EN BANC
G.R. No. 190872, October 17, 2013
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE COMMISSIONER OF INTERNAL REVENUE, Petitioners, v. GST PHILIPPINES, INC., Respondent.
D E C I S I O N
PERLAS-BERNABE, J.:
Period | Date of Filing | Zero-Rated Sales |
1 st Quarter of year 2004 | April 16, 2004 | P 77,687,420.54 |
2 nd Quarter of year 2004 | July 15, 2004 | 53,737,063.05 |
3 rd Quarter of year 2004 | October 15, 2004 | 74,280,682.00 |
4 th Quarter of year 2004 | January 11, 2005 | 104,633,604.23 |
1 st Quarter of year 2005 | April 25, 2005 | 37,742,969.02 |
2 nd Quarter of year 2005 | July 19, 2005 | 56,133,761.00 |
3 rd Quarter of year 2005 | October 26, 2005 | 51,147,677.80 |
Period | Date of Filing of Administrative Claim for Refund |
1 st Quarter of 2004 | June 9, 2004 |
2 nd Quarter of 2004 | August 12, 2004 |
3 rd Quarter of 2004 | February 18, 2005 |
4 th Quarter of 2004 | February 18, 2005 |
1 st Quarter of 2005 | May 11, 2005 |
2 nd Quarter of 2005 | November 18, 2005 |
3 rd Quarter of 2005 | November 18, 2005 |
Section 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. (Emphasis supplied)
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. (Emphasis supplied)cralawlawlibrary
Applying the above discourse in the case at bar, a table is prepared for easy reference:
Filing of Administrative Claim 120 th day [Section 112 (D), NIRC of 1997] 30 th day [Section 112 (D), 2 nd par., NIRC of 1997) Filing of the Petition before the First Division of this Court Remarks June 9, 2004 October 7, 2004 November 6, 2004 March 17, 2006 Prescribed August 12, 2004 December 10, 2004 January 9, 2005 March 17, 2006 Prescribed February 18, 2005 June 18, 2005 July 18, 2005 March 17, 2006 Prescribed May 11, 2005 September 8, 2005 October 8, 2005 March 17, 2006 Prescribed November 18, 2005 March 18, 2006 April 17, 2006 March 17, 2006 Premature
Based on the above, the filing of the Petition for Review before the First Division has already prescribed with respect to the administrative claim filed on June 9, 2004; August 12, 2004; February 18, 2005; and May 11, 2005 for being filed beyond the 30th day provided under the second paragraph of Section 112 (D) of the NIRC of 1997. The petition is therefore dismissible for being out of time.
Anent the administrative claim filed on November 18, 2005, the filing of the petition before the First Division is premature for failure of respondent to wait for the 120-day period to expire. It failed to exhaust the available administrative remedies. Hence, the instant petition is likewise dismissible for lack of cause of action.30
In fact, applying the two-year period to judicial claims would render nugatory Section 112(D) [now Section 112 (C)] of the NIRC, which already provides for a specific period within which a taxpayer should appeal the decision or inaction of the CIR. The second paragraph of Section 112(D) [now Section 112 (C)] of the NIRC envisions two scenarios: (1) when a decision is issued by the CIR before the lapse of the 120-day period; and (2) when no decision is made after the 120-day period. In both instances, the taxpayer has 30 days within which to file an appeal with the CTA. As we see it then, the 120-day period is crucial in filing an appeal with the CTA.35 (Emphasis supplied)cralawlawlibrary
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.
Section 4 of the Tax Code, a new provision introduced by RA 8424, expressly grants to the Commissioner the power to interpret tax laws, thus:chanRoblesvirtualLawlibrarySec. 4. Power of the Commissioner To Interpret Tax Laws and To Decide Tax Cases. – The power to interpret the provisions of this Code and other tax laws shall be under the exclusive and original jurisdiction of the Commissioner, subject to review by the Secretary of Finance.
The power to decide disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters arising under this Code or other laws or portions thereof administered by the Bureau of Internal Revenue is vested in the Commissioner, subject to the exclusive appellate jurisdiction of the Court of Tax Appeals.
Since the Commissioner has exclusive and original jurisdiction to interpret tax laws, taxpayers acting in good faith should not be made to suffer for adhering to general interpretative rules of the Commissioner interpreting tax laws, should such interpretation later turn out to be erroneous and be reversed by the Commissioner or this Court. Indeed, Section 246 of the Tax Code expressly provides that a reversal of a BIR regulation or ruling cannot adversely prejudice a taxpayer who in good faith relied on the BIR regulation or ruling prior to its reversal. x x x.41
Taxable Period | Filing of Administrative claim | 120 th day [Section 112 (D), NIRC of 1997] | 30 th day [Section 112 (D), NIRC of 1997] | Filing of Judicial Claim | Remarks | Action on Claim |
1 st Quarter 2004 | June 9, 2004 | October 7, 2004 | November 6, 2004 | March 17, 2006 | Filed late | DENY , pursuant to Section 112 (C), NIRC of 1997 |
2 nd Quarter 2004 | August 12, 2004 | December 10, 2004 | January 9, 2005 | March 17, 2006 | Filed late | DENY , pursuant to Section 112 (C), NIRC of 1997 |
3 rd Quarter 2004 | February 18, 2005 | June 18, 2005 | July 18, 2005 | March 17, 2006 | Filed late | DENY , pursuant to Section 112 (C), NIRC of 1997 |
4 th Quarter 2004 | February 18, 2005 | June 18, 2005 | July 18, 2005 | March 17, 2006 | Filed late | DENY , pursuant to Section 112 (C), NIRC of 1997 |
1 st Quarter 2005 | May 11, 2005 | September 8, 2005 | October 8, 2005 | March 17, 2006 | Filed late | DENY , pursuant to Section 112 (C), NIRC of 1997 |
2 nd Quarter 2005 | November 18, 2005 | March 18, 2006 | April 17, 2006 | March 17, 2006 | Prematurely filed | GRANT , pursuant to BIR Ruling No. DA-489-03 |
3 rd Quarter 2005 | November 18, 2005 | March 18, 2006 | April 17, 2006 | March 17, 2006 | Prematurely filed | GRANT , pursuant to BIR Ruling No. DA-489-03 |
Endnotes:
1Rollo, pp. 8-27.
2 Id. at 28-45. Penned by Associate Justice Juanito C. Castañeda, Jr., with Presiding Justice Ernesto D. Acosta, dissenting, Associate Justices Erlinda P. Uy and Olga Palanca-Enriquez, concurring, and Associate Justices Lovell R. Bautista and Caesar A. Casanova, both concurring and dissenting.
3 Id. at 62-65. Penned by Associate Justice Juanito C. Castañeda, Jr., with Presiding Justice Ernesto D. Acosta, dissenting, and Associate Justices Lovell R. Bautista, Erlinda P. Uy, Caesar A. Casanova, and Olga Palanca-Enriquez, concurring.
4 Id. at 9.
5 Id. at 29.
6 Otherwise known as the “Omnibus Investments Code of 1987.”
7Rollo, pp. 77-78.
8 See CIR v. Seagate Technology (Phils.), 491 Phil. 317, 338-339 (2005), citing Section 106 (A)(2)(a)(5) of RA 8424 in relation to EO 226 and RA 7916 (The Special Economic Zone Act of 1995).
9Rollo, p. 30.
10 Id.
11 Id. at 44.
12 The said decision is not attached to the records of this case.
13Rollo, p. 30.
14 The CTA First Division’s Resolution dated March 30, 2009 which denied CIR’s motion for reconsideration was not attached in the records of this case.
15Rollo, p. 30.
16 Id. at 31.
17 “An Act Amending the National Internal Revenue Code, As Amended, and for Other Purposes.” This is otherwise known as the “Tax Reform Act of 1997” or the “National Internal Revenue Code of 1997.”
18Rollo, p. 41.
19 Id. at 28-45.
20 Id. at 44.
21 Id. at 62-65.
22 “Adopting a Value-Added Tax, Amending for this Purpose Certain Provisions of the National Internal Revenue Code, and for Other Purposes.” It added Section 106 in the Tax Code and the pertinent provisions read:
Sec. 106. Refunds or tax credits of input tax. – x x x.
(b) Zero-rated or effectively zero-rated sales. – Any person, except those covered by paragraph (a) above, whose sales are zero-rated or are effectively zero-rated may, within two years after the close of the quarter when such sales were made, apply for the issuance of a tax credit certificate or refund of the input taxes attributable to such sales to the extent that such input tax has not been applied against output tax.
x x x
(e) Period within which refund of input taxes may be made by the Commissioner. – The Commissioner shall refund input taxes within 60 days from the date the application for refund was filed with him or his duly authorized representative. No refund of input taxes shall be allowed unless the VAT-registered person files an application for refund within the period prescribed in paragraphs (a), (b) and (c), as the case may be.
x x x
23 “An Act Restructuring the Value-Added Tax (VAT) System, Widening its Tax Base and Enhancing its Administration, and for These Purposes Amending and Repealing the Relevant Provisions of the National Internal Revenue Code, as Amended, and for Other Purposes.” It further amended Section 106 and the pertinent provisions read:
Sec. 106. Refunds or tax credits of creditable input tax. –
(a) 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 100(a)(2)(A)(i), (ii) and (b) and Section 102(b)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the 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.
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 for creditable input taxes within sixty (60) days from the date of submission of complete documents in support of the application filed in accordance with sub-paragraphs (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 sixty-day period, appeal the decision or the unacted claim with the Court of Tax Appeals.
x x x
24 “An Act Amending Sections 27, 28, 34, 106, 107, 108, 109, 110, 111, 112, 113, 114, 116, 117, 119, 121, 148, 151, 236, 237 and 288 of the National Internal Revenue Code of 1997, as Amended, and for Other Purposes.” Pertinent provisions of Section 112 now reads:
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: Provided, finally, That for a person making sales that are zero-rated under Section 108(B)(6), the input taxes shall be allocated ratably between his zero-rated and non-zero-rated sales.
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 Appeals.
x x x
25 Its effectivity clause provides that it shall take effect on July 1, 2005 but its effectivity was suspended due to a temporary restraining order (TRO) issued by the Court. The law finally took effect only on November 1, 2005 when the validity of the law was upheld and the TRO was lifted (see Abakada Guro Party List v. Ermita, G.R. Nos. 168056, 168207, 168461, 168463 & 168730, September 1, 2005, 469 SCRA 1). See also CIR v. Philippine Global Communications, Inc., G.R. No. 144696, August 16, 2006, 499 SCRA 53 regarding the effect of a TRO on the effectivity of a law. It states that with the issuance of the TRO, the enforcement and/or implementation of an entire law, not only the contested provisions, is stopped.
26 RA 9337 removed the grant to a taxpayer to refund input VAT arising from purchase of capital goods. Other than that, RA 9337 did not significantly modify Section 112.
27 Rollo, pp. 46-54.
28 Id. at 50.
29 Id. at 52.
30 Id. at 53-54.
31 Id. at 82.
32 Id. at 84.
33 Id. at 82-84.
34 G.R. No. 184823, October 6, 2010, 632 SCRA 422.
35 Id. at 444.
36CIR v. San Roque Power Corporation, G.R. Nos. 187485, 196113, and 197156, February 12, 2013, 690 SCRA 336, 398.
37 Id. at 381.
38 Id.
39 Sec. 246. Non-Retroactivity of Rulings. – Any revocation, modification or reversal of any of the rules and regulations promulgated in accordance with the preceding Sections or any of the rulings or circulars promulgated by the Commissioner shall not be given retroactive application if the revocation, modification or reversal will be prejudicial to the taxpayers, except in the following cases:
(a) Where the taxpayer deliberately misstates or omits material facts from his return or any document required of him by the Bureau of Internal Revenue;
(b) Where the facts subsequently gathered by the Bureau of Internal Revenue are materially different from the facts on which the ruling is based; or
(c) Where the taxpayer acted in bad faith.
40 Supra note 35, at 401.
41 Id. at 401-402.
42 Id. at 404.
43 Id. at 405.
44Rollo, p. 22.
45 This is consistent with several CTA decisions, as follows: Procter & Gamble Asia, PTE. LTD. v. Commissioner of Internal Revenue, CTA EB No. 830 (CTA Case No. 7982), December 20, 2012; Taganito Mining Corporation v. Commissioner of Internal Revenue, CTA EB No. 656 (CTA Case No. 7769), October 19, 2011; UCPB Properties, Inc. v. Commissioner of Internal Revenue, CTA EB No. 645 (CTA Case Nos. 6543 & 6589), July 18, 2011; Commissioner of Internal Revenue v. Team Energy Corporation (formerly Mirant Pagbilao Corporation and Southern Energy Quezon, Inc.), CTA EB No. 652 (CTA Case No. 7461).
46Gulf Air Company, Philippine Branch (GF) v. CIR, G.R. No. 182045, September 19, 2012, 681 SCRA 377, 389.
47 Supra note 33, at 425.