FIRST DIVISION
G.R. No. 205543, June 30, 2014
SAN ROQUE POWER CORPORATION, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.
D E C I S I O N
LEONARDO-DE CASTRO, J.:
Tax Period 2006 | VAT Return | Administrative Claim | Judicial Claim |
First Quarter | Filed: April 21, 2006 Amended: November 7, 2006 | Filed: April 11, 2007 Amount: P2,857,174.95 Amended: March 10, 2008 Amount: P3,128,290.74 | Filed: March 28, 2008 CTA Case No. 7744 Amount: P12,114,877.34 (for 1st, 3rd, and 4th Quarters of 2006) |
Second Quarter | Filed: July 15, 2006 Amended: November 8, 2006 Amended: February 5, 2007 | Filed: July 10, 2007 Amount: P15,044,030.82 Amended: March 10, 2008 Amount: P15,548,630.55 | Filed: June 27, 2008 CTA Case No. 7802 Amount: P15,548,630.55 |
Third Quarter | Filed: October 19, 2006 Amended: February 5, 2007 | Filed: August 31, 2007 Amount: P4,122,741.54 Amended: September 21, 2007 Amount: P3,675,574.21 | Filed: March 28, 2008 CTA Case No. 7744 Amount: P12,114,877.34 (for 1st, 3rd, and 4th Quarters of 2006) |
Fourth Quarter | Filed: January 22, 2007 Amended: May 12, 2007 | Filed: August 31, 2007 Amount: P6,223,682.61 Amended: September 21, 2007 Amount: P5,311,012.39 | Filed: March 28, 2008 CTA Case No. 7744 Amount: P12,114,877.34 (for 1st, 3rd, and 4th Quarters of 2006) |
As to [San Roque’s] original applications for refund is concerned, the Commissioner of Internal Revenue has one hundred twenty days or until August 9, 2007, November 7, 2007 and December 29, 2007 within which to make decision. After the lapse of the one hundred twenty[-]day period, [San Roque] should have elevated its claim with the Court within thirty (30) days starting from August 10, 2007 to September 8, 2007 for its first quarter claim, November 8, 2007 to December 7, 2007 for its second quarter claim, and December 30, 2007 to January 28, 2008 for its third and fourth quarters claims pursuant to Section 112(D) of the NIRC in relation to Section 11 of [Republic Act No.] 1125, as amended by Section 9 of [Republic Act No.] 9282. Unfortunately, the Petitions for Review on March 28, 2008 for the first, third and fourth quarters claims and on June 27, 2008 for the second quarter claim, were filed beyond the 30-day period set by law and therefore, the Court has no jurisdiction to entertain the subject matter of the case considering that the 30-day appeal period provided under Section 11 of [Republic Act No.] 1125 is a jurisdictional requirement as held in the case of Ker & Co., Ltd. vs. Court of Tax Appeals, x x x:
x x x x
Likewise, if we reckoned the one hundred twenty[-]day period from the date of the amended applications for refund on March 10, 2008 for the first and second quarters claims and September 21, 2007 for the third and fourth quarters claims, both Petitions for Review would still be denied.
With respect to the amended application for refund of input tax for the first and second quarters of 2006 on March 10, 2008, the Commissioner of Internal Revenue has one hundred twenty days or until July 8, 2008 within which to make a decision. After the lapse of the said
120-day period, [San Roque] had thirty days or until August 7, 2008 within which to appeal to this Court. [San Roque], however, appealed via Petitions for Review on March 28, 2008 for its first quarter claim and on June 27, 2008 for its second quarter claim, which are clearly before the lapse of the 120-day period. This violates the rule on exhaustion of administrative remedies.
x x x x
The premature invocation of the court’s intervention, like the instant Petitions for Review, is fatal to one’s cause of action; and the case is susceptible of dismissal for failure to state a cause of action. Moreover, such premature appeal will also warrant the dismissal of the Petitions for Review inasmuch as no jurisdiction was acquired by the Court in line with the recent pronouncement made by the Supreme Court in the case of Commissioner of Internal Revenue vs. Aichi Forging Company of Asia, Inc.
As far as the amended application for refund covering the third and fourth quarter[s] filed on September 21, 2007 is concerned, the Commissioner of Internal Revenue has one hundred twenty days or until January 19, 2008 within which to make a decision. After the lapse of the said one hundred twenty day[-]period, [San Roque] should have elevated its claim with the Court within thirty (30) days starting from January 20, 2008 to February 18, 2008. Unfortunately, the Petition for Review covering said third and fourth quarter[s] was filed March 28, 2008 beyond the 30-day period set by law and therefore, the Court has no jurisdiction to entertain the subject matter of the case.
Other issues raised now become moot and academic.5
WHEREFORE, these consolidated Petitions for Review, CTA Case Nos. 7744 covering the first, third and fourth quarter[s] and 7802 covering [the] second quarter are hereby DISMISSED since the Court has no jurisdiction thereof.6
Finding no reversible error, we affirm the assailed Decision dated January 10, 2011 and Resolution dated May 31, 2011 rendered by the First Division in C.T.A. Case Nos. 7744 and 7802.
WHEREFORE, premises considered, the present Petition for Review is hereby DENIED, and accordingly DISMISSED for lack of merit.12
I.
THE HONORABLE CTA EN BANC COMMITTED REVERSIBLE ERROR IN DISMISSING [SAN ROQUE’S] PETITIONS FOR REVIEW AND APPLYING RETROACTIVELY THE AICHI RULING IN THAT AT THE TIME IT FILED ITS PETITIONS FOR REVIEW, [SAN ROQUE] ACTED IN GOOD FAITH IN ACCORDANCE WITH THE THEN PREVAILING RULE AND JURISPRUDENCE CONSISTENTLY UPHELD FOR ALMOST A DECADE BY THE HONORABLE CTA IN THE ABSENCE THEN OF A RULING FROM THIS HONORABLE COURT.II.
THE HONORABLE CTA EN BANC COMMITTED REVERSIBLE ERROR IN APPLYING THE AICHI RULING TO [SAN ROQUE’S] CLAIM FILED YEARS BEFORE ITS PROMULGATION IN THAT THE AICHI RULING, WHICH LAID DOWN A NEW RULE OF PROCEDURE WHICH AFFECTS SUSBSTANTIVE RIGHTS, SHOULD BE APPLIED PROSPECTIVELY IN LIGHT OF THE LAW AND SETTLED JURISPRUDENCE UPHOLDING THE PRINCIPLE OF PROSPECTIVITY.III.
THE HONORABLE CTA EN BANC COMMITTED REVERSIBLE ERROR IN APPLYING RETROACTIVELY THE AICHI RULING IN THAT ITS RETROACTIVE APPLICATION TO [SAN ROQUE’S] PENDING CLAIM WILL BE UNJUST AND UNFAIR AND WILL CERTAINLY PRODUCE SUBSTANTIAL INEQUITABLE RESULTS AND GRAVE INJUSTICE TO [SAN ROQUE] AND MANY TAXPAYERS WHO RELIED IN GOOD FAITH ON ITS THEN CONSISTENT RULINGS FOR ALMOST A DECADE.IV.
THE HONORABLE CTA EN BANC COMMITTED REVERSIBLE ERROR IN APPLYING RETROACTIVELY THE AICHI RULING IN THAT ITS RETROACTIVE APPLICATION GOES AGAINST THE BASIC POLICIES AND THE SPIRIT OF THE EPIRA LAW.V.
[SAN ROQUE] SHOULD BE GIVEN THE SAME TREATMENT AS THOSE DECIDED IN PRECEDENT CASES PROMULGATED PRIOR TO THE PROMULGATION OF THE AICHI RULING IN ACCORDANCE WITH THE EQUAL PROTECTION CLAUSE OF THE CONSTITUTION AND THE DOCTRINE OF EQUITABLE ESTOPPEL.VI.
RECENTLY, THIS HONORABLE COURT EN BANC HAS CATEGORICALLY RULED THAT THE AICHI RULING SHALL BE APPLIED PROSPECTIVELY.13
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
(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 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 Appeal. (Emphases supplied.)
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).16 (Emphasis deleted.)
According to Mirant and Aichi | |||
Tax Period 2006 | Close of Quarter When Relevant Sales were Made | End of the Two-Year Prescriptive Period | Date of Filing of Administrative Claim |
First Quarter | March 31, 2006 | March 31, 2008 | April 11, 2007 |
Second Quarter | June 30, 2006 | June 30, 2008 | July 10, 2007 |
Third Quarter | September 30, 2006 | September 30, 2008 | August 31, 2007 |
Fourth Quarter | December 31, 2006 | December 31, 2008 | August 31, 2007 |
According to Atlas | |||
Tax Period 2006 | Filing of Returns and Payment of Taxes 20 Days after the Close of Taxable Quarter | End of the Two-Year Prescriptive Period | Date of Filing of Administrative Claim |
First Quarter | April 20, 2006 | April 20, 2008 | April 11, 2007 |
Second Quarter | July 20, 2006 | July 20, 2008 | July 10, 2007 |
Third Quarter | October 20, 2006 | October 20, 2008 | August 31, 2007 |
Fourth Quarter | January 21, 200619 | January 21, 2009 | August 31, 2007 |
Tax Period 2006 | Date of Filing of Amended Administrative Claim | End of 120- Day Period for CIR to Decide | End of 30-day Period to File Appeal with CTA | Date of Actual Filing of Judicial Claim | No. of Days: End of 120-day Period to Filing of Judicial Claim |
First Quarter | April 11, 2007 | August 9, 2007 | September 8, 200720 | March 28, 2008 | 232 days |
Second Quarter | July 10, 2007 | November 7, 2007 | December 7, 2007 | June 27, 2008 | 233 days |
Third Quarter | August 31, 2007 | December 29, 2007 | January 28, 2008 | March 28, 2008 | 90 days |
Fourth Quarter | August 31, 2007 | December 29, 2007 | January 28, 2008 | March 28, 2008 | 90 days |
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.21 (Citations omitted.)
Tax Period 2006 | Date of Filing of Amended Administrative Claim | End of 120- Day Period for CIR to Decide | End of 30-day Period to File Appeal with CTA | Date of Actual Filing of Judicial Claim | No. of Days: End of 120-day Period to Filing of Judicial Claim |
Third Quarter | September 21, 2007 | January 19, 2008 | February 18, 2008 | March 28, 2008 | 69 days |
Fourth Quarter | September 21, 2007 | January 19, 2008 | February 18, 2008 | March 28, 2008 | 69 days |
Philex’s situation is not a case of premature filing of its judicial claim but of late filing, indeed very late filing. BIR Ruling No. DA-489-03 allowed premature filing of a judicial claim, which means non- exhaustion of the 120-day period for the Commissioner to act on an administrative claim. Philex cannot claim the benefit of BIR Ruling No. DA-489-03 because Philex did not file its judicial claim prematurely but filed it long after the lapse of the 30-day period following the expiration of the 120-day period. In fact, Philex filed its judicial claim 426 days after the lapse of the 30-day period.23
Taxpayers should not be prejudiced by an erroneous interpretation by the Commissioner, particularly on a difficult question of law. The abandonment of the Atlas doctrine by Mirant and Aichi is proof that the reckoning of the prescriptive periods for input VAT tax refund or credit is a difficult question of law. The abandonment of the Atlas doctrine did not result in Atlas, or other taxpayers similarly situated, being made to return the tax refund or credit they received or could have received under Atlas prior to its abandonment. This Court is applying Mirant and Aichi prospectively. Absent fraud, bad faith or misrepresentation, the reversal by this Court of a general interpretative rule issued by the Commissioner, like the reversal of a specific BIR ruling under Section 246, should also apply prospectively.x x x.24 (Emphases included.)
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.
The Atlas doctrine has no relevance to the 120+30 day periods under Section 112(C) because the application of the 120+30 day periods was not in issue in Atlas. 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. 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.25 (Emphases supplied.)
There is no dispute that the 120-day period is mandatory and jurisdictional, and that the CTA does not acquire jurisdiction over a judicial claim that is filed before the expiration of the 120-day period. There are, however, two exceptions to this rule. The first exception is if the Commissioner, through a specific ruling, misleads a particular taxpayer to prematurely file a judicial claim with the CTA. Such specific ruling is applicable only to such particular taxpayer. The second exception is where the Commissioner, through a general interpretative rule issued under Section 4 of the Tax Code, misleads all taxpayers into filing prematurely judicial claims with the CTA. In these cases, the Commissioner cannot be allowed to later on question the CTA’s assumption of jurisdiction over such claim since equitable estoppel has set in as expressly authorized under Section 246 of the Tax Code.
x x x x
BIR Ruling No. DA-489-03 is a general interpretative rule because it was a response to a query made, not by a particular taxpayer, but by a government agency tasked with processing tax refunds and credits, that is, the One Stop Shop Inter-Agency Tax Credit and Drawback Center of the Department of Finance. This government agency is also the addressee, or the entity responded to, in BIR Ruling No. DA-489-03. Thus, while this government agency mentions in its query to the Commissioner the administrative claim of Lazi Bay Resources Development, Inc., the agency was in fact asking the Commissioner what to do in cases like the tax claim of Lazi Bay Resources Development, Inc., where the taxpayer did not wait for the lapse of the 120-day period.
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.26 (Emphasis supplied.)
Endnotes:
1Rollo, pp. 95-119; penned by Associate Justice Olga Palanca-Enriquez with Presiding Justice Emesto D. Acosta and Associate Justices Juanito C. Castaneda, Jr., Erlinda P. Uy, Caesar A. Casanova, Esperanza R. Fabon-Victorino, Cielito N. Mindaro-Grulla, and Amelia R. Cotangco Manalastas, concurring, and Associate Justice Lovell R. Bautista, dissenting.
2 Id. at 88-91; penned by Associate Justice Esperanza R. Fabon-Victorino with Acting Presiding Justice Juanito C. Castañeda, Jr. and Associate Justices Erlinda P. Uy, Caesar A. Casanova, Cielito N. Mindaro-Grulla, and Amelia R. Cotangco-Manalastas, concurring, and Associate Justice Lovell R. Bautista, dissenting.
3 Id. at 125'-133; penned by Presiding Justice Ernesto D. Acosta with Associate Justices Erlinda P. Uy and Esperanza Fabon-Victorino, concurring.
4 SEC. 108. Value-Added Tax on Sale of Services and Use or Lease of Properties. –
x x x x
B. Transactions Subject to Zero Percent (0%) Rate. – The following services performed in the Philippines by VAT-registered person shall be subject to zero percent (0%) rate:
x x x x
(3) Services rendered to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects the supply of such services to zero percent (0%) rate.
x x x x
(7) Sale of power or fuel generated through renewable sources of energy such as, but not limited to, biomass, solar, wind, hydropower, geothermal, ocean energy, and other emerging energy sources using technologies such as fuel cells and hydrogen fuels.
5Rollo, pp. 130-132.
6 Id. at 132.
7 Id. at 145-157; penned by Presiding Justice Ernesto D. Acosta with Associate Justices Erlinda P. Uy, on leave, and Esperanza R. Fabon-Victorino, concurring.
8 G.R. No. 184823, October 6, 2010, 632 SCRA 422.
9 Citing Rizal Commercial Banking Corporation v. Commissioner of Internal Revenue, 550 Phil. 316, 324 (2007).
10 G.R. No. 180345, November 25, 2009, 605 SCRA 536.
11 Under Section 112(A) of the NIRC of 1997, as amended, the VAT-registered taxpayer, “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.” (Emphasis supplied.)
12Rollo, p. 114.
13 Id. at 50-51.
14 586 Phil. 712 (2008).
15 G.R. Nos. 187485, 196113, and 197156, February 12, 2013, 690 SCRA 336.
16 Id. at 392.
17 Id. at 399.
18 551 Phil. 519 (2007). In San Roque (2013), the Court ruled that Atlas “should be effective only from its promulgation on 8 June 2007 until its abandonment on September 12, 2008 in Mirant” (Id. at 397). Some of the administrative claims of San Roque in the present case were filed within the period of effectivity of Atlas.
19 January 20, 2006 fell on a Sunday.
20 September 8, 2007 is a Saturday. San Roque had until September 10, 2007 to file its Petition for Review with the CTA.
21Commissioner of Internal Revenue v. San Roque Power Corporation, Taganito Mining Corporation v. Commissioner of Internal Revenue, and Philex Mining Corporation v. Commissioner of Internal Revenue, supra note 15 at 389-390.
22 Id. at 403.
23 Id. at 405-406.
24 Id. at 403.
25 Id. at 397-399.
26 Id. at 401-404.