G.R. No. 192006, November 14, 2018
COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. MINDANAO I GEOTHERMAL PARTNERSHIP, Respondent.
D E C I S I O N
- Whether or not the CTA erred in taking judicial notice of the quarterly VAT returns filed by M1 in other cases before the CTA;
- Whether or not the BIR was denied due process when the CTA took judicial notice of the quarterly VAT returns filed by M1 in other cases before the CTA without a hearing;
- Whether or not CTA erred in granting M1's motion for new trial; and
- Whether or not the First Division of the CTA had jurisdiction to entertain M1's claim for a tax credit certificate.
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.
x 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 Subsection (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.
- Two-Year Prescriptive Period
- It is only the administrative claim that must be filed within the two-year prescriptive period. (Aichi)
- The proper reckoning date for the two-year prescriptive period is the close of the taxable quarter when the relevant sales were made. (San Roque)
- The only other rule is the Atlas ruling, which applied only from 8 June 2007 to 12 September 2008. Atlas states that the two-year prescriptive period for filing a claim for tax refund or credit of unutilized input VAT payments should be counted from the date of filing of the VAT return and payment of the tax. (San Roque)
- 120+30 Day Period
- The taxpayer can file an appeal in one of two ways: (1) file the judicial claim within thirty days after the Commissioner denies the claim within the 120-day period, or (2) file the judicial claim within thirty days from the expiration of the 120-day period if the Commissioner does not act within the 120-day period.
- The 30-day period always applies, whether there is a denial or inaction on the part of the CIR.
- As a general rule, the 30-day period to appeal is both mandatory and jurisdictional. (Aichi and San Roque)
- As an exception to the general rule, premature filing is allowed only if filed between 10 December 2003 and 5 October 2010, when BIR Ruling No. DA-489-03 was still in force. (San Roque)
- Late filing is absolutely prohibited, even during the time when BIR Ruling No. DA-489-03 was in force. (San Roque)28
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.30 (Emphasis and underscoring Ours)
After 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 [under BIR Ruling No. DA-489-03]. 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.
Similarly, Silicon's claim for tax refund for the second quarter of 2000 should have been dismissed for having been filed out of time. Records show that Silicon filed its claim for tax credit or refund on August 10, 2000. The CIR then had 120 days or until December 8, 2000 to grant or deny the claim. With the inaction of the CIR to decide on the claim which was deemed a denial of the claim for tax credit or refund, Silicon had until January 7, 2001 or 30 days from December 8, 2000 to file its petition for review with the CTA. However, Silicon again failed to comply with the 120+30-day period provided under Section 112 (C) since it filed its judicial claim only on June 28, 2002 or 536 days late. Thus, the petition for review, which was belatedly filed, should have been dismissed by the CTA which acquired no jurisdiction to act on the petition.33 (Citations omitted and bracketing, emphasis and underscoring Ours)
This Court cannot brush aside the grave issue of the mandatory and jurisdictional nature of the 120-day period just because the Commissioner merely asserts that the case was prematurely filed with the CTA and does not question the entitlement of San Roque to the refund. The mere fact that a taxpayer has undisputed excess input VAT, or that the tax was admittedly illegally, erroneously or excessively collected from him, does not entitle him as a matter of right to a tax refund or credit. Strict compliance with the mandatory and jurisdictional conditions prescribed by law to claim such tax refund or credit is essential and necessary for such claim to prosper. Well-settled is the rule that tax refunds or credits, just like tax exemptions, are strictly construed against the taxpayer. The burden is on the taxpayer to show that he has strictly complied with the conditions for the grant of the tax refund or credit.
This Court cannot disregard mandatory and jurisdictional conditions mandated by law simply because the Commissioner chose not to contest the numerical correctness of the claim for tax refund or credit of the taxpayer. Non-compliance with mandatory periods, non-observance of prescriptive periods, and non-adherence to exhaustion of administrative remedies bar a taxpayer's claim for tax refund or credit, whether or not the Commissioner questions the numerical correctness of the claim of the taxpayer. This Court should not establish the precedent that non-compliance with mandatory and jurisdictional conditions can be excused if the claim is otherwise meritorious, particularly in claims for tax refunds or credit. Such precedent will render meaningless compliance with mandatory and jurisdictional requirements x x x.43 (Citations omitted)
Endnotes:
* Designated as Acting Member per Special Order No. 2587 dated August 28, 2018.
1Rollo, pp. 7-30.
2 Penned by Associate Justice Juanito C. Castañeda, Jr., with Presiding Justice Ernesto D. Acosta and Associate Justices Caesar A. Casanova and Lovell R. Bautista concurring, and Associate Justices Erlinda P. Uy and Olga Palanca-Enriquez dissenting; id. at 37-53.
3 Id. at 70-75.
4 Penned by Associate Justice Lovell R. Bautista, with Presiding Justice Ernesto D. Acosta and Associate Justice Caesar A. Casanova, concurring; id. at 232-244.
5 Id. at 40.
6 Id.
7 Id. at 40-41.
8 Id. at 41.
9 Id.
10 Penned by Presiding Justice Ernesto D. Acosta, with Associate Justices Lovell R. Bautista and Caesar A. Casanova, concurring; id. at 89-96.
11 Id. at 95-96.
12 Id. at 108.
13 Id. at 109-230.
14 Id. at 232-244.
15 Id. at 241-242.
16 Id. at 37-53.
17 Dissenting Opinion of Associate Justice Erlinda P. Uy, id. at 54-58; and Dissenting Opinion of Associate Justice Olga Palanca-Enriquez, id. at 59-69.
18 Id. at 70-75.
19 Id. at 311-325.
20 Id. at 333-344.
21 Id. at 371.
22 646 Phil. 710 (2010).
23 Section 112(C) has been amended by Republic Act No. 10963 (Tax Reform for Acceleration and Inclusion Law) by reducing the period within which the Commissioner could act on input VAT refund claims from 120 days to 90 days.
24 551 Phil. 519 (2007).
25 586 Phil. 712 (2008).
26 703 Phil. 310 (2013).
27 757 Phil. 54 (2015).
28 Id. at 65.
29 298-A Phil. 76 (1993).
30 Supra note 26, at 371.
31Mindanao II Geothermal Partnership v. CIR, 706 Phil. 48 (2013), which involves M1's VAT input tax credit claims for 2005; and Mindanao I Geothermal Partnership v. CIR, G.R. No. 197519, November 8, 2017, involving M1's VAT input tax credit claims for 2004.
32 727 Phil. 487 (2014).
33 Id. at 503-504.
34 772 Phil. 672 (2015).
35 Id. at 718, citing Fabian v. Hon. Desierto, 356 Phil. 787, 800-801 (1998).
36Asiatrust Dev't. Bank v. First Aikka Dev't, Inc., et al., 665 Phil. 313, 326-327 (2011).
37 131 Phil. 556 (1968).
38 204 Phil. 25 (1982).
39 Id. at 34-35.
40 306 Phil. 84 (1994).
41 Id. at 93-94.
42 Supra note 37, at 562-563.
43 Supra note 26, at 356-357.