G.R. No.
197525 June 4, 2014 the two-year prescriptive period, its judicial claim filed with the CTA Second Division was
VISAYAS GEOTHERMAL POWER COMPANY, Petitioner,
vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.
DECISION
MENDOZA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court
assailing the February 7, 2011 Decision 1 and the June 27, 2011 Resolution 2 of the Court of Tax
Appeals En Banc (CTA En Banc) in CTA EB Case Nos. 561 and 562, which reversed and set
aside the April 17, 2009 Decision of the CT A Second Division in CTA Case No. 7559.
The Facts:
Petitioner Visayas Geothermal Power Company (VGPC) is a special limited partnership duly
organized and existing under Philippine Laws with its principal office at Milagro, Ormoc City,
Province of Leyte. It is principally engaged in the business of power generation through
geothermal energy and the sale of generated power to the Philippine National Oil Company
(PNOC),pursuant to the Energy Conversion Agreement.
VGPC filed with the Bureau of Internal Revenue (BIR)its Original Quarterly VAT Returns for the
first to fourth quarters of taxable year 2005 on April 25, 2005, July 25, 2005, October 25, 2006,
and January 20, 2006, respectively.
On December 6, 2006, it filed an administrative claim for refund for the amount of 14,160,807.95
with the BIR District Office No. 89 of Ormoc City on the ground that it was entitled to recover
excess and unutilized input VAT payments for the four quarters of taxable year 2005, pursuant to
Republic Act (R.A.) No. 9136, 3 which treated sales of generated power subject to VAT to a zero
percent (0%) rate starting June 26, 2001.
Nearly one month later, on January3, 2007, while its administrative claim was pending, VGPC
filed its judicial claim via a petition for review with the CTA praying for a refund or the issuance of
a tax credit certificate in the amount of 14,160,807.95, covering the four quarters of taxable year
2005.
In its April 17, 2009 Decision, the CTA Second Division partially granted the petition as follows:
WHEREFORE, in view of the foregoing considerations, the Petition for Review is hereby
PARTIALLY GRANTED. Accordingly, respondent is ORDERED TO REFUND or, in the
alternative, TO ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner the reduced amount
of SEVEN MILLION SIX HUNDRED NINENTY NINE THOUSAND THREE HUNDRED SIXTY
SIX PESOS AND 37/100 (P7,699,366.37) representing unutilized input VAT paid on domestic
purchases of non-capital goods and services, services rendered by non-residents, and
importations of non-capital goods for the first to fourth quarters of taxable year 2005.
SO ORDERED.4
The CTA Second Division found that only the amount of 7,699,366.37 was duly substantiated by
the required evidence. As to the timeliness of the filing of the judicial claim, the Court ruled that
following the case of Commissioner of Internal Revenue (CIR) v. Mirant Pagbilao Corporation
(Mirant),5 both the administrative and judicial claims were filed within the two-year prescriptive
period provided in Section 112(A) of the National Internal Revenue Code of 1997 (NIRC),the
reckoning point of the period being the close of the taxable quarter when the sales were made.
In its October 29, 2009 Resolution, 6 the CTA Second Division denied the separate motions for
partial reconsideration filed by VGPC and the CIR. Thus, both VGPC and the CIR appealed to
the CTA En Banc.
In the assailed February 7, 2011 Decision,7 the CTA En Banc reversed and set aside the
decision and resolution of the CTA Second Division, and dismissed the original petition for
review for having been filed prematurely, to wit:
WHEREFORE, premises considered:
i. As regards CTA EB Case No. 562, the Petition for Review is hereby DISMISSED; and
ii. As regards CTA EB Case No. 561, the Petition for Review is hereby GRANTED.
Accordingly, the Decision, dated April 17, 2009, and the Resolution, dated October 29, 2009, of
the CTA Former Second Division are hereby REVERSED and SET ASIDE, and another one is
hereby entered DISMISSING the Petition for Review filed in CTA Case No. 7559 for having been
filed prematurely.
SO ORDERED.8
The CTA En Banc explained that although VGPC seasonably filed its administrative claim within
prematurely filed under Section 112(D) of the National Internal Revenue Code (NIRC).Citing the
case of CIR v. Aichi Forging Company of Asia, Inc. (Aichi), 9 the CTA En Banc held that the
judicial claim filed 28 days after the petitioner filed its administrative claim, without waiting for the
expiration of the 120-day period, was premature and, thus, the CTA acquired no jurisdiction over
the case.
The VGPC filed a motion for reconsideration, but the CTA En Banc denied it in the assailed June
27, 2011 Resolution for lack of merit. It stated that the case of Atlas Consolidated Mining v. CIR
(Atlas)10 relied upon by the petitioner had long been abandoned.
Hence, this petition.
ASSIGNMENT OF ERRORS
I
The CTA En Banc erred in finding that the 120-day and 30-day periods prescribed under Section
112(D) of the 1997 Tax Code are jurisdictional and mandatory in the filing of the judicial claim for
refund. The CTA-Division should take cognizance of the judicial appeal as long as it is filed with
the two-year prescriptive period under Section 229 of the 1997 Tax Code.
II
The CTA En Banc erred in finding that Aichi prevails over and/or overturned the doctrine in Atlas,
which upheld the primacy of the two-year period under Section 229 of the Tax Code. The law
and jurisprudence have long established the doctrine that the taxpayer is duty-bound to observe
the two-year period under Section 229 of the Tax Code when filing its claim for refund of excess
and unutilized VAT.
III
The CTA En Banc erred in finding that Respondent CIR is not estopped from questioning the
jurisdiction of the CTA. Respondent CIR, by her actions and pronouncements, should have been
precluded from questioning the jurisdiction of the CTA-Division.
IV
The CTA En Banc erred in applying Aichi to Petitioner VGPCs claim for refund. The novel
interpretation of the law in Aichi should not be made to apply to the present case for being
contrary to existing jurisprudence at the time Petitioner VGPC filed its administrative and judicial
claims for refund.11
Petitioner VGPC argues that (1) the law and jurisprudence have long established the rule
regarding compliance with the two-year prescriptive period under Section 112(D) in relation to
Section 229 of the 1997 Tax Code; (2) Aichi did not overturn the doctrine in Atlas, which upheld
the primacy of the two-year period under Section 229; (3) respondent CIR is estopped from
questioning the jurisdiction of the CTA and Aichi cannot be indiscriminately applied to all VAT
refund cases; (4) applying Aichi invariably to all VAT refund cases would effectively grant
respondent CIR unbridled discretion to deprive a taxpayer of the right to effectively seek judicial
recourse, which clearly violates the standards of fairness and equity; and (5) the novel
interpretation of the law in Aichi should not be made to apply to the present case for being
contrary to existing jurisprudence at the time VGPC filed its administrative and judicial claims for
refund. Aichi should be applied prospectively.
Ruling of the Court
Judicial claim not premature
The assignment of errors is rooted in the core issue of whether the petitioners judicial claim for
refund was prematurely filed.
Two sections of the NIRC are pertinent to the issue at hand, namely Section 112 (A) and (D) and
Section 229, to wit:
SEC. 112. Refunds or Tax Credits of Input Tax.
(A) Zero-rated or Effectively Zero-rated Sales.- Any VAT-registered person, whose sales are
zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable
quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of
creditable input tax due or paid attributable to such sales, except transitional input tax, to the
extent that such input tax has not been applied against output tax: Provided, however, That in
the case of zero-rated sales under Section 106(A)(2)(a)(1), (2) and (B) and Section 108 (B)(1)
and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted
for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP):
Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale
and also in taxable or exempt sale of goods of properties or services, and the amount of
creditable input tax due or paid cannot be directly and entirely attributed to any one of the
transactions, it shall be allocated proportionately on the basis of the volume of sales.
xxx
(D) Period within which Refund or Tax Credit of Input Taxes shall be Made.- In proper cases, the
Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes
within one hundred twenty (120) days from the date of submission of complete documents in
support of the application filed in accordance with Subsections (A) and (B) hereof.
In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of
the Commissioner to act on the application within the period prescribed above, the taxpayer
affected may, within thirty (30) days from the receipt of the decision denying the claim or after the
expiration of the one hundred twenty day period, appeal the decision or the unacted claim with
the Court of Tax Appeals.
SEC. 229. Recovery of Tax Erroneously or Illegally Collected. - No suit or proceeding shall be
maintained in any court for the recovery of any national internal revenue tax hereafter alleged to
have been erroneously or illegally assessed or collected, or of any penalty claimed to have been
collected without authority, of any sum alleged to have been excessively or in any manner
wrongfully collected without authority, or of any sum alleged to have been excessively or in any
manner wrongfully collected, until a claim for refund or credit has been duly filed with the
Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty,
or sum has been paid under protest or duress.
In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from
the date of payment of the tax or penalty regardless of any supervening cause that may arise
after payment: Provided, however, That the Commissioner may, even without a written claim
therefor, refund or credit any tax, where on the face of the return upon which payment was
made, such payment appears clearly to have been erroneously paid.
[Emphases supplied]
It has been definitively settled in the recent En Banc case of CIR v. San Roque Power
Corporation (San Roque),12 that it is Section 112 of the NIRC which applies to claims for tax
credit certificates and tax refunds arising from sales of VAT-registered persons that are zero-
rated or effectively zero-rated, which are, simply put, claims for unutilized creditable input VAT.
Thus, under Section 112(A), the taxpayer may, within 2 years after the close of the taxable
quarter when the sales were made, via an administrative claim with the CIR, apply for the
issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to
such sales. Under Section 112(D), the CIR must then act on the claim within 120 days from the
submission of the taxpayers complete documents. In case of (a) a full or partial denial by the
CIR of the claim, or (b) the CIRs failure to act on the claim within 120 days, the taxpayer may
file a judicial claim via an appeal with the CTA of the CIR decision or unacted claim, within 30
days (a) from receipt of the decision; or (b) after the expiration of the 120-day period.
The 2-year period under Section 229 does not apply to appeals before the CTA in relation to
claims for a refund or tax credit for unutilized creditable input VAT.Section 229 pertains to the
recovery of taxes erroneously, illegally, or excessively collected. 13 San Roque stressed that
"input VAT is not excessively collected as understood under Section 229 because, at the time
the input VAT is collected, the amount paid is correct and proper." 14 It is, therefore, Section 112
which applies specifically with regard to claiming a refund or tax credit for unutilized creditable
input VAT.15
Upholding the ruling in Aichi,16 San Roque held that the 120+30 day period prescribed under
Section 112(D) mandatory and jurisdictional.17 The jurisdiction of the CTA over decisions or
inaction of the CIR is only appellate in nature and, thus, necessarily requires the prior filing of an
administrative case before the CIR under Section 112. 18 The CTA can only acquire jurisdiction
over a case after the CIR has rendered its decision, or after the lapse of the period for the CIR to
act, in which case such inaction is considered a denial. 19 A petition filed prior to the lapse of the
120-day period prescribed under said Section would be premature for violating the doctrine on
the exhaustion of administrative remedies.20
There is, however, an exception to the mandatory and jurisdictional nature of the 120+30 day
period. The Court in San Roque noted that BIR Ruling No. DA-489-03, dated December 10,
2003, expressly stated that the "taxpayer-claimant need not wait for the lapse of the 120-day
period before it could seek judicial relief with the CTA by way of Petition for Review." 21 This BIR
Ruling was recognized as a general interpretative rule issued by the CIR under Section 4 22 of the
NIRC and, thus, applicable to all taxpayers. Since the CIR has exclusive and original jurisdiction
to interpret tax laws, it was held that taxpayers acting in good faith should not be made to suffer
for adhering to such interpretations. Section 24623 of the Tax Code, in consonance with equitable
estoppel, expressly provides that a reversal of a BIR regulation or ruling cannot adversely
prejudice a taxpayer who in good faith relied on the BIR regulation or ruling prior to its reversal.
Hence, taxpayers can rely on BIR Ruling No. DA-489-03 from the time of its issuance on
December 10, 2003 up to its reversal by this Court in Aichion October 6, 2010, where it was held
that the 120+30 day period was mandatory and jurisdictional.
Accordingly, the general rule is that the 120+30 day period is mandatory and jurisdictional from
the effectivity of the 1997 NIRC on January 1, 1998, up to the present. As an exception, judicial
claims filed from December 10, 2003 to October 6, 2010 24 need not wait for the exhaustion of the
120-day period.
A review of the facts of the present case reveals that petitioner VGPC timely filed its
administrative claim with the CIR on December 6, 2006, and later, its judicial claim with the CTA
on January 3, 2007. The judicial claim was clearly filed within the period of exception and was,
therefore, not premature and should not have been dismissed by the CTA En Banc.
In the present petition, VGPC prays that the Court grant its claim for refund or the issuance of a
tax credit certificate for its unutilized input VAT in the amount of P14,160,807.95. The CTA
Second Division, however, only awarded the amount of P7,699,366.37. The petitioner has failed
to present any argument to support its entitlement to the former amount.
In any case, the Court would have been precluded from considering the same as such would
require a review of the evidence, which would constitute a question of fact outside the Courts
purview under Rule 45 of the Rules of Court. The Court, thus, finds that the petitioner is entitled
to the refund awarded to it by the CTA Second Division in the amount of P7,699,366.37.
Atlas doctrine has no relevance
to the 120+30 day period for
filing judicial claim
Although the core issue of prematurity of filing has already been resolved, the Court deems it
proper to discuss the petitioners argument that the doctrine in Atlas, which allegedly upheld the
primacy of the 2-year prescriptive period under Section 229,should prevail over the ruling in Aichi
regarding the mandatory and jurisdictional nature of the 120+30 day period in Section 112.
In this regard, it was thoroughly explained in San Roque that the Atlas doctrine only pertains to
the reckoning point of the 2-year prescriptive period from the date of payment of the output VAT
under Section 229, and has no relevance to the 120+30 day period under Section 112, to wit:
The Atlas doctrine, which held that claims for refund or credit of input VAT must comply with the
two-year prescriptive period under Section 229, should be effective only from its promulgation on
8 June 2007 until its abandonment on 12 September 2008 in Mirant. The Atlas doctrine was
limited to the reckoning of the two-year prescriptive period from the date of payment of the
output VAT. Prior to the Atlas doctrine, the two-year prescriptive period for claiming refund or
credit of input VAT should be governed by Section 112(A) following the verba legis rule. The
Mirant ruling, which abandoned the Atlas doctrine, adopted the verba legis rule, thus applying
Section 112(A) in computing the two year prescriptive period in claiming refund or credit of input
VAT.
The Atlas doctrine has no relevance to the 120+30 day periods under Section 112(C) because
the application of the 120+30 day periods was not in issue in Atlas. The application of the
120+30 day periods was first raised in Aichi, which adopted the verba legis rule in holding that
the 120+30 day periods are mandatory and jurisdictional. The language of Section 112(C) is
plain, clear, and unambiguous. When Section 112(C) states that "the Commissioner shall grant a
refund or issue the tax credit within one hundred twenty (120) days from the date of submission
of complete documents," the law clearly gives the Commissioner 120 days within which to
decide the taxpayers claim. Resort to the courts prior to the expiration of the 120-day period is a
patent violation of the doctrine of exhaustion of administrative remedies, a ground for dismissing
the judicial suit due to prematurity. Philippine jurisprudence is awash with cases affirming and
reiterating the doctrine of exhaustion of administrative remedies. Such doctrine is basic and
elementary.25
[Underscoring supplied]
Thus, Atlas is only relevant in determining when to file an administrative claim with the CIR for
refund or credit of unutilized creditable input VAT, and not for determining when to file a judicial government to serve the people for whose benefit taxes are collected. To safeguard such
claim with the CTA. From June 8, 2007 to September 12, 2008, the 2-year prescriptive period to interest, neglect or omission of government officials entrusted with the collection of taxes should
file administrative claims should be counted from the date of payment of the output VAT tax. not be allowed to bring harm or detriment to the people.34
Before and after said period, the 2-year prescriptive period is counted from the close of the Rules on claims for refund or tax credit of unutilized input VAT
taxable quarter when the sales were made, in accordance with Section 112(A). In either case, For clarity and guidance, the Court deems it proper to outline the rules laid down in San Roque
the mandatory and jurisdictional 120+30 day period must be complied with for the filing of the with regard to claims for refund or tax credit of unutilized creditable input VAT. They are as
judicial claim with the CTA, except for the period provided under BIR Ruling No. DA-489-03, as follows:
previously discussed. 1. When to file an administrative claim with the CIR:
The Court further noted that Atlas was decided in relation to the 1977 Tax Code which had not a. General rule Section 112(A) and Mirant Within 2 years from the close of the taxable quarter
yet provided for the 30-day period for the taxpayer to appeal to the CTA from the decision or when the sales were made.
inaction of the CIR over claims for unutilized input VAT. Clearly then, the Atlas doctrine cannot be b. Exception Atlas
invoked to disregard compliance with the 120+30 day mandatory and jurisdictional period. 26 In Within 2 years from the date of payment of the output VAT, if the administrative claim was filed
San Roque, it was written: from June 8, 2007 (promulgation of Atlas) to September 12, 2008 (promulgation of Mirant).
The old rule that the taxpayer may file the judicial claim, without waiting for the Commissioners 2. When to file a judicial claim with the CTA:
decision if the two-year prescriptive period is about to expire, cannot apply because that rule a. General rule Section 112(D); not Section 229
was adopted before the enactment of the 30-day period. The 30-day period was adopted i. Within 30 days from the full or partial denial of the administrative claim by the CIR; or
precisely to do away with the old rule, so that under the VAT System the taxpayer will always ii. Within 30 days from the expiration of the 120-day period provided to the CIR to decide on the
have 30 days to file the judicial claim even if the Commissioner acts only on the 120th day, or claim. This is mandatory and jurisdictional beginning January L 1998 ( effectivity of 1997 NI RC).
does not act at all during the 120-day period. With the 30-day period always available to the b. Exception - BIR Ruling No. DA-489-03
taxpayer, the taxpayer can no longer file a judicial claim for refund or credit of input VAT without The judicial claim need not await the expiration of the 120-day period, if such was filed from
waiting for the Commissioner to decide until the expiration of the 120-day period.27 December 10, 2003 (issuance of BIR Ruling No. DA-489-03) to October 6, 2010 (promulgation
At any rate, even assuming that the Atlas doctrine was relevant to the present case, it could not of Aichi).
be applied since it was held to be effective only from its promulgation on June 8, 2007 until its WHEREFORE, the petition is PARTIALLY GRANTED. The February 7, 2011 Decision and the
abandonment on September 12, 2008 when Mirant was promulgated. The petitioner in this case June 27, 2011 Resolution of the Court of Tax Appeals En Banc, in CT A EB Case Nos. 561 and
filed both its administrative and judicial claims outside the said period of effectivity. 562 are REVERSED and SET ASIDE. The April 17, 2009 Decision and the October 29, 2009
Aichi not applied prospectively Resolution of the CTA Former Second Division in CTA Case No. 7559 are REINSTATED.
Petitioner VGPC also argues that Aichi should be applied prospectively and, therefore, should Public respondent is hereby ORDERED TO REFUND or, in the alternative, TO ISSUE A TAX
not be applied to the present case. This position cannot be given consideration. CREDIT CERTIFICATE, in favor or the petitioner the amount of SEVEN MILLION SIX
Article 8 of the Civil Code provides that judicial decisions applying or interpreting the law shall HUNDRED NINETY NINE THOUSAND THREE HUNDRED SIXTY SIX PESOS AND 37/100
form part of the legal system of the Philippines and shall have the force of law. The interpretation (P7,699,366.37) representing unutilized input VAT paid on domestic purchases of non-capital
placed upon a law by a competent court establishes the contemporaneous legislative intent of goods and services, services rendered by nonresidents, and importations of non-capital goods
the law. Thus, such interpretation constitutes a part of the law as of the date the statute is for the first to fourth quarters of taxable year 2005.
enacted. It is only when a prior ruling of the Court is overruled, and a different view adopted, that SO ORDERED
the new doctrine may have to be applied prospectively in favor of parties who have relied on the
old doctrine and have acted in good faith.28
Considering that the nature of the 120+30 day period was first settled in Aichi, the interpretation
by the Court of its being mandatory and jurisdictional in nature retro acts to the date the NIRC
was enacted. It cannot be applied prospectively as no old doctrine was overturned.
The petitioner cannot rely either on the alleged jurisprudence prevailing at the time it filed its
judicial claim. The Court notes that the jurisprudence relied upon by the petitioner consists of
CTA cases. It is elementary that CTA decisions do not constitute precedent and do not bind this
Court or the public. Only decisions of this Court constitute binding precedents, forming part of
the Philippine legal system.29
As regards the cases30 which were later decided allegedly in contravention of Aichi, it is of note
that all of them were decided by Divisions of this Court, and not by the Court En Banc. 1wphi1
Any doctrine or principle of law laid down by the Court, either rendered En Bancor in Division,
may be overturned or reversed only by the Court sitting En Banc. 31 Thus, the cases cited by the
petitioner could not have overturned the doctrine laid down in Aichi.
CIR not estopped
The petitioners argument that the CIR should have been estopped from questioning the
jurisdiction of the CTA after actively participating in the proceedings before the CTA Second
Division deserves scant consideration.
It is a well-settled rule that the government cannot be estopped by the mistakes, errors or
omissions of its agents.32 It has been specifically held that estoppel does not apply to the
government, especially on matters of taxation. Taxes are the nations lifeblood through which
government agencies continue to operate and with which the State discharges its functions for
the welfare of its constituents.33 Thus, the government cannot be estopped from collecting taxes
by the mistake, negligence, or omission of its agents. Upon taxation depends the ability of the
G.R. No. 203774, March 11, 2015
CARGILL PHILIPPINES, INC., Petitioner, v. COMMISSIONER OF INTERNAL REVENUE,
Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated June 18, 2012 and the
Resolution3 dated September 27, 2012 of the Court of Tax Appeals (CTA) En Banc in CTA EB
Case No. 779, which affirmed the Amended Decision 4 dated April 20, 2011 of the CTA Special
First Division (CTA Division) in CTA Case Nos. 6714 and 7262, dismissing petitioner Cargill
Philippines, Inc.s (Cargill) claims for refund of unutilized input value-added tax (VAT) for being
prematurely filed.chanroblesvirtuallawlibrary
The Facts
Cargill is a domestic corporation duly organized and existing under Philippine laws whose
primary purpose is to own, operate, run, and manage plants and facilities for the production,
crushing, extracting, or otherwise manufacturing and refining of coconut oil, coconut meal,
vegetable oil, lard, margarine, edible oil, and other articles of similar nature and their by-
products. It is a VAT-registered entity with Tax Identification No./VAT Registration No.000-110-
659-000.5As such, it filed its quarterly VAT returns for the second quarter of calendar year 2001
up to the third quarter of fiscal year 2003, covering the period April 1, 2001 to February 28, 2003,
which showed an overpayment of P44,920,350.92 and, later, its quarterly VAT returns for the
fourth quarter of fiscal year 2003 to the first quarter of fiscal year 2005, covering the period
March 1, 2003 to August 31, 2004 which reflected an overpayment of P31,915,642.26. 6 Cargill
maintained that said overpayments were due to its export sales of coconut oil, the proceeds of
which were paid for in acceptable foreign currency and accounted for in accordance with the
rules and regulations of the Bangko Sentralng Pilipinas and, thus, are zero-rated for VAT
purposes.7cralawred
On June 27, 2003, Cargill filed an administrative claim for refund of its unutilized input VAT in
the amount of P26,122,965.81 for the period of April 1, 2001 to February 28, 2003 (first refund
claim) before the Bureau of Internal Revenue (BIR). Thereafter, or on June 30, 2003, it filed a
judicial claim for refund, by way of a petition for review, before the CTA, docketed as CTA Case
No. 6714. On September 29, 2003, it subsequently filed a supplemental application with the BIR
increasing its claim for refund of unutilized input VAT to the amount of
P27,847,897.72.8cralawred
On May 31, 2005, Cargill filed a second administrative claim for refund of its unutilized input VAT
in the amount of P22,194,446.67 for the period of March 1, 2003 to August 31, 2004 (second
refund claim) before the BIR. On even date, it filed a petition for review before the CTA,
docketed as CTA Case No. 7262.9cralawred
For its part, respondent Commissioner of Internal Revenue (CIR) claimed, inter alia, that the
amounts being claimed by Cargill as unutilized input VAT in its first and second refund claims
were not properly documented and, hence, should be denied.10cralawred
11 12
On Cargills motion for consolidation, the CTA Division, in a Resolution dated July 10, 2007,
ordered the consolidation of CTA Case No. 6714 with CTA Case No. 7262 for having common
questions of law and facts.13cralawred
The CTA Division Ruling
In a Decision14 dated August 24, 2010 (August 24, 2010 Decision), the CTA Division partially
granted Cargills claims for refund of unutilized input VAT and thereby ordered the CIR to issue a
tax credit certificate in the reduced amount of P3,053,469.99, representing Cargills unutilized
input VAT attributable to its VAT zero-rated export sales for the period covering April 1, 2001 to
August 31, 2004.15 It found that while Cargill timely filed its administrative and judicial claims
within the two (2)-year prescriptive period, 16 as held in the case of CIR v. Mirant Pagbilao
Corp.,17 it, however, failed to substantiate the remainder of its claims for refund of unutilized input
VAT, resulting in the partial denial thereof.18cralawred
Dissatisfied, CIR respectively moved for reconsideration, 19 and for the dismissal of Cargills
petitions,claiming that they were prematurely filed due to its failure to exhaust administrative
remedies.20 Cargill likewise sought for reconsideration, 21 maintaining that the CTA Division erred
in disallowing the rest of its refund claims.
In an Amended Decision22dated April 20, 2011, the CTA Division preliminarily denied the
individual motions of both parties, to wit: (a) CIRs motion for reconsideration for lack of notice of
hearing; (b) CIRs motion to dismiss on the ground of estoppel; and (c) Cargills motion for
reconsideration for lack of merit.23cralawred
Separately, however, the CTA Division superseded and consequently reversed its August 24,
2010 Decision. Citing the case of CIR v. Aichi Forging Company of Asia, Inc. (Aichi),24it held that
the 120-day period provided under Section 112(D) of the National Internal Revenue Code
(NIRC) must be observed prior to the filing of a judicial claim for tax refund. 25As Cargill failed to
comply therewith, the CTA Division, without ruling on the merits, dismissed the consolidated
cases for being prematurely filed.26cralawred
Aggrieved, Cargill elevated its case to the CTA En Banc.
The CTA En Banc Ruling
In a Decision27 dated June 18, 2012, the CTA En Banc affirmed the CTA Divisions April 20, 2011
Amended Decision, reiterating that Cargills premature filing of its claims divested the CTA of
jurisdiction, and perforce, warranted the dismissal of its petitions. To be specific, it highlighted
that Cargills petition in CTA Case No. 6714 was filed on June 30, 2003, or after the lapse of
three (3) days from the time it filed its administrative claim with the BIR; while its petition in CTA
Case No. 7672 was filed on the same date it filed its administrative claim with the BIR, i.e., on
May 31, 2005. As such, the CTA En Banc ruled that Cargills judicial claims were correctly
dismissed for being filed prematurely.28cralawred
Cargill moved for reconsideration 29 which was, however, denied by the CTA En Banc in a
Resolution30 dated September 27, 2012, hence, this petition.chanroblesvirtuallawlibrary
The Issue Before the Court
The core issue in this case is whether or not the CTA En Banc correctly affirmed the CTA
Divisions outright dismissal of Cargills claims for refund of unutilized input VAT on the ground of
prematurity.chanroblesvirtuallawlibrary
The Courts Ruling
The petition is partly meritorious.
Allowing the refund or credit of unutilized input VAT finds its genesis in Executive Order No.
273,31 series of 1987, which is recognized as the Original VAT Law. Thereafter, it was amended
through the passage of Republic Act No. (RA) 7716,32 RA 8424,33 and, finally by RA 9337,34
which took effect on November 1, 2005. Considering that Cargills claims for refund covered
periods before the effectivity of RA 9337, Section 112 of the NIRC, as amended by RA 8424,
should, therefore, be the governing law,35the pertinent portions of which
read:chanRoblesvirtualLawlibrary
Section 112. Refunds or Tax Credits of Input Tax.
(A) Zero-rated or Effectively Zero-rated Sales. any VAT-registered person, whose sales are
zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable
quarter when the sales were made, apply for the issuance of a tax credit certificate or refund
of creditable input tax due or paid attributable to such sales, except transitional input tax, to the
extent that such input tax has not been applied against output tax: x x x.chanrobleslaw
xxxx
(D) Period within which Refund or Tax Credit of Input Taxes shall be Made. In proper cases,
the Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes
within one hundred twenty (120) days from the date of submission of complete
documents in support of the application filed in accordance with Subsections (A) and (B)
hereof.
In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of
the Commissioner to act on the application within the period prescribed above, the taxpayer
affected may, within thirty (30) days from the receipt of the decision denying the claim or
after the expiration of the one hundred twenty day-period, appeal the decision or the
unacted claim with the Court of Tax Appeals. (Emphases and underscoring supplied)
xxxx
cralawlawlibrary
In the landmark case of Aichi, it was held that the observance of the 120-day period is a
mandatory and jurisdictional requisite to the filing of a judicial claim for refund before the CTA. As
such, its non-observance would warrant the dismissal of the judicial claim for lack of jurisdiction.
It was, withal, delineated in Aichi that the two (2)-year prescriptive period would only apply to
administrative claims, and not to judicial claims. 36 Accordingly, once the administrative claim is
filed within the two (2)-year prescriptive period, the taxpayer-claimant must wait for the lapse of
the 120-day period and, thereafter, he has a 30-day period within which to file his judicial claim
before the CTA, even if said 120-day and 30-day periods would exceed the aforementioned two
(2)-year prescriptive period.37cralawred
after three (3) days later, the CTA En Banc, thus, correctly dismissed Cargills petition in CTA
Case No. 6714for being prematurely filed.
In contrast, records show that with respect to Cargills second refund claim, its administrative
and judicial claims were both filed on May 31, 2005, or during the period of effectivity of BIR
Ruling NO. DA-489-03, and, thus, fell within the exemption window period contemplated in San
Roque, i.e., when taxpayer-claimants need not wait for the expiration of the 120-day period
before seeking judicial relief. Verily, the CTA En Banc erred when it outrightly dismissed CTA
Case No. 7262on the ground of prematurity.
This notwithstanding, the Court finds that Cargills second refund claim in the amount of
P22,194,446.67 which allegedly represented unutilized input VAT covering the period March 1,
2003 to August 31, 2004 should not be instantly granted. This is because the determination of
Cargills entitlement to such claim, if any, would necessarily involve factual issues and, thus, are
evidentiary in nature which are beyond the pale of judicial review under a Rule 45 petition where
only pure questions of law, not of fact, may be resolved. 43 Accordingly, the prudent course of
action is to remand CTA Case No. 7262 to the CTA Division for resolution on the merits,
consistent with the Courts ruling in Panay Power Corporation v. CIR.44cralawred
WHEREFORE, the petition is PARTLY GRANTED. Accordingly, the Decision dated June 18,
2012 and the Resolution dated September 27, 2012 of the Court of Tax Appeals (CTA) En Banc
in CTA EB Case No. 779 are hereby AFFIRMED only insofar as it dismissed CTA Case No.
6714. On the other hand, CTA Case No. 7262 is REINSTATED and REMANDED to the CTA
Special First Division for its resolution on the merits.
SO ORDERED.cralawlawlibrary

Nevertheless, the Court, in the case of CIR v. San Roque Power Corporation38 (San Roque),
recognized an exception to the mandatory and jurisdictional nature of the 120-day period. San
Roque enunciated that BIR Ruling No. DA-489-03 dated December 10, 2003, which expressly
declared that the taxpayer-claimant need not wait for the lapse of the 120-day period before it
could seek judicial relief with the CTA by way of petition for review, provided a valid claim for
equitable estoppel under Section 24639 of the NIRC.40cralawred

In the more recent case of Taganito Mining Corporation v. CIR,41 the Court reconciled the
pronouncements in Aichi and San Roque, holding that from December 10, 2003 to October 6,
2010 which refers to the interregnum when BIR Ruling No. DA-489-03 was issued until the date
of promulgation of Aichi, taxpayer-claimants need not observe the stringent 120-day period; but
before and aftersaid window period, the mandatory and jurisdictional nature of the 120-day
period remained in force, viz.:chanRoblesvirtualLawlibrary

Reconciling the pronouncements in the Aichi and San Roque cases, the rule must therefore be
that during the period December 10, 2003 (when BIR Ruling No. DA-489-03 was issued) to
October 6, 2010 (when the Aichi case was promulgated), taxpayers-claimants need not
observe the 120-day period before it could file a judicial claim for refund of excess input VAT
before the CTA. Before and after the aforementioned period ( i.e., December 10, 2003 to
October 6, 2010), the observance of the 120-day period is mandatory and jurisdictional to
the filing of such claim.42 (Emphases and underscoring supplied)cralawlawlibrary

In this case, records disclose that anent Cargills first refund claim, it filed its administrative claim
with the BIR on June 27, 2003, and its judicial claim before the CTA on June 30, 2003, or before
the period when BIR Ruling No. DA-489-03 was in effect, i.e., from December 10, 2003 to
October 6, 2010. As such, it was incumbent upon Cargill to wait for the lapse of the 120-day
period before seeking relief with the CTA, and considering that its judicial claim was filed only

G.R. No. 187456 June 2, 2014
ALABANG DEVELOPMENT CORPORATION, Petitioner,
vs.
ALABANG HILLS VILLAGE ASSOCIATION and RAFAEL TINIO, Respondents.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari assailing the Decision 1 of the Court of
Appeals (CA), dated March 27, 2009, in CA-G.R. CV No. 88864.
The factual and procedural antecedents of the case, as summarized by the CA, are as follows:
The case traces its roots to the Complaint for Injunction and Damages filed [with the Regional
Trial Court (RTC) of Muntinlupa City] on October 19, 2006 by [herein petitioner, Alabang
Development Corporation] ADC against [herein respondents, Alabang Hills Village Association,
Inc.] AHVAI and Rafael Tinio (Tinio), President of AHVAI. The Complaint alleged that [petitioner]
is the developer of Alabang Hills Village and still owns certain parcels of land therein that are yet
to be sold, as well as those considered open spaces that have not yet been donated to [the]
local government of Muntinlupa City or the Homeowner's Association. Sometime in September
[2006], ADC learned that AHVAI started the construction of a multi-purpose hall and a swimming
pool on one of the parcels of land still owned by ADC without the latter's consent and approval,
and that despite demand, AHVAI failed to desist from constructing the said improvements. ADC
thus prayed that an injunction be issued enjoining defendants from constructing the multi-
purpose hall and the swimming pool at the Alabang Hills Village.
In its Answer With Compulsory Counterclaim, AHVAI denied ADC's asseverations and claimed
that the latter has no legal capacity to sue since its existence as a registered corporate entity
was revoked by the Securities and Exchange Commission (SEC) on May 26, 2003; that ADC
has no cause of action because by law it is no longer the absolute owner but is merely holding
the property in question in trust for the benefit of AHVAI as beneficial owner thereof; and that the
subject lot is part of the open space required by law to be provided in the subdivision. As
counterclaim, it prayed that an order be issued divesting ADC of the title of the property and
declaring AHVAI as owner thereof; and that ADC be made liable for moral and exemplary
damages as well as attorney's fees.
Tinio filed his separate Answer With Compulsory Counterclaim, practically reiterating the
defenses of AHVAI.2
On January 4, 2007, the RTC of Muntinlupa City, Branch 276, rendered judgment dismissing
herein petitioner's complaint on the grounds (1) that the latter has no personality to file the same;
(2) that the subject property "is a reserved area for the beneficial use of the homeowners, as
mandated by law;" and (3) that the Housing and Land Use Regulatory Board (HLURB), not the
RTC, has exclusive jurisdiction over the dispute between petitioner and respondents.3
Aggrieved, herein petitioner filed a Notice of Appeal of the RTC decision. Herein respondent
AHVAI, on the other hand, moved that it be allowed to prosecute its compulsory counterclaim
praying, for this purpose, that the RTC decision be amended accordingly.
In its Order dated February 20, 2007, the RTC approved petitioner's notice of appeal but
dismissed respondent AHVAIs counterclaim on the ground that it is dependent on petitioner's
complaint. Respondent AHVAI then filed an appeal with the CA.
In its assailed Decision dated March 27, 2009, the CA dismissed both appeals of petitioner and
respondent, and affirmed the decision of the RTC. With respect to petitioner, the CA ruled that
the RTC correctly dismissed petitioner's complaint as the same was filed when petitioner was
already defunct and, as such, it no longer had capacity to file the said complaint. As regards,
respondent AHVAIs counterclaim, the CA held that "where there is no claim against the
[respondent], because [petitioner] is already in existent and has no capacity to sue, the
counterclaim is improper and it must be dismissed, more so where the complaint is dismissed at
the instance of the [respondent]."
Thus, the instant petition based on the following grounds:
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN RELYING ON THE CASE OF
"COLUMBIA PICTURES, INC. v. COURT OF APPEALS" IN RESOLVING PETITIONER'S LACK
OF CAPACITY
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING LACK OF
CAPACITY OFTHE PETITIONER IN FILING THE CASE CONTRARY TO THE EARLIER
RULINGS OF THIS HONORABLE COURT THE HONORABLE COURT OF APPEALS
GRAVELY ERRED WHEN IT FAILED TO RESOLVE THE ISSUE THAT PETITIONER IS
MANDATED TO CEDE PROPERTIES TO RESPONDENT AHVAI 4
Anent the first assigned error, the Court does not agree that the CA erred in relying on the case
of Columbia Pictures, Inc. v. Court of Appeals.5 The CA cited the case for the purpose of
restating and distinguishing the jurisprudential definition of the terms "lack of capacity to sue"
and "lack of personality to sue;" and of applying these definitions to the present case. Thus, the
fact that, unlike in the instant case, the corporations involved in the Columbia case were foreign
corporations is of no moment. The definition of the term "lack of capacity to sue" enunciated in
the said case still applies to the case at bar. Indeed, as held by this Court and as correctly cited
by the CA in the case of Columbia: "[l]ack of legal capacity to sue means that the plaintiff is not
in the exercise of his civil rights, or does not have the necessary qualification to appear in the
case, or does not have the character or representation he claims[;] 'lack of capacity to sue' refers
to a plaintiff's general disability to sue, such as on account of minority, insanity, incompetence,
lack of juridical personality or any other general disqualifications of a party. ..."6 In the instant
case, petitioner lacks capacity to sue because it no longer possesses juridical personality by
reason of its dissolution and lapse of the three-year grace period provided under Section 122 of
the Corporation Code, as will be discussed below.
With respect to the second assigned error, Section 122 of the Corporation Code provides as
follows:
SEC. 122. Corporate liquidation. Every corporation whose charter expires by its own limitation
or is annulled by forfeiture or otherwise, or whose corporate existence for other purposes is
terminated in any other manner, shall nevertheless be continued as a body corporate for three
(3) years after the time when it would have been so dissolved, for the purpose of prosecuting
and defending suits by or against it and enabling it to settle and close its affairs, to dispose of
and convey its property and to distribute its assets, but not for the purpose of continuing the
business for which it was established.
At any time during said three (3) years, said corporation is authorized and empowered to convey
all of its property to trustees for the benefit of stockholders, members, creditors, and other
persons in interest. From and after any such conveyance by the corporation of its property in
trust for the benefit of its stockholders, members, creditors and others in interest, all interest
which the corporation had in the property terminates, the legal interest vests in the trustees, and
the beneficial interest in the stockholders, members, creditors or other persons in interest.
Upon winding up of the corporate affairs, any asset distributable to any creditor or stockholder or
member who is unknown or cannot be found shall be escheated to the city or municipality where
such assets are located.
Except by decrease of capital stock and as otherwise allowed by this Code, no corporation shall
distribute any of its assets or property except upon lawful dissolution and after payment of all its
debts and liabilities.
This Court has held that:
It is to be noted that the time during which the corporation, through its own officers, may conduct
the liquidation of its assets and sue and be sued as a corporation is limited to three years from
the time the period of dissolution commences; but there is no time limit within which the trustees
must complete a liquidation placed in their hands. It is provided only (Corp. Law, Sec. 78 now
Sec. 122]) that the conveyance to the trustees must be made within the three-year period. It may
be found impossible to complete the work of liquidation within the three-year period or to reduce
disputed claims to judgment. The authorities are to the effect that suits by or against a
corporation abate when it ceased to be an entity capable of suing or being sued (7 R.C.L.,
Corps., par. 750); but trustees to whom the corporate assets have been conveyed pursuant to
the authority of Sec. 78 [now Sec. 122] may sue and be sued as such in all matters connected
with the liquidation...7
In the absence of trustees, this Court ruled, thus:
Still in the absence of a board of directors or trustees, those having any pecuniary interest in
the assets, including not only the shareholders but likewise the creditors of the corporation,
acting for and in its behalf, might make proper representations with the Securities and Exchange
Commission, which has primary and sufficiently broad jurisdiction in matters of this nature, for
working out a final settlement of the corporate concerns.8
In the instant case, there is no dispute that petitioner's corporate registration was revoked on
May 26, 2003.1wphi1 Based on the above-quoted provision of law, it had three years, or until
May 26, 2006, to prosecute or defend any suit by or against it. The subject complaint, however,
was filed only on October 19, 2006, more than three years after such revocation. It is likewise
not disputed that the subject complaint was filed by petitioner corporation and not by its directors
or trustees. In fact, it is even averred, albeit wrongly, in the first paragraph of the Complaint 9 that
"[p]laintiff is a duly organized and existing corporation under the laws of the Philippines, with
capacity to sue and be sued. x x x"10
Petitioner, nonetheless, insists that a corporation may still sue, even after it has been dissolved
and the three-year liquidation period provided under Section 122 of the Corporation Code has
passed. Petitioner cites the cases of Gelano v. Court of Appeals,11 Knecht v. United Cigarette
Corporation,12 and Pepsi-Cola Products Philippines, Inc. v. Court of Appeals,13 as authority to
support its position. The Court, however, agrees with the CA that in the abovecited cases, the
corporations involved filed their respective complaints while they were still in existence. In other
words, they already had pending actions at the time that their corporate existence was
terminated.
The import of this Court's ruling in the cases cited by petitioner is that the trustee of a corporation
may continue to prosecute a case commenced by the corporation within three years from its
dissolution until rendition of the final judgment, even if such judgment is rendered beyond the
three-year period allowed by Section 122 of the Corporation Code. However, there is nothing in
the said cases which allows an already defunct corporation to initiate a suit after the lapse of the
said three-year period. On the contrary, the factual circumstances in the abovecited cases would
show that the corporations involved therein did not initiate any complaint after the lapse of the
three-year period. In fact, as stated above, the actions were already pending at the time that
they lost their corporate existence.
In the present case, petitioner filed its complaint not only after its corporate existence was
terminated but also beyond the three-year period allowed by Section 122 of the Corporation
Code. Thus, it is clear that at the time of the filing of the subject complaint petitioner lacks the
capacity to sue as a corporation. To allow petitioner to initiate the subject complaint and pursue it
until final judgment, on the ground that such complaint was filed for the sole purpose of
liquidating its assets, would be to circumvent the provisions of Section 122 of the Corporation
Code.
As to the last issue raised, the basic and pivotal issue in the instant case is petitioner's capacity
to sue as a corporation and it has already been settled that petitioner indeed lacks such
capacity. Thus, this Court finds no cogent reason to depart from the ruling of the CA finding it
unnecessary to delve on the other issues raised by petitioner.
WHEREFORE, the instant petition is DENIED. The assailed Decision of the Court of Appeals in
CA-G.R. CV No. 88864, sustaining the Decision of the Regional Trial Court of Muntinlupa City,
Branch 276, in Civil Case No. 06-138, is AFFIRMED.
SO ORDERED.