Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
(Emphasis added)
Rules of the House of Representatives
Rule XIV:
85. Conference Committee Reports. In the
event that the House does not agree with the
Senate on the amendments to any bill or joint
resolution, the differences may be settled by
conference committees of both Chambers.
The consideration of conference committee
reports shall always be in order, except when the
journal is being read, while the roll is being called
or the House is dividing on any question. Each of
the pages of such reports shall be signed by the
conferees. Each report shall contain a detailed,
sufficiently explicit statement of the changes in or
amendments to the subject measure.
The consideration of such report shall not be in
order unless copies thereof are distributed to the
Members: Provided, That in the last fifteen days of
each session period it shall be deemed sufficient
that three copies of the report, signed as above
provided, are deposited in the office of the
Secretary General.
(Emphasis added)
of the VAT and that this was made only in the Conference
Committee bill which became Republic Act No. 7716 without
reflecting this fact in its title.
The title of Republic Act No. 7716 is:
AN ACT RESTRUCTURING THE VALUE- ADDED
TAX (VAT) SYSTEM, WIDENING ITS TAX BASE
AND ENHANCING ITS ADMINISTRATION, AND
FOR THESE PURPOSES AMENDING AND
REPEALING THE RELEVANT PROVISIONS OF
THE NATIONAL INTERNAL REVENUE CODE, AS
AMENDED, AND FOR OTHER PURPOSES.
Among the provisions of the NIRC amended is 103, which
originally read:
103. Exempt transactions. The following shall
be exempt from the value-added tax:
(q) Transactions which are exempt under special
laws or international agreements to which the
Philippines is a signatory. Among the transactions
exempted from the VAT were those of PAL
because it was exempted under its franchise (P.D.
No. 1590) from the payment of all "other taxes . . .
now or in the near future," in consideration of the
payment by it either of the corporate income tax or
a franchise tax of 2%.
As a result of its amendment by Republic Act No. 7716, 103 of
the NIRC now provides:
103. Exempt transactions. The following shall
be exempt from the value-added tax:
....
the tax was to curtail both their revenue and their circulation. As
the U.S. Supreme Court noted, the tax was "a deliberate and
calculated device in the guise of a tax to limit the circulation of
information to which the public is entitled in virtue of the
constitutional guaranties." 29 The case is a classic illustration of
the warning that the power to tax is the power to destroy.
In the other case 30 invoked by the PPI, the press was also
found to have been singled out because everything was exempt
from the "use tax" on ink and paper, except the press.
Minnesota imposed a tax on the sales of goods in that state. To
protect the sales tax, it enacted a complementary tax on the
privilege of "using, storing or consuming in that state tangible
personal property" by eliminating the residents' incentive to get
goods from outside states where the sales tax might be lower.
The Minnesota Star Tribune was exempted from both taxes
from 1967 to 1971. In 1971, however, the state legislature
amended the tax scheme by imposing the "use tax" on the cost
of paper and ink used for publication. The law was held to have
singled out the press because (1) there was no reason for
imposing the "use tax" since the press was exempt from the
sales tax and (2) the "use tax" was laid on an "intermediate
transaction rather than the ultimate retail sale." Minnesota had a
heavy burden of justifying the differential treatment and it failed
to do so. In addition, the U.S. Supreme Court found the law to
be discriminatory because the legislature, by again amending
the law so as to exempt the first $100,000 of paper and ink
used, further narrowed the coverage of the tax so that "only a
handful of publishers pay any tax at all and even fewer pay any
significant amount of tax." 31 The discriminatory purpose was
thus very clear.
More recently, in Arkansas Writers' Project, Inc. v. Ragland, 32 it
was held that a law which taxed general interest magazines but
not newspapers and religious, professional, trade and sports
journals was discriminatory because while the tax did not single
out the press as a whole, it targeted a small group within the
press. What is more, by differentiating on the basis of contents
(i.e., between general interest and special interests such as
more imagined than real. It would seem that the VAT is not as
bad as we are made to believe.
In any event, if petitioners seriously believe that the adoption
and continued application of the VAT are prejudicial to the
general welfare or the interests of the majority of the people,
they should seek recourse and relief from the political branches
of the government. The Court, following the time-honored
doctrine of separation of powers, cannot substitute its judgment
EN BANC
Abakada Guro v. Ermita
DECISION
AUSTRIA-MARTINEZ, J.:
RESPONDENTS COMMENT
ISSUES
The Court defined the issues, as follows:
PROCEDURAL ISSUE
Whether R.A. No. 9337 violates
following provisions of the Constitution:
the
SUBSTANTIVE ISSUES
1. Whether Sections 4, 5 and 6 of R.A. No. 9337,
amending Sections 106, 107 and 108 of the NIRC,
violate the following provisions of the Constitution:
a. Article VI, Section 28(1), and
b. Article VI, Section 28(2)
2. Whether Section 8 of R.A. No. 9337, amending
Sections 110(A)(2) and 110(B) of the NIRC; and
Section 12 of R.A. No. 9337, amending Section
114(C) of the NIRC, violate the following
provisions of the Constitution:
a. Article VI, Section 28(1), and
b. Article III, Section 1
RULING OF THE COURT
As a prelude, the Court deems it apt to restate the
general principles and concepts of value-added tax (VAT), as
Conference
House Bill
No.3705
Provides
for
12% VAT on
every sale of
goods
or
properties
(amending
Sec. 106 of
NIRC);
12%
VAT
on
importation of
goods
(amending
Sec. 107 of
NIRC);
and
12% VAT on
sale of services
and use or
lease
of
properties
(amending
Sec. 108 of
NIRC)
Provides for a
single rate of 10%
VAT on sale of
goods
or
properties
(amending
Sec.
106 of NIRC), 10%
VAT on sale of
services including
sale of electricity
by
generation
companies,
transmission and
distribution
companies,
and
use or lease of
properties
(amending
Sec.
108 of NIRC)
Provides that
the input tax
credit
for
capital goods
on which a VAT
has been paid
shall be equally
distributed over
5 years or the
depreciable life
of such capital
goods;
the
No
provision
similar
services
other
than capital goods
shall not exceed
90% of the output
VAT.
No
provision
similar
Provided
for
amendments
to
several
NIRC
provisions
regarding
corporate income,
percentage,
franchise
and
excise taxes
28(A)(1)
Tax
on
Resident
Foreign Corporation
28(B)(1)
Inter-corporate
Dividends
34(B)(1)
Inter-corporate
Dividends
116
Tax
on
Persons
Exempt from VAT
117
Percentage Tax on
domestic carriers and
keepers of Garage
119
Tax on franchises
121
148
Excise
Tax
on
manufactured oils and
other fuels
151
236
Registration
requirements
237
Issuance of receipts or
sales or commercial
invoices
288
Disposition
of
Incremental Revenue
savings
have
been
identified
by
the
administration. It is supported with a credible
package of revenue measures that include
measures to improve tax administration and
control the leakages in revenues from income
taxes and the value-added tax (VAT). (Emphasis
supplied)
value-added
tax
collection as a percentage
of Gross Domestic Product
(GDP) of the previous year
exceeds two and four-fifth
percent (2 4/5%) or
(1
(ii)
National
government
deficit as a percentage of GDP of the
previous year exceeds one and onehalf percent (1 %).
The case before the Court is not a delegation of
legislative power. It is simply a delegation of ascertainment of
facts upon which enforcement and administration of the
increase rate under the law is contingent. The legislature has
made the operation of the 12% rate effective January 1, 2006,
contingent upon a specified fact or condition. It leaves the entire
operation or non-operation of the 12% rate upon factual matters
outside of the control of the executive.
No discretion would be exercised by the President.
Highlighting the absence of discretion is the fact that the
word shall is used in the common proviso. The use of the
word shall connotes a mandatory order. Its use in a statute
denotes an imperative obligation and is inconsistent with the
the 24/5 of the GDP of the previous year or that the national
government deficit as a percentage of GDP of the previous year
does not exceed 1%.
Therefore, no statutory construction or interpretation is
needed. Neither can conditions or limitations be introduced
where none is provided for. Rewriting the law is a forbidden
ground that only Congress may tread upon. [60]
Thus, in the absence of any provision providing for a
return to the 10% rate, which in this case the Court finds none,
petitioners argument is, at best, purely speculative. There is no
basis for petitioners fear of a fluctuating VAT rate because the
law itself does not provide that the rate should go back to 10% if
the conditions provided in Sections 4, 5 and 6 are no longer
present. The rule is that where the provision of the law is clear
and unambiguous, so that there is no occasion for the court's
seeking the legislative intent, the law must be taken as it is,
devoid of judicial addition or subtraction.[61]
Petitioners also contend that the increase in the VAT rate,
which was allegedly an incentive to the President to raise the
VAT collection to at least 2 4/5 of the GDP of the previous year,
should be based on fiscal adequacy.
Petitioners obviously overlooked that increase in VAT
collection is not the only condition. There is another
condition, i.e., the national government deficit as a percentage
of GDP of the previous year exceeds one and one-half percent
(1 %).
Respondents explained the philosophy behind these
alternative conditions:
1.
that the input tax is less than 70% of the output tax, then 100%
of such input tax is still creditable.
More importantly, the excess input tax, if any, is retained
in a businesss books of accounts and remains creditable in the
succeeding quarter/s. This is explicitly allowed by Section
110(B), which provides that if the input tax exceeds the output
tax, the excess shall be carried over to the succeeding quarter
or quarters. In addition, Section 112(B) allows a VAT-registered
person to apply for the issuance of a tax credit certificate or
refund for any unused input taxes, to the extent that such input
taxes have not been applied against the output taxes. Such
unused input tax may be used in payment of his other internal
revenue taxes.
The non-application of the unutilized input tax in a given
quarter is not ad infinitum, as petitioners exaggeratedly contend.
Their analysis of the effect of the 70% limitation is incomplete
and one-sided. It ends at the net effect that there will be
unapplied/unutilized inputs VAT for a given quarter. It does not
proceed further to the fact that such unapplied/unutilized input
tax may be credited in the subsequent periods as allowed by the
carry-over provision of Section 110(B) or that it may later on be
refunded through a tax credit certificate under Section 112(B).
Therefore, petitioners argument must be rejected.
On the other hand, it appears that petitioner Garcia failed
to comprehend the operation of the 70% limitation on the input
tax. According to petitioner, the limitation on the creditable input
tax in effect allows VAT-registered establishments to retain a
portion of the taxes they collect, which violates the principle that
tax collection and revenue should be for public purposes and
expenditures
As earlier stated, the input tax is the tax paid by a person,
passed on to him by the seller, when he buys goods. Output tax
meanwhile is the tax due to the person when he sells goods. In
computing the VAT payable, three possible scenarios may arise:
Transfer agent's
fee.........................................................P59,477.42
Total.........................................................................
.......... P32,189.79
1958
Total net income for
1958.................................P1,968,898.27
Net income corresponding to
taxable period April 1 to
expenses.................................................................
........6, 666.65
Net income per
decision..........................................11, 02,4 2.70
Tax due
thereon.........................................................412,69
5.00
Less: Amount already
assessed .............................405,468.00
DEFICIENCY INCOME TAX
DUE............................P7,227.00
Add: 1/2 % monthly interest
from 6-20-59 to 6-20-62
(18%)....................................P1,300.89
TOTAL AMOUNT DUE &
COLLECTIBLE............P8,526.22
From the Court of Tax Appeals' decision of October 25, 1966,
both parties appealed to this Court by way of two (2) separate
petitions for review docketed as G. R. No. L-26911 (Atlas,
petitioner) and G. R. No. L-29924 (Commissioner, petitioner).
G. R. No. L-26911Atlas appealed only that portion of the
Court of Tax Appeals' decision disallowing the deduction from
gross income of the so-called stockholders relation service fee
amounting to P25,523.14, making a lone assignment of error
that
I
THE COURT OF TAX APPEALS ERRED IN
ALLOWING THE DEDUCTION FROM GROSS
INCOME OF THE SO- CALLED TRANSFER
AGENT'S FEES ALLEGEDLY PAID BY
RESPONDENT;
II
III
THE COURT OF TAX APPEALS ERRED IN
HOLDING THAT THE AMOUNT OF P60,000
REPRESENTED BY RESPONDENT AS
"PROVISION FOR CONTINGENCIES" WAS
ADDED BACK BY RESPONDENT TO ITS
GROSS INCOME IN COMPUTING THE INCOME
TAX DUE FROM IT FOR 1958;
IV
THE COURT OF TAX APPEALS ERRED IN
DISALLOWING ONLY THE AMOUNT OF
P6,666.65 AS SUIT EXPENSES, THE CORRECT
AMOUNT THAT SHOULD HAVE BEEN
DISALLOWED BEING P17,499.98.
It is well to note that only in the Court of Tax Appeals did the
Commissioner raise for the first time (in his memorandum) the
question of whether or not the business expenses deducted
from Atlas gross income in 1958 may be allowed in the absence
of proof of payments. 17 Before this Court, the Commissioner
reiterated the same as ground against deductibility when he
claimed that the Court of Tax Appeals erred in allowing the
deduction of transfer agent's fee and stock listing fee from gross
income in the absence of proof of payment thereof.
The Commissioner contended that under Section 30 (a) (1) of
the National Internal Revenue Code, it is a requirement for an
expense to be deductible from gross income that it must have
been "paid or incurred during the year" for which it is claimed;
that in the absence of convincing and satisfactory evidence of
payment, the deduction from gross income for the year 1958
income tax return cannot be sustained; and that the best
evidence to prove payment, if at all any has been made, would
be the vouchers or receipts issued therefor which ATLAS failed
to present.
Atlas admitted that it failed to adduce evidence of payment of
the deduction claimed in its 1958 income tax return, but explains
the failure with the allegation that the Commissioner did not
raise that question of fact in his pleadings, or even in the report
of the investigating examiner and/or letters of demand and
assessment notices of ATLAS which gave rise to its appeal to
the Court of Tax Appeal. 18 It was emphasized by Atlas that it
went to trial and finally submitted this case for decision on the
assumption that inasmuch as the fact of payment was never
raised as a vital issue by the Commissioner in his answer to the
petition for review in the Court of Tax Appeal, the issues is
limited only to pure question of lawwhether or not the
expenses deducted by petitioner from its gross income for 1958
should not prejudice the Government. This Court will pass upon
this particular question since there is a clear error committed by
officials concerned in the computation of the deductible amount.
As held in the case of Vera vs. Fernandez, 30 this Court
emphatically said that taxes are the lifeblood of the Government
and their prompt and certain availability are imperious need.
Upon taxation depends the Government's ability to serve the
people for whose benefit taxes are collected. To safeguard such
interest, neglect or omission of government officials entrusted
with the collection of taxes should not be allowed to bring harm
or detriment to the people, in the same manner as private
persons may be made to suffer individually on account of his
own negligence, the presumption being that they take good care
of their personal affair. This should not hold true to government
officials with respect to matters not of their own personal
concern. This is the philosophy behind the government's
exception, as a general rule, from the operation of the principle
of estoppel. 31
WHEREFORE, judgment appealed from is hereby affirmed with
modification that the amount of P17,499.98 (3/4 of P23,333.00)
representing suit expenses be disallowed as deduction instead
of P6,666.65 only. With this amount as part of the net income,
the corresponding income tax shall be paid thereon, with
interest of 6% per annum from June 20, 1959 to June 20,1962.
SO ORDERED.
On August 23, 2010 the Office of the Solicitor General filed the
governments comment.[4] The government avers that the NIRC
imposes VAT on all kinds of services of franchise grantees,
including tollway operations, except where the law provides
otherwise; that the Court should seek the meaning and intent of
the law from the words used in the statute; and that the
imposition of VAT on tollway operations has been the subject as
early as 2003 of several BIR rulings and circulars. [5]
It is plain from the above that the law imposes VAT on all
kinds of services rendered in the Philippines for a fee, including
those specified in the list. The enumeration of affected services
is not exclusive.[11] By qualifying services with the words all
kinds, Congress has given the term services an allencompassing meaning. The listing of specific services are
intended to illustrate how pervasive and broad is the VATs reach
rather than establish concrete limits to its application. Thus,
every activity that can be imagined as a form of service
rendered for a fee should be deemed included unless some
provision of law especially excludes it.
distributors
of
the grant had been made by Congress itself. [15] The term
franchise has been broadly construed as referring, not only to
authorizations that Congress directly issues in the form of a
special law, but also to those granted by administrative agencies
to which the power to grant franchises has been delegated by
Congress.[16]
Tollway operators are, owing to the nature and object of
their business, franchise grantees. The construction, operation,
and maintenance of toll facilities on public improvements are
activities of public consequence that necessarily require a
special grant of authority from the state. Indeed, Congress
granted special franchise for the operation of tollways to the
Philippine National Construction Company, the former tollway
concessionaire
for
the
North
and
South
Luzon
Expressways. Apart from Congress, tollway franchises may also
be granted by the TRB, pursuant to the exercise of its delegated
powers under P.D. 1112.[17] The franchise in this case is
evidenced by a Toll Operation Certificate.[18]
WHEREFORE,
the
Court DENIES respondents
Secretary of Finance and Commissioner of Internal Revenues
motion for reconsideration of its August 24, 2010
resolution, DISMISSES the petitioners Renato V. Diaz and
Aurora Ma. F. Timbols petition for lack of merit, and SETS
ASIDE the Courts temporary restraining order dated August 13,
2010.
- versus -
SECOND DIVISION
COMMISSIONER OF INTERNAL
REVENUE,
Petitioner,
Simply put, the issue in this case is whether the gross receipts
derived by operators or proprietors of cinema/ theater houses from
admission tickets are subject to VAT.
Petitioners Arguments
such activity falls under the phrase similar services. The intent of the
legislature must therefore be ascertained.
The legislature never
intended operators
or
proprietors
of
cinema/theater houses
to be covered by VAT
Under the NIRC of 1939,[41] the national government imposed
amusement tax on proprietors, lessees, or operators of theaters,
cinematographs, concert halls, circuses, boxing exhibitions, and other
places of amusement, including cockpits, race tracks, and cabaret.
[42]
In the case of theaters or cinematographs, the taxes were first
deducted, withheld, and paid by the proprietors, lessees, or operators
of such theaters or cinematographs before the gross receipts were
divided between the proprietors, lessees, or operators of the theaters
or cinematographs and the distributors of the cinematographic
films. Section 11[43] of the Local Tax Code,[44] however, amended this
provision by transferring the power to impose amusement tax[45] on
admission from theaters, cinematographs, concert halls, circuses and
other places of amusements exclusively to the local
government. Thus, when the NIRC of 1977[46] was enacted, the
national government imposed amusement tax only on proprietors,
lessees or operators of cabarets, day and night clubs, Jai-Alai and
race tracks.[47]
On January 1, 1988, the VAT Law[48] was promulgated. It
amended certain provisions of the NIRC of 1977 by imposing a multistage VAT to replace the tax on original and subsequent sales tax
and percentage tax on certain services. It imposed VAT on sales of
services under Section 102 thereof, which provides:
SECTION 102. Value-added tax on sale of
services. (a) Rate and base of tax. There shall be
levied, assessed and collected, a value-added tax
equivalent to 10% percent of gross receipts derived by
any person engaged in the sale of services. The
xxxx
Gross receipts means the total amount of
money or its equivalent representing the contract
price, compensation or service fee, including the
amount charged for materials supplied with the
services and deposits or advance payments actually
or constructively received during the taxable quarter
for the service performed or to be performed for
another person, excluding value-added tax.
(b) Determination of the tax. (1) Tax billed as a
separate item in the invoice. If the tax is billed as a
separate item in the invoice, the tax shall be based on
the gross receipts, excluding the tax.
(2) Tax not billed separately or is billed
erroneously in the invoice. If the tax is not billed
separately or is billed erroneously in the invoice, the
tax shall be determined by multiplying the gross
xxxx
Since the promulgation of the Local Tax Code
which took effect on June 28, 1973 none of the
amendatory laws which amended the National Internal
Revenue Code, including the value added tax law
under Executive Order No. 273, has amended the
provisions of Section 11 of the Local Tax Code.
Accordingly, the sole jurisdiction for collection of
amusement tax on admission receipts in places of
amusement rests exclusively on the local government,
to the exclusion of the national government. Since the
Bureau of Internal Revenue is an agency of the
national government, then it follows that it has no legal
mandate to levy amusement tax on admission receipts
in the said places of amusement.
Considering the foregoing legal background,
the provisions under Section 123 of the National
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
October 6, 2010
In the Petition for Review, respondent alleged that for the period
July 1, 2002 to September 30, 2002, it generated and recorded
zero-rated sales in the amount of P131,791,399.00,8 which was
paid pursuant to Section 106(A) (2) (a) (1), (2) and (3) of the
National Internal Revenue Code of 1997 (NIRC);9 that for the
said period, it incurred and paid input VAT amounting
to P3,912,088.14 from purchases and importation attributable to
its zero-rated sales;10and that in its application for refund/credit
filed with the DOF One-Stop Shop Inter-Agency Tax Credit and
Duty Drawback Center, it only claimed the amount
of P3,891,123.82.11
Issue
Hence, the present recourse where petitioner interposes the
issue of whether respondents judicial and administrative claims
for tax refund/credit were filed within the two-year prescriptive
period provided in Sections 112(A) and 229 of the NIRC. 24
Petitioners Arguments
Petitioner maintains that respondents administrative and judicial
claims for tax refund/credit were filed in violation of Sections
112(A) and 229 of the NIRC.25 He posits that pursuant to Article
13 of the Civil Code,26 since the year 2004 was a leap year, the
filing of the claim for tax refund/credit on September 30, 2004
Form No. 1914 for the third quarter of 2002, 37 which were filed
with the DOF, were attached as Annexes "M" and "N,"
respectively, to the Petition for Review filed with the
CTA.38 Respondent further contends that the non-observance of
the 120-day period given to the CIR to act on the claim for tax
refund/credit in Section 112(D) is not fatal because what is
important is that both claims are filed within the two-year
prescriptive period.39 In support thereof, respondent cites
Commissioner of Internal Revenue v. Victorias Milling Co.,
Inc.40 where it was ruled that "[i]f, however, the [CIR] takes time
in deciding the claim, and the period of two years is about to
end, the suit or proceeding must be started in the [CTA] before
the end of the two-year period without awaiting the decision of
the [CIR]."41 Lastly, respondent argues that even if the period
had already lapsed, it may be suspended for reasons of equity
considering that it is not a jurisdictional requirement. 42
Our Ruling
The petition has merit.
Unutilized input VAT must be claimed within two years after the
close of the taxable quarter when the sales were made
In computing the two-year prescriptive period for claiming a
refund/credit of unutilized input VAT, the Second Division of the
CTA applied Section 112(A) of the NIRC, which states:
SEC. 112. Refunds or Tax Credits of Input Tax.
(A) Zero-rated or Effectively Zero-rated Sales Any VATregistered 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 zerorated sales under Section 106(A)(2)(a)(1), (2) and (B) and
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, MPCs
claim for refund or tax credit filed on December 10, 1999 had
already prescribed.
Reckoning for prescriptive period under
Secs. 204(C) and 229 of the NIRC inapplicable
To be sure, 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:
Sec. 204. Authority of the Commissioner to Compromise, Abate
and Refund or Credit Taxes. The Commissioner may
xxxx
(c) Credit or refund taxes erroneously or illegally received or
penalties imposed without authority, refund the value of internal
revenue stamps when they are returned in good condition by
the purchaser, and, in his discretion, redeem or change unused
stamps that have been rendered unfit for use and refund their
value upon proof of destruction. No credit or refund of taxes or
penalties shall be allowed unless the taxpayer files in writing
with the Commissioner a claim for credit or refund within two (2)
(D) Period within which Refund or Tax Credit of Input Taxes shall
be Made. In proper cases, the Commissioner shall grant a
July 15, 1999 to August 14, 1999 refund or issue the tax credit certificate for creditable input taxes
within one hundred twenty (120) days from the date of
August 15, 1999 to September 14, 1999
submission of complete documents in support of the application
September 15, 1999 to October 14, filed in accordance with Subsections (A) and (B) hereof.
1999
In case of full or partial denial of the claim for tax refund or tax
October 15, 1999 to November 14, 1999
credit, or the failure on the part of the Commissioner to act on
November 15, 1999 to December 14,the application within the period prescribed above, the taxpayer
1999
affected may, within thirty (30) days from the receipt of the
decision denying the claim or after the expiration of the one
December 15, 1999 to January 14, 2000
hundred twenty day-period, appeal the decision or the unacted
January 15, 2000 to February 14, 2000
claim with the Court of Tax Appeals. (Emphasis supplied.)
the completion date of the Power Station, NPC will take and pay
for all electricity available from the Power Station.
On the construction and development of the San Roque MultiPurpose Project which comprises of the dam, spillway and
power plant, [San Roque] allegedly incurred, excess input VAT
in the amount of 559,709,337.54 for taxable year 2001 which it
declared in its Quarterly VAT Returns filed for the same year.
[San Roque] duly filed with the BIR separate claims for refund,
in the total amount of 559,709,337.54, representing unutilized
input taxes as declared in its VAT returns for taxable year 2001.
However, on March 28, 2003, [San Roque] filed amended
Quarterly VAT Returns for the year 2001 since it increased its
unutilized input VAT to the amount of 560,200,283.14.
Consequently, [San Roque] filed with the BIR on even date,
separate amended claims for refund in the aggregate amount of
560,200,283.14.
[CIRs] inaction on the subject claims led to the filing by [San
Roque] of the Petition for Review with the Court [of Tax Appeals]
in Division on April 10, 2003.
Trial of the case ensued and on July 20, 2005, the case was
submitted for decision.15
The Court of Tax Appeals Ruling: Division
on July 10, 2001, October 10, 2001, February 21, 2002, and
May 9, 2002 for the first, second, third, and fourth quarters of
2001, respectively, (Exhibits "EE, FF, GG, and HH") and
subsequently filed amended claims for all quarters on March 28,
2003 (Exhibits "II, JJ, KK, and LL"). Moreover, the Petition for
Review was filed on April 10, 2003. Counting from the
respective dates when [San Roque] originally filed its VAT
returns for the first, second, third and fourth quarters of 2001,
the administrative claims for refund (original and amended) and
the Petition for Review fall within the two-year prescriptive
period.18
The CTA Second Division found that San Roque complied with
the first, third, and fourth requirements, thus:
Date of Filing
Administrative
Claim
Date of Filing
Petition With
CTA
2nd Quarter,
20 July 1990
1990
Close of Quarter
30 June 1990
21 August 1990
20 July 1992
3rd Quarter,
18 October
1990
1990
Close of Quarter
30 September
1990
21 November
1990
9 October
1992
Period Covered
4th Quarter,
20 January
1990
1991
Close of Quarter
31 December
1990
Atlas paid the output VAT at the time it filed the quarterly tax
returns on the 20th, 18th, and 20th day after the close of the
taxable quarter. Had the twoyear prescriptive period been
counted from the "close of the taxable quarter" as expressly
stated in the law, the tax refund claims of Atlas would have
already prescribed. In contrast, the Mirant doctrine counts the
two-year prescriptive period from the "close of the taxable
quarter when the sales were made" as expressly stated in the
law, which means the last day of the taxable quarter. The 20day difference55 between the Atlas doctrine and the
later Mirant doctrine is not material to San Roques claim
for tax refund.
Whether the Atlas doctrine or the Mirant doctrine is applied to
San Roque is immaterial because what is at issue in the present
case is San Roques non-compliance with the 120-day
mandatory and jurisdictional period, which is counted from the
date it filed its administrative claim with the Commissioner. The
120-day period may extend beyond the two-year prescriptive
period, as long as the administrative claim is filed within the twoyear prescriptive period. However, San Roques fatal mistake is
that it did not wait for the Commissioner to decide within the
120-day period, a mandatory period whether the Atlas or
the Mirant doctrine is applied.
At the time San Roque filed its petition for review with the CTA,
the 120+30 day mandatory periods were already in the law.
Section 112(C)56 expressly grants the Commissioner 120 days
within which to decide the taxpayers claim. The law is clear,
plain, and unequivocal: "x x x 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
claim, without saying that the taxpayer can file its judicial claim
before the expiration of the 120-day period. RMC 49-03 states:
"In cases where the taxpayer has filed a Petition for Review
with the Court of Tax Appeals involving a claim for refund/TCC
that is pending at the administrative agency (either the Bureau
of Internal Revenue or the One- Stop Shop Inter-Agency Tax
Credit and Duty Drawback Center of the Department of
Finance), the administrative agency and the court may act on
the case separately." Thus, if the taxpayer files its judicial claim
before the expiration of the 120-day period, the BIR will
nevertheless continue to act on the administrative claim
because such premature filing cannot divest the Commissioner
of his statutory power and jurisdiction to decide the
administrative claim within the 120-day period.
On the other hand, if the taxpayer files its judicial claim after the
120- day period, the Commissioner can still continue to evaluate
the administrative claim. There is nothing new in this because
even after the expiration of the 120-day period, the
Commissioner should still evaluate internally the administrative
claim for purposes of opposing the taxpayers judicial claim, or
even for purposes of determining if the BIR should actually
concede to the taxpayers judicial claim. The internal
administrative evaluation of the taxpayers claim
must necessarilycontinue to enable the BIR to oppose
intelligently the judicial claim or, if the facts and the law warrant
otherwise, for the BIR to concede to the judicial claim, resulting
in the termination of the judicial proceedings.
What is important, as far as the present cases are
concerned, is that the mere filing by a taxpayer of a judicial
claim with the CTA before the expiration of the 120-day
period cannot operate to divest the Commissioner of his
jurisdiction to decide an administrative claim within the
120-day mandatory period,unless the Commissioner has
clearly given cause for equitable estoppel to apply as
expressly recognized in Section 246 of the Tax Code.67
VI. BIR Ruling No. DA-489-03 dated 10 December 2003