Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&view=article&id=82537:56445&catid=1576&Itemid=566
Timestamp: 2019-04-19 22:25:51+00:00

Document:
G.R. No. 181276, November 11, 2013 - THE COMMISSIONER OF INTERNAL REVENUE, Petitioners, v. VISAYAS GEOTHERMAL POWER COMPANY, INC., Respondent.
THE COMMISSIONER OF INTERNAL REVENUE, Petitioners, v. VISAYAS GEOTHERMAL POWER COMPANY, INC., Respondent.
WHEREFORE, premises considered, the Petition is hereby DISMISSED for lack of merit. The assailed Decision dated January 18, 2007 and the Resolution dated May 17, 2007 are AFFIRMED.
The tax court ruled that: (1) the law does not require the submission by a taxpayer of its VAT registration documents in order to be able to claim for a refund of unutilized input VAT; (2) VGCPI was able to show, by submitting its VAT invoices and official receipts, that its purchases of goods and services were incurred in the course of its trade and business; (3) VGCPI sufficiently proved that its claimed input VAT was directly attributable to its zero-rated sales or sales of power generation services to PNOC-EDC; and (4) the petition was timely filed before the CTA because the taxpayer was not bound by the 120-day audit period but by the two-year prescriptive period. As explained by the tax court, when the two-year period is about to lapse, the taxpayer may, without awaiting the verdict of the CIR, file its claim for refund before the CTA.
The pivotal question in this case then is whether VGPCI failed to observe the proper prescriptive period required by law for the filing of an appeal before the CTA because it filed its petition before the end of the 120-day period granted to the CIR to decide its claim for refund under Section 112(D) of the National Internal Revenue Code (NIRC).
The CIR insists that VGPCI should have waited for the decision of the CIR or the lapse of the 120-day period from the date of submission of complete documents in support of the application for refund as provided in Section 112(D) of the NIRC.13 The filing by VGPCI of its petition for review before the CTA almost immediately after filing its administrative claim for refund is premature.
VGPCI’s reliance on Gibbs and College of Oral & Dental Surgery is misplaced. Of note is the fact that at the time of the promulgation by this Court of the said cases, there was no provision yet in the NIRC in force (Commonwealth Act No. 466,20 as amended) similar to Section 112. Therefore, the said cases hold no sway over the case at bench.
SEC. 229. Recovery of Tax Erroneously or Illegally Collected. - No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessively or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress.
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.
As such, it is now clear and indisputable that it is Section 112, and not 229, of the Tax Code which is applicable to all cases involving an application for the issuance of a tax credit certificate or refund of unutilized input VAT.
It cannot be stressed enough that the jurisdiction of the CTA over the decisions or inaction of the CIR is only appellate in nature. Thus, it necessarily requires the prior filing of an administrative case before the CIR. The CTA can only validly acquire jurisdiction over a case after the CIR has rendered its decision or, should the CIR fail to act, after the lapse of the period of action provided in the Tax Code, in which case the inaction of the CIR is considered a denial.
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.” Prior to this ruling, the BIR held, as shown by its position in the Court of Appeals, that the expiration of the 120-day period is mandatory and jurisdictional before a judicial claim can be filed.
Therefore, although the 120+30 day period in Section 112(D) is mandatory and jurisdictional and must be applied from the effectivity of the 1997 Tax Code on January 1, 1998, an exception shall be made for judicial claims filed from the issuance of BIR Ruling No. DA 489-03 on December 10, 2003 until the promulgation of Aichi on October 6, 2010. During the said period, a judicial claim for refund may be filed with the CTA even before the lapse of the 120-day period given to the BIR to decide on the administrative case.
The taxpayer has two (2) years after the close of the taxable quarter when the relevant sales were made within which to file an administrative claim before the CIR for a refund of the creditable input tax or the issuance of a tax credit certificate, regardless of when the input VAT was paid, according to Section 112(A) of the NIRC and Mirant.
The CIR is given 120 days, from the date of the submission of the complete documents in support of the application for tax refund or tax credit, to act on the said application.
If the CIR fully or partially denies the application or fails to act on the same within the required 120-day period, the taxpayer is allowed to appeal the decision or inaction of the CIR to the CTA. For this reason, the taxpayer has 30 days from his receipt of the decision of the CIR or from the lapse of the 120-day period, within which to file a petition for review with the CTA. In no case shall a petition for review be filed with the CTA before the expiration of the 120-day period. The judicial claim need not be filed within the two-year prescriptive period referred to in Section 112(A), which only pertains to administrative claims.
The two-year period referred to in Section 229 of the NLRC does not apply to appeals filed before the CTA, in relation to claims for refund or issuance of tax credits made pursuant to Section 112. Consequently, an appeal may be maintained with the CTA for so long as it observes the abovementioned period for filing the appeal.
Following San Roque, the 120+30 day period is mandatory and jurisdictional from January 1, 1998 (the effectivity of the 1997 Tax Code). However, from December 10, 2003 (the date BIR Ruling No. DA 489-03 was issued) until October 6, 2010 (the promulgation of Aichi), judicial claims need not follow the 120+30 day period. Thereafter, Aichi shall be the controlling rule for all claims filed with the CTA and the 120+30 day period must be observed.
Applying the abovementioned rules to the case at bench, the judicial claim filed on September 30, 2003 (CTA Case No. 6790) was prematurely filed and cannot be taken cognizance of because respondent failed to wait for the requisite 120 days after the filing of its claim for refund with the BIR before elevating the case to the CTA. However, the judicial claim filed on December 19, 2003 (CTA Case No. 6838), which was made after the issuance of BIR Ruling DA-489-03, can be considered by the CTA despite its hasty filing only one day after the application for refund was first lodged with the BIR.
Velasco, (Chairperson), Peralta, Abad, and Leonen, JJ., concur.
1 Rollo, pp. 67-85; Penned by Associate Justice Juanito C. Castañeda, Jr. and concurred in by Presiding Justice Ernesto D. Acosta (with concurring and dissenting opinion) and Associate Justices Lovell R. Bautista, Erlinda P. Uy, Caesar A. Casanova and Olga Palanca-Enriquez.
7 Id. at 231-245; Penned by Associate Justice Lovell R. Bautista and concurred in by Presiding Justice Ernesto D. Acosta (with Dissenting Opinion) and Associate Justice Caesar A. Casanova.
17 107 Phil. 232 (1960).
18 102 Phil. 912 (1958).
20 An Act to Revise, Amend and Codify the Internal Revenue Laws of the Philippines (June 15, 1939).
21 G.R. No. 172129, September 12, 2008, 565 SCRA 154.
22 Id. at 172-173 and 175.
23 G.R. No. 184823, October 6, 2010, 632 SCRA 422.
25 G.R. No. 187485, February 12, 2013.
28 An Act Creating the Court of Tax Appeals (June 16, 1954).
29 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 (March 30, 2004).
30 G.R. No. 187485, February 12, 2013.
I dissent with respect to the claim pertaining to CTA Case No. 6838.1 Consistent with my dissent in Commissioner of Internal Revenue v. San Roque Power Corporation2 and its consolidated cases, I am of the view that the Court of lax Appeals (CTA) cannot acquire jurisdiction without waiting for the lapse of the 120-day period or the denial by the Commissioner of Internal Revenue within that period. The 120+30-day periods are mandatory and jurisdictional.3 Section 112(D) of the National Internal Revenue Code (NIRC)4 was always clear.
This continues to allow private parties to rely on an erroneous interpretation of t-he text despite the clear language of the law.
Lastly, I underscore that the allowances we have given to the clearly erroneous reliance by lawyers of taxpayers on opinions of the Commissioner of Internal Revenue that contravene the text of the law cause damage to the government and its ability to do social justice. The costs of error are better internalized by private parties rather than the public in general. After all, as, observed in my dissent in CJR v. San Roque, government had no agency in the choice of premature filing by the private parties.
In view of the discussion above, I vote to grant the Petition and to nullify the order of the Court of fax Appeals to refund or to issue a tax credit to respondent in CTA Case No. 6838.
1 Claim for refund or issuance of tax credit certificate in the amount of P 19,070,378.18 covering the period of October 2001 to December 2002.
2 G.R. No. 187485, February 12, 2013, 690 SCRA 336. The Motions for Reconsideration filed by San Roque Power Corporation in G.R. No. 187485 and the Commissioner of Internal Revenue in G.R. No. 196113 were denied with finality on October 8, 2013.
3Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc., G.R. No. 184823, October 6, 2010, 632 SCRA 422 as cited in Commissioner of Internal Revenue v. San Roque, G.R. No. 187485, February 12, 2013, 690 SCRA 336.
4(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.
6Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc., supra.
7Commissioner of Internal Revenue v. San Roque Power Corporation, supra at 404.
8Philippine Bank of Communications v. CIR. CTA and CA, 361 Phil. 916(1999).
9Commissioner of Internal Revenue v. San Roque Power Corporation, supra at 465, Leonen, J., Separate Opinion.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.