G.R. No. 184360 & 184361, February 19, 2014
SILICON PHILIPPINES, INC., (FORMERLY INTEL PHILIPPINES MANUFACTURING, INC.), Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.
[G.R. No. 184384]
COMMISSIONER OF INTERNAL REVENUE, PETITIONER, VS, SILICON PHILIPPINES, INC., (FORMERLY INTEL PHILIPPINES MANUFACTURING, INC.), Respondent.
D E C I S I O N
VILLARAMA, JR., J.:
SEC. 112. Refunds or Tax Credits of Input Tax. –The above–mentioned provision expressly grants the CIR 120 days within which to decide the taxpayer’s claim for refund or tax credit. In addition, the taxpayer is granted a 30–day period to appeal to the CTA the decision or inaction of the CIR after the 120–day period.
x x x
(C) 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 Subsection (A) 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 (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. (Emphasis supplied.)
Section 7. Jurisdiction. – The CTA shall exercise:The CTA has exclusive appellate jurisdiction to review on appeal decisions of the CIR in cases involving refunds of internal revenue taxes. Moreover, if the CIR fails to decide within the 120–day period provided by law, such inaction shall be deemed a denial of the application for tax refund which the taxpayer can elevate to the CTA through a petition for review.
x x x x (Emphasis supplied.)chanroblesvirtualawlibrary
- Exclusive appellate jurisdiction to review by appeal, as herein provided:
- Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue or other laws administered by the Bureau of Internal Revenue;
- Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue, where the National Internal Revenue Code provides a specific period of action, in which case the inaction shall be deemed a denial;
x x x The application of the 120+30 day periods was first raised in Aichi, which adopted the verba legis rule in holding that the 120+30 day periods are mandatory and jurisdictional. The language of Section 112(C) is plain, clear, and unambiguous. When Section 112(C) states that “the Commissioner shall grant a refund or issue the tax credit within one hundred twenty (120) days from the date of submission of complete documents,” the law clearly gives the Commissioner 120 days within which to decide the taxpayer’s claim. Resort to the courts prior to the expiration of the 120–day period is a patent violation of the doctrine of exhaustion of administrative remedies, a ground for dismissing the judicial suit due to prematurity. Philippine jurisprudence is awash with cases affirming and reiterating the doctrine of exhaustion of administrative remedies. Such doctrine is basic and elementary.In the case of Philex Mining Corporation v. Commissioner of Internal Revenue, which was consolidated with the case of San Roque, this Court denied Philex’s claim for refund since its petition for review was filed with the CTA beyond the 120+30 day period. The Court explained:chanRoblesvirtualLawlibrary
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. Certainly, by no stretch of the imagination can the word “may” be construed as making the 120+30 day periods optional, allowing the taxpayer to file a judicial claim one day after filing the administrative claim with the Commissioner.
The old rule that the taxpayer may file the judicial claim, without waiting for the Commissioner’s decision if the two–year prescriptive period is about to expire, cannot apply because that rule was adopted before the enactment of the 30–day period. The 30–day period was adopted precisely to do away with the old rule, so that under the VAT System the taxpayer will always have 30 days to file the judicial claim even if the Commissioner acts only on the 120th day, or does not act at all during the 120–day period. With the 30–day period always available to the taxpayer, the taxpayer can no longer file a judicial claim for refund or credit of input VAT without waiting for the Commissioner to decide until the expiration of the 120–day period.
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.31ChanRoblesVirtualawlibrary
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.Also, in the recent case of Commissioner of Internal Revenue v. Dash Engineering Philippines, Inc.,33 this Court likewise denied the claim for tax refund for having been filed late or after the expiration of the 30–day period from the denial by the CIR or failure of the CIR to make a decision within 120 days from the submission of the documents in support of its administrative claim. We held:chanRoblesvirtualLawlibrary
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.32ChanRoblesVirtualawlibrary
Petitioner is entirely correct in its assertion that compliance with the periods provided for in the abovequoted provision is indeed mandatory and jurisdictional, as affirmed in this Court’s ruling in San Roque, where the Court En Banc settled the controversy surrounding the application of the 120+30–day period provided for in Section 112 of the NIRC and reiterated the Aichi doctrine that the 120+30–day period is mandatory and jurisdictional. Nonetheless, the Court took into account the issuance by the Bureau of Internal Revenue (BIR) of BIR Ruling No. DA–489–03 which misled taxpayers by explicitly stating that taxpayers may file a petition for review with the CTA even before the expiration of the 120–day period given to the CIR to decide the administrative claim for refund. Even though observance of the periods in Section 112 is compulsory and failure to do so will deprive the CTA of jurisdiction to hear the case, such a strict application will be made from the effectivity of the Tax Reform Act of 1997 on January 1, 1998 until the present, except for the period from December 10, 2003 (the issuance of the erroneous BIR ruling) to October 6, 2010 (the promulgation of Aichi), during which taxpayers need not wait for the lapse of the 120+30–day period before filing their judicial claim for refund.34ChanRoblesVirtualawlibraryAfter a careful perusal of the records in the instant case, we find that Silicon’s judicial claims were filed late and way beyond the prescriptive period. Silicon’s claims do not fall under the exception mentioned above. Silicon filed its Quarterly VAT Return for the 1st quarter of 1999 on April 22, 1999 and subsequently filed on August 6, 1999 a claim for tax credit or refund of its input VAT taxes for the same period. From August 6, 1999, the CIR had until December 4, 1999, the last day of the 120–day period, to decide Silicon’s claim for tax refund. But since the CIR did not act on Silicon’s claim on or before the said date, Silicon had until January 3, 2000, the last day of the 30–day period to file its judicial claim. However, Silicon failed to file an appeal within 30 days from the lapse of the 120–day period, and it only filed its petition for review with the CTA on March 30, 2001 which was 451 days late. Thus, in consonance with our ruling in Philex in the San Roque ponencia, Silicon’s judicial claim for tax credit or refund should have been dismissed for having been filed late. The CTA did not acquire jurisdiction over the petition for review filed by Silicon.
1Rollo (G.R. No. 184361), pp. 11–27; rollo (G.R. No. 184384), pp. 33–50. Penned by Associate Justice Erlinda P. Uy with Presiding Justice Ernesto D. Acosta, Associate Justices Juanito C. Castañeda, Jr., Lovell R. Bautista, Caesar A. Casanova and Olga Palanca–Enriquez concurring.
2Rollo (G.R. No. 184360), pp. 10–28. Penned by Associate Justice Erlinda P. Uy with Associate Justices Juanito C. Castañeda, Jr., Lovell R. Bautista, Caesar A. Casanova and Olga Palanca–Enriquez concurring; Presiding Justice Ernesto D. Acosta filed a Concurring and Dissenting Opinion.
3 Id. at 37–42; rollo (G.R. No. 184361), pp. 28–31; rollo (G.R. No. 184384), pp. 51–54.
4 Id. at 11.
5 Id. Originally under RDO Control No. 32A–3–002649 dated January 1, 1988. Id. at 138.
8 Id. at 138.
9 Id. at 121–130.
10 Id. at 131–132.
11 SECTION 16. Refunds or tax credits of input tax. –
x x x
(c) Claims for tax credits/refunds. – Application For Tax Credit/Refund of Value–Added Tax Paid (BIR Form No. 2552) shall be filed with the Revenue District Office of the city or municipality where the principal place of business of the applicant is located or directly with the Commissioner, Attention: VAT Division.
A photo copy of the purchase invoice or receipt evidencing the value added tax paid shall be submitted together with the application. The original copy of the said invoice/receipt, however, shall be presented for cancellation prior to the issuance of the Tax Credit Certificate or refund. In addition, the following documents shall be attached whenever applicable:chanRoblesvirtualLawlibraryx x x12 Should be P9,948,285.73.
3. Effectively zero–rated sale of goods and services.
i) photo copy of approved application for zero rate if filing for the first time.
ii) sales invoice or receipt showing name of the person or entity to whom the sale of goods or services were delivered, date of delivery, amount of consideration, and description of goods or services delivered.
iii) evidence of actual receipt of goods or services.
x x x
13Rollo (G.R. No. 184360), pp. 139–140.
14Rollo (G.R. No. 184361), pp. 86–97.
15 Id. at 98–100.
16 SEC. 106. Value–added Tax on Sale of Goods or Properties. –
(A) Rate and Base of Tax. – There shall be levied, assessed and collected on every sale, barter or exchange of goods or properties, value–added tax equivalent to ten percent (10%) of the gross selling price or gross value in money of the goods or properties sold, bartered or exchanged, such tax to be paid by the seller or transferor.
x x x
(2) The following sales by VAT–registered persons shall be subject to zero percent (0%) rate:chanRoblesvirtualLawlibrary(a) Export Sales. – The term “export sales” means:17 SEC. 108. Value–added Tax on Sale of Services and Use or Lease of Properties. –
(1) The sale and actual shipment of goods from the Philippines to a foreign country, irrespective of any shipping arrangement that may be agreed upon which may influence or determine the transfer of ownership of the goods so exported and paid for in acceptable foreign currency or its equivalent in goods or services, and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP)[.]
x x x
(B) Transactions Subject to Zero Percent (0%) Rate. – The following services performed in the Philippines by VAT– registered persons shall be subject to zero percent (0%) rate:
(1) Processing, manufacturing or repacking goods for other persons doing business outside the Philippines which goods are subsequently exported, where the services are paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP)[.]
18 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.
19Rollo (G.R. No. 184360), pp. 137–146. Penned by Associate Justice Juanito C. Castañeda, Jr. with Associate Justices Erlinda P. Uy and Olga Palanca–Enriquez concurring.
20 SEC. 113. Invoicing and Accounting Requirements for VAT–Registered Persons. –
(A) Invoicing Requirements. – A VAT–registered person shall, for every sale, issue an invoice or receipt. In addition to the information required under Section 237, the following information shall be indicated in the invoice or receipt:
(1) A statement that the seller is a VAT–registered person, followed by his taxpayer’s identification number (TIN); and
(2) The total amount which the purchaser pays or is obligated to pay to the seller with the indication that such amount includes the value–added tax.
(B) Accounting Requirements. – Notwithstanding the provisions of Section 233, all persons subject to the value–added tax under Sections 106 and 108 shall, in addition to the regular accounting records required, maintain a subsidiary sales journal and subsidiary purchase journal on which the daily sales and purchases are recorded. The subsidiary journals shall contain such information as may be required by the Secretary of Finance.
21 SEC. 237. Issuance of Receipts or Sales or Commercial Invoices. – All persons subject to an internal revenue tax shall, for each sale or transfer of merchandise or for services rendered valued at Twenty–five pesos (P25.00) or more, issue duly registered receipts or sales or commercial invoices, prepared at least in duplicate, showing the date of transaction, quantity, unit cost and description of merchandise or nature of service: Provided, however, That in the case of sales, receipts or transfers in the amount of One hundred pesos (P100.00) or more, or regardless of the amount, where the sale or transfer is made by a person liable to value–added tax to another person also liable to value–added tax; or where the receipt is issued to cover payment made as rentals, commissions, compensations or fees, receipts or invoices shall be issued which shall show the name, business style, if any, and address of the purchaser, customer or client: Provided, further, That where the purchaser is a VAT–registered person, in addition to the information herein required, the invoice or receipt shall further show the Taxpayer’s Identification Number (TIN) of the purchaser.
The original of each receipt or invoice shall be issued to the purchaser, customer or client at the time the transaction is effected, who, if engaged in business or in the exercise of profession, shall keep and preserve the same in his place of business for a period of three (3) years from the close of the taxable year in which such invoice or receipt was issued, while the duplicate shall be kept and preserved by the issuer, also in his place of business, for a like period.
The Commissioner may, in meritorious cases, exempt any person subject to an internal revenue tax from compliance with the provisions of this Section.
22 SEC. 238. Printing of Receipts or Sales or Commercial Invoices. – All persons who are engaged in business shall secure from the Bureau of Internal Revenue an authority to print receipts or sales or commercial invoices before a printer can print the same.
No authority to print receipts or sales or commercial invoices shall be granted unless the receipts or invoices to be printed are serially numbered and shall show, among other things, the name, business style, Taxpayer Identification Number (TIN) and business address of the person or entity to use the same, and such other information that may be required by rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner.
All persons who print receipt or sales or commercial invoices shall maintain a logbook/register of taxpayers who availed of their printing services. The logbook/register shall contain the following information:
(1) Names, Taxpayer Identification Numbers of the persons or entities for whom the receipts or sales or commercial invoices were printed; and
(2) Number of booklets, number of sets per booklet, number of copies per set and the serial numbers of the receipts or invoices in each booklet.
23 SEC. 4.104–5. Substantiation of claims for input tax credit. – (a) Input taxes shall be allowed only if the domestic purchase of goods, properties or services is made in the course of trade or business. The input tax should be supported by an invoice or receipt showing the information as required under Sections 108(a) and 238 of the Code. Input tax on purchases of real property should be supported by a copy of the public instrument, i.e., deed of absolute sale, deed of conditional sale, contract/agreement to sell, etc., together with the VAT receipt issued by the seller.
A cash register machine tape issued to a VAT–registered buyer by a VAT–registered seller from a machine duly registered with the BIR in lieu of the regular sales invoice, shall constitute valid proof of substantiation of tax credit only if the name and TIN of the purchaser is indicated in the receipt and authenticated by a duly authorized representative of the seller.
(b) Input tax on importations shall be supported with the import entry or other equivalent document showing actual payment of VAT on the imported goods.
(c) Presumptive input tax shall be supported by an inventory of goods as shown in a detailed list to be submitted to the BIR.
(d) Input tax on “deemed sale” transactions shall be substantiated with the required invoices.
(e) Input tax from payments made to non–residents shall be supported by a copy of the VAT declaration/return filed by the resident licensee/lessee in behalf of the non–resident licensor/lessor evidencing remittance of the VAT due.
24 SEC. 4.106–1. Refunds or tax credits of input tax. – x x x
(b) Capital Goods. – Only a VAT–registered person may apply for issuance of a tax credit certificate or refund of input taxes paid on capital goods imported or locally purchased. The refund shall be allowed to the extent that such input taxes have not been applied against output taxes. The application should be made within two (2) years after the close of the taxable quarter when the importation or purchase was made.
Refund of input taxes on capital goods shall be allowed only to the extent that such capital goods are used in VAT taxable business. If it is also used in exempt operations, the input tax refundable shall only be the ratable portion corresponding to the taxable operations.
“Capital goods or properties” refer to goods or properties with estimated useful life greater than one year and which are treated as depreciable assets under Section 29(f), used directly or indirectly in the production or sale of taxable goods or services.
25Rollo (G.R. No. 184360), pp. 179–180.
26Rollo (G.R. No. 184361), pp. 106–117. Penned by Associate Justice Caesar A. Casanova with Associate Justice Lovell R. Bautista concurring and Presiding Justice Ernesto D. Acosta dissenting.
27 Id. at 154–156.
28Aliling v. Feliciano, G. R. No. 185829, April 25, 2012, 671 SCRA 186, 198–199.
29 In R.A. No. 8424, the section is number 112(D). R.A. No. 9337 re–numbered the section to 112(C). In this Decision, we refer to Section 112(D) under R.A. No. 8424 as Section 112(C) as it is currently numbered.
30 G.R. Nos. 187485, 196113 & 197156, February 12, 2013, 690 SCRA 336.
31 Id. at 397–399.
32 Id. at 389–390.
33 G.R. No. 184145, December 11, 2013.
34 Id. at 6–7.
35J.R.A. Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 177127, October 11, 2010, 632 SCRA 517, 518, citing Agencia Exquisite of Bohol, Incorporated v. Commissioner of Internal Revenue, G.R. Nos. 150141, 157359 and 158644, February 12, 2009, 578 SCRA 539, 550.
36Microsoft Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 180173, April 6, 2011, 647 SCRA 398, 403.
37Mindanao II Geothermal Partnership v. Commissioner of Internal Revenue, G.R. Nos. 193301 & 194637, March 11, 2013, 693 SCRA 49, 77, citing the case of Commissioner of Internal Revenue v. San Roque Power Corporation, supra note 30, at 383.
38 Id. at 78.