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G.R. No. 184823 October 6, 2010

COMMISSIONER OF INTERNAL REVENUE, Petitioner,

vs.

AICI FORGING COM!AN" OF ASIA, INC., Respondent.

D E C I S I O N

#EL CASTILLO, J.$

A taxpayer is entitled to a refund either by authority of a statute expressly rantin

su!h riht, privilee, or in!entive in his favor, or under the prin!iple of solutioindebiti re"uirin the return of taxes erroneously or illeally !olle!ted. In both !ases,

a taxpayer #ust prove not only his entitle#ent to a refund but also his !o#plian!e

$ith the pro!edural due pro!ess as non%observan!e of the pres!riptive periods

$ithin $hi!h to &le the ad#inistrative and the 'udi!ial !lai#s $ould result in the

denial of his !lai#.

(his Petition for Revie$ on Certiorari under Rule )* of the Rules of Court see+s to set

aside the uly -, /0 De!ision1 and the O!tober 2, /0 Resolution / of the Court of

(ax Appeals 3C(A4 En Banc.

Factual Antecedents

Respondent Ai!hi 5orin Co#pany of Asia, In!., a !orporation duly orani6ed and

existin under the la$s of the Republi! of the Philippines, is enaed in the

#anufa!turin, produ!in, and pro!essin of steel and its by%produ!ts.- It is

reistered $ith the 7ureau of Internal Revenue 37IR4 as a 8alue%Added (ax 38A(4

entity) and its produ!ts, 9!lose i#pression die steel forins9 and 9tool and dies,9 are

reistered $ith the 7oard of Invest#ents 37OI4 as a pioneer status.*

On Septe#ber -, /), respondent &led a !lai# for refund:!redit of input 8A( for

the period uly 1, // to Septe#ber -, // in the total a#ount of P-,0;1,1/-.0/

$ith the petitioner Co##issioner of Internal Revenue 3CIR4, throuh the Depart#entof 5inan!e 3DO54 One%Stop Shop Inter%Aen!y (ax Credit and Duty Dra$ba!+ Center. 2

Proceedings before the Second Division of the CTA

On even date, respondent &led a Petition for Revie$< $ith the C(A for the

refund:!redit of the sa#e input 8A(. (he !ase $as do!+eted as C(A Case No. <2*

and $as ra=ed to the Se!ond Division of the C(A.

In the Petition for Revie$, respondent alleed that for the period uly 1, // to

Septe#ber -, //, it enerated and re!orded 6ero%rated sales in the a#ount

of P1-1,<;1,-;;.,0 $hi!h $as paid pursuant to Se!tion 123A4 3/4 3a4 314, 3/4 and

3-4 of the National Internal Revenue Code of 1;;< 3NIRC4>; that for the said period, it

in!urred and paid input 8A( a#ountin to P-,;1/,00.1) fro# pur!hases andi#portation attributable to its 6ero%rated sales>1and that in its appli!ation for

refund:!redit &led $ith the DO5 One%Stop Shop Inter%Aen!y (ax Credit and Duty

Dra$ba!+ Center, it only !lai#ed the a#ount of P-,0;1,1/-.0/. 11

In response, petitioner &led his Ans$er1/ raisin the follo$in spe!ial and a?r#ative

defenses, to $it@

). Petitioners alleed !lai# for refund is sub'e!t to ad#inistrative investiation by

the 7ureau>

*. Petitioner #ust prove that it paid 8A( input taxes for the period in "uestion>

2. Petitioner #ust prove that its sales are export sales !onte#plated under Se!tions

123A4 3/4 3a4, and 10374 314 of the (ax Code of 1;;<>

<. Petitioner #ust prove that the !lai# $as &led $ithin the t$o 3/4 year period

pres!ribed in Se!tion //; of the (ax Code>

0. In an a!tion for refund, the burden of proof is on the taxpayer to establish its riht

to refund, and failure to sustain the burden is fatal to the !lai# for refund> and

;. Clai#s for refund are !onstrued stri!tly aainst the !lai#ant for the sa#e parta+e

of the nature of exe#ption fro# taxation.1-

(rial ensued, after $hi!h, on anuary ), /0, the Se!ond Division of the C(A

rendered a De!ision partially rantin respondents !lai# for refund:!redit. Pertinent

portions of the De!ision read@

5or a 8A( reistered entity $hose sales are 6ero%rated, to validly !lai# a refund,

Se!tion 11/ 3A4 of the NIRC of 1;;<, as a#ended, provides@

SEC. 11/. Refunds or (ax Credits of Input (ax. B

3A4 ero%rated or Ee!tively ero%rated Sales. B Any 8A(%reistered person, $hose

sales are 6ero%rated or ee!tively 6ero%rated #ay, $ithin t$o 3/4 years after the

!lose of the taxable "uarter $hen the sales $ere #ade, apply for the issuan!e of a

tax !redit !erti&!ate or refund of !reditable input tax due or paid attributable to su!h

sales, ex!ept transitional input tax, to the extent that su!h input tax has not been

applied aainst output tax@ x x x

Pursuant to the above provision, petitioner #ust !o#ply $ith the follo$in

re"uisites@ 314 the taxpayer is enaed in sales $hi!h are 6ero%rated or ee!tively

6ero%rated> 3/4 the taxpayer is 8A(%reistered> 3-4 the !lai# #ust be &led $ithin t$o

years after the !lose of the taxable "uarter $hen su!h sales $ere #ade> and 3)4 the

!reditable input tax due or paid #ust be attributable to su!h sales, ex!ept the

transitional input tax, to the extent that su!h input tax has not been applied aainst

the output tax.

(he Court &nds that the &rst three re"uire#ents have been !o#plied $ithF by

petitioner.

Gith reard to the &rst re"uisite, the eviden!e presented by petitioner, su!h as the

Sales Invoi!es 3Exhibits 9II9 to 9II%/2/,9 99 to 9%)-1,9 9HH9 to 9HH%-;)9 and 994

sho$s that it is enaed in sales $hi!h are 6ero%rated.

(he se!ond re"uisite has li+e$ise been !o#plied $ith. (he Certi&!ate of Reistration

$ith OCN 1RC1)0);; 3Exhibit 9C94 $ith the 7IR proves that petitioner is a

reistered 8A( taxpayer.

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In !o#plian!e $ith the third re"uisite, petitioner &led its ad#inistrative !lai# for

refund on Septe#ber -, /) 3Exhibit 9N94 and the present Petition for Revie$ on

Septe#ber -, /), both $ithin the t$o 3/4 year pres!riptive period fro# the !lose

of the taxable "uarter $hen the sales $ere #ade, $hi!h is fro# Septe#ber -,

//.

As reards, the fourth re"uire#ent, the Court &nds that there are so#e do!u#ents

and !lai#s of petitioner that are baseless and have not been satisfa!torilysubstantiated.

x x x x

In su#, petitioner has su?!iently proved that it is entitled to a refund or issuan!e of

a tax !redit !erti&!ate representin unutili6ed ex!ess input 8A( pay#ents for theperiod uly 1, // to Septe#ber -, //, $hi!h are attributable to its 6ero%rated

sales for the sa#e period, but in the redu!ed a#ount of P-,/-;,11;./*, !o#puted

as follo$s@

A#ount of Clai#ed Input 8A( P -,0;1,1/-.0/

ess@

Ex!eptions as found by the ICPA )1,/.-<

Net Creditable Input 8A( P -,0*,1-.)*

ess@

Output 8A( Due 21,;0)./

Ex!ess Creditable Input 8A( P -,/-;,11;./*

GJERE5ORE, pre#ises !onsidered, the present Petition for Revie$ is PAR(IAK

LRAN(ED. A!!ordinly, respondent is hereby ORDERED (O RE5MND OR ISSME A (A

CREDI( CER(I5ICA(E in favor of petitioner inF the redu!ed a#ount of (JREE

IION (GO JMNDRED (JIR(K NINE (JOMSAND ONE JMNDRED NINE(EEN AND/*:1 PESOS 3P-,/-;,11;./*4, representin the unutili6ed input 8A( in!urred for

the #onths of uly to Septe#ber //.

SO ORDERED.1)

Dissatis&ed $ith the above%"uoted De!ision, petitioner &led a otion for Partial

Re!onsideration, 1* insistin that the ad#inistrative and the 'udi!ial !lai#s $ere &led

beyond the t$o%year period to !lai# a tax refund:!redit provided for under Se!tions

11/3A4 and //; of the NIRC. Je reasoned that sin!e the year /) $as a leap year,

the &lin of the !lai# for tax refund:!redit on Septe#ber -, /) $as beyond the

t$o%year period, $hi!h expired on Septe#ber /;, /).12 Je !ited as basis Arti!le 1-

of the Civil Code,1< $hi!h provides that $hen the la$ spea+s of a year, it is

e"uivalent to -2* days. In addition, petitioner arued that the si#ultaneous &lin of

the ad#inistrative and the 'udi!ial !lai#s !ontravenes Se!tions 11/ and //; of theNIRC.10 A!!ordin to the petitioner, a prior &lin of an ad#inistrative !lai# is a

9!ondition pre!edent91; before a 'udi!ial !lai# !an be &led. Je explained that the

rationale of su!h re"uire#ent rests not only on the do!trine of exhaustion of

ad#inistrative re#edies but also on the fa!t that the C(A is an appellate body $hi!h

exer!ises the po$er of 'udi!ial revie$ over ad#inistrative a!tions of the 7IR. /

(he Se!ond Division of the C(A, ho$ever, denied petitioners otion for Partial

Re!onsideration for la!+ of #erit. Petitioner thus elevated the #atter to the C(A En

Banc via a Petition for Revie$./1

Ruling of the CTA En Banc

On uly -, /0, the C(A En Banc a?r#ed the Se!ond Divisions De!ision allo$in

the partial tax refund:!redit in favor of respondent. Jo$ever, as to the re!+onin

point for !ountin the t$o%year period, the C(A En 7an! ruled@

Petitioner arues that the ad#inistrative and 'udi!ial !lai#s $ere &led beyond the

period allo$ed by la$ and hen!e, the honorable Court has no 'urisdi!tion over the

sa#e. In addition, petitioner further !ontends that respondents &lin of the

ad#inistrative and 'udi!ial !lai#sF ee!tively eli#inates the authority of the

honorable Court to exer!ise 'urisdi!tion over the 'udi!ial !lai#.

Ge are not persuaded.

Se!tion 11) of the 1;;< NIRC, and Ge "uote, to $it@

SEC. 11). Return and Pay#ent of 8alue%added (ax. B

3A4 In Leneral. B Every person liable to pay the value%added tax i#posed under this

(itle shall &le a "uarterly return of the a#ount of his ross sales or re!eipts $ithin

t$enty%&ve 3/*4 days follo$in the !lose of ea!h taxable "uarter pres!ribed for ea!h

taxpayer@ Provided, ho$ever, (hat 8A(%reistered persons shall pay the value%added

tax on a #onthly basis.

x x x x F

7ased on the above%stated provision, a taxpayer has t$enty &ve 3/*4 days fro# the

!lose of ea!h taxable "uarter $ithin $hi!h to &le a "uarterly return of the a#ount of

his ross sales or re!eipts. In the !ase at bar, the taxable "uarter involved $as for

the period of uly 1, // to Septe#ber -, //. Applyin Se!tion 11) of the 1;;<

NIRC, respondent has until O!tober /*, // $ithin $hi!h to &le its "uarterly return

for its ross sales or re!eipts $ithF $hi!h it !o#plied $hen it &led its 8A( Quarterly

Return on O!tober /, //.

In relation to this, the re!+onin of the t$o%year period provided under Se!tion //;

of the 1;;< NIRC should start fro# the pay#ent of tax sub'e!t !lai# for refund. As

stated above, respondent &led its 8A( Return for the taxable third "uarter of // on

O!tober /, //. (hus, respondents ad#inistrative and 'udi!ial !lai#s for refund

&led on Septe#ber -, /) $ere &led on ti#e be!ause AICJI has until O!tober /,

/) $ithin $hi!h to &le its !lai# for refund.

In addition, Ge do not aree $ith the petitioners !ontention that the 1;;< NIRC

re"uires the previous &lin of an ad#inistrative !lai# for refund prior to the 'udi!ial

!lai#. (his should not be the !ase as the la$ does not prohibit the si#ultaneous

&lin of the ad#inistrative and 'udi!ial !lai#s for refund. Ghat is !ontrollin is that

both !lai#s for refund #ust be &led $ithin the t$o%year pres!riptive period.

























In su#, the Court En 7an! &nds no !oent 'usti&!ation to disturb the &ndins and

!on!lusion spelled out in the assailed anuary ), /0 De!ision and ar!h 1-, /0

Resolution of the C(A Se!ond Division. Ghat the instant petition see+s is for the

Court En 7an! to vie$ and appre!iate the eviden!e in their o$n perspe!tive of

thins, $hi!h unfortunately had already been !onsidered and passed upon.

GJERE5ORE, the instant Petition for Revie$ is hereby DENIED DME COMRSE and

DISISSED for la!+ of #erit. A!!ordinly, the anuary ), /0 De!ision and ar!h1-, /0 Resolution of the C(A Se!ond Division in C(A Case No. <2* entitled,

9AICJI 5orin Co#pany of Asia, In!. petitioner vs. Co##issioner of Internal

Revenue, respondent9 are hereby A55IRED in toto.

SO ORDERED.//

Petitioner souht re!onsideration but the C(A En Banc denied/- his otion for

Re!onsideration.

I%%&e

Jen!e, the present re!ourse $here petitioner interposes the issue of $hether

respondents 'udi!ial and ad#inistrative !lai#s for tax refund:!redit $ere &led $ithin

the t$o%year pres!riptive period provided in Se!tions 11/3A4 and //; of

the NIRC./)

Petitioner’s Arguments

Petitioner #aintains that respondents ad#inistrative and 'udi!ial !lai#s for tax

refund:!redit $ere &led in violation of Se!tions 11/3A4 and //; of the NIRC. /* Je

posits that pursuant to Arti!le 1- of the Civil Code,/2 sin!e the year /) $as a leap

year, the &lin of the !lai# for tax refund:!redit on Septe#ber -, /) $as beyond

the t$o%year period, $hi!h expired on Septe#ber /;, /)./<

Petitioner further arues that the C(A En Banc erred in applyin Se!tion 11)3A4 of

the NIRC in deter#inin the start of the t$o%year period as the said provision

pertains to the !o#plian!e re"uire#ents in the pay#ent of 8A(./0 Je asserts that itis Se!tion 11/, pararaph 3A4, of the sa#e Code that should apply be!ause it

spe!i&!ally provides for the period $ithin $hi!h a !lai# for tax refund: !redit should

be #ade./;

Petitioner li+e$ise puts in issue the fa!t that the ad#inistrative !lai# $ith the 7IR

and the 'udi!ial !lai# $ith the C(A $ere &led on the sa#e day.- Je opines that the

si#ultaneous &lin of the ad#inistrative and the 'udi!ial !lai#s !ontravenes Se!tion

//; of the NIRC, $hi!h re"uires the prior &lin of an ad#inistrative !lai#. -1 Je

insists that su!h pro!edural re"uire#ent is based on the do!trine of exhaustion of

ad#inistrative re#edies and the fa!t that the C(A is an appellate body exer!isin

'udi!ial revie$ over ad#inistrative a!tions of the CIR.-/

Resondent’s Arguments

5or its part, respondent !lai#s that it is entitled to a refund:!redit of its unutili6ed

input 8A( for the period uly 1, // to Septe#ber -, // as a #atter of riht

be!ause it has substantially !o#plied $ith all the re"uire#ents provided by

la$.-- Respondent li+e$ise defends the C(A En Banc in applyin Se!tion 11)3A4 of

the NIRC in !o#putin the pres!riptive period for the !lai# for tax refund:!redit.

Respondent believes that Se!tion 11/3A4 of the NIRC #ust be read toether $ith

Se!tion 11)3A4 of the sa#e Code.-)

As to the alleed si#ultaneous &lin of its ad#inistrative and 'udi!ial !lai#s,

respondent !ontends that it &rst &led an ad#inistrative !lai# $ith the One%Stop

Shop Inter%Aen!y (ax Credit and Duty Dra$ba!+ Center of the DO5 before it &led a

'udi!ial !lai# $ith the C(A.-* (o prove this, respondent points out that its Clai#ant

Infor#ation Sheet No. );</-2 and 7IR 5or# No. 1;1) for the third "uarter of //,-< $hi!h $ere &led $ith the DO5, $ere atta!hed as Annexes 99 and 9N,9

respe!tively, to the Petition for Revie$ &led $ith the C(A.-0 Respondent further

!ontends that the non%observan!e of the 1/%day period iven to the CIR to a!t onthe !lai# for tax refund:!redit in Se!tion 11/3D4 is not fatal be!ause $hat is

i#portant is that both !lai#s are &led $ithin the t$o%year pres!riptive period.-; In

support thereof, respondent !ites Co##issioner of Internal Revenue v. 8i!torias

illin Co., In!.) $here it $as ruled that 9iFf, ho$ever, the CIRF ta+es ti#e in

de!idin the !lai#, and the period of t$o years is about to end, the suit or

pro!eedin #ust be started in the C(AF before the end of the t$o%year period

$ithout a$aitin the de!ision of the CIRF.9 )1 astly, respondent arues that even if

the period had already lapsed, it #ay be suspended for reasons of e"uity

!onsiderin that it is not a 'urisdi!tional re"uire#ent.)/

O&r R&'()*

(he petition has #erit.

Mnutili6ed input 8A( #ust be !lai#ed $ithin t$o years after the !lose of the taxable

"uarter $hen the sales $ere #ade

In !o#putin the t$o%year pres!riptive period for !lai#in a refund:!redit of

unutili6ed input 8A(, the Se!ond Division of the C(A applied Se!tion 11/3A4 of the

NIRC, $hi!h states@


3A4 ero%rated or Ee!tively ero%rated Sales B Any 8A(%reistered person, $hose

sales are 6ero%rated or ee!tively 6ero%rated #ay, $ithin t$o 3/4 years after the

!lose of the taxable "uarter $hen the sales $ere #ade, apply for the issuan!e of a

tax !redit !erti&!ate or refund of !reditable input tax due or paid attributable to su!h

sales, ex!ept transitional input tax, to the extent that su!h input tax has not been

applied aainst output tax@ Provided, ho$ever, (hat in the !ase of 6ero%rated salesunder Se!tion 123A43/43a4314, 3/4 and 374 and Se!tion 10 374314 and 3/4, the

a!!eptable forein !urren!y ex!hane pro!eeds thereof had been duly a!!ounted for

in a!!ordan!e $ith the rules and reulations of the 7an+o Sentral n Pilipinas

37SP4@ Provided, further, (hat $here the taxpayer is enaed in 6ero%rated or

ee!tively 6ero%rated sale and also in taxable or exe#pt sale of oods or properties

or servi!es, and the a#ount of !reditable input tax due or paid !annot be dire!tly

and entirely attributed to any one of the transa!tions, it shall be allo!ated

proportionately on the basis of the volu#e of sales. 3E#phasis supplied.4

(he C(A En 7an!, on the other hand, too+ into !onsideration Se!tions 11) and //;

of the NIRC, $hi!h read@

SEC. 11). Return and Pay#ent of 8alue%Added (ax. B

























































3A4 In Leneral. B Every person liable to pay the value%added tax i#posed under this

(itle shall &le a "uarterly return of the a#ount of his ross sales or re!eipts $ithin

t$enty%&ve 3/*4 days follo$in the !lose of ea!h taxable "uarter pres!ribed for ea!h

taxpayer@ Provided, ho$ever, (hat 8A(%reistered persons shall pay the value%added

tax on a #onthly basis.

Any person, $hose reistration has been !an!elled in a!!ordan!e $ith Se!tion /-2,

shall &le a return and pay the tax due thereon $ithin t$enty%&ve 3/*4 days fro# thedate of !an!ellation of reistration@ Provided, (hat only one !onsolidated return shall

be &led by the taxpayer for his prin!ipal pla!e of business or head o?!e and all

bran!hes.

x x x x

SEC. //;. Re!overy of tax erroneously or illeally !olle!ted. B

No suit or pro!eedin shall be #aintained in any !ourt for the re!overy of any

national internal revenue tax hereafter alleed to have been erroneously or illeally

assessed or !olle!ted, or of any penalty !lai#ed to have been !olle!ted $ithout

authority, or of any su# alleed to have been ex!essively or in any #anner

$ronfully !olle!ted, until a !lai# for refund or !redit has been duly &led $ith the

Co##issioner> but su!h suit or pro!eedin #ay be #aintained, $hether or not su!h

tax, penalty or su# has been paid under protest or duress.

In any !ase, no su!h suit or pro!eedin shall be &led after the expiration of t$o 3/4

years fro# the date of pay#ent of the tax or penalty reardless of any supervenin

!ause that #ay arise after pay#ent@ Provided, ho$ever, (hat the Co##issioner

#ay, even $ithout $ritten !lai# therefor, refund or !redit any tax, $here on the fa!e

of the return upon $hi!h pay#ent $as #ade, su!h pay#ent appears !learly to have

been erroneously paid. 3E#phasis supplied.4

Jen!e, the C(A En Banc ruled that the re!+onin of the t$o%year period for &lin a

!lai# for refund:!redit of unutili6ed input 8A( should start fro# the date of pay#ent

of tax and not fro# the !lose of the taxable "uarter $hen the sales $ere #ade.)-

(he pivotal "uestion of $hen to re!+on the runnin of the t$o%year pres!riptive

period, ho$ever, has already been resolved in Co##issioner of Internal Revenue v.

irant Pabilao Corporation,)) $here $e ruled that Se!tion 11/3A4 of the NIRC is the

appli!able provision in deter#inin the start of the t$o%year period for !lai#in a

refund:!redit of unutili6ed input 8A(, and that Se!tions /)3C4 and //; of the NIRCare inappli!able as 9both provisions apply only to instan!es of erroneous pay#ent or

illeal !olle!tion of internal revenue taxes.9)* Ge explained that@

(he above proviso Se!tion 11/ 3A4 of the NIRCF !learly provides in no un!ertain

ter#s that &)&t('(+e ()-&t VAT -/e)t% )ot oter(%e &%e or )/

()ter)' ree)&e t5 &e te t5-/er &%t be c'(e (t() to /er%

reco)e ro te c'o%e o te t5b'e 7&rter e) te re'e)t %'e%

ere e -ert()()* to te ()-&t VAT re*r'e%% o eter %( t5 %

-( or )ot. As the CA aptly puts it, albeit it erroneously applied the afore"uoted

Se!. 11/ 3A4, 9PFres!riptive period !o##en!es fro# the !lose of the taxable "uarter

$hen the sales $ere #ade and not fro# the ti#e the input 8A( $as paid nor fro#

the ti#e the o?!ial re!eipt $as issued.9 (hus, $hen a 6ero%rated 8A( taxpayer pays

its input 8A( a year after the pertinent transa!tion, said taxpayer only has a year to

&le a !lai# for refund or tax !redit of the unutili6ed !reditable input 8A(. (here!+onin fra#e $ould al$ays be the end of the "uarter $hen the pertinent sales or

transa!tion $as #ade, reardless $hen the input 8A( $as paid. 7e that as it #ay,

and iven that the last !reditable input 8A( due for the period !overin the proress

billin of Septe#ber 2, 1;;2 is the third "uarter of 1;;2 endin on Septe#ber -,

1;;2, any !lai# for unutili6ed !reditable input 8A( refund or tax !redit for said

"uarter pres!ribed t$o years after Septe#ber -, 1;;2 or, to be pre!ise, onSepte#ber -, 1;;0. Conse"uently, PCs !lai# for refund or tax !redit &led on

De!e#ber 1, 1;;; had already pres!ribed.

Reco)()* or -re%cr(-t(e -er(o &)er

Sec%. 204C9 ) 22: o te NIRC ()--'(cb'e

(o be sure, PC !annot avail itself of the provisions of either Se!. /)3C4 or //; of

the NIRC $hi!h, for the purpose of refund, pres!ribes a dierent startin point for

the t$o%year pres!riptive li#it for the &lin of a !lai# therefor. Se!s. /)3C4 and //;

respe!tively provide@

Se!. /). Authority of the Co##issioner to Co#pro#ise, Abate and Refund or Credit

(axes. B (he Co##issioner #ay B

x x x x

3!4 Credit or refund taxes erroneously or illeally re!eived or penalties i#posed

$ithout authority, refund the value of internal revenue sta#ps $hen they are

returned in ood !ondition by the pur!haser, and, in his dis!retion, redee# or

!hane unused sta#ps that have been rendered un&t for use and refund their value

upon proof of destru!tion. No !redit or refund of taxes or penalties shall be allo$ed

unless the taxpayer &les in $ritin $ith the Co##issioner a !lai# for !redit or

refund $ithin t$o 3/4 years after the pay#ent of the tax or penalty@ Provided,

ho$ever, (hat a return &led sho$in an overpay#ent shall be !onsidered as a

$ritten !lai# for !redit or refund.

x x x x

Se!. //;. Re!overy of (ax Erroneously or Illeally Colle!ted. B No suit or pro!eedin

shall be #aintained in any !ourt for the re!overy of any national internal revenue

tax hereafter alleed to have been erroneously or illeally assessed or !olle!ted, or

of any penalty !lai#ed to have been !olle!ted $ithout authority, of any su# alleed

to have been ex!essively or in any #anner $ronfully !olle!ted $ithout authority, or

of any su# alleed to have been ex!essively or in any #anner $ronfully !olle!ted,

until a !lai# for refund or !redit has been duly &led $ith the Co##issioner> but su!hsuit or pro!eedin #ay be #aintained, $hether or not su!h tax, penalty, or su# has

been paid under protest or duress.

In any !ase, no su!h suit or pro!eedin shall be &led after the expiration of t$o 3/4

years fro# the date of pay#ent of the tax or penalty reardless of any supervenin

!ause that #ay arise after pay#ent@ Provided, ho$ever, (hat the Co##issioner

#ay, even $ithout a $ritten !lai# therefor, refund or !redit any tax, $here on the

fa!e of the return upon $hi!h pay#ent $as #ade, su!h pay#ent appears !learly to

have been erroneously paid.

Notably, the above provisions also set a t$o%year pres!riptive period, re!+oned fro#

date of pay#ent of the tax or penalty, for the &lin of a !lai# of refund or tax !redit.

Notably too, bot -ro(%(o)% --'/ o)'/ to ()%t)ce% o erro)eo&% -/e)t

or (''e*' co''ect(o) o ()ter)' ree)&e t5e%.









M!C;% cre(tb'e ()-&t VAT )ot erro)eo&%'/ -(

5or perspe!tive, under Se!. 1* of the NIRC, !reditable input 8A( is an indire!t tax

$hi!h !an be shifted or passed on to the buyer, transferee, or lessee of the oods,

properties, or servi!es of the taxpayer. (he fa!t that the subse"uent sale or

transa!tion involves a $holly%tax exe#pt !lient, resultin in a 6ero%rated or

ee!tively 6ero%rated transa!tion, does not, standin alone, deprive the taxpayer of

its riht to a refund for any unutili6ed !reditable input 8A(, albeit the erroneous,illeal, or $ronful pay#ent anle does not enter the e"uation.

x x x x

Considerin the foreoin dis!ussion, (t (% c'er tt Sec. 112 A9 o te NIRC,

-ro(()* to</er -re%cr(-t(e -er(o reco)e ro te c'o%e o tet5b'e 7&rter e) te re'e)t %'e% or tr)%ct(o)% ere e

-ert()()* to te cre(tb'e ()-&t VAT, --'(e% to te ()%t)t c%e, ) )ot

to te oter ct(o)% (c reer to erro)eo&% -/e)t o t5e%.)2 3E#phasis

supplied.4

In vie$ of the foreoin, $e &nd that the C(A En Banc erroneously applied Se!tions

11)3A4 and //; of the NIRC in !o#putin the t$o%year pres!riptive period for

!lai#in refund:!redit of unutili6ed input 8A(. (o be !lear, Se!tion 11/ of the NIRC is

the pertinent provision for the refund:!redit of input 8A(. (hus, the t$o%year period

should be re!+oned fro# the !lose of the taxable "uarter $hen the sales $ere #ade.

(he ad#inistrative !lai# $as ti#ely &led

7earin this in #ind, $e shall no$ pro!eed to deter#ine $hether the ad#inistrative

!lai# $as ti#ely &led.

Relyin on Arti!le 1- of the Civil Code, )< $hi!h provides that a year is e"uivalent to

-2* days, and ta+in into a!!ount the fa!t that the year /) $as a leap year,

petitioner sub#its that the t$o%year period to &le a !lai# for tax refund: !redit for

the period uly 1, // to Septe#ber -, // expired on Septe#ber /;, /).)0

Ge do not aree.

In Co##issioner of Internal Revenue v. Pri#eto$n Property Lroup, In!.,); $e said

that as bet$een the Civil Code, $hi!h provides that a year is e"uivalent to -2* days,

and the Ad#inistrative Code of 1;0<, $hi!h states that a year is !o#posed of 1/!alendar #onths, it is the latter that #ust prevail follo$in the leal #axi#, ex

posteriori deroat priori.* (hus@

7oth Arti!le 1- of the Civil Code and Se!tion -1, Chapter 8III, 7oo+ I of the

Ad#inistrative Code of 1;0< deal $ith the sa#e sub'e!t #atter B the !o#putation of

leal periods. Mnder the Civil Code, a year is e"uivalent to -2* days $hether it be a

reular year or a leap year. Mnder the Ad#inistrative Code of 1;0<, ho$ever, a year

is !o#posed of 1/ !alendar #onths. Needless to state, under the Ad#inistrative

Code of 1;0<, the nu#ber of days is irrelevant.

(here obviously exists a #anifest in!o#patibility in the #anner of

!o#putin leal periods under the Civil Code and the Ad#inistrative Code of 1;0<.

5or this reason, $e hold that Se!tion -1, Chapter 8III, 7oo+ I of the Ad#inistrative

Code of 1;0<, bein the #ore re!ent la$, overns the !o#putation of leal periods.ex posteriori deroat priori.

Applyin Se!tion -1, Chapter 8III, 7oo+ I of the Ad#inistrative Code of 1;0< to this

!ase, the t$o%year pres!riptive period 3re!+oned fro# the ti#e respondent &led its

&nal ad'usted return on April 1), 1;;04 !onsisted of /) !alendar #onths, !o#puted

as follo$s@

Kear 1 1st !alendar #onth April 1*, 1;;0 to ay 1), 1;;0

/nd !alendar #onth ay 1*, 1;;0 to une 1), 1;;0

-rd !alendar #onth une 1*, 1;;0 to uly 1), 1;;0

)th !alendar #onth uly 1*, 1;;0 to Auust 1), 1;;0

*th !alendar #onth Auust 1*, 1;;0 to Septe#ber 1), 1;;0

2th !alendar #onth Septe#ber 1*, 1;;0 to O!tober 1), 1;;0

<th !alendar #onth O!tober 1*, 1;;0 to Nove#ber 1), 1;;0

0th !alendar #onth Nove#ber 1*, 1;;0 to De!e#ber 1), 1;;0

;th !alendar #onth De!e#ber 1*, 1;;0 to anuary 1), 1;;;

1th !alendar #onth anuary 1*, 1;;; to 5ebruary 1), 1;;;

11th !alendar #onth 5ebruary 1*, 1;;; to ar!h 1), 1;;;

1/th !alendar #onth ar!h 1*, 1;;; to April 1), 1;;;

Kear / 1-th !alendar #onth April 1*, 1;;; to ay 1), 1;;;

1)th !alendar #onth ay 1*, 1;;; to une 1), 1;;;

1*th !alendar #onth une 1*, 1;;; to uly 1), 1;;;

12th !alendar #onth uly 1*, 1;;; to Auust 1), 1;;;

1<th !alendar #onth Auust 1*, 1;;; to Septe#ber 1), 1;;;

10th !alendar #onth Septe#ber 1*, 1;;; to O!tober 1), 1;;;

1;th !alendar #onth O!tober 1*, 1;;; to Nove#ber 1), 1;;;

/th !alendar #onth Nove#ber 1*, 1;;; to De!e#ber 1), 1;;;














/1st !alendar #onth De!e#ber 1*, 1;;; to anuary 1), /

//nd !alendar #onth anuary 1*, / to 5ebruary 1), /

/-rd !alendar #onth 5ebruary 1*, / to ar!h 1), /

/)th !alendar #onth ar!h 1*, / to April 1), /

Ge therefore hold that respondents petition 3&led on April 1), /4 $as &led on the

last day of the /)th !alendar #onth fro# the day respondent &led its &nal ad'usted

return. Jen!e, it $as &led $ithin the rele#entary period.*1

Applyin this to the present !ase, the t$o%year period to &le a !lai# for tax

refund:!redit for the period uly 1, // to Septe#ber -, // expired on

Septe#ber -, /). Jen!e, respondents ad#inistrative !lai# $as ti#ely &led.

(he &lin of the 'udi!ial !lai# $as pre#ature

Jo$ever, not$ithstandin the ti#ely &lin of the ad#inistrative !lai#, $e

are !onstrained to deny respondents !lai# for tax refund:!redit for havin been&led in violation of Se!tion 11/3D4 of the NIRC, $hi!h provides that@


x x x x

3D4 Period $ithin $hi!h Refund or (ax Credit of Input (axes shall be ade. B In proper

!ases, the Co##issioner shall rant a refund or issue the tax !redit !erti&!ate for

!reditable input taxes $ithin one hundred t$enty 31/4 days fro# the date of

sub#ission of !o#plete do!u#ents in support of the appli!ation &led in a!!ordan!e

$ith Subse!tions 3A4 and 374 hereof.

In !ase of full or partial denial of the !lai# for tax refund or tax !redit, or the failure

on the part of the Co##issioner to a!t on the appli!ation $ithin the period

pres!ribed above, the taxpayer ae!ted #ay, $ithin thirty 3-4 days fro# the

re!eipt of the de!ision denyin the !lai# or after the expiration of the one hundred

t$enty day%period, appeal the de!ision or the una!ted !lai# $ith the Court of (ax

Appeals. 3E#phasis supplied.4

Se!tion 11/3D4 of the NIRC !learly provides that the CIR has 91/ days, fro# the

date of the sub#ission of the !o#plete do!u#ents in support of the appli!ation for

tax refund:!reditF,9 $ithin $hi!h to rant or deny the !lai#. In !ase of full or partial

denial by the CIR, the taxpayers re!ourse is to &le an appeal before the C(A $ithin

- days fro# re!eipt of the de!ision of the CIR. Jo$ever, if after the 1/%day period

the CIR fails to a!t on the appli!ation for tax refund:!redit, the re#edy of the

taxpayer is to appeal the ina!tion of the CIR to C(A $ithin - days.

In this !ase, the ad#inistrative and the 'udi!ial !lai#s $ere si#ultaneously &led on

Septe#ber -, /). Obviously, respondent did not $ait for the de!ision of the CIR

or the lapse of the 1/%day period. 5or this reason, $e &nd the &lin of the 'udi!ial

!lai# $ith the C(A pre#ature.

Respondents assertion that the non%observan!e of the 1/%day period is not fatal to

the &lin of a 'udi!ial !lai# as lon as both the ad#inistrative and the 'udi!ial !lai#s

are &led $ithin the t$o%year pres!riptive period*/ has no leal basis.

(here is nothin in Se!tion 11/ of the NIRC to support respondents vie$. Subse!tion

3A4 of the said provision states that 9any 8A(%reistered person, $hose sales are

6ero%rated or ee!tively 6ero%rated #ay, $ithin t$o years after the !lose of the

taxable "uarter $hen the sales $ere #ade, apply for the issuan!e of a tax !redit!erti&!ate or refund of !reditable input tax due or paid attributable to su!h sales.9

(he phrase 9$ithin t$o 3/4 years x x x apply for the issuan!e of a tax !redit

!erti&!ate or refund9 refers to appli!ations for refund:!redit &led $ith the CIR and

not to appeals #ade to the C(A. (his is apparent in the &rst pararaph of subse!tion

3D4 of the sa#e provision, $hi!h states that the CIR has 91/ days fro# the


$ith Subse!tions 3A4 and 3749 $ithin $hi!h to de!ide on the !lai#.

In fa!t, applyin the t$o%year period to 'udi!ial !lai#s $ould render nuatory

Se!tion 11/3D4 of the NIRC, $hi!h already provides for a spe!i&! period $ithin $hi!h

a taxpayer should appeal the de!ision or ina!tion of the CIR. (he se!ond pararaph

of Se!tion 11/3D4 of the NIRC envisions t$o s!enarios@ 314 $hen a de!ision is issued

by the CIR before the lapse of the 1/%day period> and 3/4 $hen no de!ision is #ade

after the 1/%day period. In both instan!es, the taxpayer has - days $ithin $hi!hto &le an appeal $ith the C(A. As $e see it then, the 1/%day period is !ru!ial in

&lin an appeal $ith the C(A.

Gith reard to Commissioner of Internal Revenue v. Victorias Milling, Co., Inc .*- relied

upon by respondent, $e &nd the sa#e inappli!able as the tax provision involved in

that !ase is Se!tion -2, no$ Se!tion //; of the NIRC. And as already dis!ussed,

Se!tion //; does not apply to refunds:!redits of input 8A(, su!h as the instant !ase.

In &ne, the pre#ature &lin of respondents !lai# for refund:!redit of input 8A(

before the C(A $arrants a dis#issal inas#u!h as no 'urisdi!tion $as a!"uired by the

C(A.

GJERE5ORE, the Petition is hereby GRANTE#. (he assailed uly -, /0 De!ision

and the O!tober 2, /0 Resolution of the Court of (ax Appeals are

hereby REVERSE# and SET ASI#E. (he Court of (ax Appeals Se!ond Division isDIREC(ED to dis#iss C(A Case No. <2* for havin been pre#aturely &led.

SO ORDERED.









G.R. No. 18=48> Febr&r/ 12, 2013

COMMISSIONER OF INTERNAL REVENUE, Petitioner,

vs.

SAN RO?UE !O@ER COR!ORATION, Respondent.

%%%%%%%%%%%%%%%%%%%%%%%%%%%%

G.R. No. 1:6113

TAGANITO MINING COR!ORATION, Petitioner,

vs.

COMMISSIONER OF INTERNAL REVENUE, Respondent.

x%%%%%%%%%%%%%%%%%%%%%%%%%%%%x

G.R. No. 1:=1>6

!ILE MINING COR!ORATION, Petitioner,

vs.

COMMISSIONER OF INTERNAL REVENUE, Respondent.

D E C I S I O N

CAR!IO, J!"

Te C%e%

L.R. No. 10<)0* is a petitiOn for revie$1 assailin the De!ision/ pro#ulated on /*

ar!h /; as $ell as the Resolution- pro#ulated on /) April /; by the Court of

(ax Appeals En Banc 3C(A E74 in C(A E7 No. )0. (he C(A E7 a?r#ed the /;

Nove#ber /< A#ended De!ision) as $ell as the 11 uly /0 Resolution* of the

Se!ond Division of the Court of (ax Appeals 3C(A Se!ond Division4 in C(A Case No.

22)<. (he C(A Se!ond Division ordered the Co##issioner of Internal Revenue

3Co##issioner4 to refund or issue a tax !redit for P)0-,<;<,*;;.2* to San Ro"ue

Po$er Corporation 3San Ro"ue4 for unutili6ed input value%added tax 38A(4 on

pur!hases of !apital oods and servi!es for the taxable year /1.

L.R. No. 1;211- is a petition for revie$2 assailin the De!ision< pro#ulated on 0

De!e#ber /1 as $ell as the Resolution0 pro#ulated on 1) ar!h /11 by the

C(A E7 in C(A E7 No. 2/). In its De!ision, the C(A E7 reversed the 0 anuary /1De!ision; as $ell as the < April /1 Resolution1of the C(A Se!ond Division and

ranted the CIRs petition for revie$ in C(A Case No. <*<). (he C(A E7 dis#issed,

for havin been pre#aturely &led, (aanito inin Corporations 3(aanito4 'udi!ial

!lai# for P0,-2*,22).-0 tax refund or !redit.

L.R. No. 1;<1*2 is a petition for revie$11 assailin the De!ision1/pro#ulated on -

De!e#ber /1 as $ell as the Resolution 1- pro#ulated on 1< ay /11 by the C(A

E7 in C(A E7 No. *2;. (he C(A E7 a?r#ed the / uly /; De!ision as $ell as the

1 Nove#ber /; Resolution of the C(A Se!ond Division in C(A Case No. <20<. (he

C(A Se!ond Division denied, due to pres!ription, Philex inin Corporations 3Philex4

'udi!ial !lai# for P/-,;*2,<-/.)) tax refund or !redit.

On - Auust /11, the Se!ond Division of this Court resolved1) to !onsolidate L.R.

No. 1;<1*2 $ith L.R. No. 1;211-, $hi!h $ere pendin in the sa#e Division, and$ith L.R. No. 10<)0*, $hi!h $as assined to the Court En Banc. (he Se!ond Division

also resolved to refer L.R. Nos. 1;<1*2 and 1;211- to the Court En Banc, $here

L.R. No. 10<)0*, the lo$er%nu#bered !ase, $as assined.

#!R! $o! %&'(&)

C*R v! San Ro+ue Po,er Cororation

Te Fct%

(he C(A E7s narration of the pertinent fa!ts is as follo$s@

CIRF is the duly appointed Co##issioner of Internal Revenue, e#po$ered, a#on

others, to a!t upon and approve !lai#s for refund or tax !redit, $ith o?!e at the

7ureau of Internal Revenue 397IR94 National O?!e 7uildin, Dili#an, Que6on City.

San Ro"ueF is a do#esti! !orporation duly orani6ed and existin under and by

virtue of the la$s of the Philippines $ith prin!ipal o?!e at 7aranay San Ro"ue, San

anuel, Panasinan. It $as in!orporated in O!tober 1;;< to desin, !onstru!t, ere!t,

asse#ble, o$n, !o##ission and operate po$er%eneratin plants and related

fa!ilities pursuant to and under !ontra!t $ith the Lovern#ent of the Republi! of the

Philippines, or any subdivision, instru#entality or aen!y thereof, or any

overn#ento$ned or !ontrolled !orporation, or other entity enaed in the

develop#ent, supply, or distribution of enery.

As a seller of servi!es, San Ro"ueF is duly reistered $ith the 7IR $ith (IN:8A( No.

*%1<%*1. It is li+e$ise reistered $ith the 7oard of Invest#ents 397OI94 on a

preferred pioneer status, to enae in the desin, !onstru!tion, ere!tion, asse#bly,as $ell as to o$n, !o##ission, and operate ele!tri! po$er%eneratin plants andrelated a!tivities, for $hi!h it $as issued Certi&!ate of Reistration No. ;<%-*2 on

5ebruary 11, 1;;0.

On O!tober 11, 1;;<, San Ro"ueF entered into a Po$er Pur!hase Aree#ent 39PPA94

$ith the National Po$er Corporation 39NPC94 to develop hydro%potential of the o$er

Ano River and enerate additional po$er and enery for the u6on Po$er Lrid, by

buildin the San Ro"ue ulti%Purpose Pro'e!t lo!ated in San anuel, Panasinan. (he

PPA provides, a#on others, that San Ro"ueF shall be responsible for the desin,

!onstru!tion, installation, !o#pletion, testin and !o##issionin of the Po$er

Station and shall operate and #aintain the sa#e, sub'e!t to NPC instru!tions. Durin

the !ooperation period of t$enty%&ve 3/*4 years !o##en!in fro# the !o#pletion

date of the Po$er Station, NPC $ill ta+e and pay for all ele!tri!ity available fro# the

Po$er Station.

On the !onstru!tion and develop#ent of the San Ro"ue ulti% Purpose Pro'e!t $hi!h

!o#prises of the da#, spill$ay and po$er plant, San Ro"ueF alleedly in!urred,

ex!ess input 8A( in the a#ount of **;,<;,--<.*) for taxable year /1 $hi!h it

de!lared in its Quarterly 8A( Returns &led for the sa#e year. San Ro"ueF duly &led

$ith the 7IR separate !lai#s for refund, in the total a#ount of **;,<;,--<.*),

representin unutili6ed input taxes as de!lared in its 8A( returns for taxable year

/1.

Jo$ever, on ar!h /0, /-, San Ro"ueF &led a#ended Quarterly 8A( Returns for

the year /1 sin!e it in!reased its unutili6ed input 8A( to the a#ount of

*2,/,/0-.1). Conse"uently, San Ro"ueF &led $ith the 7IR on even date,

separate a#ended !lai#s for refund in the areate a#ount of *2,/,/0-.1).

http://www.lawphil.net/judjuris/juri2013/feb2013/gr_187485_2013.html#fnt1


































CIRsF ina!tion on the sub'e!t !lai#s led to the &lin by San Ro"ueF of the Petition

for Revie$ $ith the Court of (ax AppealsF in Division on April 1, /-.

(rial of the !ase ensued and on uly /, /*, the !ase $as sub#itted for de!ision.1*

Te Co&rt o T5 A--e'%; R&'()*$ #((%(o)

(he C(A Se!ond Division initially denied San Ro"ues !lai#. In its De!ision12 dated 0

ar!h /2, it !ited the follo$in as bases for the denial of San Ro"ues !lai#@ la!+

of re!orded 6ero%rated or ee!tively 6ero%rated sales> failure to sub#it do!u#ents

spe!i&!ally identifyin the pur!hased oods:servi!es related to the !lai#ed input

8A( $hi!h $ere in!luded in its Property, Plant and E"uip#ent a!!ount> and failure to

prove that the related !onstru!tion !osts $ere !apitali6ed in its boo+s of a!!ount and

sub'e!ted to depre!iation.

(he C(A Se!ond Division re"uired San Ro"ue to sho$ that it !o#plied $ith the

follo$in re"uire#ents of Se!tion 11/374 of Republi! A!t No. 0)/) 3RA 0)/)41< to be

entitled to a tax refund or !redit of input 8A( attributable to !apital oods i#ported

or lo!ally pur!hased@ 314 it is a 8A(%reistered entity> 3/4 its input taxes !lai#ed $ere

paid on !apital oods duly supported by 8A( invoi!es and:or o?!ial re!eipts> 3-4 it

did not oset or apply the !lai#ed input 8A( pay#ents on !apital oods aainst any

output 8A( liability> and 3)4 its !lai# for refund $as &led $ithin the t$o%year

pres!riptive period both in the ad#inistrative and 'udi!ial levels.

(he C(A Se!ond Division found that San Ro"ue !o#plied $ith the &rst, third, and

fourth re"uire#ents, thus@

(he fa!t that San Ro"ueF is a 8A( reistered entity is ad#itted 3 par. 4, Facts Admitted, oint !tipulation of Facts, Records, p. "#$ 4. It $as also established that the

instant !lai# of *2,/,0/-.1) is already net of the 11,*;.; output tax

de!lared by San Ro"ueF in its a#ended 8A( return for the &rst "uarter of /1.

oreover, the entire a#ount of *2,/,0/-.1) $as dedu!ted by San Ro"ueF fro#

the total available input tax ree!ted in its a#ended 8A( returns for the last t$o

"uarters of /1 and &rst t$o "uarters of // 3 E%&ibits M'(, )'(, ))'" * ++'" 4.

(his #eans that the !lai#ed input taxes of *2,/,0/-.1) did not for# part of the

ex!ess input taxes of 0-,2;/,/*<.0-, as of the se!ond "uarter of // that $as to

be !arried%over to the su!!eedin "uarters. 5urther, San Ro"uesF !lai# for

refund:tax !redit !erti&!ate of ex!ess input 8A( $as &led $ithin the t$o%year

pres!riptive period re!+oned fro# the dates of &lin of the !orrespondin "uarterly

8A( returns.

5or the &rst, se!ond, third, and fourth "uarters of /1, San Ro"ueF &led its 8A(

returns on April /*, /1, uly /*, /1, O!tober /-, /1 and anuary /), //,

respe!tively 3E%&ibits -, , , and /4. (hese returns $ere all subse"uently a#ended

on ar!h /0, /- 3E%&ibits I, 0, M, and )4. On the other hand, San Ro"ueF

oriinally &led its separate !lai#s for refund on uly 1, /1, O!tober 1, /1,

5ebruary /1, //, and ay ;, // for the &rst, se!ond, third, and fourth "uarters

of /1, respe!tively, 3E%&ibits EE, FF, 11, and --4 and subse"uently &led

a#ended !lai#s for all "uarters on ar!h /0, /- 3E%&ibits II, , 00, and 4.

oreover, the Petition for Revie$ $as &led on April 1, /-. Countin fro# the

respe!tive dates $hen San Ro"ueF oriinally &led its 8A( returns for the &rst,

se!ond, third and fourth "uarters of /1, the ad#inistrative !lai#s for refund

3oriinal and a#ended4 and the Petition for Revie$ fall $ithin the t$o%year

pres!riptive period.10

San Ro"ue &led a otion for Ne$ (rial and:or Re!onsideration on < April /2. In its

/; Nove#ber /< A#ended De!ision,1; the C(A Se!ond Division found leal basis

to partially rant San Ro"ues !lai#. (he C(A Se!ond Division ordered the

Co##issioner to refund or issue a tax !redit in favor of San Ro"ue in the a#ount of

)0-,<;<,*;;.2*, $hi!h represents San Ro"ues unutili6ed input 8A( on itspur!hases of !apital oods and servi!es for the taxable year /1. (he C(A based

the ad'ust#ent in the a#ount on the &ndins of the independent !erti&ed publi!

a!!ountant. (he follo$in reasons $ere !ited for the disallo$ed !lai#s@ erroneous

!o#putation> failure to as!ertain $hether the related pur!hases are in the nature of

!apital oods> and the pur!hases pertain to !apital oods. oreover, the redu!tion

of !lai#s $as based on the follo$in@ the dieren!e bet$een San Ro"ues !lai# andthat appearin on its boo+s> the o?!ial re!eipts !overin the !lai#ed input 8A( on

pur!hases of lo!al servi!es are not $ithin the period of the !lai#> and the a#ount of

8A( !annot be deter#ined fro# the sub#itted o?!ial re!eipts and invoi!es. (he C(A

Se!ond Division denied San Ro"ues !lai# for refund or tax !redit of its unutili6ed

input 8A( attributable to its 6ero%rated or ee!tively 6ero%rated sales be!ause San

Ro"ue had no re!ord of su!h sales for the four "uarters of /1.

(he dispositive portion of the C(A Se!ond Divisions /; Nove#ber /< A#ended

De!ision reads@

GJERE5ORE, San Ro"uesF 9otion for Ne$ (rial and:or Re!onsideration9 is hereby

PAR(IAK LRAN(ED and this Courts De!ision pro#ulated on ar!h 0, /2 in the

instant !ase is hereby ODI5IED.

A!!ordinly, the CIRF is hereby ORDERED to RE5MND or in the alternative, to ISSME

A (A CREDI( CER(I5ICA(E in favor of San Ro"ueF in the redu!ed a#ount of 5our

Jundred Eihty (hree illion Seven Jundred Ninety Seven (housand 5ive Jundred

Ninety Nine Pesos and Sixty 5ive Centavos 3)0-,<;<,*;;.2*4 representin

unutili6ed input 8A( on pur!hases of !apital oods and servi!es for the taxable year

/1.

SO ORDERED./

(he Co##issioner &led a otion for Partial Re!onsideration on / De!e#ber /<.

(he C(A Se!ond Division issued a Resolution dated 11 uly /0 $hi!h denied the

CIRs #otion for la!+ of #erit.

Te Co&rt o T5 A--e'%; R&'()*$ E) B)c

(he Co##issioner &led a Petition for Revie$ before the C(A E7 prayin for the

denial of San Ro"ues !lai# for refund or tax !redit in its entirety as $ell as for the

settin aside of the /; Nove#ber /< A#ended De!ision and the 11 uly /0

Resolution in C(A Case No. 22)<.

(he C(A E7 dis#issed the CIRs petition for revie$ and a?r#ed the !hallened

de!ision and resolution.

(he C(A E7 !ited Commissioner of Internal Revenue v. 2oledo 3oer, Inc./1 and

Revenue e#orandu# Cir!ular No. );%-,// as its bases for rulin that San Ro"ues

'udi!ial !lai# $as not pre#aturely &led. (he pertinent portions of the De!ision state@

ore i#portantly, the Court En Banc has s"uarely and exhaustively ruled on this

issue in this $ise@

























It (% tr&e tt Sect(o) 112#9 o te boee)t(o)e -ro(%(o) --'(e% to

te -re%e)t c%e. oeer, t te -et(t(o)er ('e to co)%(er (% Sect(o)

112A9 o te %e -ro(%(o). (he respondent is also !overed by the t$o 3/4 year

pres!riptive period. Ge have repeatedly held that the !lai# for refund $ith the 7IR

and the subse"uent appeal to the Court of (ax Appeals #ust be &led $ithin the t$o%year period.

A!!ordinly, the Supre#e Court held in the !ase of Atlas Consolidated Mining and5evelopment Corporation vs. Commissioner of Internal Revenue that the t$o%year

pres!riptive period for &lin a !lai# for input tax is re!+oned fro# the date of the

&lin of the "uarterly 8A( return and pay#ent of the tax due. I te %( -er(o (%bo&t to e5-(re b&t te BIR % )ot /et cte o) te --'(ct(o) or re&),

te t5-/er / ()ter-o%e -et(t(o) or re(e (t t(% Co&rt (t() te

to /er -er(o.

In the !ase of 1ibbs vs. Collector, the Supre#e Court held that if, ho$ever, the

Colle!tor 3no$ Co##issioner4 ta+es ti#e in de!idin the !lai#, and the period of

t$o years is about to end, the suit or pro!eedin #ust be started in the Court of (ax

Appeals before the end of the t$o%year period $ithout a$aitin the de!ision of the

Colle!tor.

5urther#ore, in the !ase of Commissioner of Customs and Commissioner of InternalRevenue vs. 2&e -onorable Court of 2a% Appeals and 3lanters 3roducts, Inc., te

S&-ree Co&rt e' tt te t5-/er )ee )ot (t ()e)(te'/ or

ec(%(o) or r&'()* (c / or / )ot be ortco()* ) (c e %)o 'e*' r(*t to e5-ect. It is disheartenin enouh to a taxpayer to +eep hi#

$aitin for an inde&nite period of ti#e for a rulin or de!ision of the Colle!tor 3no$

Co##issioner4 of Internal Revenue on his !lai# for refund. It $ould #a+e #atters

#ore exasperatin for the taxpayer if $e $ere to !lose the doors of the !ourts of

'usti!e for su!h a relief until after the Colle!tor 3no$ Co##issioner4 of Internal

Revenue, $ould have, at his personal !onvenien!e, iven his o sinal.

(his Court ruled in several !ases that on!e the petition is &led, the Court has already

a!"uired 'urisdi!tion over the !lai#s and the Court is not bound to $ait inde&nitely

for no reason for $hatever a!tion respondent 3herein petitioner4 #ay ta+e. At %te

re c'(% or re&) ) &)'(e (%-&te %%e%%e)t%, )o ec(%(o) o

re%-o)e)t ere() -et(t(o)er9 (% re7&(re beore o)e c) *o to t(%

Co&rt. 3E#phasis supplied and !itations o#itted4

astly, it is apparent fro# the follo$in provisions of Revenue e#orandu# Cir!ular

No. );%- dated Auust 10, /-, that the CIRF +no$s that !lai#s for 8A( refund or

tax !redit &led $ith the Court of (ax AppealsF !an pro!eed si#ultaneously $ith the

ones &led $ith the 7IR and that taxpayers need not $ait for the lapse of the sub'e!t

1/%day period, to $it@

In response to theF re"uest of sele!ted taxpayers for adoption of pro!edures in

handlin refund !ases that are alined to the statutory re"uire#ents that refund

!ases should be elevated to the Court of (ax Appeals before the lapse of the period

pres!ribed by la$, !ertain provisions of RC No. )/%/- are hereby a#ended andne$ provisions are added thereto.

In !onsonan!e there$ith, the follo$in a#end#ents are bein introdu!ed to RC

No. )/%/-, to $it@

I.4 A%1< of Revenue e#orandu# Cir!ular No. )/%/- is hereby revised to read as

follo$s@

I) c%e% ere te t5-/er % 'e D!et(t(o) or Re(eD (t te

Co&rt o T5 A--e'% ()o'()* c'( or re&)TCC tt (% -e)()* t te

()(%trt(e *e)c/ B&re& o I)ter)' Ree)&e or OSS<#OF9, te

()(%trt(e *e)c/ ) te t5 co&rt / ct o) te c%e

%e-rte'/. Ghile the !ase is pendin in the tax !ourt and at the sa#e ti#e is stillunder pro!ess by the ad#inistrative aen!y, the litiation la$yer of the 7IR, upon

re!eipt of the su##ons fro# the tax !ourt, shall re"uest fro# the head of the

investiatin:pro!essin o?!e for the do!+et !ontainin !erti&ed true !opies of allthe do!u#ents pertinent to the !lai#. (he do!+et shall be presented to the !ourt as

eviden!e for the 7IR in its defense on the tax !redit:refund !ase &led by the

taxpayer. In the #eanti#e, the investiatin:pro!essin o?!e of the ad#inistrative

aen!y shall !ontinue pro!essin the refund:(CC !ase until su!h ti#e that a &nal

de!ision has been rea!hed by either the C(A or the ad#inistrative aen!y.

I te CTA (% b'e to re'e%e (t% ec(%(o) e o te e'&t(o) o te

()(%trt(e *e)c/, te 'tter %'' ce%e ro -roce%%()* te c'(. On

the other hand, if the ad#inistrative aen!y is able to pro!ess the !lai# of the

taxpayer ahead of the C(A and the taxpayer is a#enable to the &ndins thereof, the

!on!erned taxpayer #ust &le a #otion to $ithdra$ the !lai# $ith the

C(A./- 3E#phasis supplied4

#!R! $o! %-.%%/Taganito 0ining Cororation v! C*R

Te Fct%

(he C(A Se!ond Divisions narration of the pertinent fa!ts is as follo$s@

Petitioner, (aanito inin Corporation, is a !orporation duly orani6ed and existin

under and by virtue of the la$s of the Philippines, $ith prin!ipal o?!e at )th 5loor,

Solid ills 7uildin, De a Rosa St., easFpi 8illae, a+ati City. It is duly reistered

$ith the Se!urities and Ex!hane Co##ission $ith Certi&!ate of Reistration No.

1-020/ issued on ar!h ), 1;0< $ith the follo$in pri#ary purpose@

(o !arry on the business, for itself and for others, of #inin lode and:or pla!er

#inin, developin, exploitin, extra!tin, #illin, !on!entratin, !onvertin,

s#eltin, treatin, re&nin, preparin for #ar+et, #anufa!turin, buyin, sellin,ex!hanin, shippin, transportin, and other$ise produ!in and dealin in ni!+el,

!hro#ite, !obalt, old, silver, !opper, lead, 6in!, brass, iron, steel, li#estone, and all

+inds of ores, #etals and their by%produ!ts and $hi!h by%produ!ts thereof of every

+ind and des!ription and by $hatsoever pro!ess the sa#e !an be or #ay hereafter

be produ!ed, and enerally and $ithout li#it as to a#ount, to buy, sell, lo!ate,

ex!hane, lease, a!"uire and deal in lands, #ines, and #ineral rihts and !lai#s

and to !ondu!t all business appertainin thereto, to pur!hase, lo!ate, lease or

other$ise a!"uire, #inin !lai#s and rihts, ti#ber rihts, $ater rihts, !on!essions

and #ines, buildins, d$ellins, plants #a!hinery, spare parts, tools and other

properties $hatsoever $hi!h this !orporation #ay fro# ti#e to ti#e &nd to be to its

advantae to #ine lands, and to explore, $or+, exer!ise, develop or turn to a!!ount

the sa#e, and to a!"uire, develop and utili6e $ater rihts in su!h #anner as #ay be

authori6ed or per#itted by la$> to pur!hase, hire, #a+e, !onstru!t or other$ise,

a!"uire, provide, #aintain, e"uip, alter, ere!t, i#prove, repair, #anae, $or+ andoperate private roads, bares, vessels, air!raft and vehi!les, private teleraph and






telephone lines, and other !o##uni!ation #edia, as #ay be needed by the

!orporation for its o$n purpose, and to pur!hase, i#port, !onstru!t, #a!hine,

fabri!ate, or other$ise a!"uire, and #aintain and operate brides, piers, $harves,

$ells, reservoirs, plu#es, $ater!ourses, $ater$or+s, a"uedu!ts, shafts, tunnels,

furna!es, !oo+ ovens, !rushin $or+s, as$or+s, ele!tri! lihts and po$er plants and!o#pressed air plants, !he#i!al $or+s of all +inds, !on!entrators, s#elters, s#eltin

plants, and re&neries, #attin plants, $arehouses, $or+shops, fa!tories, d$ellin

houses, stores, hotels or other buildins, enines, #a!hinery, spare parts, tools,

i#ple#ents and other $or+s, !onvenien!es and properties of any des!ription in

!onne!tion $ith or $hi!h #ay be dire!tly or indire!tly !ondu!ive to any of the

ob'e!ts of the !orporation, and to !ontribute to, subsidi6e or other$ise aid or ta+epart in any operations>

and is a 8A(%reistered entity, $ith Certi&!ate of Reistration 37IR 5or# No. /--4

No. OCN 0RC1<);). i+e$ise, (aanitoF is reistered $ith the 7oard of

Invest#ents 37OI4 as an exporter of bene&!iated ni!+el sili!ate and !hro#ite ores,

$ith 7OI Certi&!ate of Reistration No. EP%00%-2.

Respondent, on the other hand, is the duly appointed Co##issioner of Internal

Revenue vested $ith authority to exer!ise the fun!tions of the said o?!e,

in!ludin inter alia, the po$er to de!ide refunds of internal revenue taxes, fees and

other !hares, penalties i#posed in relation thereto, or other #atters arisin under

the National Internal Revenue Code 3NIRC4 or other la$s ad#inistered by 7ureau of

Internal Revenue 37IR4 under Se!tion ) of the NIRC. Je holds o?!e at the 7IR

National O?!e 7uildin, Dili#an, Que6on City.

(aanitoF &led all its onthly 8A( De!larations and Quarterly 8at Returns for the

period anuary 1, /* to De!e#ber -1, /*. 5or easy referen!e, a su##ary of the

&lin dates of the oriinal and a#ended Quarterly 8A( Returns for taxable year /*

of (aanitoF is as follo$s@

(b(t%9 ?&rter Nt&re o

te Ret&r)

Moe o '()* F('()* #te

%) 1st Oriinal Ele!troni! April 1*, /*

%- A#ended Ele!troni! uly /, /*

N%) A#ended Ele!troni! O!tober 10, /2

Q%- /nd Oriinal Ele!troni! uly /, /*

R%) A#ended Ele!troni! O!tober 10, /2

M%) -rd Oriinal Ele!troni! O!tober 1;, /*

8%) A#ended Ele!troni! O!tober 10, /2

K%) )th Oriinal Ele!troni! anuary /, /2

to %) A#ended Ele!troni! O!tober 10, /2

As !an be leaned fro# its a#ended Quarterly 8A( Returns, (aanitoF reported

6ero%rated sales a#ountin to P1,))2,0*),-).20> input 8A( on its do#esti!

pur!hases and i#portations of oods 3other than !apital oods4 and servi!es

a#ountin to P/,-1),<-.)-> and input 8A( on its do#esti! pur!hases and

i#portations of !apital oods a#ountin to P2,*,;--.;*, the details of $hi!h are

su##ari6ed as follo$s@

!er(oCoere ero<Rte S'e% I)-&t VAT o)#oe%t(c

!&rc%e% )

I-ortt(o)%

o Goo% )

Ser(ce%

I)-&t VAT o)#oe%t(c

!&rc%e% )

I-ortt(o)%

o C-(t'

Goo%

Tot' I)-&t VAT

1:1:* %

-:-1:*

P**1,1<;,0<1.*0 P1,);1,00.*2 P/-;,0-.// P1,<-1,20-.<0

):1:* %

2:-:*

2),2<<,*-.<0 /),-2).1< *,011,1-.<- 2,1*,);).;

<:1:* %;:-:*

)0,<0),/0<.- 1)),00<.2< % 1)),00<.2<

1:1:* %

1/:-1:*

-*,/1/,-)*./ )<-,*;0.- % )<-,*;0.-

TOTAL !1,446,8>4,034.68 !2,314,=30.43 !6,0>0,:33.:> !8,36>,664.38

On Nove#ber 1), /2, (aanitoF &led $ith the CIRF, throuh 7IRs are

(axpayers Audit and Investiation Division II 3(AID II4, a letter dated Nove#ber 1-,

/2 !lai#in a tax !redit:refund of its supposed input 8A( a#ountin to

0,-2*,22).-0 for the period !overin anuary 1, /) to De!e#ber -1, /). On

the sa#e date, (aanitoF li+e$ise &led an Appli!ation for (ax Credits:Refunds for the

period !overin anuary 1, /* to De!e#ber -1, /* for the sa#e a#ount.

On Nove#ber /;, /2, (aanitoF sent aain another letter dated Nove#ber /;,

/) to the CIRF, to !orre!t the period of the above !lai# for tax !redit:refund in the

said a#ount of 0,-2*,22).-0 as a!tually referrin to the period !overin anuary 1,/* to De!e#ber -1, /*.

As the statutory period $ithin $hi!h to &le a !lai# for refund for said input 8A( isabout to lapse $ithout a!tion on the part of the CIRF, (aanitoF &led the instant

Petition for Revie$ on 5ebruary 1<, /<.

In his Ans$er &led on ar!h /0, /<, the CIRF interposes the follo$in defenses@

). (aanitosF alleed !lai# for refund is sub'e!t to ad#inistrative

investiation:exa#ination by the 7ureau of Internal Revenue 37IR4>



*. (he a#ount of 0,-2*,22).-0 bein !lai#ed by (aanitoF as alleed unutili6ed

input 8A( on do#esti! pur!hases of oods and servi!es and on i#portation of !apital

oods for the period anuary 1, /* to De!e#ber -1, /* is not properly

do!u#ented>

2. (aanitoF #ust prove that it has !o#plied $ith the provisions of Se!tions 11/ 3A4

and 3D4 and //; of the National Internal Revenue Code of 1;;< 31;;< (ax Code4 on

the pres!riptive period for !lai#in tax refund:!redit>

<. Proof of !o#plian!e $ith the pres!ribed !he!+list of re"uire#ents to be sub#itted

involvin !lai# for 8A( refund pursuant to Revenue e#orandu# Order No. *-%;0, oter(%e tere o&' be )o %&c(e)t co-'()ce (t te '()* o

()(%trt(e c'( or re&), te ()(%trt(e c'( tereo be()*

ere -roor, (c (% co)(t(o) %()e 7& )o) -r(or to te '()* o

H&(c(' c'( in a!!ordan!e $ith the provision of Se!tion //; of the 1;;< (ax

Code. 5urther, Se!tion 11/ 3D4 of the (ax Code, as a#ended, re"uires

the %&b(%%(o) o co-'ete oc&e)t% () %&--ort o te --'(ct(o)

'e $ith the 7IR before the 1/%day audit period shall apply, and beore te

t5-/er co&' (' o H&(c(' ree(e% % -ro(e or () te '. Jen!e,

(aanitosF failure to sub#it proof of !o#plian!e $ith the above%stated

re"uire#ents $arrants i##ediate dis#issal of the petition for revie$.

0. (aanitoF #ust prove that it has !o#plied $ith the invoi!in re"uire#ents

#entioned in Se!tions 11 and 11- of the 1;;< (ax Code, as a#ended, in relation to

provisions of Revenue Reulations No. <%;*.

;. In an a!tion for refund:!redit, the burden of proof is on the taxpayer to establish

its riht to refund, and failure to sustain the burden is fatal to the !lai# for

refund:!redit A%(t(c !etro'e& Co. %. L')e%, 4: !('. 466 c(te () Co''ector

o I)ter)' Ree)&e %. M)(' oce/ C'&b, I)c., :8 !('. 6=09J

1. Clai#s for refund are !onstrued stri!tly aainst the !lai#ant for the sa#e

parta+e the nature of exe#ption fro# taxation Co(%%(o)er o I)ter)'

Ree)&e %. Lee%, 31 SCRA :>9 and as su!h, they are loo+ed upon $ith

disfavor @e%ter) M()o'co Cor-. %. Co(%%(o)er o I)ter)' Ree)&e, 124

SCRA 12119.

S!ECIAL AN# AFFIRMATIVE #EFENSES

11. (he Court of (ax Appeals has no 'urisdi!tion to entertain the instant petition forrevie$ for failure on the part of (aanitoF to !o#ply $ith the provision of Se!tion

11/ 3D4 of the 1;;< (ax Code $hi!h provides, thus@

Se!tion 11/. Refunds or 2a% Credits of Input 2a%. 6

x x x x x x x x x

3D4 3eriod it&in &ic& refund or 2a% Credit of Input 2a%es s&all be Made. 6 In proper

!ases, the Co##issioner shall rant a refund or issue the tax !redit !erti&!ate for

!reditable input taxes (t() o)e &)re 1209 /% ro te te o

%&b(%%(o) o co-'ete oc&e)t% () %&--ort o te --'(ct(o) 'e ()

ccor)ce (t S&b%ect(o)% A9 ) B9 ereo.

In !ases of full or partial denial for tax refund or tax !redit, or the failure on the part

of the Co##issioner to a!t on the appli!ation $ithin the period pres!ribed above,the taxpayer ae!ted #ay, (t() t(rt/ 309 /% ro te rece(-t o te

ec(%(o) e)/()* te c'( or ter te e5-(rt(o) o te o)e &)re

te)t/ /-er(o, --e' te ec(%(o) or te &)cte c'( (t te Co&rt

o T5 A--e'%. 3E#phasis supplied.4

1/. As stated, (aanitoF &led the ad#inistrative !lai# for refund $ith the 7ureau of

Internal Revenue on Nove#ber 1), /2. Subse"uently on 5ebruary 1), /<, the

instant petition $as &led. Obviously the 1/ days iven to the Co##issioner to

de!ide on the !lai# has not yet lapsed $hen the petition $as &led. (he petition $aspre#aturely &led, hen!e it #ust be dis#issed for la!+ of 'urisdi!tion.

Durin trial, (aanitoF presented testi#onial and do!u#entary eviden!e pri#arilyai#ed at provin its supposed entitle#ent to the refund in the a#ount of

0,-2*,22).-0, representin input taxes for the period !overin anuary 1, /* to

De!e#ber -1, /*. (he CIRF, on the other hand, opted not to present eviden!e.

(hus, in the Resolution pro#ulated on anuary //, /;, this !ase $as sub#itted

for de!ision as of su!h date, !onsiderin (aanitosF 9e#orandu#9 &led on anuary

1;, /; and the CIRsF 9e#orandu#9 &led on De!e#ber 1;, /0./)

Te Co&rt o T5 A--e'%; R&'()*$ #((%(o)

(he C(A Se!ond Division partially ranted (aanitos !lai#. In its De!ision/* dated 0

anuary /1, the C(A Se!ond Division found that (aanito !o#plied $ith the

re"uire#ents of Se!tion 11/3A4 of RA 0)/), as a#ended, to be entitled to a tax

refund or !redit of input 8A( attributable to 6ero%rated or ee!tively 6ero%rated

sales./2

(he pertinent portions of the C(A Se!ond Divisions De!ision read@

5inally, re!ords sho$ that (aanitosF ad#inistrative !lai# &led on Nove#ber 1),

/2, $hi!h $as a#ended on Nove#ber /;, /2, and the Petition for Revie$ &led

$ith this Court on 5ebruary 1), /< are $ell $ithin the t$o%year pres!riptive period,

re!+oned fro# ar!h -1, /*, une -, /*, Septe#ber -, /*, and De!e#ber

-1, /*, respe!tively, the !lose of ea!h taxable "uarter !overin the period anuary

1, /* to De!e#ber -1, /*.

In &ne, (aanitoF su?!iently proved that it is entitled to a tax !redit !erti&!ate in

the a#ount of 0,/);,00-.-- representin unutili6ed input 8A( for the four taxable

"uarters of /*.

GJERE5ORE, pre#ises !onsidered, the instant Petition for Revie$ is herebyPAR(IAK LRAN(ED.A!!ordinly, the CIRF is hereby ORDERED to RE5MND to

(aanitoF the a#ount of EILJ( IION (GO JMNDRED 5OR(K NINE (JOMSAND

EILJ( JMNDRED EILJ(K (JREE PESOS AND (JIR(K (JREE CEN(A8OS

3P0,/);,00-.--4 representin its unutili6ed input taxes attributable to 6ero%rated

sales fro# anuary 1, /* to De!e#ber -1, /*.

SO ORDERED./<

(he Co##issioner &led a otion for Partial Re!onsideration on /; anuary /1.

(aanito, in turn, &led a Co##ent:Opposition on the otion for Partial

Re!onsideration on 1* 5ebruary /1.

In a Resolution/0 dated < April /1, the C(A Se!ond Division denied the CIRs

#otion. (he C(A Se!ond Division ruled that the leislature did not intend that

Se!tion 11/ 3Refunds or (ax Credits of Input (ax4 should be read in isolation fro#Se!tion //; 3Re!overy of (ax Erroneously or Illeally Colle!ted4 or vi!e versa. (he















C(A Se!ond Division applied the #andatory statute of li#itations in see+in 'udi!ial

re!ourse pres!ribed under Se!tion //; to !lai#s for refund or tax !redit under

Se!tion 11/.

Te Co&rt o T5 A--e'%; R&'()*$ E) B)c

On /; April /1, the Co##issioner &led a Petition for Revie$ before the C(A E7

assailin the 0 anuary /1 De!ision and the < April /1 Resolution in C(A Case

No. <*<) and prayin that (aanitos entire !lai# for refund be denied.

In its 0 De!e#ber /1 De!ision,/; the C(A E7 ranted the CIRs petition for revie$

and reversed and set aside the !hallened de!ision and resolution.

(he C(A E7 de!lared that Se!tion 11/3A4 and 374 of the 1;;< (ax Code both set forth

the re!+onin of the t$o%year pres!riptive period for &lin a !lai# for tax refund or

!redit over input 8A( to be the !lose of the taxable "uarter $hen the sales $ere

#ade. (he C(A E7 also relied on this Courts rulins in the !ases of Commissioner of Internal Revenue v. Aic&i Forging Compan7 of Asia, Inc. 8Aic&i9 - and Commisioner of Internal Revenue v. Mirant 3agbilao Corporation8Mirant9.-1 7oth Aic&i and Mirant ruled that the t$o%year pres!riptive period to &le a

refund for input 8A( arisin fro# 6ero%rated sales should be re!+oned fro# the !lose

of the taxable "uarter $hen the sales $ere #ade. Aic&i further e#phasi6ed that the

failure to a$ait the de!ision of the Co##issioner or the lapse of 1/%day period

pres!ribed in Se!tion 11/3D4 a#ounts to a pre#ature &lin.

(he C(A E7 found that (aanito &led its ad#inistrative !lai# on 1) Nove#ber /2,$hi!h $as $ell $ithin the period pres!ribed under Se!tion 11/3A4 and 374 of the

1;;< (ax Code. Jo$ever, the C(A E7 found that (aanitos 'udi!ial !lai# $as

pre#aturely &led. (aanito &led its Petition for Revie$ before the C(A Se!ond

Division on 1) 5ebruary /<. (he 'udi!ial !lai# $as &led after the lapse of only ;/

days fro# the &lin of its ad#inistrative !lai# before the CIR, in violation of the 1/%

day period pres!ribed in Se!tion 11/3D4 of the 1;;< (ax Code.

(he dispositive portion of the De!ision states@

GJERE5ORE, the instant Petition for Revie$ is hereby LRAN(ED. (he assailed

De!ision dated anuary 0, /1 and Resolution dated April <, /1 of the Spe!ial

Se!ond Division of this Court are hereby RE8ERSED and SE( ASIDE. Another one is

hereby entered DISISSINL the Petition for Revie$ &led in C(A Case No. <*<) for

havin been pre#aturely &led.

SO ORDERED.-/

In his dissent,-- Asso!iate usti!e ovell R. 7autista insisted that (aanito ti#ely &led

its !lai# before the C(A. usti!e 7autista read Se!tion 11/3C4 of the 1;;< (ax Code

3Period $ithin $hi!h Refund or (ax Credit of Input (axes shall be ade4 in

!on'un!tion $ith Se!tion //; 3Re!overy of (ax Erroneously or Illeally Colle!ted4.

usti!e 7autista also relied on this Courts rulin in Atlas Consolidated Mining and5evelopment Corporation v. Commissioner of Internal Revenue 8Atlas9,-) $hi!h

stated that refundable or !reditable input 8A( and illeally or erroneously !olle!ted

national internal revenue tax are the sa#e, insofar as both are #onetary a#ounts

$hi!h are !urrently in the hands of the overn#ent but #ust rihtfully be returned

to the taxpayer. usti!e 7autista !on!luded@

7ein #erely per#issive, a taxpayer !lai#ant has the option of see+in 'udi!ial

redress for refund or tax !redit of ex!ess or unutili6ed input tax $ith this Court,

either $ithin - days fro# re!eipt of the denial of its !lai#, or after the lapse of the

1/%day period in the event of ina!tion by the Co##issioner, provided that both

ad#inistrative and 'udi!ial re#edies #ust be underta+en $ithin the /%year period.-*

(aanito &led its otion for Re!onsideration on /; De!e#ber /1. (he

Co##issioner &led an Opposition on /2 anuary /11. (he C(A E7 denied for la!+ of #erit (aanitos #otion in a Resolution-2 dated 1) ar!h /11. (he C(A E7 did not

see any 'usti&able reason to depart fro# this Courts rulins in Aic&i and Mirant .

#!R! $o! %-'%).

Phile1 0ining Cororation v! C*R

Te Fct%

(he C(A E7s narration of the pertinent fa!ts is as follo$s@

PhilexF is a !orporation duly orani6ed and existin under the la$s of the Republi!

of the Philippines, $hi!h is prin!ipally enaed in the #inin business, $hi!h

in!ludes the exploration and operation of #ine properties and !o##er!ial

produ!tion and #ar+etin of #ine produ!ts, $ith o?!e address at /< Philex 7uildin,

5airlaine St., Hapitolyo, Pasi City.

(he CIRF, on the other hand, is the head of the 7ureau of Internal Revenue 397IR94,

the overn#ent entity tas+ed $ith the duties:fun!tions of assessin and !olle!tinall national internal revenue taxes, fees, and !hares, and enfor!e#ent of allforfeitures, penalties and &nes !onne!ted there$ith, in!ludin the exe!ution of

'ud#ents in all !ases de!ided in its favor by the Court of (ax AppealsF and the

ordinary !ourts, $here she !an be served $ith !ourt pro!esses at the 7IR Jead

O?!e, 7IR Road, Que6on City.

On O!tober /1, /*, PhilexF &led its Oriinal 8A( Return for the third "uarter of

taxable year /* and A#ended 8A( Return for the sa#e "uarter on De!e#ber 1,

/*.

On ar!h /, /2, PhilexF &led its !lai# for refund:tax !redit of the a#ount of

/-,;*2,<-/.)) $ith the One Stop Shop Center of the Depart#ent of 5inan!e.

Jo$ever, due to the CIRsF failure to a!t on su!h !lai#, on O!tober 1<, /<,

pursuant to !ections "": and ::; of t&e /IRC of ";;$, as amended , PhilexF &led aPetition for Revie$, do!+eted as C.(.A. Case No. <20<.

In herF Ans$er, respondent CIR alleed the follo$in spe!ial and a?r#ative

defenses@

). Clai#s for refund are stri!tly !onstrued aainst the taxpayer as the sa#e parta+e

the nature of an exe#ption>

*. (he taxpayer has the burden to sho$ that the taxes $ere erroneously or illeally

paid. 5ailure on the part of PhilexF to prove the sa#e is fatal to its !ause of a!tion>

2. PhilexF should prove its leal basis for !lai#in for the a#ount bein refunded.-<

Te Co&rt o T5 A--e'%; R&'()*$ #((%(o)


























(he C(A Se!ond Division, in its De!ision dated / uly /;, denied Philexs !lai#

due to pres!ription. (he C(A Se!ond Division ruled that the t$o%year pres!riptive

period spe!i&ed in Se!tion 11/3A4 of RA 0)/), as a#ended, applies not only to the

&lin of the ad#inistrative !lai# $ith the 7IR, but also to the &lin of the 'udi!ial

!lai# $ith the C(A. Sin!e Philexs !lai# !overed the -rd "uarter of /*, itsad#inistrative !lai# &led on / ar!h /2 $as ti#ely &led, $hile its 'udi!ial !lai#

&led on 1< O!tober /< $as &led late and therefore barred by pres!ription.

On 1 Nove#ber /;, the C(A Se!ond Division denied Philexs otion for

Re!onsideration.

Te Co&rt o T5 A--e'%; R&'()*$ E) B)c

Philex &led a Petition for Revie$ before the C(A E7 prayin for a reversal of the / uly /; De!ision and the 1 Nove#ber /; Resolution of the C(A Se!ond Division

in C(A Case No. <20<.

(he C(A E7, in its De!ision-0 dated - De!e#ber /1, denied Philexs petition and

a?r#ed the C(A Se!ond Divisions De!ision and Resolution.

(he pertinent portions of the De!ision read@

In this !ase, $hile there is no dispute that PhilexsF ad#inistrative !lai# for refund

$as &led $ithin the t$o%year pres!riptive period> ho$ever, as to its 'udi!ial !lai# for

refund:!redit, re!ords sho$ that on ar!h /, /2, PhilexF applied the

ad#inistrative !lai# for refund of unutili6ed input 8A( in the a#ount of /-,;*2,<-/.)) $ith the One Stop Shop Center of the Depart#ent of 5inan!e, perAppli!ation No. */);. 5ro# ar!h /, /2, $hi!h is also presu#ably the date

PhilexF sub#itted supportin do!u#ents, toether $ith the aforesaid appli!ation for

refund, the CIR has 1/ days, or until uly 10, /2, $ithin $hi!h to de!ide the

!lai#. Githin - days fro# the lapse of the 1/%day period, or fro# uly 1;, /2

until Auust 1<, /2, PhilexF should have elevated its !lai# for refund to the C(A.

Jo$ever, PhilexF &led its Petition for Revie$ only on O!tober 1<, /<, $hi!h is )/2

days $ay beyond the -% day period pres!ribed by la$.

Evidently, the Petition for Revie$ in C(A Case No. <20< $as &led )/2 days late.

(hus, the Petition for Revie$ in C(A Case No. <20< should have been dis#issed on

the round that the Petition for Revie$ $as &led $ay beyond the -%day pres!ribed

period> thus, no 'urisdi!tion $as a!"uired by the C(A in Division> and not due to

pres!ription.

GJERE5ORE, pre#ises !onsidered, the instant Petition for Revie$ is hereby DENIED

DME COMRSE, and a!!ordinly, DISISSED. (he assailed De!ision dated uly /,

/;, dis#issin the Petition for Revie$ in C(A Case No. <20< due to pres!ription,

and Resolution dated Nove#ber 1, /; denyin PhilexsF otion for

Re!onsideration are hereby A55IRED, $ith #odi&!ation that the dis#issal is based

on the round that the Petition for Revie$ in C(A Case No. <20< $as &led $ay

beyond the -%day pres!ribed period to appeal.

SO ORDERED.-;

#!R! $o! %&'(&)

C*R v! San Ro+ue Po,er Cororation

(he Co##issioner raised the follo$in rounds in the Petition for Revie$@

I. (he Court of (ax Appeals En Banc erred in holdin that San Ro"uesF !lai# for

refund $as not pre#aturely &led.

II. (he Court of (ax Appeals En Banc erred in a?r#in the a#ended de!ision of the

Court of (ax Appeals 3Se!ond Division4 rantin San Ro"uesF !lai# for refund of

alleed unutili6ed input 8A( on its pur!hases of !apital oods and servi!es for the

taxable year /1 in the a#ount of P)0-,<;<,*;;.2*. )

#!R! $o! %-.%%/

Taganito 0ining Cororation v! C*R

(aanito raised the follo$in rounds in its Petition for Revie$@

I. (he Court of (ax Appeals En Banc !o##itted serious error and a!ted $ith rave

abuse of dis!retion tanta#ount to la!+ or ex!ess of 'urisdi!tion in erroneously

applyin the Aic&i do!trine in violation of (aanitosF riht to due pro!ess.

II. (he Court of (ax Appeals !o##itted serious error and a!ted $ith rave abuse of

dis!retion a#ountin to la!+ or ex!ess of 'urisdi!tion in erroneously interpretin the

provisions of Se!tion 11/ 3D4.)1

#!R! $o! %-'%).

Phile1 0ining Cororation v! C*R

Philex raised the follo$in rounds in its Petition for Revie$@

I. (he C(A En Banc erred in denyin the petition due to alleed pres!ription. (he fa!t

is that the petition $as &led $ith the C(A $ithin the period set by prevailin !ourt

rulins at the ti#e it $as &led.

II. (he C(A En Banc erred in retroa!tively applyin the Ai!hi rulin in denyin the

petition in this instant !ase.)/

Te Co&rt;% R&'()*

5or ready referen!e, the follo$in are the provisions of the (ax Code appli!able to

the present !ases@

Sect(o) 10>@

Persons 2iable. T A)/ -er%o) o, () te co&r%e o tre or b&%()e%%, %e''%,barters, ex!hanes, leases*oo% or -ro-ert(e%, re)er% %er(ce%, and any

person $ho i#ports oods %'' be %&bHect to te '&e<e t5

VAT9 i#posed in Se!tions 12 to 10 of this Code.

Te '&e<e t5 (% ) ()(rect t5 ) te o&)t o t5 / be

%(te or -%%e o) to te b&/er, tr)%eree or 'e%%ee o te *oo%,

-ro-ert(e% or %er(ce%. (his rule shall li+e$ise apply to existin !ontra!ts of sale

or lease of oods, properties or servi!es at the ti#e of the ee!tivity of Republi! A!t

No. <<12.

x x x x

Sect(o) 110B9@

Se!. 11. 2a% Credits. T

















374 E%cess )utput or Input 2a% . T If at the end of any taxable "uarter the output tax

ex!eeds the input tax, the ex!ess shall be paid by the 8A(%reistered person. I te

()-&t t5 e5cee% te o&t-&t t5, te e5ce%% %'' be crr(e oer to te

%&ccee()* 7&rter or 7&rter%@ Provided, (hat the input tax in!lusive of input

8A( !arried over fro# the previous "uarter that #ay be !redited in every "uartershall not ex!eed seventy per!ent 3<U4 of the output 8A(@F)- Provided, ho$ever,

(hat )/ ()-&t t5 ttr(b&tb'e to +ero<rte %'e% b/ VAT<re*(%tere

-er%o) / t (% o-t(o) be re&)e or cre(te *()%t oter ()ter)'

ree)&e t5e%, %&bHect to te -ro(%(o)% o Sect(o) 112.

Sect(o) 112$))

Se!. 11/. Refunds or 2a% Credits of Input 2a% . T

3A4 <ero'Rated or E=ectivel7 <ero'Rated !ales.T A)/ VAT<re*(%tere -er%o),

o%e %'e% re +ero<rte or eKect(e'/ +ero<rte /, (t() to 29

/er% ter te c'o%e o te t5b'e 7&rter e) te %'e% ere e,

--'/ or te (%%&)ce o t5 cre(t cert(cte or re&) o cre(tb'e

()-&t t5 &e or -( ttr(b&tb'e to %&c %'e% , ex!ept transitional input tax,

to the extent that su!h input tax has not been applied aainst output tax@ Provided,

ho$ever, (hat in the !ase of 6ero%rated sales under Se!tion 123A43/4 3a4314, 3/4 and

374 and Se!tion 10374314 and 3/4, the a!!eptable forein !urren!y ex!hane

pro!eeds thereof had been duly a!!ounted for in a!!ordan!e $ith the rules and

reulations of the 7an+o Sentral n Pilipinas 37SP4@ Provided, further, (hat $here

the taxpayer is enaed in 6ero%rated or ee!tively 6ero%rated sale and also intaxable or exe#pt sale of oods or properties or servi!es, and the a#ount of

!reditable input tax due or paid !annot be dire!tly and entirely attributed to any one

of the transa!tions, it shall be allo!ated proportionately on the basis of the volu#e

of sales.

374 Capital 1oods.% A 8A( T reistered person #ay apply for the issuan!e of a tax

!redit !erti&!ate or refund of input taxes paid on !apital oods i#ported or lo!ally

pur!hased, to the extent that su!h input taxes have not been applied aainst output

taxes. (he appli!ation #ay be #ade only $ithin t$o 3/4 years after the !lose of the

taxable "uarter $hen the i#portation or pur!hase $as #ade.

3C4 Cancellation of VA2 Registration. > A person $hose reistration has been

!an!elled due to retire#ent fro# or !essation of business, or due to !hanes in or

!essation of status under Se!tion 123C4 of this Code #ay, $ithin t$o 3/4 years fro#

the date of !an!ellation, apply for the issuan!e of a tax !redit !erti&!ate for anyunused input tax $hi!h #ay be used in pay#ent of his other internal revenue taxes

3D4 3eriod it&in &ic& Refund or 2a% Credit of Input 2a%es s&all be Made . T In

proper !ases, the Co##issioner shall rant a refund or issue the tax !redit

!erti&!ate for !reditable input taxes (t() o)e &)re te)t/ 1209 /%

ro te te o %&b(%%(o) o co-'ete oc&e)t% in support of the

appli!ation &led in a!!ordan!e $ith Subse!tion 3A4 and 374 hereof.

In !ase of full or partial denial of the !lai# for tax refund or tax !redit, or the failure

on the part of the Co##issioner to a!t on the appli!ation $ithin the period

pres!ribed above, the taxpayer ae!ted #ay,(t() t(rt/ 309 /% ro te

rece(-t o te ec(%(o) e)/()* te c'( or ter te e5-(rt(o) o te o)e

&)re te)t/ /<-er(o, appeal the de!ision or the una!ted !lai# $ith the

Court of (ax Appeals.

3E4 Manner of 1iving Refund. T Refunds shall be #ade upon $arrants dra$n by the

Co##issioner or by his duly authori6ed representative $ithout the ne!essity of

bein !ountersined by the Chair#an, Co##ission on Audit, the provisions of the

Ad#inistrative Code of 1;0< to the !ontrary not$ithstandin@ Provided, that refunds

under this pararaph shall be sub'e!t to post audit by the Co##ission on Audit.

Sect(o) 22:$

Recover7 of 2a% Erroneousl7 or Illegall7 Collected. T No suit or pro!eedin shall be

#aintained in any !ourt for the re!overy of any national internal revenue tax

hereafter alleed to have been erroneously or illeally assessed or !olle!ted, or of any penalty !lai#ed to have been !olle!ted $ithout authority, or of any su# alleed

to have been e5ce%%(e'/ or () )/ ))er ro)*&''/ co''ecte, until a !lai#

for refund or !redit has been duly &led $ith the Co##issioner> but su!h suit or

pro!eedin #ay be #aintained, $hether or not su!h tax, penalty, or su# has been

paid under protest or duress.

In any !ase, no su!h suit or pro!eedin shall be &led after the expiration of to 29

/er% ro te te o -/e)t o te t5 or penalty reardless of any

supervenin !ause that #ay arise after pay#ent@ Provided, ho$ever, (hat the

Co##issioner #ay, even $ithout a $ritten !lai# therefor, refund or !redit any tax,

$here on the fa!e of the return upon $hi!h pay#ent $as #ade, su!h pay#ent

appears !learly to have been erroneously paid.

3All e#phases supplied4

I. A--'(ct(o) o te 12030 #/ !er(o%

a. #!R! $o! %&'(&) 3 C*R v! San Ro+ue Po,er Cororation

On 1 April /-, a #ere 1- days after it &led its a#ended ad#inistrative !lai# $ith

the Co##issioner on /0 ar!h /-, San Ro"ue &led a Petition for Revie$ $ith the

C(A do!+eted as C(A Case No. 22)<. 5ro# this $e ather t$o !ru!ial fa!ts@ ?rst , San

Ro"ue did not $ait for the 1/%day period to lapse before &lin its 'udi!ial

!lai#>second, San Ro"ue &led its 'udi!ial !lai# #ore than four 3)4

years beore the Atlas)* do!trine, $hi!h $as pro#ulated by the Court on 0 une

/<.

Clearly, San Ro"ue failed to !o#ply $ith the 1/%day $aitin period, the ti#e

expressly iven by la$ to the Co##issioner to de!ide $hether to rant or deny SanRo"ues appli!ation for tax refund or !redit. It is indisputable that !o#plian!e $ith

the 1/%day $aitin period is )tor/ ) H&r(%(ct(o)'. (he $aitin period,

oriinally &xed at 2 days only, $as part of the provisions of the &rst 8A( la$,

Exe!utive Order No. /<-, $hi!h too+ ee!t on 1 anuary 1;00. (he $aitin period

$as extended to 1/ days ee!tive 1 anuary 1;;0 under RA 0)/) or the (ax Refor#

A!t of 1;;<. T&%, te (t()* -er(o % bee) () o&r %tt&te boo% or ore

t) tee) 1>9 /er% before S) Ro7&e 'e (t% H&(c(' c'(.

5ailure to !o#ply $ith the 1/%day $aitin period violates a #andatory provision of

la$. It violates the do!trine of exhaustion of ad#inistrative re#edies and renders the

petition pre#ature and thus $ithout a !ause of a!tion, $ith the ee!t that the C(A

does not a!"uire 'urisdi!tion over the taxpayers petition. Philippine 'urispruden!e is

replete $ith !ases upholdin and reiteratin these do!trinal prin!iples.)2












(he !harter of the C(A expressly provides that its 'urisdi!tion is to revie$ on appeal

9ec(%(o)% of the Co##issioner of Internal Revenue in !ases involvin x x x refunds

of internal revenue taxes.9)< Ghen a taxpayer pre#aturely &les a 'udi!ial !lai# for

tax refund or !redit $ith the C(A $ithout $aitin for the de!ision of the

Co##issioner, there is no 9de!ision9 of the Co##issioner to revie$ and thus theC(A as a !ourt of spe!ial 'urisdi!tion has no 'urisdi!tion over the appeal. (he !harter

of the C(A also expressly provides that if the Co##issioner fails to de!ide $ithin 9

%-ec(c -er(o9 re"uired by la$, su!h 9()ct(o) %'' be eee e)('9)0 of

the appli!ation for tax refund or !redit. It is the Co##issioners de!ision, or ina!tion

9dee#ed a denial,9 that the taxpayer !an ta+e to the C(A for revie$. Githout a

de!ision or an 9ina!tion x x x dee#ed a denial9 of the Co##issioner, the C(A has no 'urisdi!tion over a petition for revie$.);

San Ro"ues failure to !o#ply $ith the 1/%day )tor/ period renders its

petition for revie$ $ith the C(A void. Arti!le * of the Civil Code provides, 9A!ts

exe!uted aainst provisions of #andatory or prohibitory la$s shall be void, ex!ept

$hen the la$ itself authori6es their validity.9 San Ro"ues void petition for revie$

!annot be leiti#i6ed by the C(A or this Court be!ause Arti!le * of the Civil Code

states that su!h void petition !annot be leiti#i6ed 9ex!ept $hen the la$ itself

authori6es itsF validity.9 (here is no la$ authori6in the petitions validity.

It is hornboo+ do!trine that a person !o##ittin a void a!t !ontrary to a #andatory

provision of la$ !annot !lai# or a!"uire any riht fro# his void a!t. A riht !annot

sprin in favor of a person fro# his o$n void or illeal a!t. (his do!trine is repeated

in Arti!le //*) of the Civil Code, $hi!h states, 9No vested or a!"uired riht !an arisefro# a!ts or o#issions $hi!h are aainst the la$ or $hi!h infrine upon the rihts of

others.9* 5or violatin a #andatory provision of la$ in &lin its petition $ith the C(A,

San Ro"ue !annot !lai# any riht arisin fro# su!h void petition. (hus, San Ro"ues

petition $ith the C(A is a #ere s!rap of paper.

(his Court !annot brush aside the rave issue of the #andatory and 'urisdi!tional

nature of the 1/%day period 'ust be!ause the Co##issioner #erely asserts that the

!ase $as pre#aturely &led $ith the C(A and does not "uestion the entitle#ent of

San Ro"ue to the refund. (he #ere fa!t that a taxpayer has undisputed ex!ess input

8A(, or that the tax $as ad#ittedly illeally, erroneously or ex!essively !olle!ted

fro# hi#, does not entitle hi# as a #atter of riht to a tax refund or !redit. Stri!t

!o#plian!e $ith the #andatory and 'urisdi!tional !onditions pres!ribed by la$ to

!lai# su!h tax refund or !redit is essential and ne!essary for su!h !lai# to

prosper. @e''<%ett'e (% te r&'e tt t5 re&)% or cre(t%, H&%t '(e t5e5e-t(o)%, re %tr(ct'/ co)%tr&e *()%t te t5-/er.*1 (he burden is onthe taxpayer to sho$ that he has stri!tly !o#plied $ith the !onditions for the rant

of the tax refund or !redit.

(his Court !annot disreard #andatory and 'urisdi!tional !onditions #andated by

la$ si#ply be!ause the Co##issioner !hose not to !ontest the nu#eri!al

!orre!tness of the !lai# for tax refund or !redit of the taxpayer. Non%!o#plian!e

$ith #andatory periods, non%observan!e of pres!riptive periods, and non%adheren!e

to exhaustion of ad#inistrative re#edies br a taxpayers !lai# for tax refund or

!redit, $hether or not the Co##issioner "uestions the nu#eri!al !orre!tness of the

!lai# of the taxpayer. (his Court should not establish the pre!edent that non%

!o#plian!e $ith #andatory and 'urisdi!tional !onditions !an be ex!used if the !lai#

is other$ise #eritorious, parti!ularly in !lai#s for tax refunds or !redit. Su!h

pre!edent $ill render #eaninless !o#plian!e $ith #andatory and 'urisdi!tionalre"uire#ents, for then every tax refund !ase $ill have to be de!ided on the

nu#eri!al !orre!tness of the a#ounts !lai#ed, reardless of non%!o#plian!e $ith

#andatory and 'urisdi!tional !onditions.

San Ro"ue !annot also !lai# bein #isled, #isuided or !onfused by

the Atlas do!trine be!ause S) Ro7&e 'e (t% -et(t(o) or re(e (t te CTA

ore t) o&r /er% beore Atlas % -ro&'*te. (he Atlasdo!trine did not

exist at the ti#e San Ro"ue failed to !o#ply $ith the 1/% day period. (hus, San

Ro"ue !annot invo+e the Atlas do!trine as an ex!use for its failure to $ait for the1/%day period to lapse. In any event, the Atlasdo!trine #erely stated that the t$o%

year pres!riptive period should be !ounted fro# the date of pay#ent of the output

8A(, not fro# the !lose of the taxable "uarter $hen the sales involvin the input 8A($ere #ade. Te Atlas octr()e oe% )ot ()ter-ret, e5-re%%'/ or (-'(e'/, te

12030*/ / -er(o%.

In fa!t, Se!tion 123b4 and 3e4 of the (ax Code of 1;<< as a#ended, $hi!h $as the

la$ !ited by the Court in Atlasas the appli!able provision of the la$ did not yet

provide for the -%day period for the taxpayer to appeal to the C(A fro# the de!ision

or ina!tion of the Co##issioner.*- T&%, te Atlas octr()e c))ot be ()oe

b/ )/o)e to (%re*r co-'()ce (t te 30</ )tor/ )

H&r(%(ct(o)' -er(o. Also, the dieren!e bet$een the Atlas do!trine on one hand,

and the Mirant *) do!trine on the other hand, is a #ere / days. (he Atlas do!trine

!ounts the t$o%year pres!riptive period fro# the date of pay#ent of the output 8A(,

$hi!h #eans $ithin / days after the !lose of the taxable "uarter. (he output 8A( at

that ti#e #ust be paid at the ti#e of &lin of the "uarterly tax returns, $hi!h $ere

to be &led 9$ithin / days follo$in the end of ea!h "uarter.9

(hus, in Atlas, the three tax refund !lai#s listed belo$ $ere dee#ed ti#ely &led

be!ause the ad#inistrative !lai#s &led $ith the Co##issioner, and the petitions for

revie$ &led $ith the C(A, $ere all &led $ithin t$o years fro# the date of pay#ent of

the output 8A(, follo$in Se!tion //;@

Period CoveredDate of 5ilin Return

V Pay#ent of (ax

Date of 5ilin

Ad#inistrative Clai#

Date of 5i

Petition Gith C(A

/nd Quarter, 1;;

Close of Quarter

30 &)e 1::0

20 &'/ 1::0 /1 Auust 1;; 20 &'/ 1::2

-rd Quarter, 1;;

Close of Quarter

30 Se-teber 1::0

18 October 1::0 /1 Nove#ber 1;; : October 1::2

)th Quarter, 1;;

Close of Quarter

31 #eceber 1::0

20 )&r/ 1::1 1; 5ebruary 1;;1 14 )&r/ 1::3

Atlas paid the output 8A( at the ti#e it &led the "uarterly tax returns on the /th,

10th, and /th day ter the !lose of the taxable "uarter. Jad the t$oyear

pres!riptive period been !ounted fro# the 9!lose of the taxable "uarter9 as

expressly stated in the la$, the tax refund !lai#s of Atlas $ould have already

pres!ribed. In !ontrast, theMirant

do!trine !ounts the t$o%year pres!riptive periodfro# the 9!lose of the taxable "uarter $hen the sales $ere #ade9 as expressly
























stated in the la$, $hi!h #eans the last day of the taxable "uarter. Te 20</

(Kere)ce** betee) te Atlas octr()e ) te 'ter 0irant octr()e (% )ot

ter(' to S) Ro7&e;% c'( or t5 re&).

Ghether the Atlas do!trine or the Mirant do!trine is applied to San Ro"ue is

i##aterial be!ause $hat is at issue in the present !ase is San Ro"ues non%

!o#plian!e $ith the 1/%day #andatory and 'urisdi!tional period, $hi!h is !ounted

fro# the date it &led its ad#inistrative !lai# $ith the Co##issioner. (he 1/%dayperiod #ay extend beyond the t$o%year pres!riptive period, as lon as the

ad#inistrative !lai# is &led $ithin the t$o%year pres!riptive period. Jo$ever, San

Ro"ues fatal #ista+e is that it did not $ait for the Co##issioner to de!ide $ithinthe 1/%day period, a #andatory period $hether the Atlas or the Mirant do!trine is

applied.

At the ti#e San Ro"ue &led its petition for revie$ $ith the C(A, the 1/W- day

#andatory periods $ere already in the la$. Se!tion 11/3C4*2 expressly rants the

Co##issioner 1/ days $ithin $hi!h to de!ide the taxpayers !lai#. (he la$ is

!lear, plain, and une"uivo!al@ 9x x x the Co##issioner shall rant a refund or issue

the tax !redit !erti&!ate for !reditable input taxes (t() o)e &)re te)t/

1209 /% fro# the date of sub#ission of !o#plete do!u#ents.9 5ollo$in

the verba legis do!trine, this la$ #ust be applied exa!tly as $orded sin!e it is !lear,

plain, and une"uivo!al. (he taxpayer !annot si#ply &le a petition $ith the C(A

$ithout $aitin for the Co##issioners de!ision $ithin the 1/%day #andatory and

'urisdi!tional period. (he C(A $ill have no 'urisdi!tion be!ause there $ill be no

9de!ision9 or 9dee#ed a denial9 de!ision of the Co##issioner for the C(A to revie$.In San Ro"ues !ase, it &led its petition $ith the C(A a #ere 1- days after it &led its

ad#inistrative !lai# $ith the Co##issioner. Indisputably, San Ro"ue +no$inly

violated the #andatory 1/%day period, and it !annot bla#e anyone but itself.

Se!tion 11/3C4 also expressly rants the taxpayer a -%day period to appeal to the

C(A the de!ision or ina!tion of the Co##issioner, thus@

x x x the taxpayer ae!ted #ay, (t() t(rt/ 309 /% ro te rece(-t o te

ec(%(o) e)/()* te c'( or ter te e5-(rt(o) o te o)e &)re

te)t/ /<-er(o, appeal the de!ision or the una!ted !lai# $ith the Court of (ax

Appeals. 3E#phasis supplied4

(his la$ is !lear, plain, and une"uivo!al. 5ollo$in the $ell%settled verbalegis do!trine, this la$ should be applied exa!tly as $orded sin!e it is !lear, plain,

and une"uivo!al. As this la$ states, the taxpayer #ay, if he $ishes, appeal thede!ision of the Co##issioner to the C(A $ithin - days fro# re!eipt of the

Co##issioners de!ision, or if the Co##issioner does not a!t on the taxpayers

!lai# $ithin the 1/%day period, the taxpayer #ay appeal to the C(A $ithin - days

fro# the expiration of the 1/%day period.

b. #!R! $o! %-.%%/ 3 Taganito 0ining Cororation v! C*R

i+e San Ro"ue, (aanito also &led its petition for revie$ $ith the C(A $ithout

$aitin for the 1/%day period to lapse. Also, li+e San Ro"ue, (aanito &led its

'udi!ial !lai# beore the pro#ulation of the Atlas do!trine. (aanito &led a Petition

for Revie$ on 1) 5ebruary /< $ith the C(A. (his is al#ost four #onths beore the

adoption of the Atlas do!trine on 0 une /<. (aanito is si#ilarly situated as San

Ro"ue % both !annot !lai# bein #isled, #isuided, or !onfused by

the Atlas do!trine.

Jo$ever, (aanito !an invo+e 7IR Rulin No. DA%)0;%- *< dated 1 De!e#ber /-,

$hi!h expressly ruled that the 9t5-/er<c'()t )ee )ot (t or te '-%e

o te 120</ -er(o beore (t co&' %ee H&(c(' re'(e (t te CTA b/

/ o !et(t(o) or Re(e.9 (aanito &led its 'udi!ial !lai# after the issuan!e of

7IR Rulin No. DA%)0;%- but before the adoption of the Aic&i do!trine. (hus, as $illbe explained later, (aanito is dee#ed to have &led its 'udi!ial !lai# $ith the C(A on

ti#e.

c. #!R! $o! %-'%). 4 Phile1 0ining Cororation v! C*R

Philex 314 &led on /1 O!tober /* its oriinal 8A( Return for the third "uarter of taxable year /*> 3/4 &led on / ar!h /2 its ad#inistrative !lai# for refund or

!redit> 3-4 &led on 1< O!tober /< its Petition for Revie$ $ith the C(A. (he !lose of

the third taxable "uarter in /* is - Septe#ber /*, $hi!h is the re!+onin date

in !o#putin the t$o%year pres!riptive period under Se!tion 11/3A4.

Philex ti#ely &led its ad#inistrative !lai# on / ar!h /2, $ithin the t$o%year

pres!riptive period. Even if the t$o%year pres!riptive period is !o#puted fro# the

date of pay#ent of the output 8A( under Se!tion //;, Philex still &led its

ad#inistrative !lai# on ti#e. T&%, te Atlas octr()e (% (ter(' () t(%

c%e. (he Co##issioner had until 1< uly /2, the last day of the 1/%day period,

to de!ide Philexs !lai#. Sin!e the Co##issioner did not a!t on Philexs !lai# on or

before 1< uly /2, Philex had until 1< Auust /2, the last day of the -%day

period, to &le its 'udi!ial !lai#. Te CTA EB e' tt 1= A&*&%t 2006 %

()ee te '%t / or !('e5 to 'e (t% H&(c(' c'( . Jo$ever, Philex &led its

Petition for Revie$ $ith the C(A only on 1< O!tober /<, or four hundred t$enty%six

3)/24 days after the last day of &lin. I) %ort, !('e5 % 'te b/ o)e /er )

61 /% () '()* (t% H&(c(' c'(. As the C(A E7 !orre!tly found@

E(e)t'/, te !et(t(o) or Re(e () C.T.A. C%e No. =68= % 'e 426

/% 'te. (hus, the Petition for Revie$ in C.(.A. Case No. <20< should have been

dis#issed on the round that the Petition for Revie$ $as &led $ay beyond the -%

day pres!ribed period> thus, no 'urisdi!tion $as a!"uired by the C(A Division> x x

x*03E#phasis supplied4

Mnli+e San Ro"ue and (aanito, Philexs !ase is not one of pre#ature &lin but of

late &lin. Philex did not &le any petition $ith the C(A $ithin the 1/%day period.

Philex did not also &le any petition $ith the C(A $ithin - days after the expiration

of the 1/%day period. Philex &led its 'udi!ial !lai# 'o)* ter the expiration of the

1/%day period, in fa!t )/2 days after the lapse of the 1/%day period. I) )/ee)t, eter *oer)e b/ H&r(%-r&e)ce beore, &r()*, or ter

te Atlas c%e, !('e5;% H&(c(' c'( ('' e to be reHecte bec&%e o

'te '()*. Ghether the t$o%year pres!riptive period is !ounted fro# the date of

pay#ent of the output 8A( follo$in the Atlas do!trine, or fro# the !lose of the

taxable "uarter $hen the sales attributable to the input 8A( $ere #ade follo$in

the Mirant and Aic&i do!trines, Philexs 'udi!ial !lai# $as indisputably &led late.

(he Atlas do!trine !annot save Philex fro# the late &lin of its 'udi!ial !lai#.

(he ()ct(o) of the Co##issioner on Philexs !lai# durin the 1/%day period is, byexpress provision of la$, 9dee#ed a denial9 of Philexs !lai#. Philex had - days

fro# the expiration of the 1/%day period to &le its 'udi!ial !lai# $ith the C(A.

Philexs failure to do so rendered the 9dee#ed a denial9 de!ision of the

Co##issioner &nal and inappealable. (he riht to appeal to the C(A fro# a de!ision

or 9dee#ed a denial9 de!ision of the Co##issioner is #erely a statutory privilee,not a !onstitutional riht. (he exer!ise of su!h statutory privilee re"uires stri!t













!o#plian!e $ith the !onditions atta!hed by the statute for its exer!ise.*; Philex

failed to !o#ply $ith the statutory !onditions and #ust thus bear the !onse"uen!es.

II. !re%cr(-t(e !er(o% &)er Sect(o) 112A9 ) C9

(here are three !o#pellin reasons $hy the -%day period need not ne!essarily fall

$ithin the t$o%year pres!riptive period, as lon as the ad#inistrative !lai# is &led

$ithin the t$o%year pres!riptive period.

First , Se!tion 11/3A4 !learly, plainly, and une"uivo!ally provides that the taxpayer

9#ay, (t() to 29 /er% after the !lose of the taxable "uarter $hen the sales

$ere #ade, --'/ or te (%%&)ce o t5 cre(t cert(cte or re&) of the

!reditable input tax due or paid to su!h sales.9 In short, the la$ states that the

taxpayer #ay apply $ith the Co##issioner for a refund or !redit 9(t() to 29/er%,9 (c e)% t )/t(e (t() to /er%. (hus, the appli!ation for

refund or !redit #ay be &led by the taxpayer $ith the Co##issioner on the last day

of the t$o%year pres!riptive period and it $ill still stri!tly !o#ply $ith the la$. (he

t$oyear pres!riptive period is a ra!e period in favor of the taxpayer and he !an

avail of the full period before his riht to apply for a tax refund or !redit is barred by

pres!ription.

!econd, Se!tion 11/3C4 provides that the Co##issioner shall de!ide the appli!ation

for refund or !redit 9$ithin one hundred t$enty 31/4 days fro# the date of


$ith Subse!tion 3A4.9 (he referen!e in Se!tion 11/3C4 of the sub#ission of

do!u#ents 9in support of the appli!ation &led in a!!ordan!e $ith Subse!tion A9#eans that the appli!ation in Se!tion 11/3A4 is the ad#inistrative !lai# that the

Co##issioner #ust de!ide $ithin the 1/%day period. In short, the t$o%year

pres!riptive period in Se!tion 11/3A4 refers to the period $ithin $hi!h the taxpayer

!an &le an ad#inistrative !lai# for tax refund or !redit. Stte oter(%e, te

to</er -re%cr(-t(e -er(o oe% )ot reer to te '()* o te H&(c('

c'( (t te CTA b&t to te '()* o te ()(%trt(e c'( (t te

Co(%%(o)er. As held in Aic&i, the 9phrase X$ithin t$o years x x x apply for the

issuan!e of a tax !redit or refund reer% to --'(ct(o)% or re&)cre(t (t

te CIR ) )ot to --e'% e to te CTA.9

2&ird, if the -%day period, or any part of it, is re"uired to fall $ithin the t$o%year

pres!riptive period 3e"uivalent to <- days24, then the taxpayer #ust &le his

ad#inistrative !lai# for refund or !redit $ithin the &rst 21 days of the t$o%year

pres!riptive period. Oter(%e, te '()* o te ()(%trt(e c'( be/o)te r%t 610 /% ('' re%&'t () te --e' to te CTA be()* 'e be/o)

te to</er -re%cr(-t(e -er(o. (hus, if the taxpayer &les his ad#inistrative

!lai# on the 211th day, the Co##issioner, $ith his 1/%day period, $ill have until

the <-1st day to de!ide the !lai#. If the Co##issioner de!ides only on the <-1st

day, or does not de!ide at all, the taxpayer !an no loner &le his 'udi!ial !lai# $ith

the C(A be!ause the t$o%year pres!riptive period 3e"uivalent to <- days4 haslapsed. (he -%day period ranted by la$ to the taxpayer to &le an appeal before

the C(A be!o#es utterly useless, even if the taxpayer !o#plied $ith the la$ by

&lin his ad#inistrative !lai# $ithin the t$o%year pres!riptive period.

(he theory that the -%day period #ust fall $ithin the t$o%year pres!riptive period

adds a !ondition that is not found in the la$. It results in trun!atin 1/ days fro#

the <- days that the la$ rants the taxpayer for &lin his ad#inistrative !lai# $ith

the Co##issioner. (his Court !annot interpret a la$ to defeat, $holly or even partly,a re#edy that the la$ expressly rants in !lear, plain, and une"uivo!al lanuae.

Se!tion 11/3A4 and 3C4 #ust be interpreted a!!ordin to its !lear, plain, and

une"uivo!al lanuae. (he taxpayer !an &le his ad#inistrative !lai# for refund or

!redit at )/t(e $ithin the t$o%year pres!riptive period. If he &les his !lai# on the

last day of the t$o%year pres!riptive period, his !lai# is still &led on ti#e. (he

Co##issioner $ill have 1/ days fro# su!h &lin to de!ide the !lai#. If theCo##issioner de!ides the !lai# on the 1/th day, or does not de!ide it on that day,

the taxpayer still has - days to &le his 'udi!ial !lai# $ith the C(A. (his is not only

the plain #eanin but also the only loi!al interpretation of Se!tion 11/3A4 and 3C4.

III. DE5ce%%D I)-&t VAT ) DE5ce%%(e'/D Co''ecte T5

(he input 8A( is )ot 9ex!essively9 !olle!ted as understood under Se!tion //;

be!ause t te t(e te ()-&t VAT (% co''ecte te o&)t -( (% correct

) -ro-er. (he input 8A( is a tax liability of, and leally paid by, a 8A(%reistered

seller21 of oods, properties or servi!es used as input by another 8A(%reistered

person in the sale of his o$n oods, properties, or servi!es. (his tax liability is true

even if the seller passes on the input 8A( to the buyer as part of the pur!hase pri!e.

(he se!ond 8A(%reistered person, $ho is not leally liable for the input 8A(, is the

one $ho applies the input 8A( as !redit for his o$n output 8A(. 2/ If the input 8A( is in

fa!t 9ex!essively9 !olle!ted as understood under Se!tion //;, then it is the &rst 8A(%

reistered person % the taxpayer $ho is leally liable and $ho is dee#ed to have

leally paid for the input 8A( % $ho !an as+ for a tax refund or !redit under Se!tion

//; as an ordinary refund or !redit o&t%(e of the 8A( Syste#. In su!h event, the

se!ond 8A(%reistered taxpayer $ill have no input 8A( to oset aainst his o$n

output 8A(.

In a !lai# for refund or !redit of 9ex!ess9 input 8A( under Se!tion 11374 and

Se!tion 11/3A4, the input 8A( is not 9ex!essively9 !olle!ted as understood under

Se!tion //;. At the ti#e of pay#ent of the input 8A( the a#ount paid is the !orre!t

and proper a#ount. Mnder the 8A( Syste#, there is no !lai# or issue that the input

8A( is 9ex!essively9 !olle!ted, that is, that the input 8A( paid is #ore than $hat is

leally due. (he person leally liable for the input 8A( !annot !lai# that he overpaid

the input 8A( by the #ere existen!e of an 9ex!ess9 input 8A(. (he ter# 9ex!ess9

input 8A( si#ply #eans that the input 8A( available as !redit ex!eeds the output

8A(, not that the input 8A( is ex!essively !olle!ted be!ause it is #ore than $hat is

leally due. (hus, the taxpayer $ho leally paid the input 8A( !annot !lai# for

refund or !redit of the input 8A( as 9ex!essively9 !olle!ted under Se!tion //;.

Mnder Se!tion //;, the pres!riptive period for &lin a 'udi!ial !lai# for refund is t$o

years fro# the date of pay#ent of the tax 9erroneously, x x x illeally, x x x

ex!essively or in any #anner $ronfully !olle!ted.9 (he pres!riptive period is

re!+oned fro# the date the person liable for the tax pays the tax. (hus, if the input

8A( is in fa!t 9ex!essively9 !olle!ted, that is, the person liable for the tax a!tuallypays #ore than $hat is leally due, the taxpayer #ust &le a 'udi!ial !lai# for refund

$ithin t$o years fro# his date of pay#ent. O)'/ te -er%o) 'e*''/ '(b'e to -/

te t5 c) 'e te H&(c(' c'( or re&). Te -er%o) to o te t5 (%

-%%e o) % -rt o te -&rc%e -r(ce % )o -er%o)'(t/ to 'e te

H&(c(' c'( &)er Sect(o) 22:.2-

Mnder Se!tion 11374 and Se!tion 11/3A4, the pres!riptive period for &lin a 'udi!ial

!lai# for 9ex!ess9 input 8A( is t$o years fro# the !lose of the taxable "uarter $hen

the sale $as #ade by the person leally liable to pay theoutut 8A(. (his

pres!riptive period has no relation to the date of pay#ent of the 9ex!ess9 inut 8A(.

(he 9ex!ess9 input 8A( #ay have been paid for #ore than t$o years but this does














not bar the &lin of a 'udi!ial !lai# for 9ex!ess9 8A( under Se!tion 11/3A4, $hi!h has

a dierent re!+onin period fro# Se!tion //;. oreover, the person !lai#in the

refund or !redit of the input 8A( is not the person $ho leally paid the input 8A(.

Su!h person see+in the 8A( refund or !redit does not !lai# that the input 8A( $as

9ex!essively9 !olle!ted fro# hi#, or that he paid an input 8A( that is #ore than $hatis leally due. Je is not the taxpayer $ho leally paid the input 8A(.

As its na#e i#plies, the 8alue%Added (ax syste# is a tax on the value added by thetaxpayer in the !hain of transa!tions. 5or si#pli!ity and e?!ien!y in tax !olle!tion,

the 8A( is i#posed not 'ust on the value added by the taxpayer, but on the entire

sellin pri!e of his oods, properties or servi!es. Jo$ever, the taxpayer is allo$ed arefund or !redit on the 8A( previously paid by those $ho sold hi# the inputs for his

oods, properties, or servi!es. (he net ee!t is that the taxpayer pays the 8A( only

on the value that he adds to the oods, properties, or servi!es that he a!tually sells.

Mnder Se!tion 11374, a taxpayer !an apply his input 8A( only aainst his output

8A(. (he only ex!eption is $hen the taxpayer is expressly 96ero%rated or ee!tively

6ero%rated9 under the la$, li+e !o#panies eneratin po$er throuh rene$able

sour!es of enery.2) (hus, a )o) 6ero%rated 8A(%reistered taxpayer $ho has no

output 8A( be!ause he has no sales !annot !lai# a tax refund or !redit of his unused

input 8A( under the 8A( Syste#. Even if the taxpayer has sales but his input 8A(

ex!eeds his output 8A(, he !annot see+ a tax refund or !redit of his 9ex!ess9 input

8A( under the 8A( Syste#. e c) o)'/ crr/<oer ) --'/ (% De5ce%%D

()-&t VAT *()%t (% &t&re o&t-&t VAT. If su!h 9ex!ess9 input 8A( is an

9ex!essively9 !olle!ted tax, the taxpayer should be able to see+ a refund or !reditfor su!h 9ex!ess9 input 8A( $hether or not he has output 8A(. (he 8A( Syste# does

not allo$ su!h refund or !redit. Su!h 9ex!ess9 input 8A( is not an 9ex!essively9

!olle!ted tax under Se!tion //;. (he 9ex!ess9 input 8A( is a !orre!tly and properly

!olle!ted tax. Jo$ever, su!h 9ex!ess9 input 8A( !an be applied aainst the output

8A( be!ause the 8A( is a tax i#posed only on the value added by the taxpayer. If

the input 8A( is in fa!t 9ex!essively9 !olle!ted under Se!tion //;, then it is the

person leally liable to pay the input 8A(, not the person to $ho# the tax $as

passed on as part of the pur!hase pri!e and !lai#in !redit for the input 8A( under

the 8A( Syste#, $ho !an &le the 'udi!ial !lai# under Se!tion //;.

Any suestion that the 9ex!ess9 input 8A( under the 8A( Syste# is an 9ex!essively9

!olle!ted tax under Se!tion //; #ay lead taxpayers to &le a !lai# for refund or

!redit for su!h 9ex!ess9 input 8A( under Se!tion //; as an ordinary tax refund or

!redit outside of the 8A( Syste#. Mnder Se!tion //;, #ere pay#ent of a tax beyond$hat is leally due !an be !lai#ed as a refund or !redit. (here is no re"uire#entunder Se!tion //; for an output 8A( or subse"uent sale of oods, properties, or

servi!es usin #aterials sub'e!t to input 8A(.

5ro# the plain text of Se!tion //;, it is !lear that $hat !an be refunded or !redited is

a tax that is 9erroneously, x x x illeally, x x x ex!essively or () )/ ))er

ro)*&''/ !olle!ted.9 In short, there #ust be a ro)*&' -/e)t be!ause $hat

is paid, or part of it, is not leally due. As the Court held in Mirant , Se!tion //;

should 9--'/ o)'/ to ()%t)ce% o erro)eo&% -/e)t or (''e*' co''ect(o) o

()ter)' ree)&e t5e%.9 Erroneous or $ronful pay#ent in!ludes ex!essive

pay#ent be!ause te/ '' reer to -/e)t o t5e% )ot 'e*''/ &e. Mnder the

8A( Syste#, there is no !lai# or issue that the 9ex!ess9 input 8A( is 9ex!essively or

in any #anner $ronfully !olle!ted.9 In fa!t, if the 9ex!ess9 input 8A( is an

9ex!essively9 !olle!ted tax under Se!tion //;, then the taxpayer !lai#in to applysu!h 9ex!essively9 !olle!ted input 8A( to oset his output 8A( #ay have no leal

basis to #a+e su!h osettin. (he person leally liable to pay the input 8A( !an

!lai# a refund or !redit for su!h 9ex!essively9 !olle!ted tax, and thus there $ill no

loner be any 9ex!ess9 input 8A(. (his $ill upend the present 8A( Syste# as $e

+no$ it.

I8. EKect((t/ ) Sco-e o te Atlas , 0irant ) Aichi #octr()e%

(he Atlas do!trine, $hi!h held that !lai#s for refund or !redit of input 8A( #ust

!o#ply $ith the t$o%year pres!riptive period under Se!tion //;, should be eKect(e

o)'/ ro (t% -ro&'*t(o) o) 8 &)e 200= &)t(' (t% b)o)e)t o) 12

Se-teber 2008 () 0irant . (he Atlas do!trine $as li#ited to the re!+onin of thet$o%year pres!riptive period fro# the date of pay#ent of the output 8A(. Prior to

the Atlas do!trine, the t$o%year pres!riptive period for !lai#in refund or !redit of

input 8A( should be overned by Se!tion 11/3A4 follo$in theverba legis rule.

(he Mirant rulin, $hi!h abandoned the Atlas do!trine, adopted the verba legis rule,

thus applyin Se!tion 11/3A4 in !o#putin the t$o%year pres!riptive period in

!lai#in refund or !redit of input 8A(.

(he Atlas do!trine has no relevan!e to the 1/W- day periods under Se!tion

11/3C4 be!ause the appli!ation of the 1/W- day periods $as not in issue in Atlas.

(he appli!ation of the 1/W- day periods $as &rst raised in Aic&i, $hi!h adopted

the verba legis rule in holdin that the 1/W- day periods are #andatory and

'urisdi!tional. (he lanuae of Se!tion 11/3C4 is plain, !lear, and una#biuous.

Ghen Se!tion 11/3C4 states that 9the Co##issioner shall rant a refund or issue the

tax !redit $ithin one hundred t$enty 31/4 days fro# the date of sub#ission of

!o#plete do!u#ents,9 the la$ !learly ives the Co##issioner 1/ days $ithin

$hi!h to de!ide the taxpayers !lai#. Resort to the !ourts prior to the expiration of

the 1/%day period is a patent violation of the do!trine of exhaustion of

ad#inistrative re#edies, a round for dis#issin the 'udi!ial suit due to pre#aturity.

Philippine 'urispruden!e is a$ash $ith !ases a?r#in and reiteratin the do!trine of

exhaustion of ad#inistrative re#edies.2* Su!h do!trine is basi! and ele#entary.

Ghen Se!tion 11/3C4 states that 9the taxpayer ae!ted /, $ithin thirty 3-4 days

fro# re!eipt of the de!ision denyin the !lai# or after the expiration of the one

hundred t$enty%day period, appeal the de!ision or the una!ted !lai# $ith the Court

of (ax Appeals,9 the la$ does not #a+e the 1/W- day periods optional 'ust

be!ause the la$ uses the $ord 9/.9 (he $ord 9#ay9 si#ply #eans that the

taxpayer / or / )ot --e' the de!ision of the Co##issioner $ithin - days

fro# re!eipt of the de!ision, or $ithin - days fro# the expiration of the 1/%day

period. Certainly, by no stret!h of the i#aination !an the $ord 9#ay9 be !onstrued

as #a+in the 1/W- day periods optional, allo$in the taxpayer to &le a 'udi!ial

!lai# one day after &lin the ad#inistrative !lai# $ith the Co##issioner.

(he old rule22 that the taxpayer #ay &le the 'udi!ial !lai#, $ithout $aitin for the

Co##issioners de!ision if the t$o%year pres!riptive period is about to expire,

!annot apply be!ause that rule $as adopted before the ena!t#ent of the -%dayperiod. Te 30</ -er(o % o-te -rec(%e'/ to o / (t te o'

r&'e, %o tt &)er te VAT S/%te te t5-/er ('' '/% e 30 /%

to 'e te H&(c(' c'( ee) ( te Co(%%(o)er ct% o)'/ o) te 120t

/, or oe% )ot ct t '' &r()* te 120</ -er(o. Gith the -%day period

al$ays available to the taxpayer, the taxpayer !an no loner &le a 'udi!ial !lai# for

refund or !redit of input 8A( $ithout $aitin for the Co##issioner to de!ide until the

expiration of the 1/%day period.









(o repeat, a !lai# for tax refund or !redit, li+e a !lai# for tax exe#ption, is

!onstrued stri!tly aainst the taxpayer. One of the !onditions for a 'udi!ial !lai# of

refund or !redit under the 8A( Syste# is !o#plian!e $ith the 1/W- day

#andatory and 'urisdi!tional periods. (hus, stri!t !o#plian!e $ith the 1/W- day

periods is ne!essary for su!h a !lai# to prosper, $hether before, durin, or after theee!tivity of the Atlas do!trine, ex!ept for the period fro# the issuan!e of 7IR Rulin

No. DA%)0;%- on 1 De!e#ber /- to 2 O!tober /1 $hen the Aic&i do!trine $as

adopted, $hi!h aain reinstated the 1/W- day periods as #andatory and

'urisdi!tional.

8. Ree)&e Meor)& C(rc&'r No. 4:<03 RMC 4:<039 te 1> A-r('2003

(here is nothin in RC );%- that states, expressly or i#pliedly, that the taxpayer

need not $ait for the 1/%day period to expire before &lin a 'udi!ial !lai# $ith the

C(A. RC );%- #erely authori6es the 7IR to !ontinue pro!essin the ad#inistrative

!lai# even after the taxpayer has &led its 'udi!ial !lai#, $ithout sayin that the

taxpayer !an &le its 'udi!ial !lai# before the expiration of the 1/%day period. RC

);%- states@ 9In !ases $here the taxpayer has &led a XPetition for Revie$ $ith the

Court of (ax Appeals involvin a !lai# for refund:(CC that is pendin at the

ad#inistrative aen!y 3either the 7ureau of Internal Revenue or the One% Stop Shop

Inter%Aen!y (ax Credit and Duty Dra$ba!+ Center of the Depart#ent of 5inan!e4,

the ad#inistrative aen!y and the !ourt #ay a!t on the !ase separately.9 (hus, if

the taxpayer &les its 'udi!ial !lai# before the expiration of the 1/%day period, the

7IR $ill nevertheless !ontinue to a!t on the ad#inistrative !lai# be!ause su!hpre#ature &lin !annot divest the Co##issioner of his statutory po$er and

'urisdi!tion to de!ide the ad#inistrative !lai# $ithin the 1/%day period.

On the other hand, if the taxpayer &les its 'udi!ial !lai# after the 1/% day period,

the Co##issioner !an still !ontinue to evaluate the ad#inistrative !lai#. (here is

nothin ne$ in this be!ause even after the expiration of the 1/%day period, the

Co##issioner should still evaluate internally the ad#inistrative !lai# for purposes

of opposin the taxpayers 'udi!ial !lai#, or even for purposes of deter#inin if the

7IR should a!tually !on!ede to the taxpayers 'udi!ial !lai#. (he internal

ad#inistrative evaluation of the taxpayers !lai# #ust necessaril5 !ontinue to

enable the 7IR to oppose intelliently the 'udi!ial !lai# or, if the fa!ts and the la$

$arrant other$ise, for the 7IR to !on!ede to the 'udi!ial !lai#, resultin in the

ter#ination of the 'udi!ial pro!eedins.

@t (% (-ort)t, % r % te -re%e)t c%e% re co)cer)e, (% tt te

ere '()* b/ t5-/er o H&(c(' c'( (t te CTA beore te

e5-(rt(o) o te 120</ -er(o c))ot o-erte to (e%t te

Co(%%(o)er o (% H&r(%(ct(o) to ec(e ) ()(%trt(e c'( (t()te 120</ )tor/ -er(o,unless te Co(%%(o)er % c'er'/ *(e)

c&%e or e7&(tb'e e%to--e' to --'/ % e5-re%%'/ reco*)(+e () Sect(o)

246 o te T5 Coe.2<

8I. BIR R&'()* No. #A<48:<03 te 10 #eceber 2003

7IR Rulin No. DA%)0;%- does provide a valid !lai# for e"uitable estoppel under

Se!tion /)2 of the (ax Code. 7IR Rulin No. DA%)0;%- e%pressl7 states that the

9t5-/er<c'()t )ee )ot (t or te '-%e o te 120</ -er(o

beore (t co&' %ee H&(c(' re'(e (t te CTA b/ / o !et(t(o) or

Re(e.9 Prior to this rulin, the 7IR held, as sho$n by its position in the Court of

Appeals,20 that the expiration of the 1/%day period is #andatory and 'urisdi!tional

before a 'udi!ial !lai# !an be &led.

(here is no dispute that the 1/%day period is #andatory and 'urisdi!tional, and that

the C(A does not a!"uire 'urisdi!tion over a 'udi!ial !lai# that is &led before the

expiration of the 1/%day period. (here are, ho$ever, t$o ex!eptions to this rule.

(he &rst ex!eption is if the Co##issioner, throuh a spe!i&! rulin, #isleads a

parti!ular taxpayer to pre#aturely &le a 'udi!ial !lai# $ith the C(A. Su!h spe!i&!rulin is appli!able only to su!h parti!ular taxpayer. (he se!ond ex!eption is $here

the Co##issioner, t&roug& a general interpretative rule issued under Se!tion ) of

the (ax Code, #isleads all taxpayers into &lin pre#aturely 'udi!ial !lai#s $ith theC(A. In these !ases, the Co##issioner !annot be allo$ed to later on "uestion the

C(As assu#ption of 'urisdi!tion over su!h !lai# sin!e e"uitable estoppel has set in

as expressly authori6ed under Se!tion /)2 of the (ax Code.

Se!tion ) of the (ax Code, a ne provision introdu!ed by RA 0)/), expressly rants

to the Co##issioner the po$er to interpret tax la$s, thus@

Se!. ). 3oer of t&e Commissioner 2o Interpret 2a% as and 2o 5ecide 2a% Cases .

T (he po$er to interpret the provisions of this Code and other tax la$s shall be

under the ex!lusive and oriinal 'urisdi!tion of the Co##issioner, sub'e!t to revie$

by the Se!retary of 5inan!e.

(he po$er to de!ide disputed assess#ents, refunds of internal revenue taxes, fees

or other !hares, penalties i#posed in relation thereto, or other #atters arisin

under this Code or other la$s or portions thereof ad#inistered by the 7ureau of Internal Revenue is vested in the Co##issioner, sub'e!t to the ex!lusive appellate

'urisdi!tion of the Court of (ax Appeals.

Sin!e the Co##issioner has e5c'&%(e ) or(*()' H&r(%(ct(o) to ()ter-ret t5

'%, taxpayers a!tin in ood faith should not be #ade to suer for adherin to

eneral interpretative rules of the Co##issioner interpretin tax la$s, should su!h

interpretation later turn out to be erroneous and be reversed by the Co##issioner

or this Court. Indeed, Se!tion /)2 of the (ax Code expressly provides that a reversal

of a 7IR reulation or rulin !annot adversely pre'udi!e a taxpayer $ho in ood faith

relied on the 7IR reulation or rulin prior to its reversal. Se!tion /)2 provides as

follo$s@

Se!. /)2. /on'Retroactivit7 of Rulings. T Any revo!ation, #odi&!ation or reversal of

any of the r&'e% ) re*&'t(o)% pro#ulated in a!!ordan!e $ith the pre!edinSe!tions or any of the rulins or !ir!ulars pro#ulated by the Co##issioner %''

)ot be *(e) retroct(e --'(ct(o) ( te reoct(o), o(ct(o) or

reer%' ('' be -reH&(c(' to te t5-/er%, ex!ept in the follo$in !ases@

3a4 Ghere the taxpayer deliberately #isstates or o#its #aterial fa!ts fro# his return

or any do!u#ent re"uired of hi# by the 7ureau of Internal Revenue>

3b4 Ghere the fa!ts subse"uently athered by the 7ureau of Internal Revenue are

#aterially dierent fro# the fa!ts on $hi!h the rulin is based> or

3!4 Ghere the taxpayer a!ted in bad faith. 3E#phasis supplied4

(hus, a eneral interpretative rule issued by the Co##issioner #ay be relied upon

by taxpayers fro# the ti#e the rule is issued up to its reversal by the Co##issioner

or this Court. Se!tion /)2 is not li#ited to a reversal only by the Co##issioner









be!ause this Se!tion expressly states, 9 An5 revo!ation, #odi&!ation or reversal9

$ithout spe!ifyin $ho #ade the revo!ation, #odi&!ation or reversal. Jen!e, a

reversal by this Court is !overed under Se!tion /)2.

(axpayers should not be pre'udi!ed by an erroneous interpretation by the

Co##issioner, parti!ularly on a di?!ult "uestion of la$. (he abandon#ent of

the Atlas do!trine by Mirant and Aic&i2; is proof that the re!+onin of the pres!riptive

periods for input 8A( tax refund or !redit is a di?!ult "uestion of la$. (heabandon#ent of the Atlasdo!trine did not result in Atlas, or other taxpayers si#ilarly

situated, bein #ade to return the tax refund or !redit they re!eived or !ould have

re!eived under Atlas prior to its abandon#ent. (his Court isapplyin Mirant and Aic&iprospe!tively. Absent fraud, bad faith or #isrepresentation,

the reversal by this Court of a eneral interpretative rule issued by the

Co##issioner, li+e the reversal of a spe!i&! 7IR rulin under Se!tion /)2, should

also apply prospe!tively. As held by this Court in CIR v. 3&ilippine -ealt& Care

3roviders, Inc.@<

In AB!'CB/ Broadcasting Corp. v. Court of 2a% Appeals, this Court held that under

Se!tion /)2 of the 1;;< (ax Code, te Co(%%(o)er o I)ter)' Ree)&e (%

-rec'&e ro o-t()* -o%(t(o) co)trr/ to o)e -re(o&%'/ te) ere

()H&%t(ce o&' re%&'t to te t5-/er. Jen!e, $here an assess#ent for

de&!ien!y $ithholdin in!o#e taxes $as #ade, three years after a ne$ 7IR Cir!ular

reversed a previous one upon $hi!h the taxpayer had relied upon, su!h an

assess#ent $as pre'udi!ial to the taxpayer. (o rule other$ise, opined the Court,

$ould be !ontrary to the tenets of ood faith, e"uity, and fair play.

(his Court has !onsistently rea?r#ed its rulin in AB!'CB/ Broadcasting

Corp."@p&i" in the later !ases of Commissioner of Internal Revenue v. Borroug&s,td., Commissioner of Internal Revenue v. Mega 1en. Mdsg. Corp ., Commissioner of Internal Revenue v. 2elefunen !emiconductor 83&ils.9 Inc ., and Commissioner of Internal Revenue v. Court of Appeals. Te r&'e (% tt te BIR r&'()*% e )o

retroct(e eKect ere *ro%%'/ &)(r e' o&' re%&'t to te -reH&(ce

o te t5-/er, % () t(% c%e.

ore re!ently, in Commissioner of Internal Revenue v. Benguet Corporation, $herein

the taxpayer $as entitled to tax refunds or !redits based on the 7IRs o$n issuan!es

but later $as suddenly saddled $ith de&!ien!y taxes due to its subse"uent rulin

!hanin the !ateory of the taxpayers transa!tions for the purpose of payin its

8A(, this Court ruled that applyin su!h rulin retroa!tively $ould be pre'udi!ial to

the taxpayer. 3E#phasis supplied4

(hus, the only issue is $hether 7IR Rulin No. DA%)0;%- is a eneral interpretative

rule appli!able to all taxpayers or a spe!i&! rulin appli!able only to a parti!ular

taxpayer.

7IR Rulin No. DA%)0;%- is a eneral interpretative rule be!ause it $as a response

to a "uery #ade, not by a parti!ular taxpayer, but by a overn#ent aen!y tas+ed

$ith pro!essin tax refunds and !redits, that is, the O)e Sto- So- I)ter<A*e)c/

T5 Cre(t ) #rbc Ce)ter o te #e-rte)t o F())ce. (hisovern#ent aen!y is also the addressee, or the entity responded to, in 7IR Rulin

No. DA%)0;%-. (hus, $hile this overn#ent aen!y #entions in its "uery to the

Co##issioner the ad#inistrative !lai# of a6i 7ay Resour!es Develop#ent, In!., the

aen!y $as in fa!t as+in the Co##issioner $hat to do in !ases li+e the tax !lai# of

a6i 7ay Resour!es Develop#ent, In!., $here the taxpayer did not $ait for the lapseof the 1/%day period.

Clearly, 7IR Rulin No. DA%)0;%- is a eneral interpretative rule. (hus, all taxpayers

!an rely on 7IR Rulin No. DA%)0;%- fro# the ti#e of its issuan!e on 1 De!e#ber

/- up to its reversal by this Court in Aic&i on 2 O!tober /1, $here this Court

held that the 1/W- day periods are #andatory and 'urisdi!tional

Jo$ever, 7IR Rulin No. DA%)0;%- !annot be iven retroa!tive ee!t for four

reasons@ ?rst , it is ad#ittedly an erroneous interpretation of the la$> second, prior to

its issuan!e, the 7IR held that the 1/%day period $as #andatory and 'urisdi!tional,$hi!h is the !orre!t interpretation of the la$> t&ird, prior to its issuan!e, no taxpayer

!an !lai# that it $as #isled by the 7IR into &lin a 'udi!ial !lai# pre#aturely>

and fourt&, a !lai# for tax refund or !redit, li+e a !lai# for tax exe#ption, is stri!tly!onstrued aainst the taxpayer.

San Ro"ue, therefore, !annot bene&t fro# 7IR Rulin No. DA%)0;%- be!ause it &led

its 'udi!ial !lai# pre#aturely on 1 April /-, before the issuan!e of 7IR Rulin

No. DA%)0;%- on 1 De!e#ber /-. (o repeat, San Ro"ue !annot !lai# that it $as

#isled by the 7IR into &lin its 'udi!ial !lai# pre#aturely be!ause 7IR Rulin No. DA%

)0;%- $as issued only after San Ro"ue &led its 'udi!ial !lai#. At the ti#e San

Ro"ue &led its 'udi!ial !lai#, the la$ as applied and ad#inistered by the 7IR $as

that the Co##issioner had 1/ days to a!t on ad#inistrative !lai#s. (his $as in

fa!t the position of the 7IR prior to the issuan!e of 7IR Rulin No. DA%)0;%

-. I)ee, S) Ro7&e )eer c'(e te be)et o BIR R&'()* No. #A<48:<

03 or RMC 4:<03, eter () t(% Co&rt, te CTA, or beore te

Co(%%(o)er.

(aanito, ho$ever, &led its 'udi!ial !lai# $ith the C(A on 1) 5ebruary

/<, after the issuan!e of 7IR Rulin No. DA%)0;%- on 1 De!e#ber /-. (ruly,

(aanito !an !lai# that in &lin its 'udi!ial !lai# pre#aturely $ithout $aitin for the

1/%day period to expire, it $as #isled by 7IR Rulin No. DA%)0;%-. (hus, (aanito

!an !lai# the bene&t of 7IR Rulin No. DA%)0;%-, $hi!h shields the &lin of its

'udi!ial !lai# fro# the vi!e of pre#aturity.

Philexs situation is not a !ase of pre#ature &lin of its 'udi!ial !lai# but of late

&lin, indeed ver7 late &lin. 7IR Rulin No. DA%)0;%- allo$ed pre#ature &lin of a

'udi!ial !lai#, $hi!h #eans non%exhaustion of the 1/%day period for the

Co##issioner to a!t on an ad#inistrative !lai#. Philex !annot !lai# the bene&t of

7IR Rulin No. DA%)0;%- be!ause Philex did not &le its 'udi!ial !lai# pre#aturely

but &led it lon after the lapse of the -%day period o''o()* te e5-(rt(o) o

te 120</ -er(o. In fa!t, Philex &led its 'udi!ial !lai# )/2 days after the lapse

of the -%day period.

8II. E5(%t()* &r(%-r&e)ce

(here is no basis $hatsoever to the !lai# that in &ve !ases this Court had already

#ade a rulin that the &lin dates of the ad#inistrative and 'udi!ial !lai#s are

in!onse"uential, as lon as they are $ithin the t$o%year pres!riptive period. (he

ee!t of the !lai# of the dissentin opinions is that San Ro"ues failure to $ait for

the 1/%day #andatory period to lapse is in!onse"uential, thus allo$in San Ro"ue

to !lai# the tax refund or !redit. Jo$ever, the &ve !ases !ited by the dissentinopinions do not support even re#otely the !lai# that this Court had already #ade

su!h a rulin. No)e o te%e e c%e% e)t(o), c(te, (%c&%%, r&'e or ee)

()t tt co-'()ce (t te 120</ )tor/ -er(o (% ()co)%e7&e)t('

% 'o)* % te ()(%trt(e ) H&(c(' c'(% re 'e (t() te to<

/er -re%cr(-t(e -er(o.









In CIR v. 2os&iba Information Euipment 83&ils.9, Inc.,<1 the issue $as $hether any

output 8A( $as a!tually passed on to (oshiba that it !ould !lai# as input 8A( sub'e!t

to tax !redit or refund. (he Co##issioner arued that 9althouh (oshiba #ay be a

8A(%reistered taxpayer, it is not enaed in a 8A(%taxable business.9 (he

Co##issioner !ited Se!tion ).12%1 of Revenue Reulations No. <* that 9refund of input taxes on !apital oods shall be allo$ed only to the extent that su!h !apital

oods are used in 8A(%taxable business.9 In the $ords of the Court, 9Mlti#ately,

ho$ever, the issue still to be resolved herein shall be $hether respondent (oshiba is

entitled to the tax !redit:refund of its input 8A( on its pur!hases of !apital oods and

servi!es, to $hi!h this Court ans$ers in the a?r#ative.9 No$here in this !ase did

the Court dis!uss, state, or rule that the &lin dates of the ad#inistrative and 'udi!ial !lai#s are in!onse"uential, as lon as they are $ithin the t$o%year

pres!riptive period.

In Intel 2ec&nolog7 3&ilippines, Inc. v. CIR,</ the Court stated@ 9(he issues to be

resolved in the instant !ase are 314 $hether the absen!e of the 7IR authority to print

or the absen!e of the (IN%8 in petitioners export sales invoi!es operates to forfeit its

entitle#ent to a tax refund:!redit of its unutili6ed input 8A( attributable to its 6ero%

rated sales> and 3/4 $hether petitioners failure to indi!ate 9(IN%89 in its sales

invoi!es auto#ati!ally invalidates its !lai# for a tax !redit !erti&!ation.9 Aain,

no$here in this !ase did the Court dis!uss, state, or rule that the &lin dates of the

ad#inistrative and 'udi!ial !lai#s are in!onse"uential, as lon as they are $ithin the

t$o%year pres!riptive period.

In A2*2 Communications !ervices 3&ilippines, Inc. v. CIR,

<-

the Court stated@ 9x x xthe C(A 5irst Division, !on!edin that petitioners transa!tions fall under the

!lassi&!ation of 6ero%rated sales, nevertheless denied petitioners !lai# Xor 'c o

%&b%t)t(t(o), x x x.9 (he Court "uoted the rulin of the 5irst Division that 9'(

VAT oc(' rece(-t%, ) )ot ere %'e ()o(ce%, %o&' e bee)

%&b(tte9 by petitioner to substantiate its !lai#. (he Court further stated@ 9x x x

the C(A En Banc, x x x a?r#ed x x x the C(A 5irst Division,9 and 9petitioners #otion

for re!onsideration havin been denied x x x, the present petition for revie$ $as

&led.9 Clearly, the sole issue in this !ase is $hether petitioner !o#plied $ith the

substantiation re"uire#ents in !lai#in for tax refund or !redit. Aain, no$here in

this !ase did the Court dis!uss, state, or rule that the &lin dates of the

ad#inistrative and 'udi!ial !lai#s are in!onse"uential, as lon as they are $ithin the

t$o%year pres!riptive period.

In CIR v. Ironcon Builders and 5evelopment Corporation ,

<)

the Court put the issue inthis #anner@ 9Si#ply put, the sole issue the petition raises is $hether or not the C(Aerred in rantin respondent Iron!ons appli!ation for refund of its e5ce%% !reditable

8A( $ithheld.9 (he Co##issioner arued that 9sin!e the NIRC does not spe!i&!ally

rant taxpayers the option to refund e5ce%% !reditable 8A( $ithheld, it follo$s that

su!h refund !annot be allo$ed.9 (hus, this !ase is solely about $hether the taxpayer

has the riht under the NIRC to as+ for a !ash refund of e5ce%% !reditable 8A(

$ithheld. Aain, no$here in this !ase did the Court dis!uss, state, or rule that the

&lin dates of the ad#inistrative and 'udi!ial !lai#s are in!onse"uential, as lon as

they are $ithin the t$o%year pres!riptive period.

In CIR v. Cebu 2o7o Corporation,<* the issue $as $hether Cebu (oyo $as exe#pt or

sub'e!t to 8A(. Co#plian!e $ith the 1/%day period $as never an issue in Cebu2o7o. As the Court explained@

7oth the Co##issioner of Internal Revenue and the O?!e of the Soli!itor Leneral

arue that respondent Cebu (oyo Corporation, as a PEA%reistered enterprise, (%

e5e-t ro )t(o)' ) 'oc' t5e%, ()c'&()* VAT, under Se!tion /) of Rep.

A!t No. <;12 and Se!tion 1; of the NIRC. (hus, they !ontend that respondent Cebu

(oyo Corporation is not entitled to any refund or !redit on input taxes it previouslypaid as provided under Se!tion ).1-%1 of Revenue Reulations No. <%;*,

not$ithstandin its reistration as a 8A( taxpayer. 5or petitioner !lai#s that said

reistration $as erroneous and did not !onfer upon the respondent any riht to

!lai# re!onition of the input tax !redit.

(he respondent !ounters that it availed of the in!o#e tax holiday under E.O. No. //2for four years fro# Auust <, 1;;* #a+in it exe#pt fro# in!o#e tax but not fro#

other taxes su!h as 8A(. e)ce, ccor()* to re%-o)e)t, (t% e5-ort %'e% re

)ot e5e-t ro VAT, co)trr/ to -et(t(o)er;% c'(, b&t (t% e5-ort %'e% (%

%&bHect to 0 VAT. oreover, it arues that it $as able to establish throuh a

report !erti&ed by an independent Certi&ed Publi! A!!ountant that the input taxes it

in!urred fro# April 1, 1;;2 to De!e#ber -1, 1;;< $ere dire!tly attributable to its

export sales. Sin!e it did not have any output tax aainst $hi!h said input taxes #ay

be oset, it had the option to &le a !lai# for refund:tax !redit of its unutili6ed input

taxes.

Considerin the sub#ission of the parties and the eviden!e on re!ord, $e &nd the

petition bereft of #erit.

!et(t(o)er;% co)te)t(o) tt re%-o)e)t (% )ot e)t(t'e to re&) or be()*

e5e-t ro VAT (% &)te)b'e. (his aru#ent turns a blind eye to the &s!al

in!entives ranted to PEA%reistered enterprises under Se!tion /- of Rep. A!t No.

<;12. Note that under said statute, the respondent had t$o options $ith respe!t to

its tax burden. It !ould avail of an in!o#e tax holiday pursuant to provisions of E.O.

No. //2, thus exe#pt it fro# in!o#e taxes for a nu#ber of years but not fro# other

internal revenue taxes su!h as 8A(> or it !ould avail of the tax exe#ptions on all

taxes, in!ludin 8A( under P.D. No. 22 and pay only the preferential tax rate of *U

under Rep. A!t No. <;12. 7oth the Court of Appeals and the Court of (ax Appeals

found that respondent availed of the in!o#e tax holiday for four 3)4 years startin

fro# Auust <, 1;;*, as !learly ree!ted in its 1;;2 and 1;;< Annual Corporate

In!o#e (ax Returns, $here respondent spe!i&ed that it $as availin of the tax relief

under E.O. No. //2. e)ce, re%-o)e)t (% )ot e5e-t ro VAT ) (t

correct'/ re*(%tere (t%e' % VAT t5-/er. I) )e, (t (% e)**e ()

t5b'e rter t) e5e-t tr)%ct(o)%. 3E#phasis supplied4

C'er'/, te (%%&e () Cebu To5o % eter te t5-/er % e5e-t ro

VAT or %&bHect to VAT t 0 t5 rte . If sub'e!t to U 8A( rate, the taxpayer

!ould !lai# a refund or !redit of its input 8A(. Aain, no$here in this !ase did theCourt dis!uss, state, or rule that the &lin dates of the ad#inistrative and 'udi!ial

!lai#s are in!onse"uential, as lon as they are $ithin the t$o%year pres!riptive

period.

Ghile this Court stated in the narration of fa!ts in Cebu 2o7o that the taxpayer 9did

not bother to $ait for the Resolution of its 3ad#inistrative4 !lai# by the CIR9 before

&lin its 'udi!ial !lai# $ith the C(A, this issue $as not raised before the Court.

Certainly, this state#ent of the Court is not a bindin pre!edent that the taxpayer

need not $ait for the 1/%day period to lapse.
















A)/ (%%&e, eter r(%e or )ot b/ te -rt(e%, but not assed uon b5

the Court6 oe% )ot e )/ '&e % -recee)t . As this Court has explained

as early as 1;/2@

It is !ontended, ho$ever, that the "uestion before us $as ans$ered and resolved

aainst the !ontention of the appellant in the !ase of Bautista vs. Faardo 3-0 Phil.

2/)4. In that !ase no "uestion $as raised nor $as it even suested that said

se!tion /12 did not apply to a publi! o?!er. (hat "uestion $as not dis!ussed norreferred to by any of the parties interested in that !ase. It has been fre"uently

de!ided that the fa!t that a statute has been a!!epted as valid, and invo+ed and

applied for #any years in !ases $here its validity $as not raised or passed on, doesnot prevent a !ourt fro# later passin on its validity, $here that "uestion is s"uarely

and properly raised and presented. @ere 7&e%t(o) -%%e% te Co&rt sub

silentio, te c%e () (c te 7&e%t(o) % %o -%%e (% )ot b()()* o)

te Co&rt 0c#irr vs! 7amilton and Abreu, 30 !('. >639, )or %o&' (t be

co)%(ere % -recee)t. 3D.!. vs. /oriega and 2obias, -1 Phil. -1> C&icote vs. Acasio, -1 Phil. )1> D.!. vs. More, - Cran!h M.S.F 1*;, 1</> D.!. vs. !anges, 1))

M.S. -1, -1;> Cross vs. Bure, 1)2 M.S. 0/.4 5or the reasons iven in the !ase

of Mc1irr vs. -amilton and Abreu, supra, the de!ision in the !ase of Bautista vs.Faardo, supra, !an have no bindin for!e in the interpretation of the "uestion

presented here.<2 3E#phasis supplied4

In Cebu 2o7o, the nature of the 1/%day period, $hether it is #andatory or optional,

$as not even raised as an issue by any of the parties. Te Co&rt )eer -%%e

&-o) t(% (%%&e. (hus, Cebu 2o7o does not !onstitute bindin pre!edent on thenature of the 1/%day period.

(here is also the !lai# that there are nu#erous C(A de!isions alleedly supportin

the aru#ent that the &lin dates of the ad#inistrative and 'udi!ial !lai#s are

in!onse"uential, as lon as they are $ithin the t$o%year pres!riptive period. Su?!e

it to state that C(A de!isions do not !onstitute pre!edents, and do not bind this

Court or the publi!. (hat is $hy C(A de!isions are appealable to this Court, $hi!h

#ay a?r#, reverse or #odify the C(A de!isions as the fa!ts and the la$ #ay

$arrant. Only de!isions of this Court !onstitute bindin pre!edents, for#in part of

the Philippine leal syste#.<< As held by this Court in 2&e 3&ilippine Veterans A=airs

)ce v. !egundo@<0

x x x et it be ad#onished that de!isions of the Supre#e Court 9applyin or

interpretin the la$s or the Constitution . . . for# part of the leal syste# of the

Philippines,9 and, as it $ere, 9la$s9 by their o$n riht be!ause they interpret $hat

the la$s say or #ean. U)'(e r&'()*% o te 'oer co&rt%, (c b() te

-rt(e% to %-ec(c c%e% 'o)e, o&r H&*e)t% re &)(er%' () te(r %co-e

) --'(ct(o), ) e7&''/ )tor/ () crcter. et it be $arned that todefy our de!isions is to !ourt !onte#pt. 3E#phasis supplied4

(he sa#e basi! do!trine $as reiterated by this Court in 5e Mesa v. 3epsi Cola3roducts 3&ils., Inc.@<;

(he prin!iple of stare decisis et non uieta movere is entren!hed in Arti!le 0 of theCivil Code, to $it@

AR(. 0. udi!ial de!isions applyin or interpretin the la$s or the Constitution shall

for# a part of the leal syste# of the Philippines.

It en'oins adheren!e to 'udi!ial pre!edents. It re7&(re% o&r co&rt% to o''o

r&'e 're/ e%tb'(%e () )' ec(%(o) o te S&-ree Co&rt. (hat

de!ision be!o#es a 'udi!ial pre!edent to be follo$ed in subse"uent !ases by all

!ourts in the land. (he do!trine of stare decisis is based on the prin!iple that on!e a

"uestion of la$ has been exa#ined and de!ided, it should be dee#ed settled and!losed to further aru#ent. 3E#phasis supplied4

8III. Ree)&e Re*&'t(o)% No. =<:> EKect(e 1 )&r/ 1::6

Se!tion ).12%/3!4 of Revenue Reulations No. <%;*, by its o$n express ter#s,

applies only if the taxpayer &les the 'udi!ial !lai# 9after 9 the lapse of the 2%dayperiod, a period $ith $hi!h San Ro"ue failed to !o#ply. U)er Sect(o) 4.106<2c9,

te 60</ -er(o (% %t('' )tor/ ) H&r(%(ct(o)'.

oreover, it is a hornboo+ prin!iple that a prior ad#inistrative reulation

!an never prevail over a later !ontrary la$, #ore so in this !ase $here the later la$

$as ena!ted pre!isely to a#end the prior ad#inistrative reulation and the la$ it

i#ple#ents.

(he la$s and reulation involved are as follo$s@

1:== T5 Coe, % e)e b/ Re-&b'(c Act No. ==16 1::49

Se!. 12. Refunds or ta% credits of creditable input tax. T

3a4 x x x x

3d4 Period $ithin $hi!h refund or tax !redit of input tax shall be #ade % In proper

!ases, the Co##issioner shall rant a refund or issue the tax !redit for !reditable

input taxes (t() %(5t/ 609 /% fro# the date of sub#ission of !o#plete

do!u#ents in support of the appli!ation &led in a!!ordan!e $ith subpararaphs 3a4

and 3b4 hereof. I) c%e o full or partial denial of the !lai# for tax refund or tax

!redit, or te ('&re o) te -rt o te Co(%%(o)er to ct o) te--'(ct(o) (t() te -er(o -re%cr(be boe, te t5-/er Kecte /,

(t() t(rt/ 309 /% ro rece(-t o te ec(%(o) e)/()* te c'( or

ter te e5-(rt(o) o te %(5t/</ -er(o, --e' te ec(%(o) or te

&)cte c'( (t te Co&rt o T5 A--e'% .

Ree)&e Re*&'t(o)% No. =<:> 1::69

Se!tion ).12%/. Pro!edures for !lai#in refunds or tax !redits of input tax T 3a4 x xx

x x x x

3!4 Period $ithin $hi!h refund or tax !redit of input taxes shall be #ade. T In proper

!ases, the Co##issioner shall rant a tax !redit:refund for !reditable input taxes

$ithin sixty 324 days fro# the date of sub#ission of !o#plete do!u#ents in support

of the appli!ation &led in a!!ordan!e $ith subpararaphs 3a4 and 3b4 above.

In !ase of full or partial denial of the !lai# for tax !redit:refund as de!ided by the

Co##issioner of Internal Revenue, the taxpayer #ay appeal to the Court of (axAppeals $ithin thirty 3-4 days fro# the re!eipt of said denial, other$ise the de!ision

$ill be!o#e &nal. Jo$ever, ( )o ct(o) o) te c'( or t5 cre(tre&) %

bee) te) b/ te Co(%%(o)er o I)ter)' Ree)&e after the si1t5 8.9:da5 eriod ro te te o %&b(%%(o) o te --'(ct(o) b&t beore te
















'-%e o te to 29 /er -er(o ro te te o '()* o te VAT ret&r) or

te t5b'e 7&rter, te t5-/er / --e' to te Co&rt o T5 A--e'% .

x x x x

1::= T5 Coe

Se!tion 11/. Refunds or 2a% Credits of Input 2a% T

3A4 x x x

x x x x

3D4 3eriod it&in &ic& Refund or 2a% Credit of Input 2a%es s&all be made . T In

proper !ases, the Co##issioner shall rant the refund or issue the tax !redit

!erti&!ate for !reditable input taxes (t() o)e &)re te)t/ 1209 /% fro#

the date of sub#ission of !o#plete do!u#ents in support of the appli!ation &led in

a!!ordan!e $ith Subse!tions 3A4 and 374 hereof.

I) c%e o &'' or -rt(' e)(' o te c'( or t5 re&) or t5 cre(t, or

te ('&re o) te -rt o te Co(%%(o)er to ct o) te --'(ct(o) (t()

te -er(o -re%cr(be boe, te t5-/er Kecte /, (t() t(rt/ 309

/% ro te rece(-t o te ec(%(o) e)/()* te c'( or ter te

e5-(rt(o) o te &)re te)t/ /<-er(o, --e' te ec(%(o) or te

&)cte c'( (t te Co&rt o T5 A--e'%.

(here !an be no dispute that under Se!tion 123d4 of the 1;<< (ax Code, as

a#ended by RA <<12, the Co##issioner has a 2%day period to a!t on the

ad#inistrative !lai#. T(% 60</ -er(o (% )tor/ ) H&r(%(ct(o)'.

Did Se!tion ).12%/3!4 of Revenue Reulations No. <%;* !hane this, so that the 2%

day period is no loner #andatory and 'urisdi!tionalY (he obvious ans$er is no.

Se!tion ).12%/3!4 itself expressly states that if, 9after the si1t5 8.9: da5

eriod6; the Co##issioner fails to a!t on the ad#inistrative !lai#, the taxpayer

#ay &le the 'udi!ial !lai# even 9before the lapse of the t$o 3/4 year period.9 T&%,

&)er Sect(o) 4.106<2c9 te 60</ -er(o (% %t('' )tor/ )

H&r(%(ct(o)'.

Se!tion ).12%/3!4 did not !hane Se!tion 123d4 as a#ended by RA <<12, but

#erely i#ple#ented it, for t$o reasons. First , Sect(o) 4.106<2c9 %t('' e5-re%%'/re7&(re% co-'()ce (t te 60</ -er(o. (his !annot be disputed."@p&i"

!econd, under the novel a#end#ent introdu!ed by RA <<12, #ere ()ct(o) by the

Co##issioner durin the 2%day period is eee e)(' of the !lai#. (hus,

Se!tion ).12%/3!4 states that 9if no a!tion on the !lai# for tax refund:!redit has

been ta+en by the Co##issioner after the si1t5 8.9: da5 eriod69 the taxpayer

9/9 already &le the 'udi!ial !lai# even long before the lapse of the t$o%year

pres!riptive period. Prior to the a#end#ent by RA <<12, the taxpayer had to $aituntil the t$o%year pres!riptive period $as bo&t to e5-(re if the Co##issioner did

not a!t on the !lai#.0 Gith the a#end#ent by RA <<12, the taxpayer need not $ait

until the t$o%year pres!riptive period is about to expire before &lin the 'udi!ial

!lai# be!ause #ere ina!tion by the Co##issioner durin the 2%day period is

dee#ed a denial of the !lai#. T(% (% te e)()* o te -r%e Db&t beore

te '-%e o te to 29 /er -er(oD () Sect(o) 4.106<2c9 . As Se!tion ).12%/3!4 reiterates that the 'udi!ial !lai# !an be &led only 9after the si1t5 8.9: da5

eriod6; this period re#ains #andatory and 'urisdi!tional. Clearly, Se!tion ).12%

/3!4 did not a#end Se!tion 123d4 but #erely faithfully i#ple#ented it.

Even assu#in, for the sa+e of aru#ent, that Se!tion ).12%/3!4 of Revenue

Reulations No. <%;*, an ad#inistrative issuan!e, a#ended Se!tion 123d4 of the

(ax Code to #a+e the period iven to the Co##issioner non%#andatory, still the

1;;< (ax Code, a #u!h later la$, reinstated the oriinal intent and provision of

Se!tion 123d4 by extendin the 2%day period to 1/ days and re<o-t()* teor(*()' or()*% o Sect(o) 1069. (hus, Se!tion ).12%/3!4, a #ere

ad#inistrative issuan!e, be!o#es in!onsistent $ith Se!tion 11/3D4, a later la$.

Obviously, the later la$ prevails over a prior in!onsistent ad#inistrative issuan!e.

Se!tion 11/3D4 of the 1;;< (ax Code is !lear, une"uivo!al, and !ateori!al that the

Co##issioner has 1/ days to a!t on an ad#inistrative !lai#. (he taxpayer !an &le

the 'udi!ial !lai# 314 onl5 ,ithin thirt5 da5s after the Commissioner artiall5

or full5 denies the claim $ithin the 1/% day period, or 3/4 onl5 ,ithin thirt5

da5s from the e1iration of the %<93 da5 eriod if the Co##issioner does not

a!t $ithin the 1/%day period.

(here !an be no dispute that upon ee!tivity of the 1;;< (ax Code on 1 anuary

1;;0, or ore t) e /er%before S) Ro7&e 'e (t% ()(%trt(e

c'( o) 28 Mrc 2003, the la$ has been !lear@ the 1/% day period is

#andatory and 'urisdi!tional. San Ro"ues !lai#, havin been &led ad#inistratively

on /0 ar!h /-, is overned by the 1;;< (ax Code, not the 1;<< (ax Code. Sin!e

San Ro"ue &led its 'udi!ial !lai# before the expiration of the 1/%day #andatory and

'urisdi!tional period, San Ro"ues !lai# !annot prosper.

San Ro"ue !annot also invo+e Se!tion ).12%/3!4, $hi!h expressly provides that the

taxpayer !an only &le the 'udi!ial !lai# 9after 9 the lapse of the 2%day period fro#

the &lin of the ad#inistrative !lai#. S) Ro7&e 'e (t% H&(c(' c'( H&%t 13

/% ter '()* (t% ()(%trt(e c'(. (o re!all, San Ro"ue &led its 'udi!ial

!lai# on 1 April /-, a #ere 1- days after it &led its ad#inistrative !lai#.

Even if, contrar7 to all principles of statutor7 construction as ell as plain commonsense, $e ratuitously apply no$ Se!tion ).12%/3!4 of Revenue Reulations No. <%

;*, still S) Ro7&e c))ot recoer )/ re&) or cre(t bec&%e S) Ro7&e

( )ot (t or te 60</ -er(o to '-%e, co)trr/ to te e5-re%%

re7&(ree)t () Sect(o) 4.106<2c9. In short, San Ro"ue does not even !o#ply

$ith Se!tion ).12%/3!4. A !lai# for tax refund or !redit is stri!tly !onstrued aainst

the taxpayer, $ho #ust prove that his !lai# !learly !o#plies $ith all the !onditionsfor rantin the tax refund or !redit. San Ro"ue did not !o#ply $ith the express

!ondition for su!h statutory rant.

A &nal $ord. (axes are the lifeblood of the nation. (he Philippines has been

strulin to i#prove its tax e?!ien!y !olle!tion for the lonest ti#e $ith #ini#al

su!!ess. Conse"uently, the Philippines has suered the e!ono#i! adversities arisin

fro# poor tax !olle!tions, for!in the overn#ent to !ontinue borro$in to fund the

budet de&!its. (his Court !annot turn a blind eye to this e!ono#i! #alaise by bein

unduly liberal to taxpayers $ho do not !o#ply $ith statutory re"uire#ents for taxrefunds or !redits. (he tax refund !lai#s in the present !ases are not a pittan!e.

any other !o#panies stand to ain if this Court $ere to rule other$ise. (he

dissentin opinions $ill turn on its head the $ell%settled do!trine that tax refunds are

stri!tly !onstrued aainst the taxpayer.






@EREFORE, the Court hereby 314 GRANTS the petition of the Co##issioner of

Internal Revenue in L.R. No. 10<)0* to #EN" the P)0-,<;<,*;;.2* tax refund or

!redit !lai# of San Ro"ue Po$er Corporation> 3/4 GRANTSthe petition of (aanito

inin Corporation in L.R. No. 1;211- for a tax refund or !redit of P0,-2*,22).-0>

and 3-4 #ENIES the petition of Philex inin Corporation in L.R. No. 1;<1*2 for atax refund or !redit of P/-,;*2,<-/.)).

SO ORDERED.



G.R. No. 1>3204 A&*&%t 31, 200>

COMMISSIONER OF INTERNAL REVENUE, Petitioners,

vs.

MANILA MINING COR!ORATION, Respondent.

D E C I S I O N

CAR!IO MORALES, J!$

7ein assailed via petition for revie$ on !ertiorari is the April 1/, // De!ision 1 of

the Court of Appeals reversin that of the Court of (ax Appeals 3C(A4/ $hi!h rantedthe !lai# of respondent, anila inin Corporation, in !onsolidated C(A Case Nos.

);20 and );;1, for refund or issuan!e of tax !redit !erti&!ates in the a#ounts

ofP*,20-,-*.) and P0,1<-,<0;.2 representin its input value added tax 38A(4

pay#ents for taxable year 1;;1.

Respondent, a #inin !orporation duly orani6ed and existin under Philippines

la$s, is reistered $ith the 7ureau of Internal Revenue 37IR4 as a 8A(%reistered

enterprise under 8A( Reistration Certi&!ate No. -/%2%2-/.-

In 1;;1, respondents sales of old to the Central 7an+ 3no$ 7an+o Sentral n

Pilipinas4 a#ounted toP/,0-/,-2).<.) On April //, 1;;1, uly /-, 1;;1, O!tober

/1, 1;;1 and anuary /, 1;;/, it &led its 8A( Returns for the 1st, /nd, -rd and )th

"uarters of 1;;1, respe!tively, $ith the 7IR throuh the 8A( Mnit at Revenue Distri!t

O?!e No. )< in East a+ati.*

Respondent, relyin on a letter dated O!tober 1, 1;00 fro# then 7IR Deputy

Co##issioner 8i!tor Deoferio that@

xxx under Se!. / of E.O. *01 as a#ended, old sold to the Central 7an+ is

!onsidered an export sale $hi!h under Se!tion 13a4314 of the NIRC, as a#ended

by E.O. /<-, is sub'e!t to 6ero%rated if su!h sale is #ade by a 8A(%reisteredperson,F2 3Mnders!orin supplied4

&led on April <, 1;;/ $ith the Co##issioner of Internal Revenue 3CIR4, throuh the7IR%8A( Division 37IR%8A(4, an appli!ation for tax refund:!redit of the input 8A( it

paid fro# uly 1% De!e#ber -1, 1;;; in the a#ount ofP0,1<-,<0;.2.

Petitioner subse"uently &led on ar!h *, 1;;1 another appli!ation for tax

refund:!redit of input 8A( it paid the a#ount of P*,20-,-*.) fro# anuary 1 B une-, 1;;1. As the CIR failed to a!t upon respondents appli!ation $ithin sixty 324

days fro# the dates of &lin,< it &led on ar!h //, 1;;- a Petition for Revie$ aainst

the CIR before the C(A $hi!h do!+eted it as C(A Case No. );20,0 see+in the

issuan!e of tax !redit !erti&!ate or refund in the a#ount of P*,20-,-*.) !overin

its input 8A( pay#ents for the 1st and /nd "uarters of 1;;1. And it &led on ay /),

1;;- another Petition for Revie$, do!+eted as C(A Case No. );;1, see+in the

issuan!e of tax !redit !erti&!ates in the a#ount of P0,1<-,<0;.2 !overin its input

8A( pay#ents for the -rd and )th "uarters of 1;;1.;

(o the petition in C(A Case No. );20 the CIR &led its Ans$er1 ad#ittin that

respondent &led its 8A( returns for the 1st and /nd "uarters of 1;;1 and an

appli!ation for !redit:refund of input 8A( pay#ent. It, ho$ever, spe!i&!ally denied

the vera!ity of the a#ounts stated in respondents 8A( returns and appli!ation for

!redit:refund as the sa#e !ontinued to be under investiation.

On ay /2, 1;;-, respondent &led in CTA C%e No. 4:68 a 9Re"uest for

Ad#issions911 of, a#on other fa!ts, the follo$in@

x x x

*. (hat the oriinal !opies of the O?!ial Re!eipts and Sales Invoi!es, ree!ted in

Annex 9C9 3S!hedule of 8A( INPM( on Do#esti! Pur!hase of Loods and Servi!es for

the "uarter endin ar!h -1, 1;;1F !onsistin of /) paes4 and Annex C%1

3Su##ary of I#portation, / paes4 $ere sub#itted to 7IR%8A(, as re"uired, for

do#esti! pur!hases of oods and servi!es 31st se#ester, 1;;14 for a total net

!lai#able of !>,268,401.:0> $hile its 8A( input tax paid for i#portation$as !6=:,8>3.00> 3E#phasis and unders!orin supplied4

x x x

7y Reply1/ of Auust 11, 1;;-, the CIR spe!i&!ally denied the vera!ity and a!!ura!y

of the a#ounts indi!ated in respondents Re"uest for Ad#issions,1- a#on other

thins.

(he CIRs Reply, ho$ever, $as not veri&ed, pro#ptin respondent to &le on Auust

-, 1;;- a 9SMPPEEN( 3(o Annotation of Ad#ission49 allein that as the reply

$as not under oath, 9an i#plied ad#ission of its re"uestsF aroseF9 as a

!onse"uen!e thereof .1)

On Septe#ber /<, 1;;-, the CIR &led a otion to Ad#it Reply, $hi!h Reply $as

veri&ed and atta!hed to the #otion, allein that its Reply of Auust 11, 1;;- $as9sub#itted $ithin the period for sub#ission thereof, but, ho$ever, $as in!o#pletedue to oversihtF as to the sinature of the ad#inisterin o?!er in the

veri&!ation.91*

7y Resolution12 of 5ebruary /0, 1;;), the C(A, &ndin that the #atters sub'e!t of

respondents Re"uest for Ad#issions are 9relevant to the fa!ts stated in the petition

for revie$9 and there bein an i#plied ad#ission by the CIR under Se!tion / of Rule

/2 of the then Revised Rules of Court readin@

Se!tion /. I-'(e Ad#ission. B Ea!h of the #atters of $hi!h an ad#ission is

re"uested shall be eee (tte unless xxx the party to $ho# the re"uest is

dire!ted serves upon the party re"uestin the ad#ission

as$orn state#ent either denyin spe!i&!ally the #atters of $hi!h an ad#ission is

re"uested xxx. 3E#phasis and unders!orin supplied4,

ranted respondents Re"uest for Ad#issions and denied the CIRs otion to Ad#it

Reply.

@(t re%-ect to CTA C%e No. 4::1, respondent also &led a 9Re"uest for

Ad#issions9 dated ay /<, 1;;- of the follo$in fa!ts@

x x x

/. Petitioners 3r and 4t Quarters 1;;1 8A( Returns $ere sub#itted and &led $ith

the 7IR%8A( Divisions on O!tober /1, 1;;1 and anuary /, 1;;1, respe!tively and

subse"uently, on April <, 1;;- petitioner &led and sub#itted its appli!ation for tax

!redit on 8A( paid for the /nd se#ester of 1;;>

x x x

http://www.lawphil.net/judjuris/juri2005/aug2005/gr_153204_2005.html#fnt1






































). (hat atta!hed to the trans#ittal letter for$arded petitioners appli!ation for tax

refund !reditF of ar!h -1, 1;;/ 3Annex 9794 are the follo$in do!u#ents@

a. Copies of invoi!es and other supportin do!u#ents>

b. 8A( Reistration Certi&!ate>

!. 8A( returns for the third and fourth "uarters of 1;;>

d. 7einnin and endin inventories of ra$ #aterials, $or+%in pro!ess, &nished

oods and #aterials and supplies>

e. ero%rated sales to Central 7an+ of the Philippines>

f. Certi&!ation that the Co#pany $ill not &le any tax !redit $ith the 7oard of

Invest#ents and 7ureau of Custo#s.

$hi!h !o#pletely do!u#ented the petitioners !lai# for refund as re"uired.

*. (hat the oriinal !opies of the O?!ial Re!eipts and Sales Invoi!es, ree!ted in

Annex 9C9 3!onsistin of -* paes4 and Annex C%1 3Su##ary of I#portation, /

paes4 $ere sub#itted to 7IR%8A(, as re"uired, to sho$ do#esti! pur!hases of oods

and servi!es 3/nd se#ester, 1;;14 $hi!h established that the total net !lai#able

ofP<,;*-,012.-0> $hile its 8A( input tax paid for i#portation $as P*2-,*-.>

x x x1<

(o the Re"uest for Ad#ission the CIR &led a anifestation and otion allein that

as the issues had not yet been 'oined, respondents re"uest is baseless and

pre#ature10 under Se!tion 1, Rule /2 of the Revised Rules of Court.1;

In the #eanti#e, the CIR &led on Auust 12, 1;;- its Ans$er,/ it averrin that sales

of old to the Central 7an+ #ay not be leally !onsidered export sales for purposes

of Se!tion 13a4 in relation to Se!tion 13a4314/1 of the (ax Code> and that

assu#in that a refund is proper, respondent #ust de#onstrate that it !o#plied

$ith the provisions of Se!tion /)3-4 in relation to Se!tion /- of the (ax Code. //

(he CIR subse"uently &led on ar!h /*, 1;;/ its Reply to respondents Re"uest for

Ad#ission in C(A No. );;1, it ad#ittin that respondent &led its 8A( returns and 8A(

appli!ations for tax !redit for the -rd and )th "uarters of 1;;1, but %-ec(c''/

e)/()* the !orre!tness and vera!ity of the a#ounts indi!ated in the s!hedules andsu##ary of i#portations, 8A( servi!es and oods, the total input and output taxes,

in!ludin the a#ount of refund !lai#ed./-

7y Resolution/) of 5ebruary //, 1;;), the C(A, in C(A Case No. );;1, ad#itted the

#atters !overed by respondents Re"uest for Ad#ission ex!ept those spe!i&!ally

denied by the CIR. In the sa#e Resolution, the C(A !onsolidated Case Nos. );20 and

);;1, they involvin the sa#e parties and substantially the sa#e fa!tual and leal

issues.

oint hearins of C(A Case Nos. );20 and );;1 $ere thus !ondu!ted.

(hrouh its Chief A!!ountant Danilo 7autista, respondent !lai#ed that in 1;;1, it

sold a total of /,/00.2<2 oun!es of old to the Central 7an+ valued

at P/,0-/,-2).<, as !erti&ed by the Dire!tor of the int and Re&nery Depart#ent

of the Central 7an+/* and that in support of its appli!ation for refund &led $ith the

7IR, it sub#itted !opies of all invoi!es and o?!ial re!eipts !overin its input 8A(

pay#ents to the 8A( Division of the 7IR, 9the su##ary and s!hedules9 of $hi!h

$ere !erti&ed by its external auditor, the oa"uin Cunanan V Co./2

Senior Audit anaer of oa"uin Cunanan V Co., Irene 7allesteros, $ho $as also

presented by respondent, de!lared that she !ondu!ted a spe!ial audit $or+ for

respondent for the purpose of deter#inin its a!tual input 8A( pay#ents for

the se!ond se#ester of 1;;1 and exa#ined every oriinal suppliers invoi!e, o?!ialre!eipts, and other do!u#ents supportin the pay#ents>/< and that there $ere no

dis!repan!ies or errors bet$een the su##aries and s!hedules of suppliers invoi!es

prepared by respondent and the 8A( invoi!es she exa#ined.

/0

5ollo$in the &lin by respondent of its for#al oer of eviden!e in both !ases,/; the

C(A, by Resolution- of uly 10, 1;;*, ad#itted the sa#e.

Mpon the issue of $hether respondents sales of old to the 7SP durin the four

"uarters of 1;;1 are sub'e!t to 1U 8A( under Se!tion 1 of the (ax Code or

should be !onsidered 6ero%rated under pararaph a3/4 of said Se!tion 1, the C(A

held that said sales are not sub'e!t to 1U output 8A(, !itin Atlas ConsolidatedMining and 5evelopment Corporation v. Court of Appeals,-1 Manila MiningCorporation v. Commissioner of Internal Revenue,-/ and Benguet Corporation v.

Commissioner of Internal Revenue.--

Nonetheless, the C(A denied respondents !lai# for refund of input 8A( for failure to

prove that it paid the a#ounts !lai#ed as su!h for the year 1;;1, no sales invoi!es,

re!eipts or other do!u#ents as re"uired under Se!tion /3!4314 of RevenueReulations No. -%00 havin been presented.-) (he C(A explained that

a #ere listinof 8A( invoi!es and re!eipts, even if !erti&ed to have been previously

exa#ined by an independent !erti&ed publi! a!!ountant, $ould not su?!e to

establish the truthfulness and a!!ura!y of the !ontents of su!h invoi!es and

re!eipts unless oered and a!tually veri&ed by it 3C(A4 in a!!ordan!e $ith C(A

Cir!ular No. 1%;*, as a#ended by C(A Cir!ular No. 1%;<, $hi!h re"uires that

photo!opies of invoi!es, re!eipts and other do!u#ents !overin said a!!ounts of

pay#ents be -re<re by the party !on!erned and %&b(tte to the !ourt.-*

Respondents #otion for re!onsideration-2 of the C(A de!ision havin been denied

by Resolution-< of 5ebruary 11, 1;;;, respondent brouht the !ase to the Court of

Appeals before $hi!h it !ontended that the C(A erred in denyin the refund for

insu?!ien!y of eviden!e, it aruin that in liht of the ad#issions by the CIR of the

#atters sub'e!t of it Re"uests for Ad#issions, it $as relieved of the burden of sub#ittin the pur!hase invoi!es and:or re!eipts to support its !lai#s.-0

7y De!ision-; of April 1/, //, the Court of Appeals reversed the de!ision of the C(A

and ranted respondents !lai# for refund or issuan!e of tax !redit !erti&!ates in the

a#ounts of P*,20-,-*.) for C(A Case No. );20 andP0,1<-,<0;.2 for C(A Case

No. );;1.

In rantin the refund, the appellate !ourt held that there $as no need for

respondent to present the photo!opies of the pur!hase invoi!es or re!eipts

eviden!in the 8A( paid in vie$ of Rule /2, Se!tion / of the Revised Rules of

Court) and the Resolutions of the C(A holdin that the #atters re"uested in

respondents Re"uest for Ad#issions in C(A No. );20 $ere dee#ed ad#itted by the

CIR)1 in liht of its failure to &le a veri&ed reply thereto.































































(he appellate !ourt further held that the CIRs relian!e on the best eviden!e rule is

#ispla!ed sin!e this rule does not apply to #atters $hi!h have been 'udi!ially

ad#itted.)/

Jen!e, the present petition for revie$,)- the CIR aruin that respondents failure to

sub#it do!u#entary eviden!e to !on&r# the vera!ity of its !lai#s is fatal> and that

the C(A, bein a !ourt of re!ord, is not expe!ted to o out of its $ay and di into the

re!ords of the 7IR to supply the insu?!ient eviden!e presented by a party, and infa!t it #ay set a de&nite rule that only eviden!e for#ally presented $ill be

!onsidered in de!idin !ases before it.))

Respondent, in its Co##ent,)* avers that it !o#plied $ith the provisions of Se!tion

/3!4314 of Revenue Reulation No. -%00 $hen it sub#itted the oriinal re!eipts and

invoi!es to the 7IR, $hi!h fa!t of sub#ission had been dee#ed ad#itted by

petitioner, as !on&r#ed by the C(A in its Resolutions in both !ases rantin

respondents Re"uests for Ad#issions therein.

(o respondents Co##ent the O?!e of the Soli!itor Leneral 3OSL4, on behalf of

petitioner, &led its Reply,)2aruin that the do!u#ents re"uired to be sub#itted to

the 7IR under Revenue Reulation No. -%00 should li+e$ise be presented to

the C(A to prove entitle#ent to input tax !redit.)< In addition, it arues that, !ontrary

to respondents position, a !erti&!ation by an independent Certi&ed Publi!

A!!ountant 3CPA4 as provided under C(A Cir!ulars 1%;* and 1%;< does not relieve

respondent of the onus of addu!in in eviden!e the invoi!es, re!eipts and other

do!u#ents to sho$ the input 8A( paid on its pur!hase of oods and servi!es.)0

(he pivotal issue then is $hether respondent addu!ed %&c(e)t e(e)ce to prove

its !lai# for refund of its input 8A( for taxable year 1;;1 in the a#ounts

of P*,20-,-*.) and P0,1<-,<0;.2.

(he petition is i#pressed $ith #erit.

In Commissioner of Internal Revenue v. Benguet Corporation,); this Court had the

o!!asion to note that as early as 1;00, the 7IR issued several 8A( rulins to the

ee!t that sales of old to the Central 7an+ by a 8A(%reistered person or entity are

!onsidered export sales.

(he transa!tions in "uestion o!!urred durin the period fro# 1;00 and 1;;1. Mnder

Se!. ;; of the National Internal Revenue Code 3NIRC4, as a#ended by Exe!utive

Order 3E.O.4 No. /<- s. 1;0<, then in ee!t, any person $ho, in the !ourse of tradeor business, sells, barters or ex!hanes oods, renders servi!es, or enaes in

si#ilar transa!tions and any person $ho i#ports oods is liable for output 8A( at

rates of either 1U or U 396ero rated94 dependin on the !lassi&!ation of the

transa!tion under Se!. 1 of the NIRC. xxx

x x x

In anuary of 1;00, respondent applied for and $as ranted by the 7IR 6ero%rated

status on its sale of old to the Central 7an+. On /0 Auust 1;00, Deputy

Co##issioner of Internal Revenue Eufra!io D. Santos issued 8A( Rulin No. -<00%00,

$hi!h de!lared that tG&e sale of gold to Central Ban is considered as e%port salesubect to Hero'rate pursuant to !ection " of t&e 2a% Code, as amended b7 E%ecutive )rder /o. :$J. (he 7IR !a#e out $ith at least six 324 other issuan!es,

reiteratin the 6ero%ratin of sale of old to the Central 7an+, the latest of $hi!h is

8A( Rulin No. -2%; dated 1) 5ebruary 1;;.

x x x* 3Itali!s in the oriinal> unders!orin supplied4

As export sales, the sale of old to the Central 7an+ is 6ero%rated, hen!e, no tax is

!hareable to it as pur!haser. ero ratin is pri#arily intended to be en'oyed by the

seller B respondent herein, $hi!h !hares no output 8A( but !an !lai# a refund of or

a tax !redit !erti&!ate for the input 8A( previously !hared to it by suppliers. *1

5or a 'udi!ial !lai# for refund to prosper, ho$ever, respondent #ust not only prove

that it is a 8A( reistered entity and that it &led its !lai#s $ithin the pres!riptive

period. It #ust %&b%t)t(te the input 8A( paid by pur!hase ()o(ce% or oc('

rece(-t%.*/

(his respondent failed to do.

Revenue Reulation No. -%00 a#endin Revenue Reulation No. *%0< provides the

re"uire#ents in !lai#in tax !redits:refunds.

Se!./. Se!tion 12 of Revenue Reulations *%0< is hereby a#ended to read as

follo$s@

!ec. "(. Refunds or ta% credits of input ta%. %

3a 9 <ero'rated sales of goods and services B Only a 8A(%reistered person #ay be

ranted a tax !redit or refund of value%added taxes paid !orrespondin to the 6ero%

rated sales of oods and servi!es, to the extent that su!h taxes have not been

applied aainst output taxes, upon sho$in of proof of !o#plian!e $ith the

!onditions stated in Se!tion 0 of these Reulations.

5or export sales, the appli!ation should be &led $ith the 7ureau of Internal Revenue

$ithin t$o years fro# the date of exportation. 5or other 6ero%rated sales, the

appli!ation should be &led $ithin t$o years after the !lose of the "uarter $hen the

transa!tion too+ pla!e.

xxx

3!4 Claims for ta% creditsKrefunds. % Appli!ation for (ax Credit:Refund of 8alue%Added

(ax Paid 37IR 5or# No. /**/4 shall be &led $ith the Revenue Distri!t O?!e of the

!ity or #uni!ipality $here the prin!ipal pla!e of business of the appli!ant is lo!ated

or dire!tly $ith the Co##issioner, Attention@ 8A( Division.

A photo!opy of the pur!hase invoi!e or re!eipt eviden!in the value added taxpaid %'' be sub#itted toether $ith the appli!ation. (he oriinal !opy of the said

invoi!e:re!eipt, ho$ever, shall be presented for !an!ellation prior to the issuan!e of

the (ax Credit Certi&!ate or refund. xxx 3E#phasis and unders!orin supplied4

Mnder Se!tion 0 of RA 11/*,*- the C(A is des!ribed as a !ourt of re!ord. As !ases

&led before it are litiated de novo, party litiants should prove every #inute aspe!t

of their !ases. No evidentiary value !an be iven the pur!hase invoi!es or re!eipts

sub#itted to the 7IR as the rules on do!u#entary eviden!e re"uire that thesedo!u#ents #ust be for#ally oered before the C(A. *)

(his Court thus notes $ith approval the follo$in &ndins of the C(A@

xxx SFale of old to the Central 7an+ should not be sub'e!t to the 1U 8A(%output

tax but this does not ipso facto#ean that the sellerF is entitled to the a#ount of refund souht as it is re"uired by la$ to present eviden!e sho$in the input taxes it
































paid durin the year in "uestion. Ghat is bein !lai#ed in the instant petition is the

refund of the input taxes paid by the herein petitioner on its pur!hase of oods and

servi!es. Jen!e, it is ne!essary for the Petitioner to sho$ proof that it had indeed

paid the said input taxes durin the year 1;;1. In the !ase at bar, Petitioner failed to

dis!hare this duty. It did not addu!e in eviden!e the sales invoi!e, re!eipts or otherdo!u#ents sho$in the input value added tax on the pur!hase of oods and

servi!es. **

xxx

Se!tion 0 of Republi! A!t 11/* 3An A!t Creatin the Court of (ax Appeals4 provides!ateori!ally that te Co&rt o T5 A--e'% %'' be co&rt o recor ) %

%&c (t (% re7&(re to co)&ct or' tr(' 8trial de novo: ere te

-rt(e% &%t -re%e)t te(r e(e)ce ccor()*'/ if they desire the Court to

ta+e su!h eviden!e into !onsideration.*2 3E#phasis and unders!orin supplied4

A 9sales or !o##er!ial invoi!e9 is a $ritten a!!ount of oods sold or servi!es

rendered indi!atin the pri!es !hared therefor or a list by $hatever na#e it is

+no$n $hi!h is used in the ordinary !ourse of business eviden!in sale and transfer

or aree#ent to sell or transfer oods and servi!es.*<

A 9re!eipt9 on the other hand is a $ritten a!+no$led#ent of the fa!t of pay#ent in

#oney or other settle#entbet$een seller and buyer of oods, debtor or !reditor, or

person renderin servi!es and !lient or !usto#er.*0

(hese sales invoi!es or re!eipts issued by the supplier are ne!essary to substantiatethe a!tual a#ount or "uantity of oods sold and their sellin pri!e,*; and ta+en

!olle!tively are the best #eans to prove the input 8A( pay#ents.

Respondent !ontends, ho$ever, that the !erti&!ation of the independent CPA

attestin to the !orre!tness of the !ontents of the su##ary of suppliers invoi!es or

re!eipts $hi!h $ere exa#ined, evaluated and audited by said CPA in a!!ordan!e

$ith C(A Cir!ular No. 1%;* as a#ended by C(A Cir!ular No. 1%;< should

substantiate its !lai#s.

(here is nothin, ho$ever, in C(A Cir!ular No. 1%;*, as a#ended by C(A Cir!ular No.

1%;<, $hi!h either expressly or i#pliedly suests that su##aries and s!hedules

of input 8A( pay#ents, even if !erti&ed by an independent CPA, su?!e as eviden!e

of input 8A( pay#ents.

(hus C(A Cir!ular No. 1%;* provides@

1. (he party $ho desires to introdu!e as eviden!e su!h volu#inous do!u#ents #ust

present@ 3a4 a Su##ary !ontainin the total a#ount:s of the tax a!!ount or tax paid

for the period involved and a !hronoloi!al or nu#eri!al list of the nu#bers, dates

and a#ounts !overed by the invoi!es or re!eipts> and 3b4 a Certi&!ation of an

independent Certi&ed Publi! A!!ountant attestin to the !orre!tness of the !ontents

of the su##ary after #a+in an exa#ination and evaluation of the volu#inous

re!eipts and invoi!es. Su!h su##ary and !erti&!ation #ust properly be identi&ed by

a !o#petent $itness fro# the a!!ountin &r#.

/. (he #ethod of individual presentation of ea!h and every re!eipt or invoi!e or

other do!u#ents for #ar+in, identi&!ation and !o#parison $ith the oriinals

thereof need not be done before the Court or the Co##issioner any#ore after the

introdu!tion of the su##ary and CPA !erti&!ation. It is enouh that the re!eipts,

invoi!es and other do!u#ents !overin the said a!!ounts or pay#ents #ust be pre%

#ar+ed by the party !on!erned and sub#itted to the Court in order to be #ade

a!!essible to the adverse party $henever he:she desires to !he!+ and verify the

!orre!tness of the su##ary and CPA !erti&!ation. Jo$ever, the oriinals of the said

re!eipts, invoi!es or do!u#ents should be ready for veri&!ation and !o#parison in!ase of doubt on the authenti!ity of the parti!ular do!u#ents presented is raised

durin the hearin of the !ase.2 3Mnders!orin supplied4

(he !ir!ular, in the interest of speedy ad#inistration of 'usti!e, $as pro#ulated to

avoid the ti#e%!onsu#in pro!edure of presentin, identifyin and #ar+in of

do!u#ents before the Court. It does not relieve respondent of its i#perative tas+of pre%#ar+in photo!opies of sales re!eipts and invoi!es and sub#ittin the sa#e

to the !ourtafter the independent CPA shall have exa#ined and !o#pared the# $ith

the oriinals. Githout presentin these pre%#ar+ed do!u#ents as eviden!e B fro#

$hi!h the su##ary and s!hedules $ere based, the !ourt !annot verify the

authenti!ity and vera!ity of the independent auditors !on!lusions.21

(here is, #oreover, a need to sub'e!t these invoi!es or re!eipts to exa#ination by

the C(A in order to !on&r# $hether they are 8A( invoi!es. Mnder Se!tion /1 of

Revenue Reulation No. *%0<,2/ all pur!hases !overed by invoi!es other than a 8A(

invoi!e shall not be entitled to a refund of input 8A(.

(he C(A disposition of the #atter is thus in order.

ere listin of 8A( invoi!es and re!eipts, even if !erti&ed to have been previously

exa#ined by an independent !erti&ed publi! a!!ountant, $ould not su?!e toestablish the truthfulness and a!!ura!y of the !ontents thereof unless oered and

a!tually veri&ed by this Court. C(A Cir!ular No. 1%;*, as a#ended by C(A Cir!ular

No. 1%;<, re"uires that the photo!opies of invoi!es, re!eipts and other do!u#ents

!overin said a!!ounts or pay#ents #ust be pre%#ar+ed by the party and sub#itted

to this Court.2- 3Mnders!orin supplied4

(here bein then no sho$in of abuse or i#provident exer!ise of the C(As

authority, this Court is not in!lined to set aside the !on!lusions rea!hed by it, $hi!h,

by the very nature of its fun!tions, is dedi!ated ex!lusively to the study and

!onsideration of tax proble#s and has ne!essarily developed an expertise on the

sub'e!t.2)

Ghile the C(A is not overned stri!tly by te!hni!al rules of eviden!e ,2* as rules of

pro!edure are not ends in the#selves but are pri#arily intended as tools in thead#inistration of 'usti!e, the presentation of the pur!hase re!eipts and:or invoi!es is

not #ere pro!edural te!hni!ality $hi!h #ay be disrearded !onsiderin that it is the

only #eans by $hi!h the C(A #ay as!ertain and verify the truth of respondents

!lai#s.

(he re!ords further sho$ that respondent #iserably failed to substantiate its !lai#

for input 8A( refund for the&rst se#ester of 1;;1. Ex!ept for the su##ary and

s!hedules of input 8A( pay#ents prepared by respondent itself, no other eviden!e

$as addu!ed in support of its !lai#.

As for respondents !lai# for input 8A( refund for the se!ond se#ester of 1;;1, it

e#ployed the servi!es of oa"uin Cunanan V Co. on a!!ount of $hi!h it 3oa"uin

Cunanan V Co.4 exe!uted a !erti&!ation that@
































Ge have exa#ined the infor#ation sho$n belo$ !on!ernin the input tax pay#ents

#ade by the a+ati O?!e of anila inin Corporation for the period fro# uly 1 to

De!e#ber -1, 1;;1. Our exa#ination in!luded inspe!tion of the pertinent suppliers

invoi!es and o?!ial re!eipts and su!h other auditin pro!edures as $e !onsidered

ne!essary in the !ir!u#stan!es. xxx22

As the !erti&!ation #erely stated that it used 9auditin pro!edures !onsidered

ne!essary9 and not auditin pro!edures $hi!h are in a!!ordan!e $ith enerallya!!epted auditin prin!iples and standards, and that the exa#ination $as #ade on

9input tax pay#ents by the anila inin Corporation,9 $ithout spe!ifyin that the

said input tax pay#ents are attributable to the sales of old to the Central 7an+, this

Court !annot rely thereon and reard it as su?!ient proof of respondents input 8A(

pay#ents for the se!ond se#ester.

5inally, respe!tin respondents aru#ent that it need not prove the o&)t of

input 8A( it paid for the &rst se#ester of taxable year 1;;1 as the sa#e $as proven

by the i#plied ad#ission of the CIR, $hi!h $as !on&r#ed by the C(A $hen it

ad#itted its Re"uest for Ad#ission,2< the sa#e does not lie.

Respondents Re"uests for Ad#ission do not fall $ithin Se!tion / Rule /2 of the

Revised Rules of Court.20 Ghat respondent souht the CIR to ad#it are the total

a#ount of input 8A( pay#ents it paid for the &rst and se!ond se#esters of taxable

year 1;;1, $hi!h #atters have already been previously alleed in respondents

petition and spe!i&!ally denied by the CIR in its Ans$ers dated ay 1, 1;;- and

Auust 12, 1;;- &led in C(A Case Nos. )02; and );;1, respe!tively.

As Concrete Aggregates Corporation v. Court of Appeals 2; holds, ad#issions by an

adverse party as a #ode of dis!overy !onte#plates of interroatories that $ould

!larify and tend to shed liht on the truth or falsity of the alleations in a pleadin,

and does not refer to a #ere reiteration of $hat has already been alleed in the

pleadins> other$ise, it !onstitutes an utter redundan!y and $ill be a useless,

pointless pro!ess $hi!h petitioner should not be sub'e!ted to.<

Petitioner !ontroverted in its Ans$ers the #atters set forth in respondents Petitions

for Revie$ before the C(A B the re"uests for ad#ission bein #ere reprodu!tions of

the #atters already stated in the petitions. (hus, petitioner should not be re"uired

to #a+e a se!ond denial of those #atters it already denied in its Ans$ers.<1

As observed by the C(A, petitioner did in fa!t &le its reply to the Re"uest for

Ad#issions in C(A Case No. )02; and spe!i&!ally denied the vera!ity and a!!ura!yof the &ures indi!ated in respondents su##ary. (he otion to Ad#it Reply $as,

ho$ever, denied by the C(A as the oriinal Reply $as not #ade under oath.

(hat the Reply $as not #ade under oath is #erely a for#al and not a substantive

defe!t and #ay be dispensed $ith. </ Althouh not under oath, petitioners reply to

the re"uest readily sho$ed that its intent $as to deny the #atters set forth in the

Re"uest for Ad#issions.

As for respondents Re"uest for Ad#ission in C(A Case No. );;1, petitioner ti#ely

&led its reply and spe!i&!ally denied the a!!ura!y and vera!ity of the !ontents of

the s!hedules and su##aries $hi!h listed the input 8A( pay#ents alleedly paid by

respondent for the se!ond se#ester of 1;;1.

5or failure of respondent then not only to stri!tly !o#ply $ith the rules of pro!edure

but also to establish the fa!tual basis of its !lai# for refund, this Court has to deny

its !lai#. A !lai# for refund is in the nature of a !lai# for exe#ption and should be

!onstrued in strictissimi uris aainst the taxpayer and liberally in favor of the taxin

authority.<-

@EREFORE, the petition is hereby GRANTE#. (he assailed De!ision of the Court

of Appeals dated April 1/, // is hereby REVERSE# ) SET ASI#E. (he Court of

(ax Appeals De!ision dated Nove#ber /), 1;;0 is hereby REINSTATE#.

SO OR#ERE#






















G.R. No. 1>:4:0 Febr&r/ 18, 2008

ATLAS CONSOLI#ATE# MINING AN# #EVELO!MENT

COR!ORATION, petitioner,

vs.

COMMISSIONER OF INTERNAL REVENUE, respondent.

# E C I S I O N

VELASCO, R., J!"

Te C%e

7efore us is a Petition for Revie$ on Certiorari under Rule )* assailin the ay 12,

/- De!ision1 of the Court of Appeals 3CA4 in CA%L.R. SP No. )2);), $hi!h a?r#ed

the O!tober 1-, 1;;< De!ision/ of the Court of (ax Appeals 3C(A4 in C(A Case No.

*/* entitled Atlas Consolidated Mining and 5evelopment Corporation 8Atlas9 v. 2&eCommissioner of Internal Revenue 8CIR9 , involvin petitioner Atlas appli!ation for

issuan!e of tax !redit !erti&!ate or refund of value%added tax 38A(4 pay#ents in

a!!ordan!e $ith Se!tion 123b4 of the (ax Code on 6ero%rated 8A( payers. Also

assailed is the Auust 11, /- Resolution- of the CA denyin Atlas #otion for

re!onsideration.

Te Fct%

Atlas is a !orporation duly orani6ed and existin under Philippine la$s enaed in

the produ!tion of !opper !on!entrates for export. It reistered as a 8A( entity and

$as issued 8A( Reistration Certi&!ate No. -/%%)2// ee!tive Auust 1*, 1;;.

5or the &rst "uarter of 1;;-, Atlas export sales a#ounted to PhP 2)/,20*,-/./).

Its pro!eeds $ere re!eived in a!!eptable forein !urren!y and in$ardly re#itted in

a!!ordan!e $ith Central 7an+ reulations. 5or the sa#e period, Atlas paid PhP

<,;<,22/.*- for input taxes, as follo$s@

o!al PhP <,11<,///.*-

I#portation <;,)).

(otal PhP <,;<,22/.*-

(hereafter, Atlas &led a 8A( return for the &rst "uarter of 1;;- $ith the 7ureau of

Internal Revenue 37IR4 on April /, 1;;-, and also &led an a#ended 8A( return.

On Septe#ber /, 1;;-, Atlas applied $ith the 7IR for the issuan!e of a tax !redit

!erti&!ate or refund under Se!tion 123b4 of the (ax Code. (he !erti&!ate $ould

represent the 8A( it paid for the &rst "uarter of 1;;- in the a#ount of PhP

<,;<,22/.*-, $hi!h !orresponded to the input taxes not applied aainst any output

8A(.

Atlas then &led a petition for revie$ $ith the C(A on 5ebruary //, 1;;* to prevent

the runnin of the pres!riptive period under Se!. /- of the (ax Code.

Te R&'()* o te Co&rt o T5 A--e'%

(he petition for revie$ before the C(A $as do!+eted as C(A Case No. */*. On

O!tober 1-, 1;;<, the C(A rendered a De!ision denyin Atlas !lai# for tax !redit or

refund. (he fallo reads@

GJERE5ORE, in the liht of all the foreoin, AtlasF !lai# for issuan!e of tax !redit

!erti&!ate or refund of value%added taxes for the &rst "uarter of 1;;- is hereby

DENIED for insu?!ien!y of eviden!e. No pronoun!e#ent as to !osts.

SO ORDERED.)

Ge note that respondent CIR &led his ay /), 1;;* Ans$er assertin that Atlas has

the burden of provin erroneous or illeal pay#ent of the tax bein !lai#ed forrefund, as !lai#s for refund are stri!tly !onstrued aainst the taxpayer. Jo$ever,

the CIR did not present any eviden!e before the C(A nor &le a #e#orandu#, thus!onstrainin the C(A to resolve the !ase before it solely on the basis of the eviden!e

presented by Atlas.

In denyin Atlas !lai# for tax !redit or refund, the C(A held that Atlas failed to

present su?!ient eviden!e to $arrant the rant of tax !redit or refund for the

alleed input taxes paid by Atlas. Relyin on Revenue Reulation No. 3RR4 -%00

$hi!h $as issued to i#ple#ent the then 8A( la$ and list the do!u#ents to be

sub#itted in a!tions for refunds or tax !redits of input taxes in export sales, it found

that the do!u#ents sub#itted by Atlas did not !o#ply $ith said reulation. It

pointed out that Atlas failed to sub#it photo!opies of export do!u#ents, invoi!es, or

re!eipts eviden!in the sale of oods and others. oreover, the Certi&!ation by

Atlas ban+, Jon+on Shanhai 7an+in Corporation, did not indi!ate any!onversion rate for MS dollars to pesos. (hus, the C(A !ould not as!ertain the

vera!ity of the !ontents indi!ated in Atlas 8A( return as export sales and !reditable

or refundable input 8A(.

Atlas ti#ely &led its otion for Re!onsideration of the above de!ision !ontendin

that it relied on Se!. 12 of the (ax Code $hi!h #erely re"uired proof that the

forein ex!hane pro!eeds has been a!!ounted for in a!!ordan!e $ith the

reulations of the Central 7an+ of the Philippines. Conse"uently, Atlas asserted that

the do!u#ents it presented, !oupled $ith the testi#ony of its A!!ountin and

5inan!e anaer, Isabel Espeno, su?!iently proved its !ase. It arued that RR -%00

$as issued for !lai#s for refund of input 8A( to be pro!essed by the 7IR, that is, for

ad#inistrative !lai#s, and not for 'udi!ial !lai#s as in the present !ase. Anyho$,

Atlas prayed for a re%trial, even as it ad#itted that it has !o##itted a #ista+e or

ex!usable nelien!e $hen the C(A ruled that RR -%00 should be the one applied forAtlas to sub#it the basis re"uired under the reulation.

Atlas #otion for re!onsideration $as re'e!ted by the C(A throuh its anuary *,

1;;0 Resolution, rulin that it is $ithin its dis!retion to as!ertain the vera!ity of the

!lai#s for refund $hi!h #ust be stri!tly !onstrued aainst Atlas. oreover, it also

re'e!ted Atlas prayer for a re%trial under Se!. / of Rule -< of the Rules of Court, as

Atlas failed to sub#it the re"uired a?davits of #erits.

Te R&'()* o te Co&rt o A--e'%

On Atlas appeal, the CA denied and dis#issed Atlas petition on the round of

insu?!ien!y of eviden!e to support Atlas a!tion for tax !redit or refund. (hus,

throuh its ay 12, /- De!ision, the CA sustained the C(A> and !onse"uently

denied Atlas #otion for re!onsideration.












(he CA ratio!inated that the C(A !annot be faulted in denyin Atlas a!tion for tax

!redit or refund, and in denyin Atlas prayer for a ne$ trial. (he CA !on!urred $ith

the C(A in the &ndin that Atlas failure to sub#it the re"uired do!u#ents in

a!!ordan!e $ith RR -%00 is fatal to Atlas a!tion, for, $ithout these do!u#ents,

Atlas 8A( export sales indi!ated in its a#ended 8A( return and the !reditable orrefundable input 8A( !ould not be as!ertained. (he CA stru!+ do$n Atlas !ontention

that it has su?!iently established the existen!e of its export sales throuh the

testi#ony of its A!!ountin and 5inan!e anaer, as her testi#ony is not re"uired

under RR -%00 and is self%servin.

Also, the CA re'e!ted Atlas assertion that RR -%00 is appli!able only to

ad#inistrative !lai#s and not to a 'udi!ial pro!eedin, sin!e it is !lear under Se!.

/)* 3no$ Se!. /)) of the NIRC4 that 9tFhe Se!retary of 5inan!e, upon the

re!o##endation of the Co##issioner, shall pro#ulate all needful rules and

reulations for the ee!tive enfor!e#ent of the provisions of this Code.9 (hus,

a!!ordin to the CA, RR -%00 i#ple#entin the 8A( la$ is appli!able to 'udi!ial

pro!eedins as this Court held in Eslao v. C)A that 9ad#inistrative poli!ies ena!ted

by ad#inistrative bodies to interpret the la$ have the for!e of la$ and are entitled

to reat $eiht.9* (he CA li+e$ise areed $ith the C(A in denyin a ne$ trial for

Atlas failure to atta!h the ne!essary a?davits of #erits re"uired under the rules.

Te I%%&e%

Jen!e, the instant petition of Atlas raisin the follo$in rounds for our

!onsideration@

A. In renderin the assailed De!ision and Resolution, the Court of Appeals failed to

de!ide this #atter in a!!ordan!e $ith la$ or $ith the appli!able de!isions of the

Supre#e Court.

7. In renderin the assailed De!ision and Resolution the Court of Appeals is uilty of

rave abuse of dis!retion a#ountin to a la!+ or ex!ess of 'urisdi!tion $hen it

violated Atlas riht to due pro!ess and san!tioned a si#ilar error fro# the Court of

(ax Appeals 3C(A4, !allin for the exer!ise of this Jonorable Courts po$er of

supervision.2

(he foreoin issues !an be si#pli&ed as follo$s@ ?rst , $hether Atlas has su?!iently

proven entitle#ent to a tax !redit or refund> and second, $hether Atlas should have

been a!!orded a ne$ trial.

Te Co&rt;% R&'()*

(he petition has no #erit.

F(r%t I%%&e$ At'% ('e to %o %&c(e)t -roo

Consistent $ith its position before the !ourts a uo, Atlas arues that the

re"uire#ents under RR -%00 are only appli!able in ad#inistrative !lai#s for refunds

before the 7IR and not for 'udi!ial !lai#s, as in the instant !ase. And that it is C(A

Cir!ular No. 1%;*, as a#ended by C(A Cir!ular No. 1%;<, $hi!h applies and $hi!h

Atlas asserts it has !o#plied $ith. It !ontends that C(A Cir!ular No. 1%;<, bein the

later la$, is dee#ed to have "uali&ed RR -%00. (hus, it !ontends that $hat is only

re"uired is a sub#ission of a su##ary of the invoi!es and a !erti&!ation fro# an

independent publi! a!!ountant.

Ge are not persuaded.

First , $e reiterate the prevailin rule that the &ndins of fa!t of the CA are enerally

!on!lusive and bindin and the Court need not pass upon the supportin eviden!e.

5or, it is not this Courts fun!tion to analy6e or $eih eviden!e all over

aain.< Stated a bit dierently, the CAs &ndins of fa!t a?r#in those of the trial

!ourt $ill not be disturbed by the Court.0 (his is as it should be for the trial !ourt, astrier of fa!ts, is best e"uipped to #a+e the assess#ent of issues raised and

eviden!e addu!ed before it. (herefore, its fa!tual &ndins are enerally not

disturbed on appeal unless it is per!eived to have overloo+ed, #isunderstood, or

#isinterpreted !ertain fa!ts or !ir!u#stan!es of $eiht, $hi!h, if properly

!onsidered, $ould ae!t the result of the !ase and $arrant a reversal of the de!ision

involved. In the instant !ase, $e &nd no !oent reason to depart fro# this eneralprin!iple.

!econd, the Rules of Court, $hi!h is suppletory in "uasi%'udi!ial pro!eedins,

parti!ularly Se!. -); of Rule 1-/, Revised Rules on Eviden!e, is !lear that no

eviden!e $hi!h has not been for#ally oered shall be !onsidered. (hus, $here the

pertinent invoi!es or re!eipts purportedly eviden!in the 8A( paid by Atlas $ere not

sub#itted, the !ourts a uo evidently !ould not deter#ine the vera!ity of the input

8A( Atlas has paid. oreover, $hen Atlas li+e$ise failed to sub#it pertinent export

do!u#ents to prove a!tual export sales $ith due !erti&!ation fro# a!!redited ban+s

on the export pro!eeds in forein !urren!y $ith the !orrespondin !onversion rate

into Philippine !urren!y, the !ourts a uo li+e$ise !ould not deter#ine the vera!ity

of the export sales as indi!ated in Atlas a#ended 8A( return.

It #ust be noted that the #ost !o#petent eviden!e #ust be addu!ed and presented

to prove the alleations in a !o#plaint, petition, or protest before a 'udi!ial !ourt.

And $here the best eviden!e !annot be sub#itted, se!ondary eviden!e #ay be

presented. In the instant !ase, the pertinent do!u#ents $hi!h are the best pie!es of

eviden!e $ere not presented.

2&ird, the su##ary presented by Atlas does not repla!e the pertinent invoi!es,

re!eipts, and export sales do!u#ents as !o#petent eviden!e to prove the fa!t of

refundable or !reditable input 8A(. Indeed, the su##ary presented $ith the

!erti&!ation by an independent Certi&ed Publi! A!!ountant 3CPA4 and the testi#ony

of Atlas A!!ountin and 5inan!e anaer are #erely !orroborative of the a!tual

input 8A( it paid and the a!tual export sales. Other$ise, the pertinent invoi!es,

re!eipts, and export sales do!u#ents are the best and !o#petent pie!es of

eviden!e re"uired to substantiate Atlas !lai# for tax !redit or refund $hi!h is

#erely !orroborated by the su##ary duly !erti&ed by a CPA and the testi#ony of

Atlas e#ployee on the export sales. And $hen these pertinent do!u#ents are notpresented, these !ould not be !orroborated as is true in the instant !ase.

Fourt&, Atlas #ere alleations of the &ures in its a#ended 8A( return for the &rst"uarter of 1;;- as $ell as in its petition before the C(A are not su?!ient proof of the

a#ount of its refund entitle#ent. (hey do not even !onstitute eviden!e1 adverse to

CIR aainst $ho# they are bein presented.11 Ghile Atlas indeed sub#itted several

do!u#ents, still, the C(A !ould not as!ertain fro# the# the vera!ity of the &ures as

the do!u#ents presented by Atlas $ere not su?!ient to prove its a!tion for tax

!redit or refund. Atlas has failed to #eet the burden of proof re"uired in order to

establish the fa!tual basis of its !lai# for a tax !redit or refund. Neither !an $e

as!ertain the vera!ity of Atlas alleed input 8A( taxes $hi!h are refundable nor the

alleed a!tual export sales indi!ated in the a#ended 8A( return.





















Clearly, it $ould not be proper to allo$ Atlas to si#ply prevail and !o#pel a tax

!redit or refund in the a#ount it !lai#s $ithout provin the a#ount of its !lai#.

After all, 9tFax refunds are in the nature of tax exe#ptions,91/ and are to be

!onstrued strictissimi uris aainst the taxpayer.

Fift&, it is thus a!ade#i! $hether !o#plian!e $ith the do!u#entary re"uire#ents of

RR -%00 is ne!essary. Su?!e it to say that a revenue reulation is bindin on the

!ourts as lon as the pro!edure &xed for its pro#ulation is follo$ed.1- It has notbeen disputed that RR -%00 has been duly pro#ulated pursuant to the rule%#a+in

po$er of the Se!retary of 5inan!e upon the re!o##endation of the CIR. As aptly

held by the !ourts a uo, !itinEslao,1) these RRs or ad#inistrative issuan!es have

the for!e of la$ and are entitled to reat $eiht.

!i%t&, it $ould not be a#iss to point out that Atlas !ontention on the appli!ability of

C(A Cir!ular No. 1%;< is #ispla!ed. 5or one, said !ir!ular a#ended C(A Cir!ular No.

1%;* only in 1;;< $hereas the pro!eedins of the instant !ase $ere !ondu!ted prior

to 1;;<. In fa!t, Atlas 5or#al Oer of Eviden!e1* $as &led before the C(A on

Septe#ber /, 1;;2. 5or another, even if said !ir!ular is retroa!tively applied for

bein pro!edural, still, it does not aord Atlas relief as the do!u#entary and

testi#onial pie!es of eviden!e addu!ed before the C(A are insu?!ient to prove the

!lai# for refund or tax !redit.

Seco) I%%&e$ No e)(' o &e -roce%%

Atlas asserts denial of due pro!ess $hen the !ourts a uo denied its prayer to be

iven the opportunity to present the re"uired do!u#ents, assertin that the relian!eby the !ourts a uo on Se!. / of Rule -< of the 1;;< Revised Rules on Civil

Pro!edure is #ispla!ed as said proviso applies only to a #otion for ne$ trial and not

to a #otion for re!onsideration.

Ge are not !onvin!ed.

Clearly, Atlas atte#pted or sho$ed $illinness to sub#it the re"uired do!u#ents

only after the C(A rendered its de!ision. Aside fro# assailin the appli!ability of RR

-%00, Atlas arued in its #otion for re!onsideration before the C(A that, on the

alternative, the !ase be re%opened to allo$ it to present the re"uired do!u#ents as

it follo$ed in ood faith the re"uire#ent under Se!. 12 of the 1;<< (ax Code, and

alleed that it has !o##itted a #ista+e or ex!usable nelien!e $hen the C(A ruled

that RR -%00 should be the one applied re"uirin Atlas to sub#it the do!u#ents

needed.

Obviously, Atlas relian!e on Se!. 12 of the 1;<< (ax Code is una!!eptable for su!h

does not !onstitute ex!usable nelien!e. In short, Atlas is uilty of inex!usable

nelien!e in the prose!ution of its !ase. (he !ourtsa uo relied on the pro!edural

de&!ien!y of non%!o#plian!e $ith Se!. /, Rule -< of the Rules of Court in denyin a

ne$ trial. In doin so, the !ourts a uo re!oni6ed Atlas #otion for re!onsideration

also as a #otion for ne$ trial, $hi!h $as alternatively prayed for by Atlas.

7e that as it #ay, even if Atlas has !o#plied $ith the a?davits%of%#erits

re"uire#ent, its prayer for a ne$ trial $ould still not prosper. First , Atlas is uilty of

inex!usable nelien!e in the prose!ution of its !ase. It is duty%bound to ensure that

all proofs re"uired under the rules are duly presented. Atlas has indeed repeatedly

asserted that in its a!tion for the instant 'udi!ial !lai#, the C(A is bound by its rules

and suppletorily by the Rules of Court. It !ertainly has not exer!ised the dilien!e

re"uired of a litiant $ho has the burden of proof to present all that is

re"uired. !econd, forotten eviden!e, not presented durin the trial nor for#ally

oered, is not ne$ly found eviden!e that #erits a ne$ trial. 2&ird, and #ost

i#portantly, it oes aainst the orderly ad#inistration of 'usti!e to allo$ a party to

sub#it forotten eviden!e $hi!h it !ould have oered $ith the exer!ise of ordinary

dilien!e, #ore so $hen a de!ision has already been rendered.

In ?ne, $e reiterate our !onsistent rulin that a!tions for tax refund, as in the instant

!ase, are in the nature of a !lai# for exe#ption and the la$ is not only !onstruedin strictissimi uris aainst the taxpayer, but also the pie!es of eviden!e presented

entitlin a taxpayer to an exe#ption is strictissimi s!rutini6ed and #ust be duly

proven.

@EREFORE, $e #EN" the petition for la!+ of #erit, and AFFIRM the CAs ay

12, /- De!ision and Auust 11, /- Resolution in CA%L.R. SP No. )2);). Costs

aainst petitioner.

SO ORDERED.












G.R. No. 1>888> A-r(' 2, 200:

FORT BONIFACIO #EVELO!MENT COR!ORATION, Petitioner,

vs.

COMMISSIONER OF INTERNAL REVENUE, REGIONAL #IRECTOR, REVENUE

REGION NO. 8, CIEF, ASSESSMENT #IVISION, REVENUE REGION NO. 8,

BIR, Respondents.

x % % % % % % % % % % % % % % % % % % % % % % %x

G.R. No. 1=0680 A-r(' 2, 200:

FORT BONIFACIO #EVELO!MENT COR!ORATION, Petitioner,

vs.

COMMISSIONER OF INTERNAL REVENUE ) REVENUE #ISTRICT OFFICER,

REVENUE #ISTRICT NO. 44, TAGUIG ) !ATEROS, BUREAU OF INTERNAL

REVENUE, Respondents.

D E C I S I O N

TINGA, J!"

(he value%added tax 38A(4 syste# $as &rst introdu!ed in the Philippines on 1

anuary 1;00, $ith the tax i#posable on 9any person $ho, in the !ourse of trade or

business, sells, barters or ex!hanes oods, renders servi!es, or enaes in si#ilar

transa!tions and any person $ho i#ports oods.91 (he &rst 8A( la$ is found in

Exe!utive Order No. /<- 3E.O. /<-4, $hi!h a#ended several provisions of the then

National Internal Revenue Code of 1;02 3Old NIRC4. E.O. No. /<- li+e$ise

a!!o##odated the potential burdens of the shift to the 8A( syste# by allo$in

ne$ly liable 8A(%reistered persons to avail of a transitional input tax !redit, asprovided for in Se!tion 1* of the old NIRC, as a#ended by E.O. No. /<-. Said

Se!tion 1* is "uoted, thus@

SEC. 1*. (ransitional input tax !redits. B A person $ho be!o#es liable to value%

added tax or any person $ho ele!ts to be a 8A(%reistered person shall, sub'e!t to

the &lin of an inventory as pres!ribed by reulations, be allo$ed input tax on his

beinnin inventory of oods, #aterials and supplies e"uivalent to 0U of the value

of su!h inventory or the a!tual value%added tax paid on su!h oods, #aterials and

supplies, $hi!hever is hiher, $hi!h shall be !reditable aainst the output tax. /

(here are other #easures !ontained in E.O. No. /<- $hi!h $ere si#ilarly intended toease the shift to the 8A( syste#. (hese #easures also too+ the for# of 9transitional

input taxes $hi!h !an be !redited aainst output tax,9-and are found in Se!tion /* of

E.O. No. /<-, the se!tion entitled 9(ransitory Provisions.9 Said transitory provisions,

$hi!h $ere never in!orporated in the Old NIRC, read@

Se!. /*. (ransitory provisions. 3a4 All 8A(%reistered persons shall be allo$ed

transitional input taxes $hi!h !an be !redited aainst output tax in the sa#e

#anner as provided in Se!tions 1) of the National Internal Revenue Code as

follo$s@

14 (he balan!e of the deferred sales tax !redit a!!ount as of De!e#ber -1, 1;0<

$hi!h are a!!ounted for in a!!ordan!e $ith reulations pres!ribed therefor>

/4 A presu#ptive input tax e"uivalent to 0U of the value of the inventory as of

De!e#ber -1, 1;0< of #aterials and supplies $hi!h are not for sale, the tax on

$hi!h $as not ta+en up or !lai#ed as deferred sales tax !redit> and

-4 A presu#ptive input tax e"uivalent to 0U of the value of the inventory as of

De!e#ber -1, 1;0< as oods for sale, the tax on $hi!h $as not ta+en up or !lai#ed

as deferred sales tax !redit.

(ax !redit pres!ribed in pararaphs 3/4 and 3-4 above shall be allo$ed only to a 8A(%

reistered person $ho &les an inventory of the oods referred to in said pararaphs

as provided in reulations.

3b4 Any unused tax !redit !erti&!ate issued prior to anuary 1, 1;00 for ex!ess tax

!redits $hi!h are appli!able aainst advan!e sales tax shall be surrendered to, andrepla!ed by the Co##issioner $ith ne$ tax !redit !erti&!ates $hi!h !an be used in

pay#ent for value%added tax liabilities.

3!4 Any person already enaed in business $hose ross sales or re!eipts for a 1/%

#onth period fro# Septe#ber 1, 1;02 to Auust 1, 1;0<, ex!eed the a#ount

of P/,., or any person $ho has been in business for less than 1/ #onths as

of Auust 1, 1;0< but expe!ts his ross sales or re!eipts to ex!eed P/, on or

before De!e#ber -1, 1;0<, shall apply for reistration on or before O!tober /;,

1;0<.)

On 1 anuary 1;;2, Republi! A!t 3Rep. A!t4 No. <<12 too+ ee!t.* It a#ended

provisions of the Old NIRC prin!ipally by restru!turin the 8A( syste#. It $as underRep. A!t No. <<12 that 8A( $as i#posed for the &rst ti#e on the sale of real

properties. (his $as a!!o#plished by a#endin Se!tion 1 of the NIRC to in!lude

9real properties9 a#on the 9oods or properties,9 the sale, barter or ex!hane of

$hi!h is #ade sub'e!t to 8A(. (he relevant portions of Se!tion 1, as a#ended by

Rep. A!t No. <<12, thus read@

Se!. 1. 8alue%added%tax on sale of oods or properties. T

3a4 Rate and base of tax. T (here shall be levied, assessed and !olle!ted on every

sale, barter or ex!hane of oods or properties, a value%added tax e"uivalent to

1U of the ross sellin pri!e or ross value in #oney of the oods, or properties

sold, bartered or ex!haned, su!h tax to be paid by the seller or transferor.

314 (he ter# oods or properties shall #ean all tanible and intanible ob'e!ts

$hi!h are !apable of pe!uniary esti#ation and shall in!lude@

3A4 Real properties held pri#arily for sale to !usto#ers or held for lease in the

ordinary !ourse of trade or business> xxx2

(he provisions of Se!tion 1* of the NIRC, on the transitional input tax !redit, had

re#ained inta!t despite the ena!t#ent of Rep. A!t No. <<12. Said provisions $ould

ho$ever be a#ended follo$in the passae of the ne$ National Internal Revenue

Code of 1;;< 3Ne$ NIRC4, also o?!ially +no$n as Rep A!t No. 0)/). (he se!tion on

the transitional input tax !redit $as renu#bered fro# Se!tion 1* of the Old NIRC to

Se!tion 1113A4 of the Ne$ NIRC. (he ne$ a#end#ents on the transitional input tax

!redit are relatively #inor, hardly #aterial to the !ase at bar. (hey are hihlihted

belo$ for easy referen!e@

Sect(o) 111. 2ransitionalK3resumptive Input 2a% Credits. %

http://www.lawphil.net/judjuris/juri2009/apr2009/gr_158885_2009.html#fnt1















3A4 2ransitional Input 2a% Credits. % A person $ho be!o#es liable to value%added tax

or any person $ho ele!ts to be a 8A(%reistered person shall, sub'e!t to the &lin of

an inventory a!!ordin to rules and reulations pres!ribed by the Se!retary of

&nan!e, upon re!o##endation of the Co##issioner, be allo$ed input tax on his

beinnin inventory of oods, #aterials and supplies e"uivalent for eiht per!ent30U4 of the value of su!h inventory or the a!tual value%added tax paid on su!h

oods, #aterials and supplies, $hi!hever is hiher, $hi!h shall be !reditable aainst

the output tax.< 3E#phasis supplied4.

Rep. A!t No. 0)/) also #ade part of the NIRC, for the &rst ti#e, the !on!ept of

9presu#ptive input tax !redits,9 $ith Se!tion 1113b4 of the Ne$ NIRC providin as

follo$s@

374 3resumptive Input 2a% Credits. %

314 Persons or &r#s enaed in the pro!essin of sardines, #a!+erel and #il+, and

in #anufa!turin re&ned suar and !oo+in oil, shall be allo$ed a presu#ptive input

tax, !reditable aainst the output tax, e"uivalent to one and one%half per!ent 31

1:/U4 of the ross value in #oney of their pur!hases of pri#ary ari!ultural

produ!ts $hi!h are used as inputs to their produ!tion.

As used in this Subse!tion, the ter# pro!essin shall #ean pasteuri6ation, !annin

and a!tivities $hi!h throuh physi!al or !he#i!al pro!ess alter the exterior texture

or for# or inner substan!e of a produ!t in su!h #anner as to prepare it for spe!ial

use to $hi!h it !ould not have been put in its oriinal for# or !ondition.

3/4 Publi! $or+s !ontra!tors shall be allo$ed a presu#ptive input tax e"uivalent to

one and one%half per!ent 31 1:/U4 of the !ontra!t pri!e $ith respe!t to overn#ent

!ontra!ts only in lieu of a!tual input taxes therefro#.0

Ghat $e have explained above are the statutory ante!edents that underlie the

present petitions for revie$. Ge no$ turn to the fa!tual ante!edents.

I.

Petitioner 5ort 7onifa!io Develop#ent Corporation 357DC4 is enaed in the

develop#ent and sale of real property. On 0 5ebruary 1;;*, 57DC a!"uired by $ay

of sale fro# the national overn#ent, a vast tra!t of land that for#erly for#ed part

of the 5ort 7onifa!io #ilitary reservation, lo!ated in $hat is no$ the 5ort 7onifa!io

Llobal City 3Llobal City4 in (aui City.; Sin!e the sale $as !onsu##ated prior to the

ena!t#ent of Rep. A!t No. <<12, no 8A( $as paid thereon. 57DC then pro!eeded to

develop the tra!t of land, and fro# O!tober, 1;22 on$ards it has been sellin lots

lo!ated in the Llobal City to interested buyers.1

5ollo$in the ee!tivity of Rep. A!t No. <<12, real estate transa!tions su!h as those

reularly enaed in by 57DC have sin!e been #ade sub'e!t to 8A(. As the vendor,

57DC fro# thereon has be!o#e oblied to re#it to the 7ureau of Internal Revenue

37IR4 output 8A( pay#ents it re!eived fro# the sale of its properties to the 7ureau of

Internal Revenue 37IR4. 57DC li+e$ise invo+ed its riht to avail of the transitional

input tax !redit and a!!ordinly sub#itted an inventory list of real properties it

o$ned, $ith a total boo+ value ofP<1,//<,*-,/.. 11

On 1) O!tober 1;;2, 57DC exe!uted in favor of etro Pa!i&! Corporation t$o 3/4

!ontra!ts to sell, separately !onveyin t$o 3/4 par!els of land $ithin the Llobal City

in !onsideration of the pur!hase pri!es atP1,*/2,/;0,;);. and P<0*,;,10.,

both payable in install#ents.1/ 5or the fourth "uarter of 1;;2, 57DC earned a total

of P-,);0,000,<1-.2 fro# the sale of its lots, on $hi!h the output 8A( payable to

the 7IR $asP-10,0,<;/.1). In the !ontext of re#ittin its output 8A( pay#ents to

the 7IR, 57DC paid a total ofP/2;,-),)2;.)* and utili6ed 3a4 P/0,)1-,<0-.

representin a portion of its then total transitional:presu#ptive input tax !reditof P*,2;0,/,/*2., $hi!h petitioner allo!ated for the t$o 3/4 lots sold to etro

Pa!i&!> and 3b4 its reular input tax !redit of P/,-/2,*-;.2; on the pur!hase of

oods and servi!es.1-

7et$een uly and O!tober 1;;<, 57DC sent t$o 3/4 letters to the 7IR re"uestin

appropriate a!tion on $hether its use of its presu#ptive input 8A( on its land

inventory, to the extent of P/0,)1-,<0-. in partial pay#ent of its output 8A( for

the fourth "uarter of 1;;2, $as in order. After investiatin the #atter, the 7IR

re!o##ended that the !lai#ed presu#ptive input tax !redit be

disallo$ed.1) Conse"uently, the 7IR issued to 57DC a Pre%Assess#ent Noti!e 3PAN4

dated /- De!e#ber 1;;< for de&!ien!y 8A( for the )th "uarter of 1;;2. (his $as

follo$ed by a letter of respondent Co##issioner of Internal Revenue

3CIR4,1* addressed to and re!eived by 57DC on * ar!h 1;;0, disallo$in the

presu#ptive input tax !redit arisin fro# the land inventory on the basis of Revenue

Reulation <%;* 3RR <%;*4 and Revenue e#orandu# Cir!ular -%;2 3RC -%;24.

Se!tion ).1*%1 of RR <%;* provided the basis in #ain for the CIRs opinion, the

se!tion readin, thus@

Se!. ).1*%1. (ransitional input tax on beinnin inventories. B (axpayers $ho

be!a#e 8A(%reistered persons upon ee!tivity of RA No. <<12 $ho have ex!eeded

the #ini#u# turnover of P*,. or $ho voluntarily reister even if their

turnover does not ex!eed P*,. shall be entitled to a presu#ptive input tax

on the inventory on hand as of De!e#ber -1, 1;;* on the follo$in@ 3a4 oods

pur!hased for resale in their present !ondition> 3b4 #aterials pur!hased for further

pro!essin, but $hi!h have not yet underone pro!essin> 3!4 oods $hi!h have

been #anufa!tured by the taxpayer> 3d4 oods in pro!ess and supplies, all of $hi!h

are for sale or for use in the !ourse of the taxpayers trade or business as a 8A(%

reistered person.

Jo$ever, in the !ase of real estate dealers, the basis of the presu#ptive input tax

shall be the i#prove#ents, su!h as buildins, roads, drainae syste#s, and other

si#ilar stru!tures, !onstru!ted on or after the ee!tivity of EO /<- 3anuary 1,

1;004.

(he transitional input tax shall be 0U of the value of the inventory or a!tual 8A(paid, $hi!hever is hiher, $hi!h a#ount #ay be allo$ed as tax !redit aainst the

output tax of the 8A(%reistered person.

(he CIR li+e$ise !ited fro# the (ransitory Provisions of RR <%;*, parti!ularly the

follo$in@

3a4 Presu#ptive Input (ax Credits %

x x x

3iii4 5or real estate dealers, the presu#ptive input tax of 0U of the boo+ value of

i#prove#ents on or after anuary 1, 1;00 3the ee!tivity of E.O. /<-4 shall be

allo$ed.


























5or purposes of sub%pararaphs 3i4, 3ii4 and 3iii4 above, an inventory as of De!e#ber

-1, 1;;* of su!h oods or properties and i#prove#ents sho$in the "uantity,

des!ription and a#ount &led $ith the RDO not later than anaury -1, 1;;2.

x x x

Conse"uently, 57DC re!eived an Assess#ent Noti!e in the a#ount

of P)*,100,<0.0, representin de&!ien!y 8A( for the )th "uarter of 1;;2, in!ludin

sur!hare, interest and penalty. After respondent Reional Dire!tor denied 57DCs

#otion for re!onsideration:protest, 57DC &led a petition for revie$ $ith the Court of

(ax Appeals 3C(A4, do!+eted as C.(.A. Case No. *22*.12 On 11 Auust /, the C(A

rendered a de!ision a?r#in the assess#ent #ade by the respondents. 1< 57DCassailed the C(A de!ision throuh a petition for revie$ &led $ith the Court of

Appeals, do!+eted as CA%L.R. SP No. 2)<<. On 1* Nove#ber //, the Court of

Appeals rendered a de!ision a?r#in the C(A de!ision, but re#ovin the sur!hare,

interests and penalties, thus redu!in the a#ount due to P/0,)1-,<0-..10 5ro#

said de!ision, 57DC &led a petition for revie$ $ith this Court, the &rst of the t$o

petitions no$ before us, see+in the reversal of the C(A de!ision dated 11 Auust

/ and a pronoun!e#ent that 57DC is entitled to the transitional:presu#ptive

input tax !redit of P/0,)1-,<0-.. (his petition has been do!+eted as L.R. No.

1*000*.

(he se!ond petition, $hi!h is do!+eted as L.R. No. 1<20, involves the sa#e

parties and leal issues, but !on!erns the !lai# of 57DC that it is entitled to !lai# a

si#ilar transitional:presu#ptive input tax !redit, this ti#e for the third "uarter of

1;;<. A brief re!ital of the ante!edin fa!ts underlyin this se!ond !lai# is in order.

5or the third "uarter of 1;;<, 57DC derived the total a#ount of P-,*;1,</2,-/0.11

fro# its sales and lease of lots, on $hi!h the output 8A( payable to the 7IR

$as P-*;,1</,2-/.01.1; A!!ordinly, 57DC #ade !ash pay#ents

totalin P-)<,<)1,2;*.<) and utili6ed its reular input tax !redit of P1;,<)-,*2*.<-

on pur!hases of oods and servi!es. / On 11 ay 1;;;, 57DC &led $ith the 7IR a

!lai# for refund of the a#ount ofP-)<,<)1,2;*.<) $hi!h it had paid as 8A( for the

third "uarter of 1;;<./1 No a!tion $as ta+en on the refund !lai#, leadin 57DC to &le

a petition for revie$ $ith the C(A, do!+eted as C(A Case No. *;/2. Mtili6in the

sa#e valuation// of 0U of the total boo+ value of its beinnin inventory of real

properties 3or P<1,//<,*-,/.4 57DC arued that its input tax !redit $as #ore

than enouh to oset the 8A( paid by it for the third "uarter of 1;;<. /-

On 1< O!tober /, the C(A pro#ulated its de!ision/) in C(A Case No. *;/2,denyin the !lai# for refund. 57DC then &led a petition for revie$ $ith the Court of

Appeals, do!+eted as CA%L.R. SP No. 21*1<. On - O!tober /-, the Court of

Appeals rendered a de!ision/* a?r#in the 'ud#ent of the C(A. As a result, 57DC

&led its se!ond petition, do!+eted as L.R. No. 1<20.

II.

(he t$o petitions $ere duly !onsolidated/2 and !alled for oral aru#ent on 10 April

/2. Durin the oral aru#ents, the parties $ere dire!ted to dis!uss the follo$in

issues@

1. In deter#inin the 1U value%added tax in Se!tion 1 of the Old NIRCF on the

sale of real properties by real estate dealers, is the 0U transitional input tax !redit in

Se!tion 1* applied only to the i#prove#ents on the real property or is it applied on

the value of the entire real propertyY

/. Are Se!tion ).1*.1 and pararaph 3a43III4 of the (ransitory Provisions of Revenue

Reulations No. <%;* valid in li#itin the 0U transitional input tax to the

i#prove#ents on the real propertyY

Ghile the t$o issues are lin+ed, the #ain issue is evidently $hether Se!tion 1* of

the Old NIRC #ay be interpreted in su!h a $ay as to restri!t its appli!ation in the

!ase of real estate dealers only to the i#prove#ents on the real property belonin

to their beinnin inventory, and not the entire real property itself. (here $ould beno !ontroversy before us if the Old NIRC had itself supplied that li#itation, yet the

la$ is tellinly silent in that reard. RR <%;*, $hi!h i#poses su!h restri!tions on real

estate dealers, is dis!ordant $ith the Old NIRC, so it is alleed.

III.

On its fa!e, there is nothin in Se!tion 1* of the Old NIRC that prohibits the

in!lusion of real properties, toether $ith the i#prove#ents thereon, in the

beinnin inventory of oods, #aterials and supplies, based on $hi!h inventory the

transitional input tax !redit is !o#puted. It !an be !on!eded that $hen it $as

drafted Se!tion 1* !ould not have possibly !onte#plated !on!erns spe!i&! to real

properties, as real estate transa!tions $ere not oriinally sub'e!t to 8A(. At the sa#e

ti#e, $hen transa!tions on real properties $ere &nally #ade sub'e!t to 8A(

beinnin $ith Rep. A!t No. <<12, no !orrespondin a#end#ent $as adopted as

reards Se!tion 1* to provide for a dierentiated treat#ent in the appli!ation of

the transitional input tax !redit $ith respe!t to real properties or real estate dealers.

It $as Se!tion 1 of the Old NIRC, as a#ended by Rep. A!t No. <<12, $hi!h #adereal estate transa!tions sub'e!t to 8A( for the &rst ti#e. Prior to the a#end#ent,

Se!tion 1 had i#posed the 8A( 9on every sale, barter or ex!hane of oods,9

$ithout ho$ever spe!ifyin the +ind of properties that fall $ithin or under the

eneri! !lass 9oods9 sub'e!t to the tax.

Rep. A!t No. <<12, $hi!h sini&!antly is also +no$n as the Expanded 8alue%Added

(ax 3E8A(4 la$, expanded the !overae of the 8A( by a#endin Se!tion 1 of the

Old NIRC in several respe!ts, so#e of $hi!h $e $ill enu#erate. 5irst, it #ade every

sale, barter or ex!hane of 9oods or properties9 sub'e!t to 8A(./< Se!ond, it

enerally de&ned 9oods or properties9 as 9all tanible and intanible ob'e!ts $hi!h

are !apable of pe!uniary esti#ation.9/0 (hird, it in!luded a non%ex!lusive

enu#eration of various ob'e!ts that fall under the !lass 9oods or properties9 sub'e!t

to 8A(, in!ludin 9rFeal properties held pri#arily for sale to !usto#ers or held for

lease in the ordinary !ourse of trade or business.9/;

5ro# these a#end#ents to Se!tion 1, is there any dierentiated 8A( treat#ent

on real properties or real estate dealers that $ould 'ustify the suested li#itations

on the appli!ation of the transitional input tax on the#Y Ge see none.

Rep. A!t No. <<12 !lari&es that it is the real properties 9held pri#arily for sale to

!usto#ers or held for lease in the ordinary !ourse of trade or business9 that are

sub'e!t to the 8A(, and not $hen the real estate transa!tions are enaed in by

persons $ho do not sell or lease properties in the ordinary !ourse of trade or

business. It is !lear that those reularly enaed in the real estate business are

a!!orded the sa#e treat#ent as the #er!hants of other oods or properties

available in the #ar+et. In the sa#e $ay that a #illiner !onsiders hats as his oods

and a ran!her !onsiders !attle as his oods, a real estate dealer holds real property,

$hether or not it !ontains i#prove#ents, as his oods.






































Jad Se!tion 1 itself supplied any dierentiation bet$een the treat#ent of real

properties or real estate dealers and the treat#ent of the transa!tions involvin

other !o##er!ial oods, then su!h dierin treat#ent $ould have !onstituted the

statutory basis for the CIR to enae in su!h dierentiation $hi!h said respondent

did see+ to a!!o#plish in this !ase throuh Se!tion ).1*%1 of RR <%;*. Ket thea#end#ents introdu!ed by Rep. A!t No. <<12 to Se!tion 1, !oupled $ith the fa!t

that the said la$ left Se!tion 1* inta!t, reveal the la!+ of any leislative intention to

#a+e persons or entities in the real estate business sub'e!t to a 8A( treat#ent

dierent fro# those enaed in the sale of other oods or properties or in any other

!o##er!ial trade or business.

If the plain text of Rep. A!t No. <<12 fails to supply any apparent 'usti&!ation for

li#itin the beinnin inventory of real estate dealers only to the i#prove#ents on

their properties, ho$ then $ere the CIR and the !ourts a "uo able to 'ustify su!h a

vie$Y

I8.

(he fa!t alone that the denial of 57DCs !lai#s is in a!!ord $ith Se!tion ).1*%1 of

RR <%;* does not, of !ourse, put this in"uiry to rest. If Se!tion ).1*%1 is itself

in!onruent to Rep. A!t No. <<12, the in!onruen!e !annot by itself 'ustify the

denial of the !lai#s. Ge need to in"uire into the rationale behind Se!tion ).1*%1, as

$ell as the "uestion $hether the interpretation of the la$ e#bodied therein is

validated by the la$ itself.

(he C(A, in its rulins, pro!eeded fro# a thesis $hi!h is not readily apparent fro#the texts of the la$s $e have !ited. (he transitional input tax !redit is !onditioned

on the prior pay#ent of sales taxes or the 8A(, so the C(A observed. (he

introdu!tion of the 8A( throuh E.O. No. /<- and its subse"uent expansion throuh

Rep. A!t No. <<12 sub'e!ted various persons to the tax for the very &rst ti#e,

leavin the# unable to !lai# the input tax !redit based on their pur!hases before

they be!a#e sub'e!t to the 8A(. Jen!e, the transitional input tax !redit $as

desined to alleviate that relatively ini"uitous loss. Liven that rationale, a!!ordin to

the C(A, it $ould be i#proper to allo$ 57DC, $hi!h had a!"uired its properties

throuh a tax%free pur!hase, to !lai# the transitional input tax !redit. (he C(A added

that Se!tion 1*.).1 of RR <%;* is !onsonant $ith its per!eived rationale behind the

transitional input tax !redit sin!e the #aterials used for the !onstru!tion of

i#prove#ents $ould have #ost li+ely involved the pay#ent of 8A( on their

pur!hase.

Con!ededly, this theory of the C(A has so#e sense, extravaantly extrapolated as it

is thouh fro# the see#in silen!e on the part of the provisions of the la$. Ket

ulti#ately, the theory is $oefully li#ited in perspe!tive.

It is !orre!t, as pointed out by the C(A, that upon the shift fro# sales taxes to 8A( in

1;0< ne$ly%8A( reistered people $ould have been pre'udi!ed by the inability to

!redit aainst the output 8A( their pay#ents by $ay of sales tax on their existin

sto!+s in trade. Ket that ine"uity $as pre!isely addressed by a transitory provision in

E.O. No. /<- found in Se!tion /* thereof. (he provision authori6ed 8A(%reisteredpersons to invo+e a 9presu#ptive input tax e"uivalent to 0U of the value of the

inventory as of De!e#ber -1, 1;0< of #aterials and supplies $hi!h are not for sale,

the tax on $hi!h $as not ta+en up or !lai#ed as deferred sales tax !redit9, and a

si#ilar presu#ptive input tax e"uivalent to 0U of the value of the inventory as of

De!e#ber -1, 1;0< of oods for sale, the tax on $hi!h $as not ta+en up or !lai#edas deferred sales tax !redit.-

Se!tion /* of E.O. No. /<- perfe!tly re#edies the proble# assu#ed by the C(A as

the basis for the introdu!tion of transitional input tax !redit in 1;0<. If the !ore

purpose of the tax !redit is only, as hinted by the C(A, to allo$ for so#e #ode of

a!!reditation of previously%paid sales taxes, then Se!tion /* alone $ould have

su?!ed. Ket E.O. No. /<- a#ended the Old NIRC itself by providin for thetransitional input tax !redit under Se!tion 1*, thereby assurin that the tax !redit

$ould endure lon after the last oods #ade sub'e!t to sales tax have been

!onsu#ed.

If indeed the transitional input tax !redit is interally related to previously paid sales

taxes, the purported !ausal lin+ bet$een those t$o $ould have been nonetheless

extinuished lon ao. Ket Conress has reena!ted the transitional input tax !redit

several ti#es> that fa!t si#ply belies the absen!e of any relationship bet$een su!h

tax !redit and the lon%abolished sales taxes. Obviously then, the purpose behind

the transitional input tax !redit is not !on&ned to the transition fro# sales tax to 8A(.

(here is hardly any !onstri!ted de&nition of 9transitional9 that $ill li#it its possible

#eanin to the shift fro# the sales tax rei#e to the 8A( rei#e. Indeed, it !ould

also allude to the transition one underoes fro# not bein a 8A(%reistered person

to be!o#in a 8A(%reistered person. Su!h transition does not ta+e pla!e #erely by

operation of la$, E.O. No. /<- or Rep. A!t No. <<12 in parti!ular. It !ould also o!!ur

$hen one de!ides to start a business. Se!tion 1* states that the transitional input

tax !redits be!o#e available either to 314 a person $ho be!o#es liable to 8A(> or 3/4

any person $ho ele!ts to be 8A(%reistered. (he !lear lanuae of the la$ entitles

ne$ trades or businesses to avail of the tax !redit on!e they be!o#e 8A(%reistered.

(he transitional input tax !redit, $hether under the Old NIRC or the Ne$ NIRC, #ay

be !lai#ed by a ne$ly%8A( reistered person su!h as $hen a business as it

!o##en!es operations. If $e vie$ the #atter fro# the perspe!tive of a startin

entrepreneur, reater !larity e#eres on the !ontinued utility of the transitional

input tax !redit.

5ollo$in the theory of the C(A, the ne$ enterprise should be able to !lai# the

transitional input tax !redit be!ause it has presu#ably paid taxes, 8A( in parti!ular,

in the pur!hase of the oods, #aterials and supplies in its beinnin inventory.

Conse"uently, as the C(A held belo$, if the ne$ enterprise has not paid 8A( in its

pur!hases of su!h oods, #aterials and supplies, then it should not be able to !lai#

the tax !redit. Jo$ever, it is not al$ays true that the a!"uisition of su!h oods,

#aterials and supplies entail the pay#ent of taxes on the part of the ne$ business.

In fa!t, this !ould o!!ur as a #atter of !ourse by virtue of the operation of various

provisions of the NIRC, and not only on a!!ount of a spe!ially leislated exe#ption.

et us !ite a fe$ exa#ples dra$n fro# the Ne$ NIRC. If the oods or properties are

not a!"uired fro# a person in the !ourse of trade or business, the transa!tion $ouldnot be sub'e!t to 8A( under Se!tion 1*.-1 (he sale $ould be sub'e!t to !apital ains

taxes under Se!tion /)3D4,-/ but sin!e !apital ains is a tax on passive in!o#e it is

the seller, not the buyer, $ho enerally $ould shoulder the tax.

If the oods or properties are a!"uired throuh donation, the a!"uisition $ould not

be sub'e!t to 8A( but to donors tax under Se!tion ;0 instead. -- It is the donor $ho

$ould be liable to pay the donors tax,-) and the donation $ould be exe#pt if the

donors total net ifts durin the !alendar year does not ex!eed P1,..-*

If the oods or properties are a!"uired throuh testate or intestate su!!ession, the

transfer $ould not be sub'e!t to 8A( but liable instead for estate tax under (itle III of



















the Ne$ NIRC.-2 If the net estate does not ex!eedP/,., no estate tax $ould

be assessed.-<

(he interpretation proered by the C(A $ould ex!lude oods and properties $hi!h

are a!"uired throuh sale not in the ordinary !ourse of trade or business, donation

or throuh su!!ession, fro# the beinnin inventory on $hi!h the transitional input

tax !redit is based. (his prospe!t all but hihlihts the ulti#ate absurdity of the

respondents position. Aain, nothin in the Old NIRC 3or even the Ne$ NIRC4 spea+sof su!h a possibility or "uali&es the previous pay#ent of 8A( or any other taxes on

the oods, #aterials and supplies as a pre%re"uisite for in!lusion in the beinnin

inventory.

It is apparent that the transitional input tax !redit operates to bene&t ne$ly 8A(%

reistered persons, $hether or not they previously paid taxes in the a!"uisition of

their beinnin inventory of oods, #aterials and supplies. Durin that period of

transition fro# non%8A( to 8A( status, the transitional input tax !redit serves to

alleviate the i#pa!t of the 8A( on the taxpayer. At the very beinnin, the 8A(%

reistered taxpayer is oblied to re#it a sini&!ant portion of the in!o#e it derived

fro# its sales as output 8A(. (he transitional input tax !redit #itiates this initial

di#inution of the taxpayers in!o#e by aordin the opportunity to oset the losses

in!urred throuh the re#ittan!e of the output 8A( at a stae $hen the person is yet

unable to !redit input 8A( pay#ents.

(here is another point that $eihs aainst the C(As interpretation. Mnder Se!tion

1* of the Old NIRC, the rate of the transitional input tax !redit is 90U of the value of

su!h inventory or the a!tual value%added tax paid on su!h oods, #aterials andsupplies, $hi!hever is hiher.9-0 If indeed the transitional input tax !redit is pre#ised

on the previous pay#ent of 8A(, then it does not #a+e sense to aord the taxpayer

the bene&t of su!h !redit based on 90U of the value of su!h inventory9 should the

sa#e prove hiher than the a!tual 8A( paid. (his intent that the C(A alluded to

!ould have been i#ple#ented $ith ease had the leislature shared su!h intent by

providin the a!tual 8A( paid as the sole basis for the rate of the transitional input

tax !redit.

(he C(A harped on the !ir!u#stan!e that 57DC $as ex!used fro# payin any tax on

the pur!hase of its properties fro# the national overn#ent, even !lai#in that to

allo$ the transitional input tax !redit is 9tanta#ount to ivin an undeserved bonus

to real estate dealers si#ilarly situated as 57DCF $hi!h the Lovern#ent !annot

aord to provide.9 Ket the tax la$s in "uestion, and all tax la$s in eneral, are

desined to enfor!e unifor# tax treat#ent to persons or !lasses of persons $hoshare #ini#u# leislated standards. (he !o##on standard for the appli!ation of

the transitional input tax !redit, as ena!ted by E.O. No. /<- and all subse"uent tax

la$s $hi!h reinfor!ed or reinterated the tax !redit, is si#ply that the taxpayer in"uestion has be!o#e liable to 8A( or has ele!ted to be a 8A(%reistered person. E.O.

No. /<- and the subse"uent tax la$s are all de!idedly neutral and a!!o##odatin

in as!ertainin $ho should be entitled to the tax !redit, and it behooves the CIR and

the C(A to adopt a si#ilarly 'udi!ious perspe!tive.

I8.

Liven the fatal a$s in the theory oered by the C(A as supposedly underlyin the

transitional input tax !redit, is there any other basis to 'ustify the li#itations

i#posed by the CIR throuh RR <%;*Y Ge dis!ern nothin #ore. As seen in our

dis!ussion, there is no loi! that !oheres $ith either E.O. No. /<- or Rep. A!t No.<<12 $hi!h supports the restri!tion i#posed on real estate bro+ers and their ability

to !lai# the transitional input tax !redit based on the value of their real properties.

In addition, the very idea of ex!ludin the real properties itself fro# the beinnin

inventory si#ply runs !ounter to $hat the transitional input tax !redit see+s to

a!!o#plish for persons enaed in the sale of oods, $hether or not su!h 9oods9

ta+e the for# of real properties or #ore #undane !o##odities.

Mnder Se!tion 1*, the beinnin inventory of 9oods9 for#s part of the valuation of

the transitional input tax !redit. Loods, as !o##only understood in the businesssense, refers to the produ!t $hi!h the 8A(%reistered person oers for sale to the

publi!. Gith respe!t to real estate dealers, it is the real properties the#selves $hi!h

!onstitute their 9oods.9 Su!h real properties are the operatin assets of the real

estate dealer.

Se!tion ).1%1 of RR No. <%;* itself in!ludes in its enu#eration of 9oods or

properties9 su!h 9real properties held pri#arily for sale to !usto#ers or held for

lease in the ordinary !ourse of trade or business.9 Said de&nition $as ta+en fro# the

very statutory lanuae of Se!tion 1 of the Old NIRC. 7y li#itin the de&nition of

oods to 9i#prove#ents9 in Se!tion ).1*%1, the 7IR not only !ontravened the

de&nition of 9oods9 as provided in the Old NIRC, but also the de&nition $hi!h the

sa#e revenue reulation itself has provided.

(he Court of (ax Appeals !lai#ed that under Se!tion 1* of the Old NIRC the basis

for the inventory of oods, #aterials and supplies upon $hi!h the transitional input

8A( $ould be based 9shall be left to reulation by the appropriate ad#inistrative

authority9. (his is based on the phrase 9&lin of an inventory as pres!ribed by

reulations9 found in Se!tion 1*. Nonetheless, Se!tion 1* does in!lude theparti!ular properties to be in!luded in the inventory, na#ely oods, #aterials and

supplies. It is "uestionable $hether the CIR has the po$er to a!tually rede&ne the

!on!ept of 9oods,9 as she did $hen she ex!luded real properties fro# the !lass of

oods $hi!h real estate !o#panies in the business of sellin real properties #ay

in!lude in their inventory. (he authority to pres!ribe reulations !an pertain to #ore

te!hni!al #atters, su!h as ho$ to appraise the value of the inventory or $hat papers

need to be &led to properly ite#i6e the !ontents of su!h inventory. 7ut su!h

authority !annot o as far as to a#end Se!tion 1* itself, $hi!h the Co##issioner

had unfortunately a!!o#plished in this !ase.

It is of !ourse axio#ati! that a rule or reulation #ust bear upon, and be !onsistent

$ith, the provisions of the enablin statute if su!h rule or reulation is to be

valid.-; In !ase of !oni!t bet$een a statute and an ad#inistrative order, the for#er

#ust prevail.) Indeed, the CIR has no po$er to li#it the #eanin and !overae of the ter# 9oods9 in Se!tion 1* of the Old NIRC absent statutory authority or basis

to #a+e and 'ustify su!h li#itation. A !ontrary !on!lusion $ould #ean the CIR !ould

very $ell #oot the la$ or arroate leislative authority unto hi#self by retaininsole dis!retion to provide the de&nition and s!ope of the ter# 9oods.9

8.

At this 'un!ture, $e turn to so#e of the points raised in the dissent of the estee#ed

usti!e Antonio (. Carpio.

(he dissent adopts the C(As thesis that the transitional input tax !redit applies only

$hen taxes $ere previously paid on the properties in the beinnin inventory. Jad

the dissentin vie$ $on, it $ould have introdu!ed a ne$ re"uisite to the appli!ation

of the transitional input tax !redit and re"uired the taxpayer to supply proof that ithad previously paid taxes on the a!"uisition of oods, #aterials and supplies

















!o#prisin its beinnin inventory. Ge have su?!iently rebutted this thesis, but the

dissent adds a t$ist to the aru#ent by usin the ter# 9presu#ptive input tax

!redit9 to i#ply that the transitional input tax !redit involves a presu#ption that

there $as a previous pay#ent of taxes.

et us !larify the distin!tion bet$een the presu#ptive input tax !redit and the

transitional input tax !redit. As $ith the transitional input tax !redit, the presu#ptive

input tax !redit is !reditable aainst the output 8A(. It ne!essarily has !o#e intoexisten!e in our tax stru!ture only after the introdu!tion of the 8A(. As "uoted

earlier,)1 E.O. No. /<- provided for a 9presu#ptive input tax !redit9 as one of the

transitory #easures in the shift fro# sales taxes to 8A(, but su!h presu#ptive input

tax !redit $as never interated in the NIRC itself. It $as only in 1;;<, or eleven

years after the 8A( $as &rst introdu!ed, that the presu#ptive input tax !redit $as

&rst in!orporated in the NIRC, #ore parti!ularly in Se!tion 111374 of the Ne$ NIRC.

As borne out by the text of the provision,)/ it is plain that the presu#ptive input tax

!redit is hihly li#ited in appli!ation as it #ay be !lai#ed only by 9persons or &r#s

enaed in the pro!essin of sardines, #a!+erel and #il+, and in #anufa!turin

re&ned suar and !oo+in oil>9)- and 9publi! $or+s !ontra!tors.9))

Clearly, for #ore than a de!ade no$, the ter# 9presu#ptive input tax !redit9 has

!onte#plated a parti!ularly idiosyn!rati! tax !redit far divor!ed fro# its oriinal

usae in the transitory provisions of E.O. No. /<-. (here is utterly no sense then in

lat!hin on to the ter# as havin any sini&!ant #eanin for the purpose of the

!ases at bar.

(he dissent, in aruin for the ee!tivity of Se!tion ).1*%1 of RR <%;*, ratio!inatesin this #anner@ 314 Se!tion ).1*%1 &nds basis in Se!tion 1* of the Old NIRC, $hi!h

provides that the input tax is allo$ed on the 9beinnin inventory of oods,

#aterials and supplies>9 3/4 input taxes #ust have been paid on su!h oods,

#aterials and supplies> 3-4 unli+e real property itself, the i#prove#ents thereon

$ere already sub'e!t to 8A( even prior to the passae of Rep. A!t No. <<12> 3)4 sin!e

no 8A( $as paid on the real property prior to the passae of Rep. A!t No. <<12, it

!ould not for# part of the 9beinnin inventory of oods, #aterials and supplies.9

(his !hain of pre#ises have already been debun+ed. It is apparent that the dissent

believes that only those 9oods, #aterials and supplies9 on $hi!h input 8A( $as

paid !ould for# the basis of valuation of the input tax !redit. (hus, if the 8A(%

reistered person a!"uired all the oods, #aterials and supplies of the beinnin

inventory throuh a sale not in the ordinary !ourse of trade or business, or throuh

su!!ession or donation, said person $ould be unable to re!eive a transitional input

tax !redit. Ket even RR <%;*, $hi!h i#poses the restri!tion only on real estate

dealers per#its su!h other persons $ho obtained their beinnin inventory throuh

tax%free #eans to !lai# the transitional input tax !redit. (he dissent thus betrays a

vie$ that is even #ore radi!al and #ore #isalined $ith the lanuae of the la$

than that expressed by the CIR.

8I.

A &nal observation. Se!tion ).1*.1 of RR No. <%;*, insofar as it disallo$s real estate

dealers fro# in!ludin the value of their real properties in the beinnin inventory of

oods, #aterials and supplies, has in fa!t already been repealed. (he oendin

provisions $ere deleted $ith the ena!t#ent of Revenue Reulation No. 2%;< 3RR 2%;<4 dated / anuary 1;;<, $hi!h a#ended RR <%;*.)* (he repeal of the basis for the

present assess#ents by RR 2%;< only hihlihts the !ontinuin absurdity of the

position of the 7IR to$ards 57DC.

57DC points out that $hile the transa!tions involved in L.R. No. 1*000* too+ pla!e

durin the ee!tivity of RR <%;*, the transa!tions involved in L.R. No. 1<20 in fa!t

too+ pla!e after RR No. 2%;< had ta+en ee!t. Indeed, the assess#ents sub'e!t of

L.R. No. 1<20 $ere for the third "uarter of 1;;<, or several #onths after the

ee!tivity of RR 2%;<. (hat fa!t provides additional reason to sustain 57DCs !lai#

for refund of its 1;;< (hird Quarter 8A( pay#ents. Nevertheless, sin!e the assailed

restri!tions i#ple#ented by RR <%;* $ere not san!tioned by la$ in the &rst pla!e

there is no loner need to d$ell on su!h fa!t.

GJERE5ORE, the petitions are LRAN(ED. (he assailed de!isions of the Court of (axAppeals and the Court of Appeals are RE8ERSED and SE( ASIDE. Respondents are

hereby 314 restrained fro# !olle!tin fro# petitioner the a#ount of P/0,)1-,<0-.

representin the transitional input tax !redit due it for the fourth "uarter of 1;;2>

and 3/4 dire!ted to refund to petitioner the a#ount of P-)<,<)1,2;*.<) paid as

output 8A( for the third "uarter of 1;;< in liht of the persistin transitional input

tax !redit available to petitioner for the said "uarter, or to issue a tax !redit

!orrespondin to su!h a#ount. No pronoun!e#ent as to !osts.

SO ORDERED.
















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