SECOND DIVISION
G.R. No. 197519, November 08, 2017
MINDANAO I GEOTHERMAL PARTNERSHIP, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.
D E C I S I O N
CAGUIOA, J.:
[M1] entered into a Build-Operate-Transfer [BOT] contract with the Philippine National Oil Company-Energy Development Corporation (PNOC-EDC) for the finance, design, construction, testing, commissioning, operation, maintenance, and repair of a 47-megawatt geothermal power plant, provided that PNOC-EDC shall supply and deliver steam to [M1] at no cost. In turn, [M1] shall convert the steam into electric capacity and energy for PNOC-EDC and shall deliver the same to the National Power Corporation (NPC) for and in behalf of PNOC-EDC. [M1's] 47-megawatt geothermal power plant project has been accredited by the Department of Energy (DOE) as a Private Sector Generation Facility, pursuant to the provision of Executive Order No. 215 and evidenced by Certificate of Accreditation No. 95-03-07. In order to facilitate the operations and management of the said geothermal plant, it entered into an Operations and Maintenance Agreement with Marubeni Energy Services Corporation (MESC).
For the second to fourth quarters of taxable year 2004, [M1] filed its Quarterly [Value-Added Tax (VAT)] Returns on the following dates:
Quarter Date filed Date Amended Second July 22, 2004 June 22, 2005 Third October 22, 2004 June 22, 2005 Fourth January 25, 2005 June 22, 2005
On August 16, 2005, [M1] filed a letter-request for the issuance of [TCC] with the BIR Large Taxpayers Service arising from its excess and unutilized creditable input taxes in the amount of [P]9,470,500.39, accumulated from the first to fourth quarters of taxable year 2004. However, said application for issuance of [TCC] remains unacted (sic) upon by respondent [Commissioner of Internal Revenue (CIR)] despite the lapse of the one hundred twenty (120)-day period provided under Section 112(D) of the National Internal Revenue Code (NIRC) of 1997, as amended.
On July 21, 2006, [M1] filed [its] Petition for Review, praying for the issuance of [a TCC] in the amount of [P]6,199,278.90 instead of the amount of [P]9,470,500.39, which covers merely the second to fourth quarters of taxable year 2004.5
On September 18, 2006, [the CIR] filed his Answer interposing the following counter-arguments:
"4.
[M1's] claim for refund is subject to administrative investigation by the Bureau;
5. [M1] must prove that it paid the alleged VAT input taxes for the period in question; 6. [M1] must prove that the same alleged input VAT was not utilized against any output VAT liability; 7. [M1] must prove that its sales are VAT zero-rated as contemplated under Section 112 (A) of the Tax Code of 1997; 8. [M1] must prove that the alleged VAT input taxes for the period in question are attributable to its alleged VAT zero-rated sales; 9. [M1] must prove that the claim was filed within [the] period prescribed by law; 10. In an action for refund, the burden of proof is on the taxpayer to establish its right to refund, and failure to sustain the burden is fatal to the claim for refund; [and] 11. Claims for refund are construed strictly against the claimant for the same partake the nature of exemption of (sic) taxation."[6]
WHEREFORE, [M1's] claim for issuance of [TCC] is hereby PARTIALLY GRANTED. Accordingly, [the CIR] is hereby ORDERED TO ISSUE A [TCC] in favor of [M1] in the reduced amount of [P]2,279,821.99, representing its excess and unutilized input VAT for the period covering the third and fourth quarters of taxable year 2004.
SO ORDERED.8
WHEREFORE, premises considered, [the CIR's] [MPR] is hereby DENIED for lack of merit; while [M1's] [MPR] is hereby PARTIALLY GRANTED. [The CTA First Division's] Decision dated May 12, 2009 is hereby MODIFIED. Accordingly, [the CIR] is hereby ORDERED TO ISSUE A [TCC] in the amount of [P]5,278,036.06 in favor of [M1], representing its unutilized input VAT for the second, third, and fourth quarters of taxable year 2004.
SO ORDERED.16
WHEREFORE, premises considered, the instant petition is hereby GRANTED. Accordingly, the Amended Decision dated April 30, 2010 rendered by the Former First Division of this Court in C.T.A. Case No. 7506 is hereby REVERSED and SET ASIDE, and another one is hereby entered dismissing the Petition for Review filed in C.T.A. Case No. 7506 for having been filed late.
SO ORDERED.19
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 nonzero-rated sales.
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 Appeals. (Emphasis and underscoring 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.28 (Emphasis and underscoring supplied)
(1) An administrative claim must be filed with the CIR within two [2] years after the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made.
(2) The CIR has [one hundred twenty (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 [one hundred twenty (120)]-day period may extend beyond the two [2]-year period from the filing of the administrative claim if the claim is filed in the later part of the two [2]-year period. If the [one hundred twenty (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 [thirty] 30 days from the receipt of the CIR's decision denying the administrative claim or from the expiration of the [one hundred twenty (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 [December 10, 2003] up to its reversal by this Court in Aichi on [October 6, 2010], as an exception to the mandatory and jurisdictional 120+30 day periods.32 (Emphasis supplied)
Quarter | Close of Taxable Quarter | Amended Administrative Claim | Expiration of CIR's period to Act | Judicial Claim |
Second | June 30, 2004 | June 22, 2005 | October 20, 2005 | July 21, 2006 |
Third | September 30, 2004 | June 22, 2005 | October 20, 2005 | July 21, 2006 |
Fourth | December 31, 2004 | June 22, 2005 | October 20, 2005 | July 21, 2006 |
Atlas was promulgated on [June 8, 2007], while Mirant was promulgated on [September 12, 2008]. It is therefore misleading to state that Atlas was the controlling doctrine at the time of filing of the claims. The 1997 Tax Code, which took effect on [January 1, 1998], was the applicable law at the time of filing of the claims in issue, x x x33 (Emphasis omitted)
Endnotes:
1Rollo, pp. 41-68.
2 Id. at 7-24. Penned by Associate Justice Olga Palanca-Enriquez, with Presiding Justice Ernesto D. Acosta, Associate Justices Juanito C. Castañeda, Jr., Lovell R. Bautista (with Separate Opinion, id. at 25-32), Erlinda P. Uy, Caesar A. Casanova, Esperanza R. Fabon-Victorino, Cielito N. Mindaro-Grulla and Amelia R. Cotangco-Manalastas concurring.
3 Id. at 34-38.
4 Id. at 281-288. Penned by Associate Justice Lovell R. Bautista, with Presiding Justice Ernesto D. Acosta dissenting (with Dissenting Opinion, id. at 289-290) and Associate Justice Caesar A. Casanova concurring.
5 According to M1, it no longer pursued its claim for unutilized creditable input taxes for the first quarter of 2004 as it failed to elevate the same to the CTA within the two (2)-year period under Section 112(A) of the NIRC. See rollo, p. 44.
6 Id. at 251-253.
7 Id. at 250-260. Penned by Associate Justice Lovell R. Bautista, with Presiding Justice Ernesto D. Acosta dissenting (with Dissenting Opinion, id. at 261-264) and Caesar A. Casanova concurring.
8 Id. at 260.
9 See id. at 255-259.
10 586 Phil. 712 (2008).
11 Id. at 254.
12 Id. at 254-255.
13 551 Phil. 519 (2007).
14 See rollo, pp. 284-285.
15 See id. at 282.
16 Id. at 288.
17 Id. at 291-304.
18 A.M. No. 05-11-07-CTA, November 22, 2005.
19Rollo, pp. 22-23.
20 Id. at 34-38.
21 Id. at 41.
22 Id. at 3-5.
23 Id. at 765-784.
24 Id. at 821-841.
25 646 Phil. 710 (2010).
26 703 Phil. 310 (2013).
27 See Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc., supra note 25, at 728, 730-732.
28Commissioner of Internal Revenue v. San Roque Power Corporation, supra note 26, at 373.
29 Id. at 372-373.
30 See id. at 376.
31 706 Phil. 48 (2013).
32 Id. at 86-87.
33Mindanao II Geothermal Partnership v. Commissioner of Internal Revenue, supra note 31, at 74.