G.R. No. 172129. September 12, 2008.
* Same; Same; Value Added Tax (VAT); Evidence; The law considers a duly-executed
COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. MIRANT PAGBILAO
CORPORATION (Formerly SOUTHERN ENERGY QUEZON, INC.), respondent.
Taxation; Tax Refunds and Tax Credits; Unjust Enrichment; Quantum of Proof; A
claim for tax refund may be based on a statute granting tax exemption, or, the result
of legislative grace, in which case, the claim is to be construed strictissimi juris
against the taxpayer; A tax refund may also be, as usually it is, predicated on tax
refund provisions allowing a refund of erroneous or excess payment of tax, on which
case it is founded on the principle of solutio indebiti, a basic postulate that no one
should unjustly enrich himself at the expense of another; A claim for tax refund
proper necessitates only the preponderance-of-evidence threshold like in any
ordinary civil case.—The divergent factual findings and rulings of the CTA and CA impel us
to evaluate the evidence adduced below, particularly the April 14, 1998 OR 0189 in the
amount of PhP 135,996,570 [for US$ 5,190,000 at US$1: PhP 26.203 rate of exchange].
Verily, a claim for tax refund may be based on a statute granting tax exemption, or, as
Commissioner of Internal Revenue v. Fortune Tobacco Corporation, 559 SCRA 160 (2008),
would have it, the result of legislative grace. In such case, the claim is to be construed
strictissimi juris against the taxpayer, meaning that the claim cannot be made to rest on
vague inference. Where the rule of strict interpretation against the taxpayer is applicable as
the claim for refund partakes of the nature of an exemption, the claimant must show that he
clearly falls under the exempting statute. On the other hand, a tax refund may be, as usually
it is, predicated on tax refund provisions allowing a refund of erroneous or excess payment
of tax. The return of what was erroneously paid is founded on the principle of solutio
indebiti, a basic postulate that no one should unjustly enrich himself at the expense of
another. The caveat against unjust enrichment covers the government. And as decisional
law teaches, a claim for tax refund proper, as here, necessitates only the preponderance-of-
evidence threshold like in any ordinary civil case.
Same; Same; Appeals; While, as a matter of sound practice, the Supreme Court
refrains from reviewing the factual determinations of the Court of Appeals or
reevaluate the evidence upon which its decision is founded, an exception to this rule
is when the Court of Appeals and the trial court diametrically differ in their findings.—
As a matter of sound practice, the Court refrains from reviewing the factual determinations
of the CA or reevaluate the evidence upon which its decision is founded. One exception to
this rule is when the CA and the trial court diametrically differ in their findings, as here. In
such a case, it is incumbent upon the Court to review and determine if the CA might have
overlooked, misunderstood, or misinterpreted certain facts or circumstances of weight,
which, if properly considered, would justify a different conclusion. In the instant case, the
CTA, unlike the CA, doubted the veracity of OR No. 0189 and did not appreciate the same
to support MPC’s claim for tax refund or credit.
Value Added Tax (VAT) invoice or Official Receipt referred to in Section 110(A)(1)(B)
of the National Internal Revenue Code as sufficient evidence to support a claim for
input tax credit.—Without necessarily saying that the BIR is precluded from requiring
additional evidence to prove that input tax had indeed paid or, in fine, that the taxpayer is
indeed entitled to a tax refund or credit for input VAT, we agree with the CA’s above
disposition. As the Court distinctly notes, the law considers a duly-executed VAT invoice or
OR referred to in the above provision as sufficient evidence to support a claim for input tax
credit. And any doubt as to what OR No. 0189 was for or tended to prove should reasonably
be put to rest by the SGV report on which the CTA notably placed much reliance. The SGV
report stated that “[OR] No. 0189 dated April 14, 1998 is for the payment of the VAT on the
progress billings” from Mitsubishi Japan “for the period April 7, 1993 to September 6, 1996
for the E & M Equipment Erection Portion of the Company’s contract with Mitsubishi
Corporation (Japan).”
Same; Same; Same; Prescription; Unutilized input Value Added Tax (VAT) payments
not otherwise used for any internal revenue tax due the taxpayer must be claimed
within two years reckoned from the close of the taxable quarter when the relevant
sales were made pertaining to the input Value Added Tax (VAT) regardless of whether
said tax was paid or not—the reckoning frame would always be the end of the quarter
when the pertinent sales or transaction was made, regardless when the input VAT
was paid.—The above proviso clearly provides in no uncertain terms that unutilized input
VAT payments not otherwise used for any internal revenue tax due the taxpayer must be
claimed within two years reckoned from the close of the taxable quarter when the relevant
sales were made pertaining to the input VAT regardless of whether said tax was paid or not.
As the CA aptly puts it, albeit it erroneously applied the aforequoted Sec. 112(A),
“[P]rescriptive period commences from the close of the taxable quarter when the sales were
made and not from the time the input VAT was paid nor from the time the official receipt was
issued.” Thus, when a zero-rated VAT taxpayer pays its input VAT a year after the pertinent
transaction, said taxpayer only has a year to file a claim for refund or tax credit of the
unutilized creditable input VAT. The reckoning frame would always be the end of the quarter
when the pertinent sales or transaction was made, regardless when the input VAT was paid.
Be that as it may, and given that the last creditable input VAT due for the period covering the
progress billing of September 6, 1996 is the third quarter of 1996 ending on September 30,
1996, any claim for unutilized creditable input VAT refund or tax credit for said quarter
prescribed two years after September 30, 1996 or, to be precise, on September 30, 1998.
Consequently, MPC’s claim for refund or tax credit filed on December 10, 1999 had already
prescribed.
Same; Same; Same; Same; Sections 204(C) and 229 of the National Internal Revenue
Code (NIRC) apply only to instances of erroneous payment or illegal collection of
internal revenue taxes.—MPC cannot avail itself of the provisions of either Sec. 204(C) or
229 of the NIRC which, for the purpose of refund, prescribes a different starting point for the
two-year prescriptive limit for the filing of a claim therefor. Secs. 204(C) and 229
respectively provide: x x x Notably, the above provisions also set a two-year prescriptive
period, reckoned from date of payment of the tax or penalty, for the filing of a claim of refund
or tax credit. Notably too, both provisions apply only to instances of erroneous payment or
illegal collection of internal revenue taxes.

Same; Same; Same; Same; The Court reminds the Bureau of Internal Revenue (BIR)
and other tax agencies of their duty to treat claims for refunds and tax credits with
proper attention and urgency—the all too familiar complaint is that the government
acts with dispatch when it comes to tax collection, but pays little, if any, attention to
tax claims for refund or exemption.—The Court wishes to remind the BIR and other tax
agencies of their duty to treat claims for refunds and tax credits with proper attention and
urgency. Had RDO No. 60 and, later, the BIR proper acted, instead of sitting, on MPC’s
underlying application for effective zero rating, the matter of addressing MPC’s right, or lack
of it, to tax credit or refund could have plausibly been addressed at their level and
perchance freed the taxpayer and the government from the rigors of a tedious litigation. The
all too familiar complaint is that the government acts with dispatch when it comes to tax
collection, but pays little, if any, attention to tax claims for refund or exemption. It is high time
our tax collectors prove the cynics wrong.
 G.R. No. 184823. October 6, 2010.*
COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. AICHI FORGING COMPANY
OF ASIA, INC., respondent.
Taxation; Value Added Tax (VAT); Prescription; Tax Refunds; Section 112(A) of the
National Internal Revenue Code (NIRC) is the applicable provision in determining the
start of the two-year period for claiming a refund/credit of unutilized input Value
Added Tax (VAT), and that Sections 204(C) and 229 of the NIRC are inapplicable as
“both provisions apply only to instances of erroneous payment or illegal collection
of internal revenue taxes.”—The pivotal question of when to reckon the running of the two-
year prescriptive period, however, has already been resolved in Commissioner of Internal
Revenue v. Mirant Pagbilao Corporation, 565 SCRA 154 (2008), where we ruled that
Section 112(A) of the NIRC is the applicable provision in determining the start of the two-
year period for claiming a refund/credit of unutilized input VAT, and that Sections 204(C) and
229 of the NIRC are inapplicable as “both provisions apply only to instances of erroneous
payment or illegal collection of internal revenue taxes.”
Same; Same; Same; Words and Phrases; As between the Civil Code, which provides
that a year is equivalent to 365 days, and the Administrative Code of 1987, which
states that a year is composed of 12 calendar months, it is the latter that must prevail
following the legal maxim, Lex posteriori derogat priori.—In Commissioner of Internal
Revenue v. Primetown Property Group, Inc., 531 SCRA 436 (2007), we said that as
between the Civil Code, which provides that a year is equivalent to 365 days, and the
Administrative Code of 1987, which states that a year is composed of 12 calendar months, it
is the latter that must prevail following the legal maxim, Lex posteriori derogat priori. Thus:
Both Article 13 of the Civil Code and Section 31, Chapter VIII, Book I of the Administrative
Code of 1987 deal with the same subject matter—the computation of legal periods. Under
the Civil Code, a year is equivalent to 365 days whether it be a regular year or a leap year.
Under the Administrative Code of 1987, however, a year is composed of 12 calendar
months. Needless to state, under the Administrative Code of 1987, the number of days is
irrelevant. There obviously exists a manifest incompatibility in the manner of computing
legal periods under the Civil Code and the Administrative Code of 1987. For this reason, we
hold that Section 31, Chapter VIII, Book I of the Administrative Code of 1987, being the
more recent law, governs the computation of legal periods. Lex posteriori derogat priori.
after the 120-day period the CIR fails to act on the application for tax refund/credit, the
remedy of the taxpayer is to appeal the inaction of the CIR to CTA within 30 days. In this
case, the administrative and the judicial claims were simultaneously filed on September 30,
2004. Obviously, respondent did not wait for the decision of the CIR or the lapse of the 120-
day period. For this reason, we find the filing of the judicial claim with the CTA premature.
Same; Same; Same; Words and Phrases; The phrase “within two (2) years x x x apply
for the issuance of a tax credit certificate or refund” in Section 112(A) of the National
Internal Revenue Code (NIRC) refers to applications for refund/credit filed with the
Commission of Internal Revenue (CIR) and not to appeals made to the Court of Tax
Appeals (CTA)—applying the two-year period to judicial claims would render
nugatory Section 112(D) of the NIRC, which already provides for a specific period
within which a taxpayer should appeal the decision or inaction of the CIR.—There is
nothing in Section 112 of the NIRC to support respondent’s view. Subsection (A) of the said
provision states that “any VAT-registered person, whose sales are zero-rated or effectively
zero-rated may, within two 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.” The phrase “within two (2) years x x x apply for the
issuance of a tax credit certificate or refund” refers to applications for refund/credit filed with
the CIR and not to appeals made to the CTA. This is apparent in the first paragraph of
subsection (D) of the same provision, which states that the CIR has “120 days from the
submission of complete documents in support of the application filed in accordance with
Subsections (A) and (B)” within which to decide on the claim. In fact, applying the two-year
period to judicial claims would render nugatory Section 112(D) of the NIRC, which already
provides for a specific period within which a taxpayer should appeal the decision or inaction
of the CIR. The second paragraph of Section 112(D) of the NIRC envisions two scenarios:
(1) when a decision is issued by the CIR before the lapse of the 120-day period; and (2)
when no decision is made after the 120-day period. In both instances, the taxpayer has 30
days within which to file an appeal with the CTA. As we see it then, the 120-day period is
crucial in filing an appeal with the CTA. Commissioner of Internal Revenue vs. Aichi Forging
Company of Asia, Inc., 632 SCRA 422, G.R. No. 184823 October 6, 2010

Same; Same; Same; Where the taxpayer did not wait for the decision of the
Commission of Internal Revenue or the lapse of the 120-day period, it having
simultaneously filed the administrative and the judicial claims, the filing of said
judicial claim with the Court of Tax Appeals is premature.—Section 112(D) of the NIRC
clearly provides that the CIR has “120 days, from the date of the submission of the complete
documents in support of the application [for tax refund/credit],” within which to grant or deny
the claim. In case of full or partial denial by the CIR, the taxpayer’s recourse is to file an
appeal before the CTA within 30 days from receipt of the decision of the CIR. However, if
 G.R. No. 187485. February 12, 2013.*
COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. SAN ROQUE POWER
CORPORATION, respondent.
G.R. No. 196113. February 12, 2013.*
TAGANITO MINING CORPORATION, petitioner, vs. COMMISSIONER OF INTERNAL
REVENUE, respondent.
G.R. No. 197156. February 12, 2013.*
PHILEX MINING CORPORATION, petitioner, vs. COMMISSIONER OF INTERNAL
REVENUE, respondent.
Taxation; Tax Refund; Tax Credit; Waiting Period; It is indisputable that compliance
with the 120-day waiting period is mandatory and jurisdictional. The waiting period,
originally fixed at 60 days only, was part of the provisions of the first Value-Added
Tax (VAT) law, Executive Order No. 273, which took effect on 1 January 1988. The
waiting period was extended to 120 days effective 1 January 1998 under RA 8424 or
the Tax Reform Act of 1997.—Clearly, San Roque failed to comply with the 120-day
waiting period, the time expressly given by law to the Commissioner to decide whether to
grant or deny San Roque’s application for tax refund or credit. It is indisputable that
compliance with the 120-day waiting period is mandatory and jurisdictional. The waiting
period, originally fixed at 60 days only, was part of the provisions of the first VAT law,
Executive Order No. 273, which took effect on 1 January 1988. The waiting period was
extended to 120 days effective 1 January 1998 under RA 8424 or the Tax Reform Act of
1997. Thus, the waiting period has been in our statute books for more than fifteen (15)
years before San Roque filed its judicial claim. Failure to comply with the 120-day waiting
period violates a mandatory provision of law. It violates the doctrine of exhaustion of
administrative remedies and renders the petition premature and thus without a cause of
action, with the effect that the CTA does not acquire jurisdiction over the taxpayer’s petition.
Philippine jurisprudence is replete with cases upholding and reiterating these doctrinal
principles.
Same; Court of Tax Appeals; Jurisdiction; The charter of the Court of Tax Appeals
expressly provides that its jurisdiction is to review on appeal decisions of the
Commissioner of Internal Revenue in cases involving refunds of internal revenue
taxes.—The charter of the CTA expressly provides that its jurisdiction is to review on appeal
“decisions of the Commissioner of Internal Revenue in cases involving x x x refunds of
internal revenue taxes.” When a taxpayer prematurely files a judicial claim for tax refund or
credit with the CTA without waiting for the decision of the Commissioner, there is no
“decision” of the Commissioner to review and thus the CTA as a court of special jurisdiction
has no jurisdiction over the appeal. The charter of the CTA also expressly provides that if
the Commissioner fails to decide within “a specific period” required by law, such “inaction
shall be deemed a denial” of the application for tax refund or credit. It is the Commissioner’s
decision, or inaction “deemed a denial,” that the taxpayer can take to the CTA for review.
Without a decision or an “inaction x x x deemed a denial” of the Commissioner, the CTA has
no jurisdiction over a petition for review.
Taxation; Tax Refund; Tax Credit; The Supreme Court should not establish the
precedent that non-compliance with mandatory and jurisdictional conditions can be
excused if the claim is otherwise meritorious, particularly in claims for tax refunds or
credit.—This Court cannot disregard mandatory and jurisdictional conditions mandated by
law simply because the Commissioner chose not to contest the numerical correctness of the
claim for tax refund or credit of the taxpayer. Non-compliance with mandatory periods, non-
observance of prescriptive periods, and non-adherence to exhaustion of administrative
remedies bar a taxpayer’s claim for tax refund or credit, whether or not the Commissioner
questions the numerical correctness of the claim of the taxpayer. This Court should not
establish the precedent that non-compliance with mandatory and jurisdictional conditions
can be excused if the claim is otherwise meritorious, particularly in claims for tax refunds or
credit. Such precedent will render meaningless compliance with mandatory and
jurisdictional requirements, for then every tax refund case will have to be decided on the
numerical correctness of the amounts claimed, regardless of non-compliance with
mandatory and jurisdictional conditions.
Same; Appeals; The taxpayer may, if he wishes, appeal the decision of the
Commissioner to the Court of Tax Appeals within 30 days from receipt of the
Commissioner’s decision, or if the Commissioner does not act on the taxpayer’s
claim within the 120-day period, the taxpayer may appeal to the Court of Tax Appeals
within 30 days from the expiration of the 120-day period.—Section 112(C) also
expressly grants the taxpayer a 30-day period to appeal to the CTA the decision or inaction
of the Commissioner, thus: x x x 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.
(Emphasis supplied) This law is clear, plain, and unequivocal. Following the well-settled
verba legis doctrine, this law should be applied exactly as worded since it is clear, plain, and
unequivocal. As this law states, the taxpayer may, if he wishes, appeal the decision of the
Commissioner to the CTA within 30 days from receipt of the Commissioner’s decision, or if
the Commissioner does not act on the taxpayer’s claim within the 120-day period, the
taxpayer may appeal to the CTA within 30 days from the expiration of the 120-day period.
Same; Tax Refund; Tax Credit; The taxpayer may, within two (2) years after the close
of the taxable quarter when the sales were made, apply for the issuance of a tax
credit certificate or refund of the creditable input tax due or paid to such sales.—
Section 112(A) clearly, plainly, and unequivocally provides that the taxpayer “may, within two
(2) years after the close of the taxable quarter when the sales were made, apply for the
issuance of a tax credit certificate or refund of the creditable input tax due or paid to such
sales.” In short, the law states that the taxpayer may apply with the Commissioner for a
refund or credit “within two (2) years,” which means at anytime within two years. Thus, the
application for refund or credit may be filed by the taxpayer with the Commissioner on the
last day of the two-year prescriptive period and it will still strictly comply with the law. The
two-year prescriptive period is a grace period in favor of the taxpayer and he can avail of the
full period before his right to apply for a tax refund or credit is barred by prescription.
Same; Same; Same; The two-year prescriptive period in Section 112(A) refers to the
period within which the taxpayer can file an administrative claim for tax refund or
credit. Stated otherwise, the two-year prescriptive period does not refer to the filing
of the judicial claim with the Court of Tax Appeals but to the filing of the
administrative claim with the Commissioner.—Section 112(C) provides that the
Commissioner shall decide the application for refund or credit “within one hundred twenty
(120) days from the date of submission of complete documents in support of the application
filed in accordance with Subsection (A).” The reference in Section 112(C) of the submission
of documents “in support of the application filed in accordance with Subsection A” means
that the application in Section 112(A) is the administrative claim that the Commissioner must
decide within the 120-day period. In short, the two-year prescriptive period in Section 112(A)
refers to the period within which the taxpayer can file an administrative claim for tax refund
or credit. Stated otherwise, the two-year prescriptive period does not refer to the filing of the
judicial claim with the CTA but to the filing of the administrative claim with the
Commissioner. As held in Aichi, the “phrase ‘within two years x x x apply for the issuance of
a tax credit or refund’ refers to applications for refund/credit with the CIR and not to appeals
made to the CTA.”
Same; Same; Same; If the 30-day period, or any part of it, is required to fall within the
two-year prescriptive period (equivalent to 730 days), then the taxpayer must file his
administrative claim for refund or credit within the first 610 days of the two-year
prescriptive period.—If the 30-day period, or any part of it, is required to fall within the two-
year prescriptive period (equivalent to 730 days), then the taxpayer must file his
administrative claim for refund or credit within the first 610 days of the two-year prescriptive
period. Otherwise, the filing of the administrative claim beyond the first 610 days will result
in the appeal to the CTA being filed beyond the two-year prescriptive period. Thus, if the
taxpayer files his administrative claim on the 611th day, the Commissioner, with his 120-day
period, will have until the 731st day to decide the claim. If the Commissioner decides only
on the 731st day, or does not decide at all, the taxpayer can no longer file his judicial claim
with the CTA because the two-year prescriptive period (equivalent to 730 days) has lapsed.
The 30-day period granted by law to the taxpayer to file an appeal before the CTA becomes
utterly useless, even if the taxpayer complied with the law by filing his administrative claim
within the two-year prescriptive period.
Same; Value-Added Tax; Input Value-Added Tax (VAT); Words and Phrases; The input
Value-Added Tax (VAT) is a tax liability of, and legally paid by, a VAT-registered seller
of goods, properties or services used as input by another VAT-registered person in
the sale of his own goods, properties, or services.—The 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. The input VAT is a tax liability of, and legally paid by,
a VAT-registered seller of goods, properties or services used as input by another VAT-
registered person in the sale of his own goods, properties, or services. This tax liability is
true even if the seller passes on the input VAT to the buyer as part of the purchase price.
The second VAT-registered person, who is not legally liable for the input VAT, is the one who
applies the input VAT as credit for his own output VAT. If the input VAT is in fact
“excessively” collected as understood under Section 229, then it is the first VAT-registered
person―the taxpayer who is legally liable and who is deemed to have legally paid for the
input VAT―who can ask for a tax refund or credit under Section 229 as an ordinary refund
or credit outside of the VAT System. In such event, the second VAT-registered taxpayer will
have no input VAT to offset against his own output VAT.
Same; Same; For simplicity and efficiency in tax collection, the Value-Added Tax
(VAT) is imposed not just on the value added by the taxpayer, but on the entire selling
price of his goods, properties or services.—As its name implies, the Value-Added Tax
system is a tax on the value added by the taxpayer in the chain of transactions. For
simplicity and efficiency in tax collection, the VAT is imposed not just on the value added by
the taxpayer, but on the entire selling price of his goods, properties or services. However,
the taxpayer is allowed a refund or credit on the VAT previously paid by those who sold him
the inputs for his goods, properties, or services. The net effect is that the taxpayer pays the
VAT only on the value that he adds to the goods, properties, or services that he actually
sells.
Same; Same; Input Value-Added Tax (VAT); A taxpayer can apply his input Value-
Added Tax (VAT) only against his output VAT. The only exception is when the
taxpayer is expressly “zero-rated or effectively zero-rated” under the law, like
companies generating power through renewable sources of energy.―Under Section
110(B), a taxpayer can apply his input VAT only against his output VAT. The only exception
is when the taxpayer is expressly “zero-rated or effectively zero-rated” under the law, like
companies generating power through renewable sources of energy. Thus, a non zero-rated
VAT-registered taxpayer who has no output VAT because he has no sales cannot claim a
tax refund or credit of his unused input VAT under the VAT System. Even if the taxpayer has
sales but his input VAT exceeds his output VAT, he cannot seek a tax refund or credit of his
“excess” input VAT under the VAT System. He can only carry-over and apply his “excess”
input VAT against his future output VAT. If such “excess” input VAT is an “excessively”
collected tax, the taxpayer should be able to seek a refund or credit for such “excess” input
VAT whether or not he has output VAT. The VAT System does not allow such refund or
credit. Such “excess” input VAT is not an “excessively” collected tax under Section 229. The
“excess” input VAT is a correctly and properly collected tax. However, such “excess” input
VAT can be applied against the output VAT because the VAT is a tax imposed only on the
value added by the taxpayer. If the input VAT is in fact “excessively” collected under Section
229, then it is the person legally liable to pay the input VAT, not the person to whom the tax
was passed on as part of the purchase price and claiming credit for the input VAT under the
VAT System, who can file the judicial claim under Section 229.
Same; Tax Refund; Tax Credit; It is clear that what can be refunded or credited is a
tax that is “erroneously, illegally, excessively or in any manner wrongfully
collected.”—From the plain text of Section 229, it is clear that what can be refunded or
credited is a tax that is “erroneously, x x x illegally, x x x excessively or in any manner
wrongfully collected.” In short, there must be a wrongful payment because what is paid, or
part of it, is not legally due. As the Court held in Mirant, Section 229 should “apply only to
instances of erroneous payment or illegal collection of internal revenue taxes.” Erroneous or
wrongful payment includes excessive payment because they all refer to payment of taxes
not legally due. Under the VAT System, there is no claim or issue that the “excess” input
VAT is “excessively or in any manner wrongfully collected.” In fact, if the “excess” input VAT
is an “excessively” collected tax under Section 229, then the taxpayer claiming to apply
such “excessively” collected input VAT to offset his output VAT may have no legal basis to
make such offsetting. The person legally liable to pay the input VAT can claim a refund or
credit for such “excessively” collected tax, and thus there will no longer be any “excess”
input VAT. This will upend the present VAT System as we know it.
Same; Same; Same; A claim for tax refund or credit, like a claim for tax exemption, is
construed strictly against the taxpayer.―A claim for tax refund or credit, like a claim for
tax exemption, is construed strictly against the taxpayer. One of the conditions for a judicial
claim of refund or credit under the VAT System is compliance with the 120+30 day
mandatory and jurisdictional periods. Thus, strict compliance with the 120+30 day periods is
necessary for such a claim to prosper, whether before, during, or after the effectivity of the
Atlas doctrine, except for the period from the issuance of BIR Ruling No. DA-489-03 on 10
December 2003 to 6 October 2010 when the Aichi doctrine was adopted, which again
reinstated the 120+30 day periods as mandatory and jurisdictional.
Same; A reversal of a Bureau of Internal Revenue (BIR) regulation or ruling cannot
adversely prejudice a taxpayer who in good faith relied on the BIR regulation or
ruling prior to its reversal.—Since the Commissioner has exclusive and original
jurisdiction to interpret tax laws, taxpayers acting in good faith should not be made to suffer
for adhering to general interpretative rules of the Commissioner interpreting tax laws, should
such interpretation later turn out to be erroneous and be reversed by the Commissioner or
this Court. Indeed, Section 246 of the Tax Code 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.
Same; Statutory Construction; Taxpayers should not be prejudiced by an erroneous
interpretation by the Commissioner, particularly on a difficult question of law.—
Taxpayers should not be prejudiced by an erroneous interpretation by the Commissioner,
particularly on a difficult question of law. The abandonment of the Atlas doctrine by Mirant
and Aichi is proof that the reckoning of the prescriptive periods for input VAT tax refund or
credit is a difficult question of law. The abandonment of the Atlas doctrine did not result in
Atlas, or other taxpayers similarly situated, being made to return the tax refund or credit they
received or could have received under Atlas prior to its abandonment. This Court is applying
Mirant and Aichi prospectively. Absent fraud, bad faith or misrepresentation, the reversal by
this Court of a general interpretative rule issued by the Commissioner, like the reversal of a
specific BIR ruling under Section 246, should also apply prospectively.
Same; Judgments; Court of Tax Appeals decisions do not constitute precedents, and
do not bind the Supreme Court or the public.—There is also the claim that there are
numerous CTA decisions allegedly supporting the argument that the filing dates of the
administrative and judicial claims are inconsequential, as long as they are within the two-
year prescriptive period. Suffice it to state that CTA decisions do not constitute precedents,
and do not bind this Court or the public. That is why CTA decisions are appealable to this
Court, which may affirm, reverse or modify the CTA decisions as the facts and the law may
warrant. Only decisions of this Court constitute binding precedents, forming part of the
Philippine legal system.
Same; Tax Refund; Tax Credit; Under the novel amendment introduced by RA 7716,
mere inaction by the Commissioner during the 60-day period is deemed a denial of
the claim. Thus, Section 4.106-2(c) states that “if no action on the claim for tax
refund/credit has been taken by the Commissioner after the sixty (60) day period,”
the taxpayer “may” already file the judicial claim even long before the lapse of the
two-year prescriptive period.—Under the novel amendment introduced by RA 7716, mere
inaction by the Commissioner during the 60-day period is deemed a denial of the claim.
Thus, Section 4.106-2(c) states that “if no action on the claim for tax refund/credit has been
taken by the Commissioner after the sixty (60) day period,” the taxpayer “may” already file
the judicial claim even long before the lapse of the two-year prescriptive period. Prior to the
amendment by RA 7716, the taxpayer had to wait until the two-year prescriptive period was
about to expire if the Commissioner did not act on the claim. With the amendment by RA
7716, the taxpayer need not wait until the two-year prescriptive period is about to expire
before filing the judicial claim because mere inaction by the Commissioner during the 60-
day period is deemed a denial of the claim. This is the meaning of the phrase “but before
the lapse of the two (2) year period” in Section 4.106-2(c). As Section 4.106- 2(c) reiterates
that the judicial claim can be filed only “after the sixty (60) day period,” this period remains
mandatory and jurisdictional. Clearly, Section 4.106-2(c) did not amend Section 106(d) but
merely faithfully implemented it.
Same; Taxes are the lifeblood of the nation.—Taxes are the lifeblood of the nation. The
Philippines has been struggling to improve its tax efficiency collection for the longest time
with minimal success. Consequently, the Philippines has suffered the economic adversities
arising from poor tax collections, forcing the government to continue borrowing to fund the
budget deficits. This Court cannot turn a blind eye to this economic malaise by being unduly
liberal to taxpayers who do not comply with statutory requirements for tax refunds or credits.
The tax refund claims in the present cases are not a pittance. Many other companies stand
to gain if this Court were to rule otherwise. The dissenting opinions will turn on its head the
well-settled doctrine that tax refunds are strictly construed against the taxpayer.
 G.R. No. 193301. March 11, 2013.* 112(C)] must be applied exactly as worded since it is clear, plain, and unequivocal. The
taxpayer cannot simply file a petition with the CTA without waiting for the Commissioner’s
MINDANAO II GEOTHERMAL PARTNERSHIP, petitioner, vs. COMMISSIONER OF decision within the 120-day mandatory and jurisdictional period. The CTA will have no
INTERNAL REVENUE, respondent. jurisdiction because there will be no ‘decision’ or ‘deemed a denial decision’ of the
Commissioner for the CTA to review.”

G.R. No. 194637. March 11, 2013.*

MINDANAO I GEOTHERMAL PARTNERSHIP, petitioner, vs. COMMISSIONER OF
INTERNAL REVENUE, respondent.
Taxation; Value-Added Tax; Tax Credits; Tax Refunds; 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.—In determining whether the administrative claims of Mindanao I and Mindanao II for
2003 have prescribed, we see no need to rely on either Atlas or Mirant. Section 112(A) of
the 1997 Tax Code is clear: “[A]ny VAT-registered person, whose sales are zero-rated or
effectively zero-rated may, within two (2) years after the close of the taxable quarter when
the sales were made, apply for the issuance of a tax credit certificate or refund of creditable
input tax due or paid attributable to such sales x x x.”
Same; Summary of the Rules on the Determination of the Prescriptive Period for
Filing a Tax Refund or Credit of Unutilized Input Value Added Tax (VAT) as Provided
in Section 112 of the 1997 Tax Code.—We summarize the rules on the determination of
the prescriptive period for filing a tax refund or credit of unutilized input VAT as provided in
Section 112 of the 1997 Tax Code, as follows: (1) An administrative claim must be filed with
the CIR within two years after the close of the taxable quarter when the zero-rated or
effectively zero-rated sales were made. (2) The CIR has 120 days from the date of
submission of complete documents in support of the administrative claim within which to
decide whether to grant a refund or issue a tax credit certificate. The 120-day period may
extend beyond the two-year period from the filing of the administrative claim if the claim is
filed in the later part of the two-year period. If the 120-day period expires without any
decision from the CIR, then the administrative claim may be considered to be denied by
inaction. (3) A judicial claim must be filed with the CTA within 30 days from the receipt of the
CIR’s decision denying the administrative claim or from the expiration of the 120-day period
without any action from the CIR. (4) All taxpayers, however, can rely on BIR Ruling No. DA-
489-03 from the time of its issuance on 10 December 2003 up to its reversal by this Court in
Aichi on 6 October 2010, as an exception to the mandatory and jurisdictional 120+30 day
periods.

Same; Same; Same; Same; 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
Same; A reading of Section 105 of the 1997 Tax Code would show that a transaction
within the period prescribed above, the taxpayer affected may, within thirty (30) days
“in the course of trade or business” includes “transactions incidental thereto.”—
from the receipt of the decision denying the claim or after the expiration of the one
Mindanao II’s sale of the Nissan Patrol is said to be an isolated transaction. However, it
hundred twenty day-period, appeal the decision or the unacted claim with the Court
does not follow that an isolated transaction cannot be an incidental transaction for purposes
of Tax Appeals.—In determining whether the claims for the second, third and fourth
of VAT liability. Indeed, a reading of Section 105 of the 1997 Tax Code would show that a
quarters of 2003 have been properly appealed, we still see no need to refer to either Atlas
transaction “in the course of trade or business” includes “transactions incidental thereto.”
or Mirant, or even to Section 229 of the 1997 Tax Code. The second paragraph of Section
Mindanao II’s business is to convert the steam supplied to it by PNOC-EDC into electricity
112(C) of the 1997 Tax Code is clear: “In case of full or partial denial of the claim for tax
and to deliver the electricity to NPC. In the course of its business, Mindanao II bought and
refund or tax credit, or the failure on the part of the Commissioner to act on the application
eventually sold a Nissan Patrol. Prior to the sale, the Nissan Patrol was part of Mindanao
within the period prescribed above, the taxpayer affected may, within thirty (30) days from
II’s property, plant, and equipment. Therefore, the sale of the Nissan Patrol is an incidental
the receipt of the decision denying the claim or after the expiration of the one hundred
transaction made in the course of Mindanao II’s business which should be liable for VAT.
twenty day-period, appeal the decision or the unacted claim with the Court of Tax Appeals.”
Mindanao II Geothermal Partnership vs. Commissioner of Internal Revenue, 693 SCRA 49,
G.R. No. 193301 March 11, 2013

Same; Court of Tax Appeals; The taxpayer cannot simply file a petition with the Court
of Tax Appeals without waiting for the Commissioner’s decision within the 120-day
mandatory and jurisdictional period.—In the consolidated cases of San Roque, the Court
En Banc examined and ruled on the different claims for tax refund or credit of three different
companies. In San Roque, we reiterated that “[f]ollowing the verba legis doctrine, [Section
 G.R. No. 188260. November 13, 2013.*

LUZON HYDRO CORPORATION, petitioner, vs. COMMISSIONER OF INTERNAL

REVENUE, respondent.

Taxation; Tax Refunds; Tax Credit; Requisites for Granting a Claim for Tax Refund or
Tax Credit for Unutilized Input Value-Added Tax (VAT).—A claim for refund or tax credit
for unutilized input VAT may be allowed only if the following requisites concur, namely: (a)
the taxpayer is VAT-registered; (b) the taxpayer is engaged in zero-rated or effectively zero-
rated sales; (c) the input taxes are due or paid; (d) the input taxes are not transitional input
taxes; (e) the input taxes have not been applied against output taxes during and in the
succeeding quarters; (f) the input taxes claimed are attributable to zero-rated or effectively
zero-rated sales; (g) for zero-rated sales under Section 106(A)(2)(1) and (2); 106(B); and
108(B)(1) and (2), the acceptable foreign currency exchange proceeds have been duly
accounted for in accordance with the rules and regulations of the Bangko Sentral ng
Pilipinas; (h) where there are both zero-rated or effectively zero-rated sales and taxable or
exempt sales, and the input taxes cannot be directly and entirely attributable to any of these
sales, the input taxes shall be proportionately allocated on the basis of sales volume; and (i)
the claim is filed within two years after the close of the taxable quarter when such sales
were made.
 G.R. No. 191498. January 15, 2014.*

COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. MINDANAO II Same; Appeals; The taxpayer can file the appeal in one of two ways: (1) file the
GEOTHERMAL PARTNERSHIP, respondent. judicial claim within thirty days after the Commissioner denies the claim within the
120-day period, or (2) file the judicial claim within thirty days from the expiration of
the 120-day period if the Commissioner does not act within the 120-day period.—The
San Roque pronouncement is clear. The taxpayer can file the appeal in one of two ways: (1)
Taxation; Prescription; It is only the administrative claim that must be filed within the
file the judicial claim within thirty days after the Commissioner denies the claim within the
two-year prescriptive period; the judicial claim need not fall within the two-year
120-day period, or (2) file the judicial claim within thirty days from the expiration of the 120-
prescriptive period.—In Commissioner of Internal Revenue v. Aichi Forging Company of
day period if the Commissioner does not act within the 120-day period.
Asia, Inc. (Aichi), 632 SCRA 422 (2010) we dispelled the misconception that both the
administrative and judicial claims must be filed within the two-year prescriptive period: There
is nothing in Section 112 of the NIRC to support respondent’s view. Subsection (A) of the
said provision states that “any VAT-registered person, whose sales are zero-rated or Same; Same; The 30-day period to appeal is both mandatory and jurisdictional.—
effectively zero-rated may, within two years after the close of the taxable quarter when the What is up for debate is the nature of the 30-day time requirement. The CIR posits that it is
sales were made, apply for the issuance of a tax credit certificate or refund of creditable mandatory. Mindanao II contends that the requirement of judicial recourse within 30 days is
input tax due or paid attributable to such sales.” The phrase “within two (2) years x x x apply only directory and permissive, as indicated by the use of the word “may” in Section 112(D).
for the issuance of a tax credit certificate or refund” refers to applications for refund/credit The answer is found in San Roque. There, we declared that the 30-day period to appeal is
filed with the CIR and not to appeals made to the CTA. This is apparent in the first both mandatory and jurisdictional.
paragraph of subsection (D) of the same provision, which states that the CIR has “120 days
from the submission of complete documents in support of the application filed in accordance
with Subsections (A) and (B)” within which to decide on the claim. In fact, applying the two-
year period to judicial claims would render nugatory Section 112 (D) of the NIRC, which
already provides for a specific period within which a taxpayer should appeal the decision or
inaction of the CIR. The second paragraph of Section 112 (D) of the NIRC envisions two
scenarios: (1) when a decision is issued by the CIR before the lapse of the 120-day period;
and (2) when no decision is made after the 120-day period. In both instances, the taxpayer
has 30 days within which to file an appeal with the CTA. As we see it then, the 120-day
period is crucial in filing an appeal with the CTA. (Emphasis supplied) The message of Aichi
is clear: it is only the administrative claim that must be filed within the two-year prescriptive
period; the judicial claim need not fall within the two-year prescriptive period.

Same; Same; It is only the administrative claim that must be filed within the two-year
prescriptive period; and the two-year prescriptive period begins to run from the close
of the taxable quarter when the relevant sales were made.—The task at hand is to
determine the applicable period for this case. In this case, Mindanao II filed its
administrative claims for refund or credit for the second, third and fourth quarters of 2004 on
6 October 2005. The case thus falls within the first period as indicated in the above timeline.
In other words, it is covered by the rule prior to the advent of either Atlas or Mirant.
Accordingly, the proper reckoning date in this case, as provided by Section 112(A) of the
1997 Tax Code, is the close of the taxable quarter when the relevant sales were made. x x x
We sum up our conclusions so far: (1) it is only the administrative claim that must be filed
within the two-year prescriptive period; and (2) the two-year prescriptive period begins to
run from the close of the taxable quarter when the relevant sales were made. Bearing these
in mind, we now proceed to determine whether Mindanao II’s administrative claims for the
second, third, and fourth quarters of 2004 were timely filed.
 G.R. No. 168950. January 14, 2015.*

ROHM APOLLO SEMICONDUCTOR PHILIPPINES, petitioner, vs. COMMISSIONER OF

INTERNAL REVENUE, respondent.

Taxation; Appeals; The Supreme Court (SC) held that the taxpayer can file an appeal
in one of two (2) ways: (1) file the judicial claim within thirty (30) days after the
Commissioner denies the claim within the one hundred twenty (120)-day waiting
period, or (2) file the judicial claim within 30 days from the expiration of the 120-day
period if the Commissioner does not act within that period.—The landmark case of
Commissioner of Internal Revenue v. San Roque Power Corporation, 690 SCRA 336
(2013), has interpreted Section 112(D). The Court held that the taxpayer can file an appeal
in one of two ways: (1) file the judicial claim within 30 days after the Commissioner denies
the claim within the 120-day waiting period, or (2) file the judicial claim within 30 days from
the expiration of the 120-day period if the Commissioner does not act within that period.

Same; Tax Refunds; Tax Credit; A claim for tax refund or credit, like a claim for tax
exemption, is construed strictly against the taxpayer.—As a general rule, the 30-day
period to appeal is both mandatory and jurisdictional. The only exception to the general rule
is when BIR Ruling No. DA-489-03 was still in force, that is, between 10 December 2003
and 5 October 2010, The BIR Ruling excused premature filing, declaring 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. In San Roque, the High Court explained both
the general rule and the exception: To repeat, a claim for tax refund or credit, like a claim for
tax exemption, is construed strictly against the taxpayer. One of the conditions for a judicial
claim of refund or credit under the VAT System is with the 120+30 day mandatory and
jurisdictional periods. Thus, strict compliance with the 120+30 day periods is necessary for
such a claim to prosper, whether before, during, or after the effectivity of the Atlas doctrine,
except for the period from the issuance of BIR Ruling No. DA-489-03 on 10 December 2003
to 6 October 2010 when the Aichi doctrine was adopted, which again reinstated the 120+30
day periods as mandatory and jurisdictional.

Same; Appeals; The taxpayer must file an appeal within thirty (30) days from the
lapse of the one hundred twenty (120)-day waiting period.—A final note, the taxpayers
are reminded that that when the 120-day period lapses and there is inaction on the part of
the CIR, they must no longer wait for it to come up with a decision thereafter. The CIR’s
inaction is the decision itself. It is already a denial of the refund claim. Thus, the taxpayer
must file an appeal within 30 days from the lapse of the 120-day waiting period.
 G.R. No. 190506. June 13, 2016.* the buyer. However, reporting and remittance of the VAT paid to the BIR remained to be the
seller/supplier’s obligation. Hence, the proper party to seek the tax refund or credit should
CORAL BAY NICKEL CORPORATION, petitioner, vs. COMMISSIONER OF INTERNAL be the suppliers, not the petitioner. In view of the foregoing considerations, the Court must
REVENUE, respondent. uphold the rejection of the appeal of the petitioner. This Court has repeatedly pointed out
that a claim for tax refund or credit is similar to a tax exemption and should be strictly
construed against the taxpayer. The burden of proof to show that he is ultimately entitled to
Taxation; Tax Refund; Tax Credit; As pronounced in Silicon Philippines, Inc. v. the grant of such tax refund or credit rests on the taxpayer. Sadly, the petitioner has not
Commissioner of Internal Revenue, 754 SCRA 279 (2015), the exception to the discharged its burden.
mandatory and jurisdictional compliance with the 120+30-day period is when the
claim for the tax refund or credit was filed in the period between December 10, 2003
and October 5, 2010 during which Bureau of Intenal Revenue (BIR) Ruling No. DA-
489-03 was still in effect.—As pronounced in Silicon Philippines, Inc. v. Commissioner of
Internal Revenue, 754 SCRA 279 (2015), the exception to the mandatory and jurisdictional
compliance with the 120+30-day period is when the claim for the tax refund or credit was
filed in the period between December 10, 2003 and October 5, 2010 during which BIR
Ruling No. DA-489-03 was still in effect. Accordingly, the premature filing of the judicial claim
was allowed, giving to the CTA jurisdiction over the appeal.

Same; Cross Border Doctrine; Destination Principle; With the issuance of Revenue
Memorandum Circular (RMC) No. 74-99, the distinction under the old rule was
disregarded and the new circular took into consideration the two (2) important
principles of the Philippine Value-Added Tax (VAT) system: the Cross Border
Doctrine and the Destination Principle.—With the issuance of RMC 74-99, the distinction
under the old rule was disregarded and the new circular took into consideration the two
important principles of the Philippine VAT system: the Cross Border Doctrine and the
Destination Principle.

Same; Value-Added Tax; No Value-Added Tax (VAT) shall be imposed to form part of
the cost of goods destined for consumption outside of the territorial border of the
taxing authority.—Section 8 of Republic Act No. 7916 mandates that PEZA shall manage
and operate the ECOZONE as a separate customs territory. The provision thereby
establishes the fiction that an ECOZONE is a foreign territory separate and distinct from the
customs territory. Accordingly, the sales made by suppliers from a customs territory to a
purchaser located within an ECOZONE will be considered as exportations. Following the
Philippine VAT system’s adherence to the Cross Border Doctrine and Destination Principle,
the VAT implications are that “no VAT shall be imposed to form part of the cost of goods
destined for consumption outside of the territorial border of the taxing authority.”

Same; Tax Refund; Tax Credit; A claim for tax refund or credit is similar to a tax
exemption and should be strictly construed against the taxpayer.—We should also
take into consideration the nature of VAT as an indirect tax. Although the seller is statutorily
liable for the payment of VAT, the amount of the tax is allowed to be shifted or passed on to
 is the taxpayer who ultimately determines when complete documents have been submitted
for the purpose of commencing and continuing the running of the 120-day period. After all,
G.R. No. 207112. December 8, 2015.* he may have already completed the necessary documents the moment he filed his
administrative claim, in which case, the 120-day period is reckoned from the date of filing.
PILIPINAS TOTAL GAS, INC., petitioner, vs. COMMISSIONER OF INTERNAL
The taxpayer may have also filed the complete documents on the 30th day from filing of his
REVENUE, respondent.
application, pursuant to RMC No. 49-2003. He may very well have filed his supporting
documents on the first day he was notified by the BIR of the lack of the necessary
documents. In such cases, the 120-day period is computed from the date the taxpayer is
Taxation; Tax Credit; Tax Refund; The Commissioner of Internal Revenue (CIR) has able to submit the complete documents in support of his application.
one hundred twenty (120) days from the date of submission of complete documents
to decide a claim for tax credit or refund of creditable input taxes. The taxpayer may,
within thirty (30) days from receipt of the denial of the claim or after the expiration of
Same; Same; Same; In a claim for tax credit or refund, it is the taxpayer who has the
the 120-day period, which is considered a “denial due to inaction,” appeal the
burden to prove his cause of action. As such, he enjoys relative freedom to submit
decision or unacted claim to the Court of Tax Appeals (CTA).—It is apparent that the
such evidence to prove his claim.—Except in those instances where the BIR would
CIR has 120 days from the date of submission of complete documents to decide a claim for
require additional documents in order to fully appreciate a claim for tax credit or refund, in
tax credit or refund of creditable input taxes. The taxpayer may, within 30 days from receipt
terms what additional document must be presented in support of a claim for tax credit or
of the denial of the claim or after the expiration of the 120-day period, which is considered a
refund — it is the taxpayer who has that right and the burden of providing any and all
“denial due to inaction,” appeal the decision or unacted claim to the CTA. To be clear,
documents that would support his claim for tax credit or refund. After all, in a claim for tax
Section 112(C) categorically provides that the 120-day period is counted “from the date of
credit or refund, it is the taxpayer who has the burden to prove his cause of action. As such,
submission of complete documents in support of the application.” Contrary to this mandate,
he enjoys relative freedom to submit such evidence to prove his claim.
the CTA En Banc counted the running of the period from the date the application for refund
was filed or May 15, 2008, and, thus, ruled that the judicial claim was belatedly filed.

Same; Same; Same; Under Section 112(A) of the National Internal Revenue Code
(NIRC), as amended by Republic Act (RA) No. 9337, a taxpayer has two (2) years, after
Same; Same; Same; The one hundred twenty (120)-day period granted to the
the close of the taxable quarter when the sales were made, to apply for the issuance
Commissioner of Internal Revenue (CIR) to decide the administrative claim under the
of a tax credit certificate or refund of creditable input tax due or paid attributable to
Section 112 is primarily intended to benefit the taxpayer, to ensure that his claim is
such sales.—Under Section 112(A) of the NIRC, as amended by R.A. No. 9337, a taxpayer
decided judiciously and expeditiously.—Indeed, the 120-day period granted to the CIR
has two (2) years, after the close of the taxable quarter when the sales were made, to apply
to decide the administrative claim under the Section 112 is primarily intended to benefit the
for the issuance of a tax credit certificate or refund of creditable input tax due or paid
taxpayer, to ensure that his claim is decided judiciously and expeditiously. After all, the
attributable to such sales. Thus, before the administrative claim is barred by prescription,
sooner the taxpayer successfully processes his refund, the sooner can such resources be
the taxpayer must be able to submit his complete documents in support of the application
further reinvested to the business translating to greater efficiencies and productivities that
filed. This is because, it is upon the complete submission of his documents in support of his
would ultimately uplift the general welfare. To allow the CIR to determine the completeness
application that it can be said that the application was, “officially received” as provided under
of the documents submitted and, thus, dictate the running of the 120-day period, would
RMC No. 49-2003.
undermine these objectives, as it would provide the CIR the unbridled power to indefinitely
delay the administrative claim, which would ultimately prevent the filing of a judicial claim
with the CTA.
Same; Same; Same; From the date an administrative claim for excess unutilized
value-added tax (VAT) is filed, a taxpayer has thirty (30) days within which to submit
the documentary requirements sufficient to support his claim, unless given further
Same; Same; Same; For purposes of determining when the supporting documents
extension by the Commissioner of Internal Revenue (CIR).—To summarize, for the just
have been completed — it is the taxpayer who ultimately determines when complete
disposition of the subject controversy, the rule is that from the date an administrative claim
documents have been submitted for the purpose of commencing and continuing the
for excess unutilized VAT is filed, a taxpayer has thirty (30) days within which to submit the
running of the one hundred twenty (120)-day period.—With the amendments only with
documentary requirements sufficient to support his claim, unless given further extension by
respect to its place under Section 112, the Court finds that RMC No. 49-2003 should still be
the CIR. Then, upon filing by the taxpayer of his complete documents to support his
observed. Thus, taking the foregoing changes to the law altogether, it becomes apparent
application, or expiration of the period given, the CIR has 120 days within which to decide
that, for purposes of determining when the supporting documents have been completed — it
the claim for tax credit or refund. Should the taxpayer, on the date of his filing, manifest that
he no longer wishes to submit any other addition documents to complete his administrative
claim, the 120-day period allowed to the CIR begins to run from the date of filing.
Same; Same; Same; In all cases, whatever documents a taxpayer intends to file to
support his claim must be completed within the two (2)-year period under Section
112(A) of the National Internal Revenue Code (NIRC).—In all cases, whatever
documents a taxpayer intends to file to support his claim must be completed within the two-
year period under Section 112(A) of the NIRC. The 30-day period from denial of the claim or
from the expiration of the 120-day period within which to appeal the denial or inaction of the
CIR to the CTA must also be respected.
Same; Same; Same; Under the current rule, the reckoning of the one hundred twenty
(120)-day period has been withdrawn from the taxpayer by Revenue Memorandum
Circular (RMC) No. 54-2014, since it requires him at the time he files his claim to
complete his supporting documents and attest that he will no longer submit any
other document to prove his claim.—Under the current rule, the reckoning of the 120-day
period has been withdrawn from the taxpayer by RMC No. 54-2014, since it requires him at
the time he files his claim to complete his supporting documents and attest that he will no
longer submit any other document to prove his claim. Further, the taxpayer is barred from
submitting additional documents after he has filed his administrative claim. On this score,
the Court finds that the foregoing issuance cannot be applied retroactively to the case at bar
since it imposes new obligations upon taxpayers in order to perfect their administrative
claim, that is, [1] compliance with the mandate to submit the “supporting documents”
enumerated under RMC No. 54-2014 under its “Annex A”; and [2] the filing of “a statement
under oath attesting to the completeness of the submitted documents,” referred to in RMC
No. 54-2014 as “Annex B.” This should not prejudice taxpayers who have every right to
pursue their claims in the manner provided by existing regulations at the time it was filed.
Same; Same; Same; Revenue Memorandum Order (RMO) No. 53-98 is addressed to
internal revenue officers and employees, for purposes of equity and uniformity, to
guide them as to what documents they may require taxpayers to present upon audit
of their tax liabilities.—As can be gleaned from the above, RMO No. 53-98 is addressed
to internal revenue officers and employees, for purposes of equity and uniformity, to guide
them as to what documents they may require taxpayers to present upon audit of their tax
liabilities. Nothing stated in the issuance would show that it was intended to be a benchmark
in determining whether the documents submitted by a taxpayer are actually complete to
support a claim for tax credit or refund of excess unutilized excess VAT.
Same; Same; Same; A taxpayer’s failure with the requirements listed under Revenue
Memorandum Order (RMO) No. 53-98 is not fatal to its claim for tax credit or refund of
excess unutilized excess value-added tax (VAT).—Indeed, a taxpayer’s failure with the
requirements listed under RMO No. 53-98 is not fatal to its claim for tax credit or refund of
excess unutilized excess VAT. This holds especially true when the application for tax credit
or refund of excess unutilized excess VAT has arrived at the judicial level. After all, in the
judicial level or when the case is elevated to the Court, the Rules of Court governs. Simply
put, the question of whether the evidence submitted by a party is sufficient to warrant the
granting of its prayer lies within the sound discretion and judgment of the Court.
Same; Same; Same; While it is still true a taxpayer must prove not only his
entitlement to a refund but also his compliance with the procedural due process — it
is also true that when the law or rule mandates that a party or authority must comply
with a specific obligation to perform an act for the benefit of another, the
noncompliance thereof by the former should not operate to prejudice the latter, lest it
render the nugatory the objective of the rule.—While it is still true a taxpayer must prove
not only his entitlement to a refund but also his compliance with the procedural due process
— it is also true that when the law or rule mandates that a party or authority must comply
with a specific obligation to perform an act for the benefit of another, the noncompliance
thereof by the former should not operate to prejudice the latter, lest it render the nugatory
the objective of the rule. Such is the situation in case at bar.
Same; Same; Same; It is the taxpayer who determines when complete documents
have been submitted for the purpose of the running of the one hundred twenty (120)-
day period.—The alleged failure of Total Gas to submit the complete documents at the
administrative level did not render its petition for review with the CTA dismissible for lack of
jurisdiction. First, the 120-day period had commenced to run and the 120+30 day period
was, in fact, complied with. As already discussed, it is the taxpayer who determines when
complete documents have been submitted for the purpose of the running of the 120-day
period. It must again be pointed out that this in no way precludes the CIR from requiring
additional documents necessary to decide the claim, or even denying the claim if the
taxpayer fails to submit the additional documents requested.
Same; Same; Same; A distinction must be made between administrative cases
appealed due to inaction and those dismissed at the administrative level due to the
failure of the taxpayer to submit supporting documents.—A distinction must be made
between administrative cases appealed due to inaction and those dismissed at the
administrative level due to the failure of the taxpayer to submit supporting documents. If an
administrative claim was dismissed by the CIR due to the taxpayer’s failure to submit
complete documents despite notice/request, then the judicial claim before the CTA would be
dismissible, not for lack of jurisdiction, but for the taxpayer’s failure to substantiate the claim
at the administrative level. When a judicial claim for refund or tax credit in the CTA is an
appeal of an unsuccessful administrative claim, the taxpayer has to convince the CTA that
the CIR had no reason to deny its claim. It, thus, becomes imperative for the taxpayer to
show the CTA that not only is he entitled under substantive law to his claim for refund or tax
credit, but also that he satisfied all the documentary and evidentiary requirements for an
administrative claim. It is, thus, crucial for a taxpayer in a judicial claim for refund or tax
credit to show that its administrative claim should have been granted in the first place.
Consequently, a taxpayer cannot cure its failure to submit a document requested by the BIR
at the administrative level by filing the said document before the CTA.
 G.R. No. 190021. October 22, 2014.*
COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. BURMEISTER AND WAIN
SCANDINAVIAN CONTRACTOR MINDANAO, INC., respondent.
Taxation; In the recent case of CIR v. San Roque Power Corporation, 690 SCRA 336,
promulgated on February 12, 2013, the Supreme Court (SC) clarified that (a) the Atlas
doctrine was effective only from its promulgation on June 8, 2007 until its
abandonment on September 12, 2008 in CIR v. Mirant Pagbilao Corp., 565 SCRA 154,
and (b) prior to the Atlas doctrine, Section 112(A) should be applied following the
verba legis rule adopted in Mirant.—In the case of Atlas Consolidated Mining and Dev’t.
Corp. v. CIR (Atlas), 524 SCRA 73, which was promulgated on June 8, 2007, the two-year
prescriptive period stated in Section 112(A) was counted from the date of payment of the
output VAT. At that time, the output VAT must be paid at the time of filing of the quarterly tax
returns, which meant within 20 days following the end of each quarter. However, on
September 12, 2008, the Atlas doctrine was abandoned in the case of CIR v. Mirant
Pagbilao Corp., 565 SCRA 154, which adopted the verba legis rule and counted the two-
year prescriptive period from the “close of the taxable quarter when the sales were made”
as expressly stated in the law, regardless when the input VAT was paid. In the recent case
of CIR v. San Roque Power Corporation (San Roque), 690 SCRA 336, promulgated on
February 12, 2013, the Court clarified that (a) the Atlas doctrine was effective only from its
promulgation on June 8, 2007 until its abandonment on September 12, 2008 in Mirant, and
(b) prior to the Atlas doctrine, Section 112(A) should be applied following the verba legis rule
adopted in Mirant.
Same; Tax Refund; Tax Credit; The taxpayer can file its administrative claim for
refund or credit at any time within the two (2)-year prescriptive period. If it files its
claim on the last day of said period, it is still filed on time. The Commissioner of
Internal Revenue (CIR) will have one hundred twenty (120) days from such filing to
decide the claim. If the CIR decides the claim on the 120th day, or does not decide it
on that day, the taxpayer still has thirty (30) days to file its judicial claim with the
Court of Tax Appeals (CTA); otherwise, the judicial claim would be, properly
speaking, dismissed for being filed out of time and not, as the CTA En Banc puts it,
prescribed.—In fine, the taxpayer can file its administrative claim for refund or credit at any
time within the two-year prescriptive period. If it files its claim on the last day of said period,
it is still filed on time. The CIR will have 120 days from such filing to decide the claim. If the
CIR decides the claim on the 120th day, or does not decide it on that day, the taxpayer still
has 30 days to file its judicial claim with the CTA; otherwise, the judicial claim would be,
properly speaking, dismissed for being filed out of time and not, as the CTA En Banc puts it,
prescribed. It bears emphasis that Section 112(D) (now renumbered as Section 112[C]) of
RA 8424, which is explicit on the mandatory and jurisdictional nature of the 120+30-day
period, was already effective on January 1, 1998. Hence, it is of no consequence that the
Aichi and San Roque rulings were not yet in existence when respondent’s administrative
claim was filed in 1999, so as to rid itself of the said section’s mandatory and jurisdictional
application.
Same; Same; Same; The inaction of the Commissioner of Internal Revenue (CIR) on
the claim during the one hundred twenty (120)-day period is, by express provisions
of law, “deemed a denial” of such claim, and the failure of the taxpayer to file its
judicial claim within thirty (30) days from the expiration of the 120-day period shall
render the “deemed a denial” decision of the CIR final and inappealable.—The inaction
of the CIR on the claim during the 120-day period is, by express provision of law, “deemed a
denial” of such claim, and the failure of the taxpayer to file its judicial claim within 30 days
from the expiration of the 120-day period shall render the “deemed a denial” decision of the
CIR final and inappealable. The right to appeal to the CTA from a decision or “deemed a
denial” decision of the Commissioner is merely a statutory privilege, not a constitutional
right. The exercise of such statutory privilege requires strict compliance with the conditions
attached by the statute for its exercise. Thus, respondent’s failure to comply with the
statutory conditions is fatal to its claim. This is so, notwithstanding the fact that the CIR, for
his part, failed to raise the issue of noncompliance with the mandatory periods at the earliest
opportunity.
Same; Same; Same; In the case of Nippon Express (Philippines) Corporation v. CIR,
693 SCRA 456 (2013), the Supreme Court (SC) ruled that, because the 120+30-day
period is jurisdictional, the issue of whether the taxpayer complied with the said time
frame may be broached at any stage, even on appeal.—In the case of Nippon Express
(Philippines) Corporation v. CIR, 693 SCRA 456 (2013), the Court ruled that, because the
120+30-day period is jurisdictional, the issue of whether the taxpayer complied with the said
time frame may be broached at any stage, even on appeal. Well-settled is the rule that the
question of jurisdiction over the subject matter can be raised at any time during the
proceedings. Jurisdiction cannot be waived because it is conferred by law and is not
dependent on the consent or objection or the acts or omissions of the parties or any one of
them. Therefore, respondent’s contention on this score is of no moment.
Same; It has been pronounced time and again that taxes are the lifeblood of the
government and, consequently, tax laws must be faithfully and strictly implemented
as they are not intended to be liberally construed.—Indeed, it has been pronounced
time and again that taxes are the lifeblood of the government and, consequently, tax laws
must be faithfully and strictly implemented as they are not intended to be liberally construed.
Hence, with this in mind and in light of the foregoing considerations, the Court so holds that
the CTA En Banc committed reversible error when it granted respondent’s claim for refund
or tax credit despite its noncompliance with the mandatory periods under Section 112(D)
(now renumbered as Section 112[C]) of RA 8424. Accordingly, the claim for refund/tax credit
must be denied.