Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&view=article&id=83745:58086&catid=1588&Itemid=566
Timestamp: 2019-04-21 04:42:49+00:00

Document:
G.R. No. 190021, October 22, 2014 - COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. BURMEISTER AND WAIN SCANDINAVIAN CONTRACTOR MINDANAO, INC., Respondent.
COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. BURMEISTER AND WAIN SCANDINAVIAN CONTRACTOR MINDANAO, INC., Respondent.
Assailed in this petition for review on certiorari1 are the Decision2 dated August 13, 2009 and the Resolution3 dated October 22, 2009 of the Court of Tax Appeals (CTA) En Banc in C.T.A. EB No. 487 which affirmed the Decision4 dated September 17, 2008 and the Resolution5 dated April 13, 2009 of the CTA First Division in C.T.A. Case No. 6220 granting respondent Burmeister and Wain Scandinavian Contractor Mindanao, Inc. (respondent) a refund of its unutilized input taxes attributable to zero-rated sales of services for the fourth quarter of taxable year 1998.
The CIR moved for the reconsideration of the aforesaid CTA First Division Decision, but was denied in a Resolution15 dated April 13, 2009.
Undaunted, the CIR elevated the case to the CTA En Banc on petition for review, docketed as C.T.A. EB No. 487, lamenting the alleged failure on the part of respondent to comply with the periods mandated under Section 112 of Republic Act No. (RA) 8424,16 otherwise known as the Tax Reform Act of 1997. From the time the administrative claim for refund was filed on July 21, 1999, the CIR had 120 days, or until November 18, 1999, to act on the application, failing in which, respondent may elevate the case before the CTA within 30 days from November 18, 1999, or until December 18, 1999. However, respondent filed its judicial claim only on January 9, 2001.
The CIR filed a motion for reconsideration but was likewise denied in a Resolution19 dated October 22, 2009 for lack of merit, hence, the present petition.
The lone issue for the Court's resolution is whether or not the CIA En Banc correctly dismissed the petition for review on the ground that the issue of prescription was belatedly raised.
(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 x x x.
The CIR argues, on the other hand, that the two-year period for filing both the administrative and judicial claims should be reckoned from the close of the fourth taxable quarter when the relevant sales were made, which fell on December 31, 1998. As such, respondent only had until December 31, 2000 to file both its administrative and judicial claims.23 While it filed its administrative claim on July 21, 1999 within the two-year prescriptive period, the same is not true with the petition for review that was filed with the CTA only on January 9, 2001.24 To support its contention, the CIR cited the case of CIR v. Mir ant Pagbilao Corp.25cralawred (Mirant).
To resolve the matter, the Court deems it fit to briefly discuss the doctrinal metamorphosis of the two-year prescriptive period provided under Section 112 (A) as above-cited.
Thus, applying Section 112 (A) strictly as worded, it may then be concluded that the administrative claim filed by respondent on July 21, 1999 was filed within the two-year prescriptive period reckoned from the close of the fourth taxable quarter falling on December 31, 1998, the last day of filing being December 31, 2000.
In fact, whether the two-year prescriptive period is counted from the date of payment (January 21, 1999) of the output VAT following Atlas, or from the close of the taxable quarter when the sales were made (December 31, 1998) pursuant to Mirant, the conclusion that the administrative claim was timely filed would equally stand.
The CIR insists, however, that both the administrative and judicial claims should fall within the two-year prescriptive period. This argument is untenable.
First, Section 112(A) clearly, plainly, and unequivocally provides that the taxpayer "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 the creditable input tax due or paid to such sales." In short, the law states that the taxpayer may apply with the Commissioner for a refund or credit "within two (2) years," which means at anytime within two years. Thus, the application for refund or credit may be filed by the taxpayer with the Commissioner on the last day of the two-year prescriptive period and it will still strictly comply with the law. The two-year prescriptive period is a grace period in favor of the taxpayer and he can avail of the full period before his right to apply for a tax refund or credit is barred by prescription.
Second, Section 112(C) provides that the Commissioner shall decide the application for refund or credit "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)." The reference in Section 112(C) of the submission of documents "in support of the application filed in accordance with Subsection A" means that the application in Section 112(A) is the administrative claim that the Commissioner must decide within the 120-day period. In short, the two-year prescriptive period in Section 112(A) refers to the period within which the taxpayer can file an administrative claim for tax refund or credit. Stated otherwise, the two-year prescriptive period does not refer to the filing of the judicial claim with the CTA but to the filing of the administrative claim with the Commissioner. x x x.
In fine, the taxpayer can file its administrative claim for refund or credit at any time within the two-year prescriptive period. If it files its claim on the last day of said period, it is still filed on time.37 The CIR will have 120 days from such filing to decide the claim. If the CIR decides the claim on the 120th day, or does not decide it on that day, the taxpayer still has 30 days to file its judicial claim with the CTA;38 otherwise, the judicial claim would be, properly speaking, dismissed for being filed out of time and not, as the CTA En Banc puts it, prescribed.
It bears emphasis that Section 112 (D)39 (now renumbered as Section 112[C]) of RA 8424, which is explicit on the mandatory and jurisdictional nature of the 120+30-day period, was already effective on January 1, 1998.40 Hence, it is of no consequence that the Aichi and San Roque rulings were not yet in existence when respondent's administrative claim was filed in 1999, so as to rid itself of the said section's mandatory and jurisdictional application.
That being said, and notwithstanding the fact that respondent's administrative claim had been timely filed, the Court is nonetheless constrained to deny the averred tax refund or credit, as its judicial claim therefor was filed beyond the 120+30-day period, and, hence - as earlier stated - deemed to be filed out of time.
The inaction of the CIR on the claim during the 120-day period is, by express provision of law, "deemed a denial" of such claim, and the failure of the taxpayer to file its judicial claim within 30 days from the expiration of the 120-day period shall render the "deemed a denial" decision of the CIR 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.44 Thus, respondent's failure to comply with the statutory conditions is fatal to its claim. This is so, notwithstanding the fact that the CIR, for his part, failed to raise the issue of non-compliance with the mandatory periods at the earliest opportunity.
In the case of Nippon Express (Philippines) Corporation v. CIR,45 the Court ruled that, because the 120+30-day period is jurisdictional, the issue of whether the taxpayer complied with the said time frame may be broached at any stage, even on appeal. Well-settled is the rule that the question of jurisdiction over the subject matter can be raised at any time during the proceedings. Jurisdiction cannot be waived because it is conferred by law and is not dependent on the consent or objection or the acts or omissions of the parties or any one of them.46 Therefore, respondent's contention on this score is of no moment.
Indeed, it has been pronounced time and again that taxes are the lifeblood of the government and, consequently, tax laws must be faithfully and strictly implemented as they are not intended to be liberally construed.47 Hence, with this in mind and in light of the foregoing considerations, the Court so holds that the CTA En Banc committed reversible error when it granted respondent's claim for refund or tax credit despite its non-compliance with the mandatory periods under Section 112 (D) (now renumbered as Section 112[C]) of RA 8424. Accordingly, the claim for refund/tax credit must be denied.
WHEREFORE, the petition is GRANTED. The Decision dated August 13, 2009 and the Resolution dated October 22, 2009 of the Court of Tax Appeals (CTA) En Banc in CTA. EB No. 487 are hereby REVERSED and SET ASIDE. Respondent Burmeister and Wain Scandinavian Contractor Mindanao, Inc.'s judicial claim for refund or tax credit through its petition for review before the CTA is DENIED.
2 Id. at 32-45. Penned by Associate Justice Juanito C. Castaneda, Jr. with Presiding Justice Ernesto D. Acosta and Associate Justices Lovell R. Bautista, Erlinda P. Uy, Caesar A. Casanova, and Olga Palanca-Enriquez, concurring.
4 Id. at 52-64. Penned by Associate Justice Lovell R. Bautista with Presiding Justice Ernesto D. Acosta and Associate Justice Caesar A. Casanova, concurring.
5 Id. at 65-70. Penned by Associate Justice Lovell R. Bautista with Associate Justice Caesar A. Casanova, concurring. Presiding Justice Ernesto D. Acosta was on leave.
6 Id. at 52-53. See CTA First Division Decision dated September 17, 2008.
9 See id. at 53-54.
11 See id. at 54-55.
16 Entitled "AN ACT AMENDING THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER PURPOSES" (January 1, 1998).
19 Id. at 47-5 1.
27 Referred to as Sec. 106 (b) of the Tax Code of 1977, as amended, which was the law cited by the Court in Atlas case.
28 See Atlas Consolidated Mining and Dev'I. Corp. v. Commissioner of Internal Revenue, supra note 26, at 531-539.
29CIR v. San Roque Power Corporation, supra note 21, at 385.
30 See id. at 386 and 397.
31CIR v. Mirant Pagbilao Corp., supra note 25, at 730.
34 G.R. No. 184823, October 6, 2010, 632 SCRA 422.
36CIR v. San Roque Power Corporation, supra note 21, at 390-392; citations omitted.
40 Id. at 380-381 and 397-399.
41 See CIR v. Dash Engineering Philippines, Inc., G.R. No. 184145, December 11, 2013.
42 Entitled "AN ACT CREATING THE COURT OF TAX APPEALS" (June 16, 1954).
43 Entitled "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 OR REPUBLIC ACT NO. 1125, AS AMENDED, OTHERWISE KNOWN AS THE LAW CREATING THE COURT OF TAX APPEALS, AND FOR OTHER PURPOSES" (Approved on March 30, 2004). See also Applied Food Ingredients Company, Inc. v. CIR, G.R. No. 184266, November 11,2013, 709 SCRA 164, 173.
44CIR v. San Rogue Power Corporation, supra note 21, at 390.
45 G.R. No. 196907, March 13, 2013, 693 SCRA 456.
46 Id. at 465; citations omitted.
47 See CIR v. Dash Engineering Philippines, Inc., supra note 41.

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