G.R. No. 185432, June 04, 2014
MIRAMAR FISH COMPANY, INC., Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.
D E C I S I O N
Particular Quarter Date of Filing of Quarterly VAT
First Quarter 25 April 2002 Second Quarter 8 July 2002 Third Quarter 22 October 2002 Fourth Quarter 27 January 2003
Particular Quarter Date of Filing of Quarterly VAT
First Quarter 10 April 2003 Second Quarter 16 July 2003 Third Quarter 17 October 2003 Fourth Quarter 26 January 2004
- PETITIONER HAS COMPLIED WITH THE STATUTORY REQUIREMENTS FOR CLAIMING A REFUND OF EXCESS AND UNUTILIZED INPUT VAT UNDER SECTION 112(A), IN RELATION TO SECTION 106(A)(2)(A)(1), TAX CODE. COMPLIANCE WITH THE INVOICING REQUIREMENTS UNDER THE TAX CODE AND RR NO. 7-95 IS NOT A CONDITION PRECEDENT FOR CLAIMING A REFUND OF EXCESS AND UNUTULIZED INPUT VAT UNDER SECTION 106(A)(2)(A)(1), IN RELATION TO SECTION 112(A) OF THE TAX CODE.
- THERE IS NOTHING IN THE TAX CODE AND IN RR NO. 7-95 WHICH STATES THAT FAILURE TO COMPLY WITH THE BIR’S INVOICING REQUIREMENTS WILL NULLIFY THE VAT ZERO-RATING OF AN EXPORT SALE UNDER SECTION 106(A)(2)(A)(1) OF THE TAX CODE.
- BASED ON THE SUPREME COURT’S RULING IN INTEL CASE, FAILURE TO INDICATE THE WORDS “TIN-V” AND “ZERO-RATED” ON THE INVOICES COVERING EXPORT SALES IS NOT FATAL TO A TAXPAYER’S CLAIM FOR REFUND OF EXCESS INPUT VAT UNDER SECTION 112(A), IN RELATION TO SECTION 106(A)(2)(A)(1) OF THE TAX CODE.
- REVENUE MEMORANDUM CIRCULAR NO. 42-03 IS INVALID BECAUSE IT OVERRIDES THE CLEAR PROVISION OF THE TAX CODE.11
Section 7. Jurisdiction. - The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by appeal, as herein provided.(1) Decisions of the Collector of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters arising under the National Internal Revenue Code or other law or part of law administered by the Bureau of Internal Revenue;20 (Emphasis supplied)x x x x
Section 11. Who may appeal; effect of appeal. – Any person, association or corporation adversely affected by a decision or ruling of the Collector of Internal Revenue, the Collector of Customs or any provincial or city Board of Assessment Appeals may file an appeal in the Court of Tax Appeals within thirty days after the receipt of such decision or ruling. 21 (Emphasis and underscoring supplied)
x x x x
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: x x x
x x x x
(D)22Period 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) 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.
x x x x (Emphasis and underscoring supplied)ChanRoblesVirtualawlibrary
To repeat, a claim for tax refund or credit, like a claim for tax refund 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.24 (Emphasis supplied)ChanRoblesVirtualawlibrary
We summarize the rules on the determination of the prescriptive period for filing a tax refund or credit of unutilized input VAT as provided in Section 112 of the 1997 Tax Code, as follows:chanroblesvirtuallawlibrary
(1) An administrative claim must be filed with the CIR within two years after the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made.
(2) The CIR has 120 days from the date of submission of complete documents in support of the administrative claim within which to decide whether to grant a refund or issue a tax credit certificate. The 120-day period may extend beyond the two-year period from the filing of the administrative claim if the claim is filed in the later part of the two-year period. If the 120-day period expires without any decision from the CIR, then the administrative claim may be considered to be denied by inaction.
(3) A judicial claim must be filed with the CTA within 30 days from the receipt of the CIR’s decision denying the administrative claim or from the expiration of the 120-day period without any action from the CIR.
(4) All taxpayers, however, 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, as an exception to the mandatory and jurisdictional 120+30 day periods.26 (Emphasis supplied)ChanRoblesVirtualawlibrary
(close of taxable quarters)
Filing date of the
(within the 2-year period)
Last day of the 120-day
period under Section 112(D)
from the date of submission
of complete documents in
support of its application
Last day of the
30-day period to
date of the
Taxable year 2002
(31 March 2002)
(30 June 2002)
(30 September 2002)
(31 December 2002)
24 February 200328
24 June 2003
24 July 2003
30 March 2004
Taxable year 2003
(31 March 2003)
(30 June 2003)
(30 September 2003)
(31 December 2003)
25 March 200429
23 July 2004
22 August 2004
30 March 2004
We wish to make it clear that this letter, insofar as the 2002 claim is concerned, amends the original claim for refund or issuance of TCC filed on February 24, 2003. Please note that the difference between the amount claimed in the original administrative claim filed (P6,751,751.65) and that claimed in this letter (P6,845,224.42) is in view of the fact that the original claim merely took into consideration the amount which, at that time, could be supported by the “Summary Name of Suppliers, Invoices and Official Receipts”. As abovementioned, the amount for 2002 subject of the instant claim is based on the figures reflected in the VAT returns filed for 2002.31 (Emphasis supplied)ChanRoblesVirtualawlibrary
But when petitioner Panasonic made the export sales subject of this case, i.e., from April 1998 to March 1999, the rule that applied was Section 4.108-1 of RR 7-95, otherwise known as the Consolidated Value-Added Tax Regulations, which the Secretary of Finance issued on December 9, 1995 and took effect on January 1, 1996. It already required the printing of the word “zero-rated” on the invoices covering zero-rated sales. When R.A. 9337 amended the 1997 NIRC on November 1, 2005, it made this particular revenue regulation a part of the tax code. This conversion from regulation to law did not diminish the binding force of such regulation with respect to acts committed prior to the enactment of that law.
Section 4.108-1 of RR 7-95 proceeds from the rule-making authority granted to the Secretary of Finance under Section 245 of the 1977 NIRC (Presidential Decree 1158) for the efficient enforcement of the tax code and of course its amendments. The requirement is reasonable and is in accord with the efficient collection of VAT from the covered sales of goods and services. As aptly explained by the CTA’s First Division, the appearance of the word “zero-rated” on the face of invoices covering zero-rated sales prevents buyers from falsely claiming input VAT from their purchases when no VAT was actually paid. If, absent such word, a successful claim for input VAT is made, the government would be refunding money it did not collect.
Further, the printing of the word “zero-rated” on the invoice helps segregate sales that are subject to 10% (now 12%) VAT from those sales that are zero-rated. Unable to submit the proper invoices, petitioner Panasonic has been unable to substantiate its claim for refund.
x x x x
This Court held that, since the “BIR authority to print” is not one of the items required to be indicated on the invoices or receipts, the BIR erred in denying the claim for refund. Here, however, the ground for denial of petitioner Panasonic’s claim for tax refund—the absence of the word ‘zero-rated’ on its invoices—is one which is specifically and precisely included in the above enumeration. Consequently, the BIR correctly denied Panasonic’s claim for tax refund.41 (Emphasis supplied)ChanRoblesVirtualawlibrary
It bears stressing that the law and regulations are explicit in emphasizing strict compliance with the invoicing requirements because for the same transactions the output VAT of the seller becomes the input VAT of the purchaser. Pursuant to Sections 106(D)(1) and 108(C) of the NIRC of 1997, as amended, in relation to Section 110 of the same Code, the output or input tax on the sale or purchase of goods is determined by the total amount indicated in the invoice, while the output or input tax on the sale or purchases of services is determined by the total amount indicated in the official receipt. Since petitioner is engaged in the sale of goods, specifically, canned tuna and canned pet food (Joint Stipulation of Facts and Issues, par. 3), its output tax, if any, will be determined by the total amount indicated in the invoices. Thus, as required by Section 113 of the NIRC of 1997, as amended, petitioner’s sales invoices must indicate that it is a VAT-registered person, which in this case was not complied with by petitioner.42 (Emphasis supplied)ChanRoblesVirtualawlibrary
1Rollo, pp. 59-77; 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; while Presiding Justice Ernesto D. Acosta issued a Concurring and Dissenting Opinion thereto.
2 Id. at 113-115; Joint Stipulation of Facts and Issues, Annex “D,” Petition for Review.
3 Id. at 127-128; Letter of Request for VAT Claim dated 24 February 2003, Annex “F-1,” Petition for Review.
4 Id. at 129-130; Letter of Request for VAT Claim dated 15 March 2004, Annex “F-2,” Petition for Review.
5 Id. at 122-126; Letter dated 25 March 2004, Annex “E,” Petition for Review.
6 Id. at 162-181; Penned by Associate Justice Olga Palanca-Enriquez with Associate Justices Juanito C. Castañeda, Jr. and Erlinda P. Uy concurring.
7 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; and(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. (Italics supplied)ChanRoblesVirtualawlibrary
(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.
8 Rollo, pp. 175-176; CTA in Division Decision dated 22 October 2007, Annex “H,” Petition for Review.
9 Id. at 180.
10 Id. at 59-77.
11 Id. at 25-26.
12 G.R. Nos. 187485, 196113, and 197156, 12 February 2013, 690 SCRA 336.
13 Salcedo v. People, 400 Phil. 1302, 1304 (2000).
14The Insular Life Assurance Company, Ltd. v. Court of Appeals, G.R. No. 126850, 28 April 2004, 428 SCRA 79, 85-86.
15Borromeo v. Sun, 375 Phil. 595, 602 (1999).
16 Supra note 14.
17Rollo, pp. 59-77.
18 “AN ACT CREATING THE COURT OF TAX APPEALS” which took effect on 16 June 1954.
19 “AN ACT EXPANDING THE JURISDICTION OF THE COURT OF TAX APPEALS (CTA), ELEVATING ITS RANK TO THE LEVEL OF A COLLEGIATE COURT WITH SPECIAL JURISDICTION AND ENLARGING ITS MEMBERSHIP AMENDING FOR THE PURPOSE CERTAIN SECTIONS OF REPUBLIC ACT NO.1125, AS AMENDED, OTHERWISE KNOWN AS THE LAW CREATING THE COURT OF TAX APPEALS, AND FOR OTHER PURPOSES” which took effect on 23 April 2004. This Act was a consolidation of Senate Bill No. No. 2712 and House Bill No. 6673 finally passed by the Senate and the House of Representatives on 8 December 2003 and 2 February 2004, respectively.
20 RA 9282 amended this provision as follows:chanroblesvirtuallawlibrarySEC. 7. Jurisdiction. – The CTA shall exercise:chanroblesvirtuallawlibrary21 RA 9282 amended this provision as follows:
a) Exclusive appellate jurisdiction to review by appeal, as herein provided:(1) 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 Code or other laws administered by the Bureau of Internal Revenue;
(2) 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 for action, in which case the inaction shall be deemed a denial; x x x (Emphasis supplied)SEC. 11. Who May Appeal; Mode of Appeal; Effect of Appeal. – Any party adversely affected by a decision, ruling or inaction of the Commissioner of Internal Revenue, the Commissioner of Customs, the Secretary of Finance, the Secretary of Trade and Industry or the Secretary of Agriculture or the Central Board of Assessment Appeals or the Regional Trial Courts may file an appeal with the CTA within thirty (30) days after the receipt of such decision or ruling or after the expiration of the period fixed by law for action as referred to in Section 7(a)(2) herein.22 Presently Section 112(C) upon the effectivity of Republic Act No. 9337 on 1 November 2005.
Appeal should be made by filing a petition for review under a procedure analogous to that provided for under Rule 42 of the 1997 Rules of Civil Procedure with the CTA within thirty (30) days from the receipt of the decision or ruling or in the case of inaction as herein provided, from the expiration of the period fixed by law to act thereon. x x x (Emphasis supplied)
23 Supra note 12.
24 Id. at 398-399.
25 G.R. Nos. 193301 and 194637, 11 March 2013, 693 SCRA 49.
26 Id. at 89.
27 “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.” See Commissioner of Internal Revenue v. San Roque Power Corporation, supra note 12 at 401.
28Rollo, pp. 127-128; Included thereto is a Transmittal Receipt showing that petitioner simultaneously submitted complete documents in support of its application for refund covering taxable year 2002.
29 Id. at 122-126
30 More than eight (8) months had lapsed since the last day allowed by law to file the appropriate judicial claim.
31 Rollo, p. 123; Letter dated 25 March 2004, p. 2, Annex “E,” Petition for Review.
32 Id. at 128.
33 Id. at 124; Letter dated 25 March 2004, p. 3, Annex “E,” Petition for Review.
34 Commissioner of Internal Revenue v. San Roque Power Corporation, supra note 12 at 356-380, which states:“On the construction and development of the San Roque Multi-Purpose Project which comprises of the dam, spillway and power plant, [San Roque] allegedly incurred, excess input VAT in the amount of P559,709,337.54 for taxable year 2001 which it declared in its Quarterly VAT Returns filed for the same year. [San Roque] duly filed with the BIR separate claims for refund, in the total amount of P559,709,337.54, representing unutilized input taxes as declared in its VAT returns for taxable year 2001.35 Pursuant to Section 112 of the NIRC of 1997, as amended, and consistent with the pronouncements made in the San Roque case, petitioner needs to wait for the CIR to resolve its subject administrative claim filed on 25 March 2004 within the mandatory 120-day period (or until 23 July 2004), before it can file its judicial claim within 30 days therafter (or until 22 August 2004).
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 P560,200,283.14. Consequently, [San Roque] filed with the BIR on even date, separate amended claims for refund in the aggregate amount of P560,200,283.14.
x x x x
On 10 April 2003, a mere 13 days after it filed its amended administrative claim with the Commissioner on 28 March 2003, San Roque filed a Petition for Review with the CTA docketed as CTA Case No. 6647. x x x” (Emphasis and underscoring supplied)
36Rollo, pp. 113-115.
37Laresma v. Abellana, 484 Phil. 766, 778 (2004).
38 Please refer to De Guzman v. Escalona, 186 Phil. 431, 437-438 (1980).
39 The Consolidated Value-Added Tax Regulations, issued on 9 December 1995 and implemented beginning 1 January 1996, provides:chanroblesvirtuallawlibrary
Sec. 4.108-1. Invoicing Requirements. - All VAT-registered persons shall, for every sale or lease of goods or properties or services, issue duly registered receipts or sales or commercial invoices which must show:chanroblesvirtuallawlibrary
1. The name, TIN and address of seller;
2. Date of transaction;
3. Quantity, unit cost and description of merchandise or nature of service;
4. The name, TIN, business style, if any, and address of the VAT-registered purchaser, customer or client;
5. The word “zero-rated” imprinted on the invoice covering zero-rated sales;
6. The invoice value or consideration.
In the case of sale of real property subject to VAT and where the zonal or market value is higher than the actual consideration, the VAT shall be separately indicated in the invoice or receipt.
Only VAT-registered persons are required to print their TIN followed by the word “VAT” in their invoices or receipts and this shall be considered as “VAT Invoice.” All purchases covered by invoices other than “VAT Invoice” shall not give rise to any input tax.
If the taxable person is also engaged in exempt operations, he should issue separate invoices or receipts for the taxable and exempt operations. A “VAT Invoice” shall be issued only for sales of goods, properties or services subject to VAT imposed in Sections 100 and 102 of the code.
The invoice or receipt shall be prepared at least in duplicate, the original to be given to the buyer and the duplicate to be retained by the seller as part of his accounting records. (Emphasis supplied)
40 G.R. No. 178090, 8 February 2010, 612 SCRA 28. See also Hitachi Global Storage Technologies Philippines Corp. v. Commissioner of Internal Revenue, G.R. No. 174212, 20 October 2010, 634 SCRA 205, 212.
41 Id. at 36-38.
42Rollo, p. 176; CTA in Division Decision dated 22 October 2007, Annex “H,” Petition for Review.
43 Daoang v. The Municipal Judge, San Nicolas, Ilocos Norte, 242 Phil. 774, 777 (1988) citing 2 Sutherland, Statutory Construction, 3rd ed., Section 4502, p. 316.