12/13/2014

G.R.No.190928

TodayisSaturday,December13,2014

RepublicofthePhilippines
SUPREMECOURT
Manila
THIRDDIVISION
G.R.No.190928January13,2014
TEAMENERGYCORPORATION(formerlyMIRANTPAGBILAOCORP.),Petitioner,
vs.
COMMISSIONEROFINTERNALREVENUE,Respondent.
DECISION
PERALTA,J.:
BeforeusisaPetitionforReviewonCertiorariunderRule45oftheRulesofCourtwhichseekstoreverseand
setasidetheDecision1datedAugust14,2009andResolution2datedJanuary52010oftheCourtofTaxAppeals
CTA) En Banc in CTA EB No. 422 which modified the Decision3 dated May 16 2008 and Resolution4 dated
September8,2008oftheCTAFirstDivisioninsofarasitreducedtheamountofrefundgrantedfromP69 618
971.19toP51134951.40.
Thefactsfollow.
Onthefollowingdates,petitionerfiledwiththeBureauofInternalRevenue(BIR)itsfirsttofourthquarterlyvalue
addedtax(VAT)returnsforthecalendaryear2002:
Quarter

DateFiled

First

April25,2002

Second

July23,2002

Third

October25,2002

Fourth

January27,2003

Subsequently, on December 22, 2003, petitioner filed an administrative claim for refund of unutilized input VAT
withRevenueDistrictOfficeNo.60,LucenaCity,inthetotalamountofP79,918,002.95forcalendaryear2002.
However, due to respondents inaction, petitioner elevated its claim before the CTA First Division on April 22,
2004.InhisAnswer,respondentinterposedthefollowingspecialandaffirmativedefenses:
5. Petitioners alleged claim for refund is subject to administrative investigation/examination by the
respondent
6.Tosupportitsclaim,itisimperativeforpetitionertoprovethefollowing,viz.:
a.TheregistrationrequirementsofavalueaddedtaxpayerincompliancewithSection6(a)and(b)
ofRevenueRegulationsNo.697inrelationtoSection4.1071(a)ofRevenueRegulationsNo.795,
andSection236oftheTaxCode,asamended
b. The invoicing and accounting requirements for VATregistered persons, as well as the filing and
payment of VAT in compliance with the provisions of Sections 113 and 114 of the Tax Code, as
amended
c.Proofofcompliancewiththeprescribedchecklistofrequirementstobesubmittedinvolvingclaim
forVATrefundinpursuancetoRevenueMemorandumOrderNo.5398,otherwisetherewouldbe
nosufficientcompliancewiththefilingofadministrativeclaimforrefundwhichisaconditionsinequa
non prior to the filing of judicial claim in accordance with the provision of Section 229 of the Tax
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Code, as amended. It is worthy of emphasis that Section 112 (D) of the Tax Code, as amended,
requiresthesubmissionofcompletedocumentsinsupportoftheapplicationfiledwiththeBureauof
InternalRevenuebeforethe120dayauditperiodshallapply,andbeforethetaxpayercouldavailof
judicialremediesasprovidedforinthelaw.Hence,petitionersfailuretosubmitproofofcompliance
withtheabovestatedrequirementswarrantsimmediatedismissalofthepetitionforreview.
d.ThattheinputtaxesofP79,918,002.95allegedlypaidbythepetitioneronitspurchasesofgoods
andservicesforthefour(4)quartersoftheyear2002wereattributabletoitszeroratedsalesand
such have not been applied against any output tax and were not carried over in the succeeding
taxablequarterorquarters
e. That petitioners administrative and judicial claims for tax credit or refund of unutilized input tax
(VAT)wasfiledwithintwo(2)yearsafterthecloseofthetaxablequarterwhenthesalesweremade
inaccordancewithSections112(A)and(D)and229oftheTAXCode,asamended
f.Thatpetitionersdomesticpurchasesofgoodsandservicesweremadeinthecourseofitstrade
andbusiness,properlysupportedbyVATinvoicesand/orofficialreceiptsandotherdocuments,such
as subsidiary purchase Journal, showing that it actually paid VAT in accordance with Sections 110
(A) (2) and 113 of the Tax Code as amended, and in pursuance to Section 4.1045 (a) & (b) of
RevenueRegulationsNo.795(Re:SubstantiationofClaimsforInputTaxCredit)
g. The requirements as enumerated under Section 4.1042 of Revenue Regulations 795. (Re:
PersonswhocanavailoftheInputTaxCredits)
7.Furthermore,inanactionforrefundtheburdenofproofisonthetaxpayertoestablishitsrighttorefund
andfailuretosustaintheburdenisfataltotheclaimforrefund/credit.Thisissobecauseexemptionsfrom
taxationarehighlydisfavoredinlawandhewhoclaimsexemptionmustbeabletojustifyhisclaimbythe
clearestgrantoforganicorstatutorylaw.Anexemptionfromcommonburdencannotbepermittedtoexist
uponvagueimplications
8. Claims for refund are construed strictly against the claimant for the same partake the nature of
exemptionfromtaxationand,assuch,theyarelookeduponwithdisfavor.5
Aftertrialonthemerits,theCTAFirstDivisionrenderedjudgmentasfollows:
WHEREFORE, IN VIEW OF ALL THE FOREGOING, the instant Petition for Review is hereby PARTIALLY
GRANTED. Thus, Respondent is hereby ORDERED TO REFUND OR ISSUE A TAX CREDIT CERTIFICATE to
petitioner in the reduced amount of SIXTY NINE MILLION SIX HUNDRED EIGHTEEN THOUSAND NINE
HUNDRED SEVENTYONE AND 19/100 PESOS (P69,618,971.19), representing unutilized input valueadded
taxespaidbypetitioneronitsdomesticpurchasesofgoodsandservicesandimportationofgoodsattributableto
its effectively zerorated sales of power generation services to the National Power Corporation for the taxable
year2002.
SOORDERED.6
Not satisfied, respondent filed his Motion for Partial Reconsideration against said decision, which the CTA First
DivisiondeniedinaResolutiondatedSeptember8,2008.
OnOctober10,2007,respondentfiledaPetitionforReviewwiththeCTAEnBanc.
In a Decision dated August 14, 2009, the CTA En Banc affirmed the CTA First Divisions decision with the
modificationthattherefundableamountbereducedtoP51,134,951.40.Thefalloreads:
WHEREFORE,premisesconsidered,thepetitionisherebyPARTLYGRANTED.TheassailedDecisiondatedMay
16, 2008 and Resolution dated September 8, 2008 are hereby AFFIRMED, with modification that only
P51,134,951.40istherefundableamounttorespondentfortaxableyear2002.Accordingly,theCommissionerof
Internal Revenue is hereby ORDERED to REFUND or ISSUE a TAX CREDIT CERTIFICATE in favor of Team
EnergyCorporationthereducedamountofFIFTYONEMILLIONONEHUNDREDTHIRTYFOURTHOUSAND
NINEHUNDREDFIFTYONEAND40/100(P51,134,951.40),representingthelattersexcessandunutilizedinput
VATfortheperiodcoveringcalendaryear2002.
SOORDERED.7
Unfazed, petitioner filed a motion for reconsideration against said Decision, but the same was denied in a
ResolutiondatedJanuary5,2010.
Hence,thepresentpetitionwhereinpetitionerraisesthefollowingissuesforourresolution:
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THE CTA EN BANC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR

EXCESSOFJURISDICTIONWHENITDISALLOWEDPETITIONERSINPUTVATFORTHEFIRST
QUARTERAMOUNTINGTOP18,484,019.79BASEDONPRESCRIPTIONBECAUSE:
A.PETITIONERFILEDITSJUDICIALCLAIMFORREFUNDWELLWITHINTHETWOYEAR
PRESCRIPTIVE PERIOD RECKONED FROM THE DATE OF FILING OF THE QUARTERLY
VAT RETURN PURSUANT TO LONG STANDING JURISPRUDENCE, WHICH THE
HONORABLECOURTEXPRESSLYRECOGNIZEDINATLASCONSOLIDATEDMININGAND
DEVELOPMENT CORPORATION V. COMMISSIONER OF INTERNAL REVENUE, G.R. NOS.
141104&[148763],JUNE8,2007("ATLASCASE").
B.THECTAENBANCSHOULDNOTHAVEHASTILYRELIEDONTHECONTRARYRULING
OF THE HONORABLE COURT IN COMMISSIONER OF INTERNAL REVENUE V. MIRANT
PAGBILAOCORPORATION,G.R.NO.172129,SEPTEMBER12,2008("MIRANTPAGBILAO
CASE") AS THE HONORABLE COURT COULD NOT HAVE INTENDED TO REVERSE THE
DOCTRINE IN THE ATLAS CASE IN THE LIGHT OF ARTICLE VIII, SECTION 4 (3) OF THE
CONSTITUTION.
C. ASSUMING, BUT WITHOUT CONCEDING, THAT THE MIRANT PAGBILAO CASE
REVERSED THE DOCTRINE IN THE ATLAS CASE, THE SAME SHOULD BE APPLIED
PROSPECTIVELYANDNOTRETROACTIVELYTOTHEPREJUDICEOFPETITIONERWHO
RELIED IN GOOD FAITH ON PREVAILING JURISPRUDENCE AT THE TIME OF FILING OF
ITSJUDICIALCLAIMFORREFUND.8
Simply,thesoleissueforourresolutioniswhetherornotpetitionertimelyfileditsjudicialclaimforrefundofinput
VATforthefirstquarterof2002.
Toappropriatelyaddressthisissue,itisrelevanttoquoteSections112(A)and(C)oftheTaxCode,viz.:
SEC.112.RefundorTaxCreditsofInputTax.
(A) Zerorated or Effectively Zerorated Sales. Any VATregistered person, whose sales are zerorated or
effectivelyzeroratedmay,withintwo(2)yearsafterthecloseofthetaxablequarterwhenthesalesweremade,
applyfortheissuanceofataxcreditcertificateorrefundofcreditableinputtaxdueorpaidattributabletosuch
sales, except transitional input tax, to the extent that such input tax has not been applied against output tax
Provided,however,ThatinthecaseofzeroratedsalesunderSection106(A)(2)(a)(1),(2)and(B)andSection
108(B)(1)and(2),theacceptableforeigncurrencyexchangeproceedsthereofhadbeendulyaccountedforin
accordancewiththerulesandregulationsoftheBangkoSentralngPilipinas(BSP):Provided,further,Thatwhere
thetaxpayerisengagedinzeroratedoreffectivelyzeroratedsaleandalsointaxableorexemptsaleofgoodof
propertiesorservices,andtheamountofcreditableinputtaxdueorpaidcannotbedirectlyandentirelyattributed
toanyoneofthetransactions,itshallbeallocatedproportionatelyonthebasisofthevolumeofsales.
xxxx
(C)PeriodwithinwhichRefundorTaxCreditofInputTaxesshallbeMade.Inpropercases,theCommissioner
shallgrantarefundorissueataxcreditcertificateforcreditableinputtaxeswithinonehundredtwenty(120)days
from the date of submission of complete documents in support of the application filed in accordance with
Subsection(A)hereof.
In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the
Commissionertoactontheapplicationwithintheperiodprescribedabove,thetaxpayeraffectedmay,withinthirty
(30)daysfromthereceiptofthedecisiondenyingtheclaimoraftertheexpirationoftheonehundredtwentyday
period,appealthedecisionortheunactedclaimwiththeCourtofTaxAppeals.
Initsassaileddecision,theCTAEnBancreducedpetitionersclaimforrefundofitsexcessorunutilizedinputVAT
toP51,134,951.40onthegroundthatpetitionersjudicialclaimforthefirstquarterof2002wasfiledbeyondthe
twoyearperiodprescribedunderSection112(A)oftheTaxCode,towit:
Asregardsthefifthrequisite,Section112(A)oftheNIRCof1997,asamended,providesthataVATregistered
taxpayerwhosesaleiszeroratedoreffectivelyzeroratedmay,withintwo(2)yearsafterthecloseofthetaxable
quarter when the sales were made, apply for refund or issuance of a TCC of its creditable input tax or paid
attributabletosuchsales.
IntherecentcaseofCommissionerofInternalRevenuev.MirantPagbilao(FormerlySouthernEnergyQuezon,
Inc.),565SCRA154(hereafterreferredtoasthe"MirantCase"),theSupremeCourtdefinitelysettledtheissue
on the reckoning of the prescriptive period on claims for refund of input VAT attributable to zerorated or
effectivelyzeroratedsales,asfollows:
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xxxx
Pursuant to the above ruling of the Supreme Court, it is clear that the twoyear prescriptive period provided in
Section112(A)oftheNIRCof1997,asamended,shouldbecountednotfromthepaymentofthetax,butfrom
thecloseofthetaxablequarterwhenthesalesweremade.PursuanttotheaboverulingoftheSupremeCourt,
thefollowingarethepertinentdatesrelevanttopetitionersclaimforrefund:
Period(2002)

CloseofTaxable
Quarter

LastDayforFilingof
TheClaim

1stQuarter

March31,2002

March31,2004

2ndQuarter

June30,2002

June30,2004

3rdQuarter

September30,2002

September30,2004

4thQuarter

December31,2002

December31,2004

Record shows that respondent filed its administrative claim for refund or issuance of a TCC on December 22,
2003, while the judicial claim for refund was filed on April 22, 2004. Since respondent filed its judicial claim for
refundforthefourquartersof2002,onlyonApril22,2004,twentytwo(22)daysfromMarch31,2004,thelast
dayprescribedbytheMirantCase,respondentisbarredfromclaimingrefundofitsunutilizedinputtaxesforthe
firstquarterof2002.Therefore,theclaimforrefundgrantedbytheFirstDivisionofthisCourtintheamountof
P69,618,971.19 should be reduced by deducting the portion of the claim corresponding to the first quarter that
hadalreadyprescribed,xxx.
xxxx
Insum,theCourtEnBancfindsthatthetotalsubstantiatedinputtaxfiledwithinthetwoyearprescriptiveperiod
ofrespondentTeaMEnergyamountstoP51,134,951.40only.9
Recently, however, in the consolidated cases of Commissioner of Internal Revenue v. San Roque Power
Corporation10(SanRoqueponencia),thisCourtemphasizedthatSection112(A)and(C)oftheTaxCodemust
beinterpretedaccordingtoitsclear,plainandunequivocallanguage.
In said case, we held that the taxpayer can file his administrative claim for refund or issuance of tax credit
certificate anytime within the twoyear prescriptive period. If he files his claim on the last day of the twoyear
prescriptive period, his claim is still filed on time. The Commissioner will then have 120 days from such filing to
decidetheclaim.IftheCommissionerdecidestheclaimonthe120thdayordoesnotdecideitonthatday,the
taxpayerstillhas30daystofilehisjudicialclaimwiththeCTA.Thus,theCourtexpounded:
Section112(C)alsoexpresslygrantsthetaxpayera30dayperiodtoappealtotheCTAthedecisionorinaction
oftheCommissioner,thus:
xxxthetaxpayeraffectedmay,withinthirty(30)daysfromreceiptofthedecisiondenyingtheclaimorafterthe
expirationoftheonehundredtwentydayperiod,appealthedecisionortheunactedclaimwiththeCourtofTax
Appeals.(Emphasissupplied)
Thislawisclear,plainandunequivocal.Followingthewellsettledverbalegisdoctrine,thislawshouldbeapplied
exactly as worded since it is clear, plain and unequivocal. As this law states, the taxpayer may, if he wishes,
appealthedecisionoftheCommissionertotheCTAwithin30daysfromreceiptoftheCommissionersdecision,
oriftheCommissionerdoesnotactonthetaxpayersclaimwithinthe120dayperiod,thetaxpayermayappealto
theCTAwithin30daysfromtheexpirationofthe120dayperiod.
xxxx
There are three compelling reasons why the 30day period need not necessarily fall within the twoyear
prescriptiveperiod,aslongastheadministrativeclaimisfiledwithinthetwoyearprescriptiveperiod.
First,Section112(A)clearly,plainlyandunequivocallyprovidesthatthetaxpayer"may,withintwo(2)yearsafter
the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or
refundofthecreditableinputtaxdueorpaidtosuchsales."Inshort,thelawstatesthatthetaxpayermayapply
with the Commissioner for a refund or credit "within two (2) years," which means at anytime within two years.
Thus,theapplicationforrefundorcreditmaybefiledbythetaxpayerwiththeCommissioneronthelastdayof
the twoyear prescriptive period and it will still strictly comply with the law. The twoyear prescriptive period is a
graceperiodinfavorofthetaxpayerandhecanavailofthefullperiodbeforehisrighttoapplyforataxrefundor
creditisbarredbyprescription.
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Second,Section112(C)providesthattheCommissionershalldecidetheapplicationforrefundorcredit"within
onehundredtwenty(120)daysfromthedateofsubmissionofcompletedocumentsinsupportoftheapplication
filed in accordance with Subsection (A)." The reference in Section 112 (C) of the submission of documents "in
supportoftheapplicationfiledinaccordancewithSubsection(A)"meansthattheapplicationinSection112(A)is
the administrative claim that the Commissioner must decide within the 120day period. In short, the twoyear
prescriptiveperiodinSection112(A)referstotheperiodwithinwhichthetaxpayercanfileanadministrativeclaim
fortaxrefundorcredit.Statedotherwise,thetwoyearprescriptiveperioddoesnotrefertothefilingofthejudicial
claimwiththeCTAbuttothefilingoftheadministrativeclaimwiththeCommissioner.AsheldinAichi,the"phrase
withintwoyearsxxxapplyfortheissuanceofataxcreditorrefund"referstoapplicationsforrefund/creditwith
theCIRandnottoappealsmadetotheCTA."
Third,ifthe30dayperiod,oranypartofit,isrequiredtofallwithinthetwoyearprescriptiveperiod(equivalentto
730days),thenthetaxpayermustfilehisadministrativeclaimforrefundorcreditwithinthefirst610daysofthe
twoyearprescriptiveperiod.Otherwise,thefilingoftheadministrativeclaimbeyondthefirst610dayswillresultin
the appeal to the CTA being filed beyond the twoyear prescriptive period. Thus, if the taxpayer files his
administrativeclaimonthe611thday,theCommissioner,withhis120dayperiod,willhaveuntilthe731stdayto
decidetheclaim.IftheCommissionerdecidesonlyonthe731stday,ordoesnotdecideatall,thetaxpayercan
nolongerfilehisjudicialclaimwiththeCTAbecausethetwoyearprescriptiveperiod(equivalentto730days)has
lapsed. The 30day 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 twoyear
prescriptiveperiod.
The theory that the 30day period must fall within the twoyear prescriptive period adds a condition that is not
foundinthelaw.Itresultsintruncating120daysfromthe730daysthatthelawgrantsthetaxpayerforfilinghis
administrativeclaimwiththeCommissioner.ThisCourtcannotinterpretalawtodefeat,whollyorevenpartly,a
remedythatthelawexpresslygrantsinclear,plainandunequivocallanguage.
Section112(A)and(C)mustbeinterpretedaccordingtoitsclear,plainandunequivocallanguage. Thetaxpayer
canfilehisadministrativeclaimforrefundorcreditatanytimewithinthetwoyearprescriptiveperiod.Ifhefiles
hisclaimonthelastdayofthetwoyearprescriptiveperiod,hisclaimisstillfiledontime.TheCommissionerwill
have120daysfromsuchfilingtodecidetheclaim.IftheCommissionerdecidestheclaimonthe120thday,or
doesnotdecideitonthatday,thetaxpayerstillhas30daystofilehisjudicialclaimwiththeCTA.Thisisnotonly
theplainmeaningbutalsotheonlylogicalinterpretationofSection112(A)and(C).11(Emphasissupplied)
1 w p h i1

Based on the aforequoted discussions, we therefore disagree with the CTA En Bancs finding that petitioners
judicialclaimforthefirstquarterof2002wasnottimelyfiled.
TheSanRoqueponenciafirmlyenunciatesthatthetaxpayercanfilehisadministrativeclaimforrefundorcredit
atanytimewithinthetwoyearprescriptiveperiod.Whatisonlyrequiredofhimistofilehisjudicialclaimwithin
thirty(30)daysafterdenialofhisclaimbyrespondentoraftertheexpirationofthe120dayperiodwithinwhich
respondentcandecideonitsclaim.
Here,thereisnoquestionthatpetitionertimelyfileditsadministrativeclaimwiththeBureauofInternalRevenue
withintherequiredperiod.However,sinceitsadministrativeclaimwasfiledwithinthetwoyearprescriptiveperiod
anditsjudicialclaimwasfiledonthefirstdayaftertheexpirationofthe120dayperiodgrantedtorespondent,to
decideonitsclaim,werulethatpetitionersclaimforrefundforthefirstquarterof2002shouldbegranted.
All told, we revert to the CTA First Division s finding that petitioner s total refundable amount should be
P69,618,971.19, representing petitioner s unutilized input VAT paid on its domestic purchases of goods and
services and importation of goods attributable to its effectively zerorated sales of power generation services to
theNationalPowerCorporationforthetaxableyear2002.WHEREFORE,inviewoftheforegoing,theDecision
datedAugust14,2009andResolutiondatedJanuary5,2010oftheCourtofTaxAppealsEnBanc,inCTAEB
No. 422 are hereby AFFIRMED with MODIFICATION that petitioner s total refundable amount shall be
P69,618,971.19.
SOORDERED.
DIOSDADOM.PERALTA
AssociateJustice
WECONCUR:
PRESBITEROJ.VELASCO,JR.
AssociateJustice
Chairperson
ROBERTOA.ABAD
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AssociateJustice

AssociateJustice

MARVICMARIOVICTORF.LEONEN
AssociateJustice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before the case was
assignedtothewriteroftheopinionoftheCourtsDivision.
PRESBITEROJ.VELASCO,JR.
AssociateJustice
Chairperson,ThirdDivision
CERTIFICATION
PursuanttoSection13,ArticleVIIIoftheConstitutionandtheDivisionChairpersonsAttestation,Icertifythatthe
conclusionsintheaboveDecisionhadbeenreachedinconsultationbeforethecasewasassignedtothewriterof
theopinionoftheCourtsDivision.
MARIALOURDESPASERENO
ChiefJustice

Footnotes
1

Penned y Associate Justice Olga PalancaEnriquez with Presiding Justice Ernesto D. Acosta dissenting
and concurring and Associate Justices Juanito C. Castaneda Jr. Lovell R. Bautista Erlinda P. Uy and
CaesarA.Casanovaconcurringrollo,pp.3655.
2

Id.at6978.

PennedyAssociateJusticeCaesarA.CasanovawithPresidingJusticeErnestoD.AcostaandAssociate
JusticeLovellR.Bautistaconcurringidat1330.
4

Id.at3234.

Id.at4043.(Citationsomitted)

Id.at30.(Emphasisintheoriginal)

Id.at5455.(Emphasisintheoriginal)

Id.at120121.

Id.at4953.

10

G.R.Nos.187485,196113,and197156,February12,2013,690SCRA336.

11

Commissioner of Internal Revenue v. San Roque Power Corporation, supra, at 387392. (Citations
omittedemphasisintheoriginal)
TheLawphilProjectArellanoLawFoundation

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