 Heirs of Domingo Valientes v. Ramas, 653 Phil. 111, 117-118 (2010).