Taxation Law Review - Atty.

Tuazon 1

2. Remedies for the Taxpayer

27. CIR vs. Mirant (Phils) DOCTRINE: A taxpayer has two remedies in case of overpayment of tax:
Operations Corporation (1) Tax Refund or Credit; or (2) Carry-over of the excess tax paid to the
tax liabilities for the succeeding taxable year or quarter. Each remedy is
J. Mendoza exclusive of the other. Once a taxpayer elects his option, the same shall
G.R. No. 171742 be irrevocable for the taxable period.
June 15, 2011
FACTS:
- Respondent, Mirant (Phils) is a corporation licensed to do
business in the Philippines and is engaged in the design,
construction and assembly, commissioning, operation,
maintenance, rehabilitation and management of gas turbines and
other power generating plants and related facilities using coal,
distillate and other fuel provided by and under contract with the
government.
- Mirant entered into Operating and Management Agreements with
Mirant Pagbilao Corporation and Mirant Sual Corporation to
provide these companies with maintenance and management
services in connection with the operation, construction and
commissioning of coal-fired power stations situated in Pagbilao,
Quezon and Sual, Pangasinan, respectively,
- On 15 Oct. 1999, Mirant filed with the BIR its ITR for the fiscal
year ending 30 June 1999 declaring a net loss of Php.
235,291,064.00 and unutilized tax credits of Php. 32,263,388.99.
- One 17 April 2000, Mirant filed with the BIR an
amended ITR from that previously filed reporting an
increased net loss amount of Php. 379,324,340.00 but
reporting the same unutilized tax credits, which Mirant
opted to carry over as a tax credit to the succeeding
taxable year.
- To synchronize its accounting period with those of its
affiliates, Mirant allegedly secured the approval of the
BIR to change its accounting period from fiscal year to
calendar year effective 31 December 1999, Thus, on
17 April 2000, Mirant filed its ITR for interim period 1
July 1999 to 31 December 1999, declaring a net loss in
the amount of Php. 381,874,076.00 and unutilized tax
credits of Php. 48,626,793.00.
- Mirant indicated the excess amount or tax
overpayment of Php. 48,626,793.00 as “to be carried
over as tax credit next year or quarter.”
- On 10 April 2001, Mirant filed with the BIR its ITR for
the calendar year ending 31 December 2000 reflecting
a net loss of Php. 56,901,850.00 and unutilized tax
credits of Php. 87,345,116.00.
- On 20 Sept. 2001, Mirant wrote the BIR a letter claiming a refund
of Php. 87,345,116.00 representing the overpaid income tax for
the fiscal year ending 30 June 1999; the interim period covering
1 July 1999 to 31 December 1999; and calendar year ending 31
ISSUE: W/N the CTA erred in holding that Mirant was entitled to a refund or tax credit?
HELD: NO. Mirant had already elected to carry-over the excess income tax paid to its estimated
quarterly income tax liabilities of the succeeding taxable year.
- A taxpayer has two remedies in case of overpayment of income tax: (1) Tax Refund or Credit;
or (2) Carry-over of the excess tax paid to the tax liabilities for the succeeding taxable year.
Each remedy is exclusive of the other. Here, Mirant elected to carry-over the overpaid income
tax to its tax liabilities to the succeeding taxable year, and thus cannot anymore ask for a tax
refund or credit.
- Once the option to carry-over and apply the excess quarterly income tax against income tax
due for the taxable quarters of the succeeding taxable years has been made, such option shall
be irrevocable for that taxable period and application for tax refund or issuance of a tax credit
certificate shall be allowed therefor.
- These two options under Sec. 76 of the NIRC are alternative in nature. The choice of one
precludes the other. Indeed, in Phil. Bank of Communications v. CIR, the Court ruled that a
corporation must signify its intention - whether to request a tax refund or claim a tax credit - by
marking the corresponding option box provided in the FAR. While a taxpayer is required to
mark its choice in the form provided by the BIR, this requirement is only for the purpose of
facilitating tax collection. One cannot get a tax refund and tax credit at the same time for the
same excess income taxes paid.
- In this case, in its amended ITR for the year ended 30 July 1999 and for the interim period
ended 31 December 1999, the carry-over could no longer be converted into a claim for tax
refund because of the irrevocability rule provided in Sec. 76 of the NIRC. Mirant clearly ticked
the box signifying that the overpayment was “to be carried over as tax carried next
year/quarter”. Item 31 of the Annual ITR Form also clearly indicated “if overpayment, mark one
box only (once the choice is made, the same is irrevocable).”
- Applying the irrevocability rule in Sec. 76, Mirant having opted to carry-over its tax overpayment
for the fiscal year ending 30 July 1999 and for the interim period ending 31 December 1999, it
is now barred from applying for the refund of the said amount or for the issuance of a tax credit
certificate therefor, and for the unutilized tax credits carried over from the fiscal year ended 30
June 1998.

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December 2000.
- As the two-year prescriptive period for the filing of a judicial
claim under Sec. 229 off theNIRC of 1997 was about to lapse
without action on the part the BIR, Mirant elevanted its case to
the CTA by way of Petition for Review.
- The CTA 1st Division ruled in favour of Mirant,
granting its tax refund, but decreased the amount to
be refunded to Php. 38,620.427.00 on the ground that
it exercised the carry-over option with regard to the
said unutilized tax credits, which is irrevocable
pursuant to Sec. 76 of the NIRC.

28. CIR vs. Philippine DOCTRINE: The 2-year prescriptive period for taxes erroneously or
National Bank illegally collected is not jurisdictional, it may be extended by the
Courts in the interest of equity and justice. Moreover, if recovery is
J. Garcia not due to erroneous or illegal collection, the relevant prescriptive
G.R. No. 161997 period is 10 years under Art. 1144 of the Civil Code, absent any
October 25, 2005 relevant provisions under the NIRC.
FACTS:
● In April 1991, PNB paid 180M to the BIR representing payment
of advance income tax, following the then President Aquino’s
call to generation of revenue for national development.
● In separate letters sent on April and May 1991 to the BIR
COMM, PNB requested for the issuance of Tax Credit
Certificates (TCC) to be utilized for future tax obligations.
● PNB additionally paid quarterly income tax during the year
(1991), at the end its total payment of income tax for the year
1991 amounted to 217 M
● Upon filing of its income tax return for the year 1991 on April
1992, it was determined that its total tax liability for 1991 was
merely 144M, when compared to the total amount it had already
paid, there leaves a favorable balance of 73M for PNB. PNB
opted to carry-over this balance for its tax liabilities for the years
1992 to 1996. However, PNB incurred losses during these years
(hence not liable for income tax) and consequently was not able
to apply the 73M excess.
● PNB wrote to the CIR again informing them of its predicament
and reiterating its request for the issuance of the TCC.
● The BIR denied PNB’s claim for refund contending that it was
filed beyond the 2 year prescriptive period under 230 of NIRC
(now 229). [beyond 2 years because accdg to BIR, the
reckoning period is from 1992, the year when it has already
been determined that there was excess payment, therefore it
ISSUE: WON PNB’s claim has prescribed.
RULING: NO, PNB’s claim has not yet prescribed.
Sec 230 (now 229) provides the basis of the prescriptive period, it reads:
“No suit or proceeding shall be maintained in any court for the recovery of any national internal
revenue tax hereafter alleged to have been erroneously or illegally assessed or collected , . . . .
.In any case, no such suit or proceeding shall be begun after the expiration of two [(2)] years
from the date of payment of the tax or penalty regardless of any supervening cause that may arise
after payment”
As ruled by the CA, and affirmed by the SC in this case, the payment of the PNB of the excess tax is
not based on a prior tax assessment, but rather an advanced payment of income tax, therefore it does
not qualify as “any national internal revenue tax erroneously, illegally or wrongfully paid” which are
covered by the 2-year period.
Sec. 230 is intended to apply to suits for the recovery of internal revenue taxes or sums erroneously,
excessively, illegally or wrongfully collected. As defined by Black, erroneous or illegal tax is one levied
without statutory authority.
In the present case, PNB’s claim for tax credit did not proceed from, or is a consequence of
overpayment of tax erroneously or illegally collected. PNB paid the 180m as tax payment in advance,
thus being far from the notion that there was error or illegality in the payment.
The SC likewise emphasized the special circumstances surrounding the present case; the 180M was
not in response to any assessment but rather a payment by the PNB, in the concept of advance tax
payment, in response to the President’s call for revenue generation. Additionally, PNB failed to apply
the excess from its 1991 tax liability to the succeeding years as it had incurred losses for these years,
therefore it was merely trying to apply the excess 73M for its tax liabilities for 1997.
There is also no merit to BIR’s claim that excess is only an excess of quarterly income tax payment by
corporations, only creditable to the succeeding taxable year under RR 10-771 since again, the payment

1
SEC. 7. Filing of final or adjustment return and final payment of income tax. -- A final or an adjustment return . . . covering the total taxable income of the corporation for the preceding calendar or fiscal year shall be filed on or before the 15th
day of the fourth month following the close of the calendar or fiscal year. xxxx. The amount of income tax to be paid shall be the balance of the total income tax shown on the final or adjustment return after deducting therefrom the total quarterly
income taxes paid during the preceding first three quarters of the same calendar or fiscal year.
"Any excess of the total quarterly payments over the actual income tax computed and shown in the adjustment or final corporate income tax return shall either (a) be refunded to the corporation, or (b) may be credited against the
estimated quarterly income tax liabilities for the quarters of the succeeding taxable year. The corporation must signify in its annual corporate adjustment return its intention whether to request for the refund of the overpaid income or claim
for automatic tax credit to be applied against its income tax liabilities for the quarters of the succeeding taxable year by filling the appropriate box on the corporate tax return.

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was already past 2 years] of the 180M is not quarter income tax payment but rather advanced income tax payment.
● PNB appealed such decision before the CTA, dismissed the
case on motion of the CIR on the same ground (filed beyond 2 Given that the 2-year prescriptive period is inapplicable in this case, the SC states that the relevant
year prescriptive period). period is 10 years under Article 1144 of the Civil Code considering the absence of any specific
● On appeal before the CA, the CA reversed and ruled in favor provision in the Tax Code or special laws.
of PNB. CA ruled that the prescriptive period does not apply
in this case since “the amount of advance income tax To this end, the SC cited the case of Panay Electric Co. vs. Collector of Internal Revenue, where the
payment voluntarily remitted to the BIR by the [respondent] SC likewise refused to apply the 2-year prescriptive period, owing to the special circumstances in the
was not a consequence of a prior tax assessment or said case. Special circumstances being also present in this case.
computation by the taxpayer based on business income"
and, therefore, it cannot "be treated as similar to those WHEREFORE, the petition is DENIED for lack of merit and the assailed decision and resolution of the
national revenue taxes erroneously, illegally or wrongfully Court of Appeals in CA-G.R. SP No. 76488 AFFIRMED.
paid as to be automatically covered by the two (2)-year
limitation under Sec. 230 [of the NIRC] for the right to its
recovery.”
● Hence, the present petition by the CIR reiterating its contention
that the claim of PNB has already prescribed.

29. Winebrenner & Indigo

Insurance Brokers vs.
CIR

30. CIR vs. Team
(Philippines) Operations
Corp
185728, October 16,
2013
Villarama, Jr., J:
FACTS:
1. Respondent entered into Operating and Management
Agreements with Mirant Pagbilao Corp (MPagC) and Mirant
Sual Corp (MSC) to provide these corporations with
maintenance and management services in connection with the
operation, construction and commissioning of the coal-fired
power stations situated in Pagbilao, Province of Quezon and
Sual, Province of Pangasinan.
a. Payments received by respondent for the operating
and management services rendered to MPagC and
MSC were allegedly subjected to creditable
withholding tax.
2. On April 15, 2003: Respondent filed with the BIR its original
Annual Income Tax Return (ITR) for the calendar year ended
Dec 31, 2002 declaring zero taxable income and unutilized tax
credits of PHP23,108,689.00.
3. In its ITR for the year 2002, respondent indicated its option to
refund its alleged excess creditable withholding tax when it
marked “X” the option to be refunded of the said ITR.
4. On Mar 17, 2004, respondent filed an administrative claim for
refund or issuance of tax credit certificate with the BIR in the
ISSUE: Whether respondent has complied with the requirements for refund or issuance of tax credit
certificate of creditable withholding taxes for calendar year ended December 31, 2002.
RULING: YES. Respondent has complied with the requirements for refund of creditable withholding
taxes and is therefore entitled to the PHP23,053,919.22 claim for refund or issuance of tax credit
certificate.
A taxpayer claiming for a tax credit or refund of creditable withholding tax must comply with the
following requisites:
1) The claim must be filed with the CIR within the two-year period from the date of
payment of the tax;
2) It must be shown on the return of the recipient that the income received was declared
as part of the gross income; and
3) The fact of withholding is established by a copy of a statement duly issued by the
payor to the payee showing the amount paid and the amount of tax withheld.
The first requirement is based on Section 2292 of the National Internal Revenue Code of 1997. The

2
SEC. 229.Recovery of Tax Erroneously or Illegally Collected. — No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been
erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessively or in any manner wrongfully collected, until a
claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress.

In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment: Provided,
however, That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been
erroneously paid.

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total amount of PHP23M allegedly representing overpaid
income tax or excess creditable withholding tax for the year
2002.
5. As the 2 year prescriptive period for the filing of the judicial claim
under Sec 229 of the NIRC was about to lapse without action on
the part of the petitioner, respondent elevated its case before
the Court by way of petition for review.
DECISION OF THE CTA FIRST DIVISION: partially granted respondent’s
petition & ordered petitioner to refund or issue a tax credit certificate in the
reduced amount of PHP23,053,919.22 representing excess/unutilized
creditable withholding taxes for the year 2002.
● Found respondent to have complied with the substantiation
requirements for it to be entitled to a claim of excess/unutilized
tax credits for the said taxable year.
● Respondent presented certificates of creditable tax withheld at
Source issued to it by Mirant Pagbilao Corp (MPagC) & Mirant
Sual Corp (MSC) for 2002 which were to be found faithful
reproductions of the orig copies of the certificates.
● HOWEVER, the CTA disallowed the amount of PHP54K from
the amount claimed since respondent’s annual ITR only
reflected an income of PHP247,120,318 although the income
upon which taxes were withheld amounted to
PHP247,668,015.80.
● THUS, Petitioner filed a motion for partial reconsideration but
was denied.
● Petitioner then appealed the decision to the CTA En Banc but it
was denied.
● Hence, this petition.
Petitioner’s Arguments:
● Respondent failed to comply with the requirements for refund of
creditable withholding tax.
● Argues that the withholding of the subject taxes had not been
duly proven by respondent. Petitioner posits that in order that
the claim for refund of creditable withholding tax will be granted,
the claimant must present an authentic certificate of creditable
withholding tax.
● Petitioner points out that the original copies of the subject
withholding tax certificates were not presented by respondent
before the CTA.
Respondent’ Contentions:
● maintains that it had presented the original copies of the
withholding tax certificates to the court-commissioned ICPA for
examination under the procedures laid down in CTA Circular
3
Section 10.Claims for tax credit or refund. — (a) Claims for Tax Credit or Refund of income tax deducted and withheld on income payments shall be given due course only when it is shown on the return that
the income payment received has been declared as part of the gross income and the fact of withholding is established by a copy of the Withholding Tax Statement duly issued by the payor to the payee showing
the amount paid and the amount of tax withheld therefrom . . .
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second and third conditions are specifically imposed under Sec. 103 of RR No. 6-85 as amended.
● There is no dispute that respondent has complied with the first requirement when it filed its
administrative claim for tax refund on March 17, 2004 and thereafter filed a petition for review
with the CTA on April 27, 2004 or within two years from April 15, 2003, the date of filing of its
Annual Income Tax Return.
● Respondent was also able to prove the second requirement by showing in its ITR that the
income upon which the creditable withholding taxes were paid was declared as part of its
gross income for the taxable year 2002.
● As to the third condition, both the CTA First Division and the CTA En Banc ruled that
respondent has sufficiently established the fact of withholding by presenting the Certificates
of Creditable Tax Withheld at Source issued by MPagC and MSC for the year 2002.
● We find no cogent reason to deviate from these findings. Oft-repeated is the rule that the
Court will not lightly set aside the conclusions reached by the CTA which, by the very nature
of its function of being dedicated exclusively to the resolution of tax problems, has
accordingly developed an expertise on the subject, unless there has been an abuse or
improvident exercise of authority.
● After a thorough review of the case, we find no abuse or improvident exercise of authority on
the part of the CTA in granting respondent's claim for tax refund.
● Thus, we are in accord with the findings of the CTA First Division and the CTA En Banc that
respondent complied with the substantiation requirements for refund of creditable withholding
tax.
● Here, respondent was able to establish the fact of withholding by submitting a copy of the
withholding tax certificates duly issued by MPagC and MSC, as the withholding agent,
indicating the name of the payor and showing the income payment basis of the tax withheld
and the amount of the tax withheld.
● Contrary to petitioner's assertion, it is not necessary for the person who executed and
prepared the Certificates of Creditable Tax Withheld at Source to be presented and to testify
personally as to the authenticity of the certificates.
● The copies of the Certificates of Creditable Tax Withheld at Source when found by the duly
commissioned ICPA to be faithful reproductions of the original copies would suffice to
establish the fact of withholding.
FALLO: PETITION IS DENIED. DECISION OF THE CTA IS AFFIRMED AND UPHELD.
 Taxation Law Review - Atty. Tuazon
No. 1-95, as amended by CTA Circular No. 10-97.
● Respondent avers that the original copies of those certificates
were among the voluminous documents submitted by
respondent for examination by the court-commissioned ICPA.
31. CIR vs. Smart DOCTRINE:
Communications ● The person entitled to claim a tax refund is the taxpayer, but in
case the taxpayer does not file a claim for refund, the withholding
agent may file the claim.
● While the withholding agent has the right to recover the taxes
erroneously or illegally collected, he nevertheless has the
obligation to remit the same to the principal taxpayer.
FACTS:
1. Respondent Smart Communications, Inc. is a corporation
organized and existing under Philippine law. It is an enterprise duly
registered with the Board of Investments. Respondent entered into
three Agreements for Programming and Consultancy Services
with Prism Transactive Sdn. Bhd. (Prism), a non-resident
corporation duly organized and existing under the laws of
Malaysia. Under the agreements, Prism was to provide
programming and consultancy services for the installation of the
Service Download Manager (SDM) and the Channel Manager
(CM), and for the installation and implementation of Smart Money
and Mobile Banking Service SIM Applications (SIM Applications)
and Private Text Platform (SIM Application)
2. Prism billed respondent in the amount of US$547,822.45.
Thinking that these payments constitute royalties, respondent
withheld the amount of US$136,955.61 or ₱7,008,840.43,
representing the 25% royalty tax under the RP-Malaysia Tax
Treaty. Respondent filed its Monthly Remittance Return of Final
Income Taxes Withheld for the month of August 2001
3. Within the two-year period to claim a refund, respondent filed
with the BIR, through the International Tax Affairs Division (ITAD),
an administrative claim for refund f the amount of ₱7,008,840.43.
4. Due to the failure of the petitioner CIR to act on the claim for
refund, respondent filed a Petition for Review with the CTA,
docketed as CTA Case No. 6782 which was raffled to its Second
Division.
5. In its Petition for Review, respondent claimed that it is entitled
to a refund because the payments made to Prism are not royalties
but "business profits," pursuant to the definition of royalties under
the RP-Malaysia Tax Treaty, and in view of the pertinent
Commentaries of the Organization for Economic Cooperation and
Development (OECD) Committee on Fiscal Affairs through the
Technical Advisory Group on Treaty Characterization of Electronic
Commerce Payments. Respondent further averred that since
under Article 7 of the RP-Malaysia Tax Treaty, "business profits"
are taxable in the Philippines "only if attributable to a permanent
establishment in the Philippines, the payments made to Prism, a
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ISSUE:
1) WON respondent has the right to file the claim for refund?YES
2) WON the payments made to Prism constitute "business profits" or royalties?
RULING:
1. The person entitled to claim a tax refund is the taxpayer. However, in case the
taxpayer does not file a claim for refund, the withholding agent may file the claim. In CIR v.
Procter & Gamble PhilippineManufacturing Corporation, 204 SCRA 377 (1991), a withholding
agent was considered a proper party to file a claim for refund of the withheld taxes of its foreign
parent company.
2. Petitioner, however, submits that this ruling applies only when the withholding agent
and the taxpayer are related parties, i.e., where the withholding agent is a wholly owned
subsidiary of the taxpayer. We do not agree. Although such relation between the taxpayer and
the withholding agent is a factor that increases the latter’s legal interest to file a claim for refund,
there is nothing in the decision to suggest that such relationship is required or that the lack of
such relation deprives the withholding agent of the right to file a claim for refund. Rather, what
is clear in the decision is that a withholding agent has a legal right to file a claim for refund for
two reasons. First, he is considered a “taxpayer” under the NIRC as he is personally liable for
the withholding tax as well as for deficiency assessments, surcharges, and penalties, should
the amount of the tax withheld be finally found to be less than the amount that should have
been withheld under law. Second, as an agent of the taxpayer, his authority to file the
necessary income tax return and to remit the tax withheld to the government impliedly includes
the authority to file a claim for refund and to bring an action for recovery of such claim.
3. In this connection, it is however significant to add that while the withholding agent
has the right to recover the taxes erroneously or illegally collected, he nevertheless has the
obligation to remit the same to the principal taxpayer. As an agent of the taxpayer, it is his duty
to return what he has recovered; otherwise, he would be unjustly enriching himself at the
expense of the principal taxpayer from whom the taxes were withheld, and from whom he
derives his legal right to file a claim for refund.
4. Under the RP- Malaysia Tax Treaty, the term royalties is defined as payments of
any kind received as consideration for: “(i) the use of, or the right to use, any patent, trade
mark, design or model, plan, secret formula or process, any copyright of literary, artistic or
scientific work, or for the use of, or the right to use, industrial, commercial, or scientific
equipment, or for information concerning industrial, commercial or scientific experience; (ii) the
use of, or the right to use, cinematograph films, or tapes for radio or television broadcasting.”
These are taxed at the rate of 25% of the gross amount.
5. Under the same Treaty, the “business profits” of an enterprise of a Contracting State
is taxable only in that State unless the enterprise carries on business in the other Contracting
State through a permanent establishment. The term “permanent establishment” is defined as
a fixed place of business where the enterprise is wholly or partly carried on. However, even if
there is no fixed place of business, an enterprise of a Contracting State is deemed to have a
permanent establishment in the other Contracting State if it carries on supervisory activities in
that other State for more than six months in connection with a construction, installation or
assembly project which is being undertaken in that other State.
6. In the instant case, it was established during the trial that Prism does not have a
permanent establishment in the Philippines. Hence, “business profits” derived from Prism’s
Taxation Law Review - Atty. Tuazon 6

Malaysian company with no permanent establishment in the dealings with respondent are not taxable. The question is whether the payments made to Prism
Philippines," should not be taxed. under the SDM, CM, and SIM Application agreements are “business profits” and not royalties.
6. Petitioner filed his Answer arguing that respondent, as 7.. Paragraph 1.3 of the Programming Services (Schedule A) of the SDM Agreement
withholding agent, is not a party-in-interest to file the claim for states that the SDM shall be installed by PRISM, including the SDM Libraries, the IPR of which
refund, and that assuming for the sake of argument that it is the shall be retained by PRISM. Whereas, paragraph 1.4 of the Programming Services (Schedule
proper party, there is no showing that the payments made to Prism A) of the CM Agreement state that “The IPR of all components of the CM belong to the
constitute "business profits." Client…..”. Lastly, paragraph 1.3 of the Programming Services (Schedule A) of the SIM
7. CTA upheld respondent’s right, as a withholding agent, to file Agreement provide the Client shall own the IPR for the Specifications and the Source Code
the claim for refund. However, as to the claim for refund, the for the SIM Applications.
Second Division found respondent entitled only to a partial refund. 8. The provisions in the agreements are clear. Prism has intellectual property right over
Although it agreed with respondent that the payments for the CM the SDM program, but not over the CM and SIM Application programs as the proprietary rights
and SIM Application Agreements are "business profits," and of these programs belong to respondent. In other words, out of the payments made to Prism,
therefore, not subject to tax under the RP-Malaysia Tax Treaty, the only the payment for the SDM program is a royalty subject to a 25% withholding tax. A refund
Second Division found the payment for the SDM Agreement a of the erroneously withheld royalty taxes for the payments pertaining to the CM and SIM
royalty subject to withholding tax. Accordingly, respondent was Application Agreements is therefore in order.
granted refund in the amount of ₱3,989,456.43.
8. Both parties moved for partial reconsideration but the CTA
Second Division denied the motions. Unsatisfied, both parties FALLO:
appealed to the CTA En Banc. CTA En Banc rendered a Decision WHEREFORE, the petition is DENIED. The assailed Decision dated June 28, 2007 and the Resolution
affirming the partial refund granted to respondent. In sustaining dated July 31, 2007 of the Court of Tax Appeals En Banc are hereby AFFIRMED. The Bureau of Internal
respondent’s right to file the claim for refund, the CTA En Banc Revenue is hereby ordered to issue a Tax Credit Certificate to Prism Transactive (M) Sdn. Bhd. in the
said that although respondent "and Prism are unrelated entities, amount of P3,989,456.43 representing the overpaid final withholding taxes for the month of August 2001.
such circumstance does not affect the status of [respondent] as a
party-in-interest [as its legal interest] is based on its direct and
independent liability under the withholding tax system."
9. The CTA En Banc also concurred with the Second Division’s
characterization of the payments made to Prism, specifically that
the payments for the CM and SIM Application Agreements
constitute "business profits,"33 while the payment for the SDM
Agreement is a royalty.
10. Petitioner sought reconsideration of the Decision. CTA En
Banc Denied. Hence, this petition.
11. PETITIONERS ARGUMENTS
a. Petitioner contends that the cases relied upon by
the CTA in upholding respondent’s right to claim the
refund are inapplicable since the withholding agents
therein are wholly owned subsidiaries of the principal
taxpayers, unlike in the instant case where the
withholding agent and the taxpayer are unrelated
entities. Petitioner further claims that since respondent
did not file the claim on behalf of Prism, it has no legal
standing to claim the refund.
b. To rule otherwise would result to the unjust
enrichment of respondent, who never shelled-out any
amount to pay the royalty taxes. Petitioner, thus, posits
that the real party-in-interest to file a claim for refund of
the erroneously withheld taxes is Prism. He cites as
basis the case of Silkair (Singapore) Pte, Ltd. v.
Commissioner of Internal Revenue, where it was ruled
that the proper party to file a refund is the statutory
taxpayer. Finally, assuming that respondent is the
proper party, petitioner counters that it is still not entitled

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to any refund because the payments made to Prism are

taxable as royalties, having been made in consideration
for the use of the programs owned by Prism.
12. RESPONDENT ARGUMENTS
a. Respondent, on the other hand, maintains that it is
the proper party to file a claim for refund as it has the
statutory and primary responsibility and liability to
withhold and remit the taxes to the BIR. It points out that
under the withholding tax system, the agent- payor
becomes a payee by fiction of law because the law
makes the agent personally liable for the tax arising from
the breach of its duty to withhold. Thus, the fact that
respondent is not in any way related to Prism is
immaterial.
b. Moreover, respondent asserts that the payments
made to Prism do not fall under the definition of royalties
since the agreements are for programming and
consultancy services only, wherein Prism undertakes to
perform services for the creation, development or the
bringing into existence of software applications solely for
the satisfaction of the peculiar needs and requirements
of respondent.

32. CIR vs. Primetown Primetown filed a petition for review in the CTA on April 14 2000 (The year
Property Group Inc. 2000 is a leap year) contesting its claim for a tax refund or a tax credit.
CTA dismissed the petition as it was filed beyond the two-year prescriptive
period for filing a judicial claim for tax refund. The CTA found that the final
adjusted return was filed on April 14 1998. CTA applied Article 13 of the
Civil Code that years are of 365 days each.
Issue: WON the petition was filed within the reglementary period
Held: Yes.
Article 13 of the Civil Code was impliedly repealed by Section 31 of the Administrative Code of 1987
(EO 292). Under the Administrative Code, a year is composed of 12 calendar months.
Applying the Administrative Code, the two-year prescriptive period (reckoned from the time respondent
filed its final adjusted return on April 14 1998) consisted of 24 Calendar Months.

The petition was filed on the last day of the 24th calendar month from the day respondent filed its final
adjusted return. Hence, it was filed within the reglementary period.

33. CIR vs. Goodyear Doctrine: ISSUES:

Philippines See Ruling. 1. Whether respondent’s judicial claim should be dismissed for non-exhaustion of administrative
proceedings [Procedural Issue]
G.R. No. 216130 Facts:
Respondent Goodyear is a domestic corporation. On Oct. 15, 2008, It 2. Whether the gain derived by GTRC is subject to 15% FWT.
August 3, 2016.
redeemed 3.7 million preferred shares from Goodyear Tire & Rubber
Company, a foreign corporation, at a redemption price of Php 470M RULING:
Topic: Remedies of the 1. NO. Section 229 of the Tax Code states that judicial claims for refund must be filed within two
broken down as follows:
Taxpayer (2) years from the date of payment of the tax or penalty, providing further that the same may not be
1. Php 373 million, representing the aggregate par value of the
shares; and maintained until a claim for refund or credit has been duly filed with the Commissioner of Internal
Ponente: Perlas-
2. Php 97 million, representing accrued and unpaid dividends. Revenue (CIR).
Bernabe, J.
Rrespondent filed an application for relief from double taxation before the The primary purpose of filing an administrative claim was to serve as a notice of warning to the CIR
All values provided are

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 Taxation Law Review - Atty. Tuazon 8

approximate International Tax Affairs Division of the BIR to confirm that the redemption
values/rounded up, was not subject to Philippine income tax, pursuant to the Republic of the
unless otherwise Philippines (RP)-US Tax Treaty.
indicated.
However, Respondent took the conservative approach and on Nov. 3,
2008, remitted to the BIR Php 14.6M, representing 15% FWT; i.e. 15% of
the redemption price less the aggregate par value of the shares.
On Oct. 21, 2010, Respondent filed a claim for refund of the said Php
14.6M before the BIR. 2 weeks later, on Nov. 3, 2010, Respondent filed a
judicial claim for the same amount before the CTA.
On Mar. 25, 2013, the CTA Division ruled in favor of Respondent and
ordered the BIR to issue a refund or TCC for the disputed amount.
that court action would follow unless the tax or penalty alleged to have been collected erroneously or
illegally is refunded.
However, it does not mean that the taxpayer must await the final resolution of its administrative claim
for refund, since doing so would be tantamount to the taxpayer’s forfeiture of its right to seek judicial
recourse should the two (2)-year prescriptive period expire
2. NO. GTRC is a nonresident foreign corporation, specifically a resident of the US. Thus, pursuant to
the cardinal principle that treaties have the force and effect of law in this jurisdiction, the RP-US Tax
Treaty complementarily governs the tax implications of respondent’s transactions with GTRC.
Under Article 11(5) of the RP-US Tax Treaty, the term “dividends” should be understood according to
the taxation law of the State in which the corporation making the distribution is a resident, which, in this
case, pertains to respondent, a resident of the Philippines.

Concerning the procedural issue, the CTA Division ruled that it was Under Sec. 73(A) of the Tax Code “[t]he term ‘dividends’ x x x means any distribution made by a
appropriate for respondent to dispense with the administrative remedy corporation to its shareholders out of its earnings or profits and payable to its shareholders,
before the BIR, considering that court action should be instituted within whether in money or in other property.”
two (2) years after the payment of the tax regardless of the pendency of
the administrative claim; otherwise, the taxpayer would be barred from In light of the foregoing, the Court therefore holds that the redemption price received by GTRC could
recovering the same not be treated as accumulated dividends in arrears that could be subjected to 15% FWT because they
were not paid out of unrestricted retained earnings or profits.
On the merits, the CTA Division found that the redemption of the shares
issued to GTRC — which were then converted to treasury shares — was
not subject to Philippine income tax. It held that under the RP-US Tax
Treaty and the NIRC, the amount paid by Respondent to GTRC were not
dividends subject to FWT because they were not paid out of the
unrestricted retained profits or earnings of the company.

The CTA en banc affirmed the above decision.

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 Taxation Law Review - Atty. Tuazon
34. Rhombus Energy vs. FACTS
CIR 1.) Oct 2008 – Jul 2007 – Rhombus was registered with the
jurisdiction of RDO 50 in Makati of the BIR. However, due to the its
change of address from Paseo de Roxas, Salcedo Village, Makati to Ayala
Avenue, Makati, it filed an application for change of home RDO.
2.) Jul 2007 – Rhombus was transferred to RDO 47 and was issued
a Certificate of Registration
3.) Apr 2006 – the corporation filed its annual ITR for taxable year
2005. The return indicated that its excess creditable withholding tax (CWT)
for 2005 was “to be refunded”.
4.) 2006 – the 1st, 2nd, and 3rd quarter income tax return showed
the prior year’s excess credits of P1,500,653.
5.) Dec 2006 – Rhombus filed with Revenue Region 8 an
administrative claim for refund of its alleged excess/unutilized CWT for the
year 2005 in the amount of P1,500,653.
6.) Apr 2007 – its annual ITR for 2006 showed prior year’s excess
credit of P0.0.
7.) Dec 2007 – pending the BIR’s actions on the claim and before
the lapse of the period for filing an appeal, Rhombus filed with the CTA.
a. According the CIR: the same should be subject to investigation
by the BIR; Rhombus failed to demonstrate that the tax was illegally
collected; taxes paid and collected are presumed to have been made in
accordance with laws and regulations, hence, not refundable; it is
incumbent upon Rhombus to show that it has complied with the provisions
of Section 204(C), in relation to Section 229 of the Tax Code, upon which
its claim for refund was premised; in an action for tax refund the burden is
upon the taxpayer to prove that he is entitled thereto, and failure to
discharge said burden is fatal to the claim; and claims for refund are
construed strictly against the claimant, as the same partake of the nature
of exemption from taxation.
8.) CTA: granted the claim for refund.
9.) CTA En Banc: reversed and set aside the decision of the CTA
division on the grounds that the once the carry-over option is taken it
become irrevocable.
FALLO
WHEREFORE, the Court REVERSES and SETS ASIDE the decision
promulgated on October 11, 2012 and the resolution issued on March 13,
2013 by the Court of Tax Appeals En Banc in CTA EB Case No. 803;
REINSTATES the decision rendered on March 23, 2011 and the
resolution issued on June 30, 2011 by the Court of Tax Appeals, First
Division, in CTA Case No. 7711; and DIRECTS the Commissioner of the
Bureau of Internal Revenue to refund to or to issue a tax credit certificate
in favor of petitioner Rhombus Energy, Inc. in the amount of
P1,500,653.00 representing excess creditable withholding tax for the year
2005.
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ISSUE/HELD
WON Rhombus can still claim the refund. Yes.
WON the Rhombus is barred by the irrevocability rule in claiming the refund of its excess and/or
unutilized creditable withholding tax. No, it complied with the requirements set in the rules.
RATIO
In the case at bar, Rhombus signified its intention to be refunded of its excess creditable tax withheld
for calendar year 2005 in its annual ITR for the said year. It put an “x” on the box “to be refunded”
Moreover, the 2006 and 2007 Annual ITRs do not have any entries in Line 28A "Prior Year's Excess
Credits" which only prove that petitioner did not carry-over its 2005 excess/unutilized creditable
withholding tax to the succeeding taxable years or quarters. The CTA Division was correct in finding
that Rhombus filed the annual ITR for the year 2005 on April 17, 2006. From the said date, it had until
April 17, 2008, within which to file both its administrative and judicial claim for refund or issuance of a
tax credit certificate. Clearly, petitioner's administrative claim filed on December 29, 2006 and judicial
claim via the instant Petition for Review filed on December 07, 2007, were within the two-year
prescriptive limit. To comply with the second requisite, petitioner presented Certificates of Creditable
Tax Withheld at Source issued by its sole customer Distileria Bago, Inc., a wholly owned subsidiary of
La Tondeña, Inc. (now Ginebra San Miguel, Inc.). The withholding tax certificates reveal that the
creditable income taxes of Php28,523,295.45 were withheld from petitioner's energy service fees of
Php9,313,272.54 and from the sale of its generation facility amounting to P472,283,838.00. The energy
fees paid by Distileria Bago, Inc. in the amount of P9,313,272.54 from which creditable withholding tax
in the aggregate amount of P186,265.45 was withheld was reported by petitioner as part of its
"Sales/Revenues/Receipts/Fees" amounting to P59,551,116.00 in Item No. 15A of its 2005 Annual ITR.
DOCTRINE
WHAT IS THE IRREVOCABILITY RULE? Based on Sec 76 of the NIRC, every corporation liable to
tax under Section 27 shall file a final adjustment return covering the total taxable income for the
preceding calendar of fiscal year. If the sum of the quarterly tax payments made during the said taxable
year is not equal to the total tax due on the entire taxable income of that year, the corporation shall
either: (A) Pay the balance of the tax still due; or (B) Carry over the excess credit; or (C) Be credited or
refunded with the excess amount paid, as the case may be.
In case the corporation is entitled to a tax credit or refund of the excess estimated quarterly income
taxes paid, the excess amount shown on its final adjustment return may be carried over and credited
against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable
years. Once the option to carry over and apply the excess quarterly income tax against income tax due
for the taxable years of the succeeding taxable years has been made, such option shall be considered
irrevocable for that taxable period and no application for cash refund or issuance of a tax credit
certificate shall be allowed therefor.
WHAT IS THE CONTROLLING FACTOR OF THE IRREVOCABILITY RULE? The controlling factor
for the operation of the irrevocability rule is that the taxpayer chose an option; and once it had already
done so, it could no longer make another one. Consequently, after the taxpayer opts to carry-over its
excess tax credit to the following taxable period, the question of whether or not it actually gets to apply
said tax credit is irrelevant. Section 76 of the NIRC of 1997 is explicit in stating that once the option to
carry over has been made, "no application for tax refund or issuance of a tax credit certificate shall be
 Taxation Law Review - Atty. Tuazon
35. Philippine National FACTS:
Oil Company vs. CA 1. Private respondent Savellano informed BIR that PNB had failed
to withhold the 15% final tax on interest earnings and/or yields from
the money placements of PNOC with PNB, in violation of PD 1931
which withdrew all tax exemptions of GOCCs.
2. BIR then requested PNOC to settle its liability where PNOC made
an offer to compromise its tax liability P304.4M. It proposed to set-off
its tax liability against a claim for tax refund/credit of NAPOCOR.
3. BIR then sent a demand letter to PNB, as the withholding agent,
for payment of final tax.
4. PNOC then reiterated its proposal to settle its tax liability but BIR
replied that the proposal for set-off was premature since NAPOCORs
claim was still under process. BIR requested again PNOC to settle its
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allowed therefor."
WHAT DOES “SHALL BE CONSIDERED IRREVOCABLE FOR THE TAXABLE PERIOD” MEAN? It
identifies the excess income tax, subject of the option, by referring to the taxable period when it was
acquired by the taxpayer.
WHAT ARE THE REQUISITES FOR ENTITLEMENT TO REFUND?
Ø That the claim for refund was filed within the two-year reglementary period pursuant to Section 229
of the NIRC;
Ø When it is shown on the ITR that the income payment received is being declared part of the
taxpayer's gross income; and
Ø When the fact of withholding is established by a copy of the withholding tax statement, duly issued
by the payor to the payee, showing the amount paid and income tax withheld from that amount
ISSUE: W/N the compromise agreement is valid.
HELD: NO.
1. PNOC could not apply for a compromise under E.O. No. 44 because its tax liability was
not a delinquent account or a disputed assessment as of 31 December 1985.
PNOCs tax liability could not be considered a delinquent account since (1) it was not self- assessed,
because the BIR conducted an investigation and assessment of PNOC and PNB after obtaining
information regarding the non-withholding of tax from private respondent Savellano; and (2) the demand
letter, issued against it on 08 August 1986, could not have been a deficiency assessment that became
final and executory by 31 December 1985.
2. The tax liability of PNB as withholding agent also did not qualify for compromise under
E.O. No. 44.
Taxation Law Review - Atty. Tuazon
tax liability.
5. For the third time, PNOC made another offer to BIR to settle its
tax liability. It proposed a compromise by paying P91M representing
30% of the P303.3M basic tax, in accordance with EO 44. This
compromise was accepted by BIR Commissioner Bienvenido Tan.
6. Savellano, was paid the informer’s reward of P14M, 15% of
P93.9M tax collected by the BIR from PNOC and PNB. Tan claimed
that Savellano was already fully paid pursuant to its compromise
agreement with PNOC.
7. While MR was still pending with BIR, Savellano filed a petrev ad
cautelam w/ CTA claiming that BIR Commissioner Tan acted with
grave abuse of discretion and/or whimsical exercise of jurisdiction in
entering into a compromise agreement that resulted in the gross and
unconscionable diminution of his reward.
8. Tan asserted that petition stated no coa against him and that
Savellano was already paid the informers reward due him.
9. New BIR Commissioner, Jose Ong demanded that PNB pay
deficiency withholding tax. BIR denied PNBs protest on the ground that
it was filed out of time and thus, assessment had already become final.
10. CTA rendered that the compromise agreement between BIR and
PNOC and PNB as without force and effect. CIR is ordered to enforce
assessment against PNB and Savellano may be paid the balance of
his entitlement to informer’s reward.
11. CA affirmed decision of CTA. Hence the filing of petrev on
certiorari by PNOC and PNB.
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The compromise settlement executed between the BIR and PNOC was without legal basis because
withholding taxes were not actually taxes that could be compromised, but a penalty for PNBs failure to
withhold and for which it was made personally liable.
E.O. No. 44 covers disputed or delinquency cases where the person assessed was himself the taxpayer
rather than a mere agent. RMO No. 39-86 expressly allows a withholding agent, who failed to withhold
the required tax because of neglect, ignorance of the law, or his belief that he was not required by law to
withhold tax, to apply for a compromise settlement of his withholding tax liability under E.O. No. 44. A
withholding agent, in such a situation, may compromise the withholding tax assessment against him
precisely because he is being held directly accountable for the tax. RMO No. 39-86 distinguishes
between the withholding agent in the foregoing situation from the withholding agent who withheld the tax
but failed to remit the amount to the Government. A withholding agent in the latter situation is the one
disqualified from applying for a compromise settlement because he is being made accountable as an
agent, who held funds in trust for the Government.
The BIR held PNB personally accountable for its failure to withhold the tax on the interest earnings and/or
yields from PNOCs money placements with PNB. PNB failed to take any action on the said demand
letter. Yet, all the offers to compromise the withholding tax assessment came from PNOC and PNOC did
not claim that it made the offers to compromise on behalf of PNB.
The general requirement of E.O. No. 44 still applies to withholding agents that the withholding tax liability
must either be a delinquent account or a disputed assessment as of 31 December 1985 to qualify for
compromise settlement. The demand letter against PNB, which also served as its assessment notice,
had been issued on 08 October 1986 or two months later than PNOCs. PNBs withholding tax liability
could not be considered a delinquent account or a disputed assessment, as defined under RR No. 17-
86, for the same reasons that PNOCs tax liability did not constitute as such.
3. Even assuming arguendo that PNOC and/or PNB qualified under E.O. No. 44, their
application for compromise was filed beyond the deadline.
Paragraph 2 of RMO No. 39-86 provides that: 2. Period for availment. Filing of application for compromise
settlement under the said law shall be effective only until March 31, 1987. Applications filed on or before
this date shall be valid even if the payment or payments of the compromise amount shall be made after
the said date, subject, however, to the provisions of Executive Order No. 44 and its implementing
Revenue Regulations No. 17-86.
It was only after almost seven months, or on 09 June 1987, that PNOC again wrote a letter to the BIR,
this time offering to pay the compromise amount of 30% of the basic tax assessed against. This letter
was already filed beyond 31 March 1987, after the lapse of the effectivity of E.O. No. 44 and the deadline
for filing applications for compromise under the said statute.
4. The BIR Commissioners discretionary authority to enter into a compromise agreement
is not absolute and the CTA may inquire into allegations of abuse thereof.
The discretionary authority to compromise granted to the BIR Commissioner is never meant to be
absolute, uncontrolled and unrestrained. No such unlimited power may be validly granted to any officer
of the government, except perhaps in cases of national emergency. In this case, the BIR Commissioners
authority to compromise, whether under E.O. No. 44 or Section 246 of the NIRC of 1977, as amended,
can only be exercised under certain circumstances specifically identified in said statutes. The BIR
Commissioner would have to exercise his discretion within the parameters set by the law, and in case
he abuses his discretion, the CTA may correct such abuse if the matter is appealed to them.
 Taxation Law Review - Atty. Tuazon 12

5. The CTA may set aside a compromise agreement that is contrary to law and public
policy.

The compromise agreement between the BIR and PNOC was contrary to law having been entered into
by BIR Commissioner Tan in excess or in abuse of the authority granted to him by legislation. E.O. No.
44 and the NIRC of 1977, as amended, had identified the situations wherein the BIR Commissioner may
compromise tax liabilities, and none of these situations existed in this case.

The compromise, moreover, was contrary to public policy. The primary duty of the BIR is to collect taxes,
since taxes are the lifeblood of the Government and their prompt and certain availability are imperious
needs. In the present case, however, BIR Commissioner Tan, by entering into the compromise
agreement that was bereft of any legal basis, would have caused the Government to lose almost P300
million in tax revenues and would have deprived the Government of much needed monetary resources.

Dispositive Portion: WHEREFORE, in view of the foregoing, the Petitions of PNOC and PNB in G.R.
No. 109976 and G.R. No. 112800, respectively, are hereby DENIED. This Court AFFIRMS the assailed
Decisions of the Court of Appeals in CA-G.R. SP No. 29583 and CA-G.R. SP No. 29526, which affirmed
the decision of the CTA in CTA Case No. 4249, with modifications, to wit:
1. The compromise agreement between PNOC and the BIR, dated 22 June 1987, is declared
void for being contrary to law and public policy, and is without force and effect;

36. San Roque Power FACTS: ISSUE:

Corp vs. CIR 1. Petitioner is a domestic corporation incorporated for the sole
purpose of building and operating the San Roque Multipurpose
GR 180345, Nov. 25, Project in San Miguel, Pangasinan.
2009 2. Said project consisted of the power station, dam, spillway, and
other related facilities.
Chico-Nazario, J; 3. Petitioner registered with the Board of Investments (BOI) on a
preferred pioneer status.
4. Petitioner is also registered with the BIR as a VAT taxpayer as it
is a seller of services.
5. Petitioner entered into a Power Purchase Agreement (PPA) with
NPC.
6. The PPA provides that Petitioner shall be responsible for the
Power Station and shall operate and maintain the same, subject
to NPC’s instructions.
7. Due to the exclusive nature of the PPA, Petitioner applied for
and was granted 5 Certificates of Zero Rate by the BIR.
8. Petitioner’s zero-rated status commenced in Sept. 1998 and
continued throughout 2002.
9. In Dec. 2002, Petitioner filed its Monthly VAT deductions and
Whether Petitioner is entitled to a tax refund or tax credit. (YES)
RULING:
Petitioner’s claim is justified under Sec. 112(A)4 of the NIRC. To claim refund or tax credit under Sec.
112(A), the Petitioner must comply with the following criteria:
1) the taxpayer is VAT registered;
2) the taxpayer is engaged in zero-rated or effectively zero-rated sales;
3) the input taxes are due or paid;
4) the input taxes are not transitional input taxes;
5) the input taxes have not been applied against output taxes during and in the succeeding quarters;
6) the input taxes claimed are attributable to zero-rated or effectively zero-rated sales;
7) for zero-rated sales under Sec. 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 BSP rules and
regulations;
8) 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
9) the claim is filed within 2 years after the close of the taxable quarter when such sales were made.

4
SEC. 112. Refunds or Tax Credits of Input Tax. - (A) Zero-Rated or Effectively Zero-Rated Sales.- any VAT-registered person, whose sales are zero-rated or effectively zero-rated
may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid
attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales
under Section 106(A)(2)(a)(1), (2) and (B) and Section 108 (B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with
the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable
or exempt sale of goods of properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be
allocated proportionately on the basis of the volume of sales.

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 Taxation Law Review - Atty. Tuazon
Quarterly VAT Returns.
10. Petitioner’s VAT Returns showed excess input VAT.
11. Petitioner thereafter filed 4 separate administrative claims for
refund before the BIR, contending that its sale of power to NPC
was subject to VAT at 0% rate.
12. Petitioner sought to recover Php 249 Million, representing its
unutilized excess VAT. (A CPA would later examine the records
and find a discrepancy in the documentation, reducing the
amount to be claimed to Php 246M)
13. The BIR failed to act on the claims for refund.
14. Petitioner then filed a Petition for Review before the CTA
Division.
Ruling of the CTA 2nd Division: Petitioner’s claim for refund is denied. It
ruled that in order for Petitioner to be entitled to refund or tax credit, it must
establish that it had incurred zero-rated sales or effectively zero-rated
sales for the taxable year of 2002. Since records do not show such
transactions, the claim must be denied.
Ruling of the CTA En Banc: Denied Petitioner’s appeal. Reiterated the
division’s ruling. MR likewise denied.
37. Pilipinas Total Gas FACTS:
vs. CIR
Mendoza, J. Pilipinas Total Gas, Inc., filed before the court a petition for review on
certiorari under Rule 45 of the Rules of Court assailing the decision and
resolution of the Court of Tax Appeals (CTA) En Banc.
The petitioner is a business engaged in selling, transporting, distributing
industrial gas, selling gas equipment and other related businesses
registered itself with the Bureau of Internal Revenue as a Value Added Tax
(VAT) taxpayer. On April 20, 2007 and July 20, 2007 they filed their original
quarterly VAT returns for the first and second quarter respectively. On May
20, 2008 they filed an amended quarterly VAT returns for the first and
second quarters of 2007 where they claimed that they have an excess of
₱7,898,433.98 unutilized input VAT.
On May 15 of the same year they filed an administrative claim for refund of
the unutilized input VAT inclusive of supporting documents and on August
28 they submitted additional supporting documents to the BIR. Due to the
inaction of the Commissioner of Internal Revenue (CIR) the petitioner
elevated the case to the CTA on January 23, 2009 where the CTA Division
ruled on January 13, 2011 that the petition of Pilipinas Total Gas, Inc. is
prematurely filed and thus dismissed. The CTA En Banc also denied the
petition for review of Total Gas for lack of merit because (1) Total Gas failed
to seasonably file its petition (2) it also failed to submit the complete
supporting documents to warrant the grant of its application for refund. The
petitioner filed a motion for reconsideration which was denied by the CTA
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In the present case, based on the evidence presented, the Petitioner has complied with the
requirements. Petitioner was able to prove that it is a VAT-registered taxpayer by presenting its
Certificate of Registration. It is also unquestioned that Petitioner is engaged in providing electricity for
NPC. This is subject to zero rate under Sec. 108(B)(3) of the NIRC. Petitioner also offered as evidence
the suppliers’ VAT invoices/ORs, as well as Import Entries and Internal Revenue Declarations which
were examined by an independent CPA. Further, the input taxes claimed are not transitional input
taxes.
The main contention of the lower courts for denying the Petitioner’s claim was that there was no proof
of the existence of zero-rated or effectively zero-rated sales. However, upon examination of the
records, it appears that the Petitioner carried out a “sale” to NPC. In an Affidavit by Echevarria (VP and
Director for Finance of Petitioner) which was uncontroverted by the Respondent, the affiant stated that
though there was no commercial sale made in 2002, Petitioner still produced and transferred electricity
to NPC during the testing period for the amount of Php 42.5 Million. While the transaction is not a
commercial sale, Sec. 112(A) of the NIRC does not limit the definition of a “sale” to commercial
transactions in the normal course of business. Rather, it extends the term to transactions which are
“deemed a sale”. Thus, as Petitioner was able to establish compliance with the requirements, he is
entitled to a tax credit/refund in the amount of Php 246 Million.
FALLO: Petition is GRANTED.
ISSUE:
(a) Whether the judicial claim for refund was belatedly filed on 23 January 2009, or way beyond the 30-
day period to appeal as provided in Section 112(c) of the Tax Code, as amended; and
(b) Whether the submission of incomplete documents at the adminstrative level (BIR) renders the judicial
claim premature and dismissible for lack of jurisdiction.
HELD:
(A) The court holds that the Judicial claim is timely filed since according to Section 112 (C) of the NIRC:
SEC. 112. Refunds or Tax Credits of Input Tax. -
xxxx
(C) Period within which Refund or Tax Credit of Input Taxes shall be Made. - In proper
cases, the Commissioner shall grant a refund or issue the tax credit certificate for
creditable input taxes within one hundred twenty (120) days from the date of submission
of complete documents in support of the application filed in accordance with Subsections
(A) and (B) hereof.
In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the
part of the Commissioner to act on the application within the period prescribed above, the
Taxation Law Review - Atty. Tuazon 14

En Banc. 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.-
xxxx

The CTA En Banc erred in counting the number of days and thus in ruling that the judicial claim was
belatedly filed because it started to count the 120-day period from the filing instead of starting to count
from the time the complete set of documents were submitted as clearly stated in Section 112 (C) of the
NIRC. Which was further clarified in RMC no. 49-2003 which states:

Q-18: For pending claims with incomplete documents, what is the period within
which to submit the supporting documents required by the investigating/processing
office? When should the investigating/processing office officially receive claims for
tax credit/refund and what is the period required to process such claims?

A-18: For pending claims which have not been acted upon by the
investigating/processing office due to incomplete documentation, the taxpayer-
claimants are given thirty (30) days within which to submit the documentary
requirements unless given further extension by the head of the processing unit, but
such extension should not exceed thirty (30) days.

For claims to be filed by claimants with the respective investigating/processing office

of the administrative agency, the same shall be officially received only upon
submission of complete documents.

For current and future claims for tax credit/refund, the same shall be processed
within one hundred twenty (120) days from receipt of the complete documents. If, in
the course of the investigation and processing of the claim, additional documents
are required for the proper determination of the legitimate amount of claim, the
taxpayer-claimants shall submit such documents within thirty (30) days from request
of the investigating/processing office, which shall be construed as within the one
hundred twenty (120) day period.

Although the Section 112 was amended when R.A. 9337 was passed on July 1, 2005, it was only
amended by deleting Section 112 (B) and by amending and renaming Section 112 (D) to Section 112
(C) which states:

(C) Period within which Refund or Tax Credit of Input Taxes shall be Made. - In
proper cases, the Commissioner shall grant a refund or issue the tax credit certificate
for creditable input taxes within one hundred twenty (120) days from the date of
submission of complete documents in support of the application filed in accordance
with 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 Commissioner to act on the application within the period prescribed
above, the taxpayer affected may, within thirty (30) days from the receipt of the
decision denying the claim or after the expiration of the one hundred twenty day-

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 Taxation Law Review - Atty. Tuazon
38. CIR vs. Mirant DOCTRINE
Pagbilao Corp A unutilized input VAT must be claimed within two years after the close of
the taxable quarter when the sales were made. The 2-year prescriptive
Velasco, Jr., J period shall be reckoned from the end of the taxable quarter when the
relevant sales were made but clarified that such prescriptive period applies
only to the filing of the administrative claim.
FACTS
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period, appeal the decision or the unacted claim with the Court of Tax Appeals.
Thus it must be understood that RMC No. 29-2003 still applies. Therefore it is the taxpayer that ultimately
determine when the complete documents have been submitted and thus determine the start of the 120
day period during which the CIR must decide except when the BIR requires additional documents to be
submitted in order to fully appreciate the case. However this is only applicable for claims filed prior to
June 11, 2014 because of RMC 54-2014 it should be noted that this does not apply retroactively.
Since the CIR did not question the adequacy of the documents of the petitioner nor did it rule
to deny its claim for failure to adequately substantiate its claim the 120 day period shall be reckoned from
Aug. 28, 2008 until Dec. 26 2008 and the petitioners 30 days to file a judicial claim is until Jan. 25, 2009.
Therefore it timely filed its judicial claim on Jan. 23, 2009.
RMO No. 53-98 which enumerated the documents required is not fatal to the claims of the
petitioner for refund of excess unutilized excess VAT because they were not informed or notified by any
revenue officer or employee about the lacking documents.
(B) the Judicial claim is not prematurely filed because “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. The Court Holds that first, the 120 days period has commenced and
the 120+30 days were complied with; second, the CIR failed to notify the petitioner that the documents
were incomplete or that they require additional documents – it is the inaction of the respondent that
prompted the petitioner to file the judicial claim; lastly the appeal made by the petitioner cannot be said
to be premature based on the belief that it did not observe the mandatory and jurisdictional 120+30 day
period. Since Total Gas filed the judicial claim because of the inaction of the BIR “the CT A may give
credence to all evidence presented by Total Gas, including those that may not have been submitted to
the CIR as the case is being essentially decided in the first instance.”
(C) The Court also holds that it cannot make any ruling regarding the issue of whether the petitioner is
entitled to the refund amounting to Php7,898,433.98 since it is not a trier of facts. Thus the case is
remanded to the CTA Division for trial de novo.
The Petition is partially granted and the decision and resolution of CTA are reversed and set aside and
the case is remanded to the CTA Third Division for trial de novo.
ISSUE
Is MPC entitled to the refund of its input VAT payments made from 1993 to 1996 amounting to
PhP146,760,509.48? YES. BUT IT PRESCRIBED
HELD
The OR No. 0189 proves payment by MPC of its creditable input VAT relative to its purchases from
Mitsubishi; While available records do not clearly indicate when MPC actually paid the creditable input
VAT amounting to PhP 135,993,570 (USD 5,190,000) for the aforesaid 1993 to 1996 service
Taxation Law Review - Atty. Tuazon
Mirant generated power which it sells to NAPOCOR in which connection it
secured the services of Mitsubishi Corporation of Japan (for the
construction of the electrical and mechanical equipment portion of its
Pagbilao, Quezon plant, which appears to have been undertaken from
1993 to 1996). Under Section 134 of Republic Act No. (RA) 6395, the
NPC's revised charter, NPC is exempt from all taxes. In Maceda v.
Macaraig,5 the Court construed the exemption as covering both direct and
indirect taxes.
In the belief that its sale of power generation services to the NPC was VAT
zero-rated because of NAPOCOR’s tax exempt status, Mirant filed an
application for effective zero-rating.
Not getting any response from the BIR district office, MPC refiled its
application in the form of a "request for ruling" with the VAT Review
Committee at the BIR national office on January 28, 1999.
Answering the petition, the BIR Commissioner, citing Kumagai-Gumi Co.
Ltd. v. CIR,7 asserted that MPC's claim for refund cannot be granted for
this main reason: MPC's sale of electricity to NPC is not zero-rated for its
failure to secure an approved application for zero-rating.
The BIR issued a ruling stating that the supply of electricity by Mirant to
NAPOCOR shall be subject to 0% VAT. On April 14, 1998, Mirant paid
Mitsubishi the VAT component billed by the latter for services rendered.
Mirant files its quarterly VAT return for the 2nd quarter of 1998, where it
reflected the input VAT paid to Mitsubishi. Subsequently, on December 20,
1999, Mirant filed an administrative claim for refund of unutilized input VAT
arising from purchase of capital goods from Mitsubishi and its domestic
purchase of goods and services attributable to its zero-rated sales of
power- generation services to NAPOCOR. The claim was denied for being
filed beyond the prescriptive period of two years.
CTA: Mirant petition is PARTIALLY GRANTED. CIR ORDERED to
REFUND or in the alternative, ISSUE A TAX CREDIT CERTIFICATE on
its unutilized input VAT payments directly attributable to its effectively
zero-rated sales for the second quarter of 1998 in the reduced amount of
P10,766,939.48
CA: CIR ordered to refund or issue a tax credit certificate in favor of Mirant
its unutilized input VAT payments directly attributable to its effectively
zero-rated sales for the second quarter of 1998 in the total amount of
P146,760,509.48
(1) a zero-rating for VAT purposes for its sales and services to tax-exempt
NPC; and
(2) a refund or tax credit for its unutilized input VAT for the second quarter
of 1998.
As to proper documentation, the evidentiary value of OR No. 0189 must
be evident.
It upheld the disallowance of PhP 1,242,538.14 representing zero-rated
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purchases, the presumption is that payment was made on the date appearing on OR No. 0189, i.e.,
April 14, 1998. In fact, said creditable input VAT was reflected in MPC's VAT return for the second
quarter of 1998. BUT Mirant’s claim has prescribed. Unutilized input VAT payments 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 even if the payment for the VAT was made some quarters after that.The
fact that there was a pending request for zero-rating cannot be a basis for the late filing of return and
payment of taxes.
The 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. 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.
Further, Mirant cannot avail itself of the provisions of either Section 204(C) or 229 of the NIRC which,
for the purpose of refund, prescribes the payment of the tax as the starting point for the two-year
prescriptive limit for the filing of a claim. These provisions apply only to instances of erroneous payment
or illegal collection of internal revenue taxes.
FALLO
WHEREFORE, the petition is PARTLY GRANTED. The Decision dated December 22, 2005 and the
Resolution dated March 31, 2006 of the CA in CA-G.R. SP No. 78280 are AFFIRMED with the
MODIFICATION that the claim of respondent MPC for tax refund or credit to the extent of PhP
135,993,570, representing its input VAT payments for service purchases from Mitsubishi Corporation of
Japan for the construction of a portion of its Pagbilao, Quezon power station, is DENIED on the ground
that the claim had prescribed. Accordingly, petitioner Commissioner of Internal Revenue is ordered to
refund or, in the alternative, issue a tax credit certificate in favor of MPC, its unutilized input VAT
payments directly attributable to its effectively zero-rated sales for the second quarter in the total
amount of PhP 10,766,939.48.
 Taxation Law Review - Atty. Tuazon 17

input VAT claims supported only by photocopies of VAT OR/Invoice,

documents other than VAT Invoice/OR, and mere broker's computations.

The use of a different exchange rate reflected in the OR is of no

consequence as what the OR undeniably attests and acknowledges was
Mitsubishi's receipt of MPC's input VAT payment.

39. CIR vs. Aichi Forging FACTS:

Co. · On September 30, 2004, Aichi Forging filed a claim for
G.R. No. 184823 October refund/credit of input VAT attributable to its zero-rated sales for the
6, 2010 period July 1, 2002 to September 30, 2002 with the CIR through the
DOF One-Stop Shop.
o On the same day, Aichi Forging filed a Petition for Review
with the CTA for the same action.
· The BIR disputed the claim and alleged that the same was filed
beyond the two-year period given that 2004 was a leap year and thus
the claim should have been filed on September 29, 2004.
· The CIR also raised issues related to the reckoning of the 2-
year period and the simultaneous filing of the administrative and
judicial claims.
· The CTA 2nd Division partially granted Aichi Forging’s claim for
refund/credit.
o by reducing the leaseless claims.
· CIR filed a Motion for Partial Reconsideration, insisting that the
administrative and the judicial claims were filed beyond the two-year
period to claim a tax refund/credit provided for under Sections 112(A)
and 229 of the NIRC.
o He reasoned that since the year 2004 was a leap year, the
filing of the claim for tax refund/credit on September 30, 2004
was beyond the two-year period, which expired on September
29, 2004.
o He cited as basis Article 13 of the Civil Code, which provides
that when the law speaks of a year, it is equivalent to 365 days.
o In addition, CIR argued that the simultaneous filing of the
administrative and the judicial claims contravenes Sections 112
and 229 of the NIRC.
o According to the CIR, a prior filing of an administrative claim
is a “condition precedent” before a judicial claim can be filed.
· The CTA denied the MPR thus the case was elevated to the
CTA En Banc for review.
· The decision was affirmed.
· Thus the case was elevated to the Supreme Court.
Aichi Forging 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.
· Commissioner of Internal Revenue v. Victorias Milling Co., Inc.
[130 Phil 12 (1968)] where it was ruled that “if the CIR takes time in
Issues:
1. Whether or not the claim for refund was filed within the prescribed period
2. Whether or not the simultaneous filing of the administrative and the judicial claims contravenes
Section 229 of the NIRC, which requires the prior filing of an administrative claim, and violates the
doctrine of exhaustion of administrative remedies.
Held:
1. Yes.
The right to claim the refund must be reckoned from the “close of the taxable quarter when the sales
were made” – in this case September 30, 2004.
The rules under Sections 204 (C) and 229 as cross-referred to Section 114 do not apply as they only
cover erroneous payments or illegal collections of taxes which is not the case for refund of unutilized
input VAT. Thus, the claim was filed on time even if 2004 was a leap year since the sanctioned
method of counting is the number of months.
As ruled in the case of Commissioner of Internal Revenue v. Mirant Pagbilao Corporation (G.R. No.
172129, September 12, 2008), the two-year period should be reckoned from the close of the taxable
quarter when the sales were made.
In Commissioner of Internal Revenue v. Primetown Property Group, Inc (G.R. No. 162155, August 28,
2007, 531 SCRA 436), 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 being the more recent law, following the legal maxim, Lex
posteriori derogat priori.
Thus, applying this to the present case, the two-year period to file a claim for tax refund/credit for the
period July 1, 2002 to September 30, 2002 expired on September 30, 2004. Hence, Aichi Forging’s
administrative claim was timely filed.
2. Yes.
We find the filing of the judicial claim with the CTA premature.

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 Taxation Law Review - Atty. Tuazon
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.”
40. Procter & Gamble
Asia vs. CIR
Facts
· On 26 September and 13 December 2006, P&G filed
administrative claims with the Bureau of Internal Revenue for the
refund of input VAT attributable to the former’s zero-rated sales
covering the periods
1 July-30 September 2004 and
1 October-31 December 2004, respectively.
· On 2 October and 29 December 2006, P&G filed judicial claims
for the aforementioned refund or credit.
· CIR filed Answers which basically argues that P&G failed to
substantiate its claims for refund.
· On 17 January 2011, the CTA First Division dismissed the
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Section 112 mandates that the taxpayer filing the refund must either wait for the decision of the CIR or
the lapse of the 120-day period provided therein before filing its judicial claim. Failure to observe this
rule is fatal to a claim. Thus, Section 112 (A) was interpreted to refer only to claims filed with the CIR
and not appeals to the CTA given that the word used is “application”. Finally, the Court said that
applying the 2-year period even to judicial claims would render nugatory Section 112 (D) which already
provides for a specific period to appeal to the CTA --- i.e., (a) within 30 days after a decision within the
120-day period and (b) upon expiry of the 120-day without a decision.
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 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.
Subsection (A) of Section 112 of the NIRC 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.
The case of Commissioner of Internal Revenue v. Victorias Milling, Co., Inc. is inapplicable as the tax
provision involved in that case is Section 306, now Section 229 of the NIRC.
Section 229 does not apply to refunds/credits of input VAT.
The premature filing of Aichi Forging’s claim for refund/credit of input VAT before the CTA warrants a
dismissal inasmuch as no jurisdiction was acquired by the CTA.
Filing an administrative claim is a condition precedent to a judicial claim for refund.
ISSUE:
WON the judicial claims filed on 2 October and 29 December 2006 were filed on time. YES.
Ruling
Respondent is correct.
However, he failed to mention that San Roque also recognized the validity of BIR Ruling No. DA-489-
03.
· The ruling expressly states 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."
· The Court, in San Roque, ruled that equitable estoppel had set in when respondent issued
BIR Ruling No. DA-489-03.
 Taxation Law Review - Atty. Tuazon 19

judicial claims for having been prematurely filed. · This was a general interpretative rule, which effectively misled all taxpayers into filing
o It ruled that P&G had failed to observe the mandatory 120- premature judicial claims with the CTA.
day waiting period to allow the Commissioner of Internal · Thus, taxpayers could rely on the ruling from its issuance on 10 December 2003 up to its
Revenue (CIR) to decide on the administrative claim. reversal on 6 October 2010, when CIR v. Aichi Forging Company of Asia, lnc. was promulgated.
· A motion for reconsideration was filed but was denied.
· As a result, P&G filed a Petition for Review before the CTA En The judicial claims in the petition were filed on 2 October and 29 December 2006, well within the
Banc. ruling's period of validity.
· The latter affirmed the ruling of the CTA First Division.
· Petitioner’s Motion for Reconsideration was also denied. Petitioner is in a position to "claim the benefit of BIR Ruling No. DA-489-03, which shields the filing of
· P&G filed the present petition with the contention: its judicial claim from the vice of prematurity."
o that the 120-day waiting period, reckoned from the filing of
the administrative claim for the refund or credit of unutilized The petition was granted and the decision and resolution of the Court of Tax Appeals En Banc were
input VAT before the filing of the judicial claim, is not reversed and set aside.
jurisdictional.
o that the premature filing of its judicial claims was a mere The case was remanded to the CTA First Division for further proceedings and for the determination of
failure to exhaust administrative remedies, amounting to a lack whether the claims of petitioner for refund or tax credit are valid.
of cause of action.
o As such, the failure of the CIR to file a motion to dismiss
based on this ground should be deemed as a waiver of such
defense.
· On its comment, CIR cited the recent case CIR v. San Roque
Power Corporation.
o CIR countered that the 120-day period to file judicial claims
for a refund or tax credit is mandatory and jurisdictional.
o Failure to comply violates the doctrine of exhaustion of
administrative remedies, rendering the judicial claim premature.
o Thus, the CTA cannot acquire jurisdiction.

41. CIR vs. San Roque ISSUE

Power Corp. WON the claim for refund were timely filed

3 Consolidated Cases CIR VS. SAN ROQUE; G.R. NO. 187485

[G.R. No. 187485. · San Roque is a domestic corporation in the business of power-
February 12, 2013.] generating plant facilities pursuant to and under contract with the
COMMISSIONER OF RULING:
government.
INTERNAL REVENUE · As a seller of services it is duly registered with BIR and BOI on a
vs. SAN ROQUE preferred pioneer status.
POWER · On October 1997, San Roque entered into a Power Purchase
CORPORATION Agreement (PPA) with National Power Corporation (NPC) to 1) APPLICATION OF THE 120+30 DAY PERIODS
[G.R. No. 196113. generate additional power and energy for Luzon Power Grid by
February 12, 2013.] developing hydro-potential on the Agno River
TAGANITO MINING o The PPA provides, among others, that San Roque shall be
CORPORATION vs. responsible for the design, construction and commissioning of A. For CIR vs. San Roque Corp
COMMISSIONER OF the Power Station and shall operate and maintain the same,
INTERNAL REVENUE subject to NPC instructions.
[G.R. No. 197156. On 10 April 2003, a mere 13 days after it filed its amended administrative claim with the Commissioner
o During the cooperation period of 25 years commencing from on 28 March 2003, San Roque filed a Petition for Review with the CTA docketed as CTA Case No.
February 12, 2013.] the completion date of the power station, NPC will take and pay
PHILEX MINING 6647.
for all electricity available from the power station. From this we gather 2 facts:
CORPORATION vs. · On the construction and development of the San Roque multi-
COMMISSIONER OF 1) San Roque did not wait for the 120-day period to lapse before filing judicial claim;
purpose project which comprises of the dam, spillway and power 2) San Roque filed its judicial claim more than 4 years before Atlas Doctrine (June 2007).
INTERNAL REVENUE plant, allegedly incurred, excess input VAT in the amount of 559, 709,

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Taxation Law Review - Atty. Tuazon
337.54 for taxable year 2001 which it declared in its quarterly VAT
returns filed for the same year.
o However, on Mar 28 2003, it amended its VAT returns for the
year 2001 sand increased its input VAT to the amount of
560,200,283.14.
o San Roque filed with BIR for refund of such amount.
· CIR’s inaction prompted San Roque to file petition for review
before CTA
CTA Division:
o Initially denied claim because San Roque failed to show
recorded zero-rated or effectively zero-rated sales; and
o required it to show the ff. requirements to be entitled for
refund:
§ Vat registered entity
§ Its input taxes claimed were paid on capital goods duly
supported by VAT invoices
§ Did not offset or apply the claimed input VAT on capital
goods against any output VAT liability and
§ Filed within 2 year prescriptive period.
o San Roque only complied with 1st, third and fourth
requirements. Partially granted refund reduced to 483M.
CTA En Banc:
o Commissioner filed before EN Banc to pray for denial of
refund in its entirety.
§ the claim for refund with the BIR and the subsequent
appeal to the Court of Tax Appeals must be filed within the
two-year period
§ The Supreme Court held in the case of Atlas
Consolidated Mining and Development Corporation vs.
Commissioner of Internal Revenue that the two-year
prescriptive period for filing a claim for input tax is reckoned
from the date of the filing of the quarterly VAT return and
payment of the tax due.
§ If the said period is about to expire but the BIR has not
yet acted on the application for refund, the taxpayer may
interpose a petition for review with this Court within the two
year period.
§ Lastly, it is apparent from the following provisions of
Revenue Memorandum Circular No. 49-03 dated
August 18, 2003, that [the CIR] knows that claims for
VAT refund or tax credit filed with the Court [of Tax
Appeals] can proceed simultaneously with the ones
filed with the BIR and that taxpayers need not wait for
the lapse of the subject 120-day period
· CTA dismissed petition.
· Hence, CIR’s present petition.
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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.
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.
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: refunds of internal revenue taxes.”
· Then a taxpayer prematurely files a judicial claim for tax refund or credit with the CTA without
waiting for CIR decision, there is no “decision” of the CIR to review and thus the CTA had no
jurisdiction, therefore.
· San Roque’s failure to comply with the 120-day mandatory period renders its petition for
review with the CTA void.
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.
San Roque cannot also use Atlas Doctrine as an excuse because this case existed 4 years before the
Atlas case.
· The Atlas counts the 2 years prescriptive period from the date of payment of the output VAT,
which means within 20 days after the close of the taxable quarter.
· The output VAT at the time must be paid at the time of filing of the quarterly tax returns,
which were to be filed “within 20 days ff the end of each quarter”.
Whether the Atlas doctrine (and later Mirant) is applied to San Roque is immaterial because what is the
issue in the present case is San Roque’s non-compliance with the 120-day period, a mandatory period
the Atlas or the Mirant doctrine is applied.
In San Roque’s case, it filed its petition with the CTA a mere 13 days after it filed its administrative
claim with the Commissioner.
Indisputably, San Roque knowingly violated the mandatory 120-day period, and it cannot blame
anyone but itself.
Sec 112 (c) is plain and clear. 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.
ISSUE
WON the claim for refund were timely filed
RULING:
Taxation Law Review - Atty. Tuazon
TAGANITO MINING CORP. V. CIR
G.R. NO. 196113
· Taganito Mining Corp is a corporation duly organized and
existing under and by virtue of Phil. Laws. It is duly registered with
SEC with primary purpose:
o To carry on the business, for itself and for others, of mining
lode and/or placer mining, developing, exploiting, extracting,
milling, concentrating, converting, smelting, treating, refining,
preparing for market, manufacturing, buying, selling,
exchanging, shipping, transporting, and otherwise producing
and dealing in nickel, chromite, cobalt, gold, silver, copper, lead,
zinc, brass, iron, steel, limestone, and all kinds of ores, metals
and their by-products…
· Taganito is a VAT registered entity and is also registered with
BOI as an exporter of beneficiated nickel.
o Taganito filed all its monthly VAT declarations and VAT
returns for the period of Jan 1 – December 2005.
o Taganito reported zero-rated sales amounting to
1,446,854,034; input VAY on its domestic purchases and
importations of goods and services amounting to 2, 314,730 and
input VAT on its domestic purchases and importations
amounting to 6,050,933.95.
· On Nov 14, 2005 filed with CIR claiming a tax refund of its
supposed input VAT amounting to 8M period covering Jan 1-Dec
2004 and also Jan 1-Dec 2005.
· As the statutory period within which to file claim for refund is
about to lapse without CIR’s action, they filed the instant petition for
review on Feb 17 2007.
CTA Division:
· Partially granted Taganito’s claim. Taganito was able to comply
with requirements under Sec 112 (A) of RA 8242, to be entitled for
refund or credit of input VAT attributable to zero-rated sales.
CTA 2nd division:
o Finally, records show that [Taganito’s] administrative claim
filed on November 14, 2006, which was amended on November
29, 2006, and the Petition for Review filed with this Court on
February 14, 2007 are well within the two-year prescriptive
period, reckoned from March 31, 2005, June 30, 2005,
September 30, 2005, and December 31, 2005, respectively, the
close of each taxable quarter covering the period January 1,
2005 to December 31, 2005.
o In fine, [Taganito] sufficiently proved that it is entitled to a tax
credit certificate in the amount of ₱8,249,883.33 representing
unutilized input VAT for the four taxable quarters of 2005.
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I. APPLICATION OF THE 120+30 DAY PERIODS
B. Taganito Mining Corp Case
Like San Roque, Taganito also filed its petition for review with the CTA without waiting for the
120-day period to lapse.
Also, like San Roque, Taganito filed its judicial claim before the promulgation of Atlas doctrine.
Similarly situated as San Roque – both cannot claim being misled, misguided or confused by
the Atlas doctrine.
HOWEVER, Taganito can invoke BIR Ruling No. DA-489-0357 dated 10 Dec 2003, which
expressly ruled that the “taxpayer-claimant need not wait for the lapse of the 120-day period
beforeit could seek judicial relief with the CTA by way of petition for review.”
Taganito filed its judicial claim after the issuance of BIR ruling but before the adoption of the
Aichi doctrine.
Thus, Taganito is deemed to have filed its judicial claim on time.
ISSUE
WON the claim for refund were timely filed
RULING:
I. APPLICATION OF THE 120+30 DAY PERIODS
Philex timely filed its administrative claim on Mar 20 2006, within the 2 year prescriptive period. Even if
the 2 year prescriptive period is computed from the date of payment of the output VAT under Sec 229,
Philex, still filed its claim on time.
Thus, the Atlas doctrine is immaterial in this case.
The commissioner had until 17 Jul 2006, the last day of the 120-day period, to decide Philex’s claim.
Since the commissioner did not act on Philex’s claim on or before July 17 2006, Philex had until August
17 2006, the last day of the 30-day period, to filed its judicial claim.
However, Philex filed its Petition for Review with CTA only on October 17, 2007, or 426 days after the
last day of filing.
In short, Philex was late by one year and 61 days in filing its judicial claim.
AS the CTA EB correctly found:
· Evidently, the Petition for Review in C.T.A. Case No. 7687 was filed 426 days late.
· Thus, the Petition for Review in C.T.A. Case No. 7687 should have been dismissed on the
ground that the Petition for Review was filed way beyond the 30-day prescribed period;
· thus, no jurisdiction was acquired by the CTA Division; x x x58 (Emphasis supplied)
Taxation Law Review - Atty. Tuazon
CTA en banc:
o Granted Petition of CIR. CTA EB declared that Sec 112 (A)
and (B) set forth the 2 year prescriptive period for filing for tax
refund or credit claim. Applied Aichi Doctrine.
o The CTA EB also relied on this Court’s rulings in the cases of
Commissioner of Internal Revenue v. Aichi Forging Company of
Asia, Inc. (Aichi)30 and Commisioner of Internal Revenue v.
Mirant Pagbilao Corporation (Mirant) Both Aichi and Mirant
ruled that the two-year prescriptive period to file a refund for
input VAT arising from zero-rated sales should be reckoned
from the close of the taxable quarter when the sales were made.
o Aichi further emphasized that the failure to await the decision
of the Commissioner or the lapse of 120-day period prescribed
in Section 112(D) amounts to a premature filing.
o The CTA EB found that Taganito filed its administrative claim
on 14 November 2006, which was well within the period
prescribed under Section 112(A) and (B) of the 1997 Tax Code.
o However, the CTA EB found that Taganito’s judicial
claim was prematurely filed.
o Taganito filed its Petition for Review before the CTA Second
Division on 14 February 2007.
o The judicial claim was filed after the lapse of only 92 days
from the filing of its administrative claim before the CIR, in
violation of the 120-day period prescribed in Section 112(D) of
the 1997 Tax Code.
· Hence, Taganito’s present petition.
PHILEX MINING CORP VS. CIR GR NO. 197156
· Philex is a corporation duly organized and existing under the
laws of the Republic of the Philippines, which is principally engaged
in the mining business, which includes the exploration and operation
of mine properties and commercial production and marketing of mine
products
· On Oct 21, 2005, filed its original VAT return for 3rd quarter of
taxable year 2005 and amended VAT return for the same quarter on
Dec 1, 2005.
· On March 20, 2006, [Philex] filed its claim for refund/tax credit of
the amount of ₱23,956,732.44 with the One Stop Shop Center of the
Department of Finance.
CTA Division:
· The CTA Second Division ruled that the two-year prescriptive
period specified in Section 112(A) of RA 8424, as amended, applies
not only to the filing of the administrative claim with the BIR, but also
to the filing of the judicial claim with the CTA. Since Philex’s claim
covered the 3rd quarter of 2005, its administrative claim filed on 20
March 2006 was timely filed, while its judicial claim filed on 17
October 2007 was filed late and therefore barred by prescription.
Philex prayed for reversal.
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Unlike in San Roque and Taganito, Philex’ case is not one of premature filing but of late filing.
Philex did not file any petition with the CTA within the 120-day period.
Philex did not also file any petition with the CTA within the 30 days after the 120-day period, in fact 426
days after the lapse of the 120-day period.
In any event, whether governed by jurisprudence before, during, or after the Atlas case, Philex's judicial
claim will have to be rejected because of late filing.
Whether the two-year prescriptive period is counted from the date of payment of the output VAT
following the Atlas doctrine, or from the close of the taxable quarter when the sales attributable to the
input VAT were made following the Mirant and Aichi doctrines, Philex's judicial claim was indisputably
filed late.
The Atlas doctrine cannot save Philex from the late filing of judicial claim. The inaction of CIR was
deemed a denial. Philex had 30 days from the expiration of 120-day period. And it failed to do so.
II. PRESCRIPTIVE PERIODS UNDER SEC 112 (A) AND (C)
Taxpayer may within 2 years after the close of the taxable quarter when the sales are made, apply for
the issuance of 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
2 years, which meant at anytime within 2 years.
The two-year prescriptive period does not refer to the filing of judicial claim with the CTA but the filing of
the CTA but to the filing of the administrative claim with the commissioner è refund/ credit with the CIR
and not to appeals made to the CTA.
The commissioner will have 120 days from such filing to decide the claim.
If the commissioner decides the claim on the 120th day, or does not decide it on that day, the taxpayer
has 30 days to file his judicial claim with the CTA.
The 30-day period was adopted precisely to do away with the old rule, so that under the VAT System
the taxpayer will always have 30 days to file the judicial claim even if the Commissioner acts only on
the 120th day, or does not act at all during the 120-day period .
With the 30-day period always available to the taxpayer, the taxpayer can no longer file a judicial claim
for refund or credit of input VAT without waiting for the Commissioner to decide until the expiration of
the 120-day period.
III. RMC 49-03
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.
 Taxation Law Review - Atty. Tuazon
CTA En Banc:
· Denied Philex and Affirmed CTA division’s decision.
· In this case, while there is no dispute that [Philex’s]
administrative claim for refund was filed within the two-year
prescriptive period; however, as to its judicial claim for refund/credit,
records show that on March 20, 2006, [Philex] applied the
administrative claim for refund of unutilized input VAT
· From March 20, 2006, which is also presumably the date
[Philex] submitted supporting documents, together with the aforesaid
application for refund, the CIR has 120 days, or until July 18, 2006,
within which to decide the claim.
· Within 30 days from the lapse of the 120-day period, or from
July 19, 2006 until August 17, 2006, [Philex] should have elevated its
claim for refund to the CTA.
· However, [Philex] filed its Petition for Review only on October
17, 2007, which is 426 days way beyond the 30- day period
prescribed by law
Hence, Philex’ present petition.
42. San Roque Power TOPIC: Remedies for Taxpayer
Corp vs. CIR Ponente: MARTIRES, J.
G.R. No. 203249
July 23, 2018 DOCTRINE: The 120+30-day period is generally mandatory
and jurisdictional from the effectivity of the 1997 NIRC to
January 1998, up to the present.
By way of an exception, judicial claims filed during the window
period from 10 December 2003 to 6 October 2010, need
not wait for the exhaustion of the 120-day period.
All taxpayers 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, where
this Court held that the 120+30-day periods are mandatory and
jurisdictional.
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IV. BIR RULING no. DA-489-03 dated 10 Dec 2003
Provides a valid claim for equitable estoppel under the Tax Code.
BIR ruling expressly states that the taxpayer-claimant need not wait for lapse of the 120-day
period before it could seek judicial relief with the CTA by way of petition for review.
Prior to this, BIR held that 120 day period is mandatory and jurisdictional.
It is still mandatory and jurisdictional but there are 2 exceptions to this rule:
1. The first exception is if the Commissioner, through a specific ruling, misleads a particular
taxpayer to prematurely file a judicial claim with the CTA. Such specific ruling is applicable only to
such particular taxpayer.
2. The second exception is where the Commissioner, through a general interpretative rule
issued under Section 4 of the Tax Code, misleads all taxpayers into filing prematurely judicial
claims with the CTA.
NOTE: However, this was reversed by AICHI on Oct 6 2010.
· San Roque cannot benefit from the BIR ruling because it filed its judicial claim prematurely,
before the issuance of this BIR ruling.
· Taganito, filed after the issuance of BIR ruling hence, it can claim benefit thereof.
· Philex was very late. It was not premature at all.
Section 112 (D) of the 1997 Tax Code is clear, unequivocal, and categorical that the Commissioner has
120 days to act on an administrative claim. The taxpayer can file the judicial claim
(1) only within thirty days after the Commissioner partially or fully denies the claim within the 120-day
period, or
(2) only within thirty days from the expiration of the 120-day period if the Commissioner does not act
within the 120-day period.
By reasons stated above, the court:
· GRANTS petition of CIR re: San Roque
· GRANTS Taganito’s petition for refund or credit
· DENIES Philex Mining Corporation.
ISSUE/S:
1. WON San Roque is entitled for a refund despite it prematurely filed its
judicial claims.
YES. San Roque is entitled for a refund despite filing its judicial claim
prematurely by way of an exception.
In this case, the petitioner filed its administrative claims for refund/credit of its unutilized
input VAT for the first quarter of 2004, and for the second to fourth quarters of the same
year, on 22 December 2005 and 27 February 2006, respectively, or within the two-
year prescriptive period. Counted from such dates of submission of the claims (with
supporting documents), the CIR had 120 days, or until 13 April 2006, with respect to
the first administrative claim, and until 27 June 2006, on the second administrative
claim, to decide.
Taxation Law Review - Atty. Tuazon
As long as the judicial claim was filed between December
10, 2003 and October 6, 2010, then the taxpayer would
not be required to wait for the lapse of 120-day period.
FACTS:
San Roque Power Corp a VAT-registered taxpayer and granted
by the BIR a zero-rating on its sales of electricity to National
Power Corporation (NPC) from Jan- Dec 2004.
On 22 December 2005 and 27 February 2006, San Roque
filed two separate administrative claims for refund of its
alleged unutilized input tax for the period January-March
2004, and for April-December 2004, respectively.
Due to the inaction of CIR, the San Roque filed petitions for
review before the CTA: (1) on 30 March 2006, for its
unutilized input VAT for the period 1 January 2004 to 31 March
2004, amounting to P17,017,648.31 and (2) on 20 June 2006,
for the unutilized input VAT for the period 1 April 2004 to 31
December 2004, amounting to P14,959,061.57.
On the other hand, respondent CIR was deemed to have
waived its right to present evidence due to its failure to
appear in the two scheduled hearings.
CTA: Refund partially granted, CIR to refund total of
P29,931,505.18, unutilized input VAT attributable effectively
zero-rated sales of electricity to NPC.
Thus, CIR filed a petition for review with the CTA En Banc. The
CIR asserted that the petitions for review filed with the CTA were
premature, and thus, should be dismissed.
CTA En Banc: In favor if CIR. Judicial claims of the San Roque
were prematurely filed in violation of the 120-day and 30-
day periods in Section 112 (D) of the NIRC. San Roque failed to
exhaust administrative remedies which is fatal to its invocation
of the court's power of review. Thus, PET for Review of San
Roque dismissed.
Hence, San Roque filed Pet for review in SC, arguing that at the
time it filed the petitions for review in CTA on 30 March 2006 and
20 June 2006, no ruling yet was laid down by SC
concerning the 120-day and 30-day period. Instead,
taxpayers such as the petitioner were guided only by the
rulings of the CTA which consistently adopted the
interpretation that a claimant is not bound by the 120-day
and 30-day periods but by the two-year prescriptive
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However, the petitioner, without waiting for the full expiration of the 120-day
periods and without any decision by the CIR, immediately filed its petitions for
review with the CTA on 30 March 2006, or a mere ninety-eight (98) days for the first
administrative claim; and on 20 June 2006, or only one hundred thirteen (113) days
for the second administrative claim, from the submission of the said claims. In other
words, the judicial claims of the petitioner were prematurely filed as correctly
found by the CTA En Banc.
2. WHY THE SC GRANTED SAN ROQUE’s REFUND DESPITE FILING IT
PREMATURELY
THE SC allowed SAN Roque to claim for a refund despite its judicial claims being
prematurely filed because of the BIR Ruling No. DA-489-03 which constitutes an
exception to the mandatory and jurisdictional nature of the
120+30-day period.
As long as the judicial claim was filed between December 10, 2003 and October
6, 2010, then the taxpayer would not be required to wait for the lapse of 120-
day period.
It was noted that BIR Ruling No. DA-489-03, which expressly stated:
[A] 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.
– is a general interpretative rule issued by the CIR pursuant to its power under Section 4
of the NIRC, hence, applicable to all taxpayers. Thus, taxpayers can rely on this ruling
from the time of its issuance on 10 December 2003. The conclusion is impelled by the
principle of equitable estoppel enshrined in Section 24615 of the NIRC which decrees that
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.
Then, in Taganito Mining Corporation v. CIR,16 the Court further clarified the doctrines in
Aichi and San Roque explaining that during the window period from 10 December 2003,
upon the issuance of BIR Ruling No. DA-489-03 up to 6 October 2010, or date of
promulgation of Aichi, taxpayers need not observe the stringent 120-day period.17
In other words, the 120+30-day period is generally mandatory and jurisdictional from
the effectivity of the 1997 NIRC on 1 January 1998, up to the present. By way of an
exception, judicial claims filed during the window period from 10 December
2003 to 6 October 2010, need not wait for the exhaustion of the 120-day period.
The exception in San Roque has been applied consistently in numerous decisions
of this Court.
In this case, the two judicial claims filed by the petitioner fell within the window period,
thus, the CTA can take cognizance over them.
The petitioner is similarly situated as Taganito Mining Corporation (Taganito) in the
consolidated cases of San Roque. In that case, Taganito prematurely filed on 14 February
Taxation Law Review - Atty. Tuazon 25

period. 2007 its petition for review with the CTA, or within the window period from 10 December
2003, with the issuance of BIR Ruling DA-489-03 and 6 October 2010, when Aichi was
promulgated. The Court considered Taganito to have filed its administrative claim on time.
Similarly, the judicial claims in this case were filed on 30 March 2006 and 20 June 2006,
or within the said window period. Consequently, the exception to the mandatory and
jurisdictional character of the 120-day and 30-day periods is applicable.

The beneficiaries of BIR Ruling No. DA-489-03 include those who did not
specifically invoke it.
It is imperative, however, to point out that the petitioner did not actually invoke BIR
Ruling No. DA-489-03 in all its pleadings to justify the timeliness of its judicial claims with
the CTA. The petitioner can benefit from BIR Ruling DA-489-03 even if it did not invoke it
in its pleadings.

We resolve to apply the exception recognized in San Roque, which we quote, viz:

x x x BIR Ruling No. DA-489-03 is a general interpretative rule. Thus, all taxpayers 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, where this Court
held that the 120+30-day periods are mandatory and jurisdictional.18 (emphasis
supplied)

As previously stated, San Roque has been consistently applied in a long line of cases that
recognized the exception to the mandatory and jurisdictional nature of the 120+30-day
period. To limit the application of BIR Ruling No. DA-489-03 only to those who invoked it
specifically would unduly strain the pronouncements in San Roque. To provide
jurisprudential stability, it is best to apply the benefit of BIR Ruling No. DA-489-03 to all
taxpayers who filed their judicial claims within the window period from 10 December 2003
until 6 October 2010.

Thus, we must apply BIR Ruling No. DA-489-03 to all taxpayers who filed their judicial
claim for VAT refund within the period of exception from December 10, 2003 to October
6, 2010.20 (citations omitted)

Moreover, in Procter and Gamble Asia Pte Ltd. v. Commissioner of Internal Revenue,21 we
considered as insignificant the failure of a taxpayer to invoke BIR Ruling No. DA-489-03
before the CTA. Our reason was that the said ruling is an official act emanating from the
BIR. We can take judicial notice of such issuance and its consistent application in past
rulings of the Court relating to the timeliness of judicial claims which makes it even more
mandatory in taking cognizance of the same.

All told, the CTA has jurisdiction over the judicial claims filed by the petitioner in this case.
The CTA En Banc, thus, erred in setting aside the decision of the CTA Division on the
ground of lack of jurisdiction. Consequently, the decision of the CTA Division partially
granting the claim for refund/credit in favor of the petitioner must be reinstated.

3. WON the CTA erred when it ruled a retroactive application of the AICHI
Ruling.

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 Taxation Law Review - Atty. Tuazon 26

YES, CTA erred. THERE IS NO RETROACTIVE APPLICATION OF AICHI RULING

because it will impair vested rights.

Hence, from the effectivity of the 1997 NIRC on 1 January 1998, the procedure
has always been definite: the 120-day period is mandatory and jurisdictional.
Accordingly, a taxpayer can file a judicial claim (1)only within thirty days after the
Commissioner partially or fully denies the claim within the 120-day period, or (2)
only within thirty days from the expiration of the 120- day period if the
Commissioner does not act within such period.13 This is the rule of procedure beginning 1
January 1998 as interpreted in Aichi.

Section 112 (D) of the NIRC, not the Aichi ruling, lays down the rule of procedure governing
refund claims of unutilized creditable input VAT attributable to zero-rated sales; Aichi is
merely an interpretation of an existing law; there is no vested right to speak of respecting
a wrong construction of the law (permitting a premature filing of judicial claim);

A judicial ruling overruling a previous one cannot be applied retroactively before its
abandonment. There was no established doctrine abandoned or overturned by Aichi; the
petitioner merely harps on CTA decisions that cannot be relied on as binding precedents;
and

A judicial decision which declares an otherwise permissible act as impermissible violates the
ex post facto rule under the Constitution – Prior to Aichi, there was no law or jurisprudence
permitting the premature filing of a judicial claim of creditable input VAT; Aichi did not
declare as impermissible that which was previously recognized by law or jurisprudence as
a permissible act; it is, therefore, inconsequential to consider the ex post facto provision of
the Constitution.

To reiterate, the 120-day and 30-day periods, as held in the case of Aichi, are
mandatory and jurisdictional. Thus, noncompliance with the mandatory 120+30-day
period renders the petition before the CTA void. The ruling in said case as to the
mandatory and jurisdictional character of said periods was reiterated in San Roque and a
host of succeeding similar cases.

WHEREFORE, the petition is GRANTED. Resolution of the CTA En Banc are REVERSED
and SET ASIDE. Resolution of the CTA Former Second Division are hereby
REINSTATED.

The public respondent CIR is hereby ORDERED TO REFUND or, in the alternative, TO
ISSUE A TAX CREDIT CERTIFICATE in favor of the San Roque for P29,931,505.18 for
unutilized input VAT attributable to zero-rated sales to the NPC for the four taxable
quarters of 2004.

43. CIR vs. Toledo Power TOPIC: VAT REFUND Corporation,8 (San Roque), the Court confirmed the mandatory and jurisdictional nature of the 120+30
Inc. day rule.
DOCTRINE:
The old rule that the taxpayer may file the judicial claim, without waiting for Section 112(C) also expressly grants the taxpayer a 30-day period to appeal to the CTA the decision or

Block G04 and G05 (First Semester, 2019 - 2020)

Taxation Law Review - Atty. Tuazon
the Commissioner’s decision if the two-year prescriptive period is about to
expire, cannot apply because that rule was adopted before the enactment
of the 30-day period.
The 30-day period was adopted precisely to do away with the old rule, so
that under the VAT System the taxpayer will always have 30 days to file
the judicial claim even if the Commissioner acts only on the 120th day, or
does not act at all during the 120-day period.
With the 30-day period always available to the taxpayer, the taxpayer can
no longer file a judicial claim for refund or credit of input VAT without
waiting for the Commissioner to decide until the expiration of the 120-day
period.
FACTS:
· Toledo Power, Inc. is a general partnership at Sangi, Toledo
City, Cebu.
· It is registered with the BIR as a Value Added Tax taxpayer in
accordance with Section 236.
· On October 25, 2001, Toledo Power filed with the BIR Revenue
District Office (RDO) No. 83 at Toledo City, Province of Cebu, its
Quarterly VAT Return x x for the issuance of Certificate of
Compliance.
· For the third and fourth quarters of 2001, Toledo Power incurred
and accumulated input VAT from its domestic purchase of goods and
services, which are all attributable to its zero-rated sales of power
generation services to NPC, xx x in the total amount of
P9,129,370.27.
· Said excess and unutilized input VAT was allegedly not utilized
against any output VAT liability in the subsequent quarters nor
carried over to the succeeding taxable quarters.
· Toledo Power filed with the BIR RDO No. 83, an administrative
claim for refund or unutilized input VAT for the third and fourth quarter
of 2001 in the amounts of P5,909,588.96 and P3,219,781.31,
respectively, or the aggregate amount of P9,129,370.27.
· CIR has not ruled upon Toledo Power’s administrative claim and
· in order to preserve its right to file a judicial claim for the refund
or issuance of a tax credit certificate of its unutilized input VAT,
Toledo Power filed a Petition for Review to suspend the running of
the two-year prescriptive period under Section 112(D) of the 1997
NIRC and Section 4.106-2(c) of Revenue Regulations No. 7-95, as
amended.
· Toledo Power
o On October 24, 2003, filed a Petition for Review for the
refund or issuance of a tax credit certificate in the amount of
P5,909,588.96 for the third quarter of 2001, docketed as CTA
Case No. 6805 and,
o January 22, 2004, filed another Petition for Review for the
refund or issuance of tax credit certificate in the amount of
P3,219,781.31 for the fourth quarter of 2001, docketed as CTA
Case No. 6851, both for its unutilized input VAT paid by Toledo
Power on its domestic purchases of goods and services and
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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.
xxxx
The old rule that the taxpayer may file the judicial claim, without waiting for the Commissioner’s
decision if the two-year prescriptive period is about to expire, cannot apply because that rule was
adopted before the enactment of the 30-day period.
The 30-day period was adopted precisely to do away with the old rule, so that under the VAT System
the taxpayer will always have 30 days to file the judicial claim even if the Commissioner acts only on
the 120th day, or does not act at all during the 120-day period.
With the 30-day period always available to the taxpayer, the taxpayer can no longer file a judicial claim
for refund or credit of input VAT without waiting for the Commissioner to decide until the expiration of
the 120-day period.
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 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.9
In a nutshell, 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 Tax Code, are 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.
 Taxation Law Review - Atty. Tuazon
importation of goods attributable to zero-rated sales.
· On January 30, 2004, Toledo Power filed a Motion for
Consolidation CTA Case Nos. 6805 and 6851,
· The CTA First Division issued a Decision dated May 17, 2007
partially granting Toledo Power, Inc.’s (TPI) refund claim or issuance
of tax credit certificate.
o In sum, Toledo Power was able to show its entitlement to the
refund or issuance of tax credit certificate in the amount of
P8,553,050.44 x x representing the substantiated unutilized
input VAT for the third and fourth quarters of 2001.
· The Commissioner of Internal Revenue (CIR), thereafter, filed a
Motion for Reconsideration against said Decision.
· However, the same was denied in a Resolution dated October
15, 2007.
· On appeal to the CTA En Banc, the CIR:
o argued that TPI failed to comply with the invoicing
requirements to prove entitlement to the refund or issuance of
tax credit certificate.
o challenged the jurisdiction of the CTA First Division to
entertain CIR’s petition for review for failure on its part to comply
with the provisions of Section 112 (C) of the Tax Code.
· In a Decision dated May 7, 2008, the CTA En Banc affirmed
with modification the First Division’s assailed decision. It held –
o out of the alleged Zero-rated sales amounting to
P270,259,752.81, only the amount of P248,989,191.87 is fully
substantiated.
o Therefore, CIR is entitled to the refund or issuance of tax
credit certificate in the amount of P8,088,151.07
Undaunted by the adverse ruling of the CTA, the CIR now seeks recourse
to this Court on the following ground:
44. CIR vs. Burmeister & Doctrine:
Wain Scandinavian The taxpayer can file its administrative claim for refund or credit at any
190021, October 22, time within the two-year prescriptive period. If it files its claim on the last
2014 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.
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(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.
Here, TPI filed its third and fourth quarterly VAT returns for 2001 on October 25, 2001 and January 25,
2002, respectively.
It then filed an administrative claim for refund of its unutilized input VAT for the third and fourth quarters
of 2001 on September 30, 2003.
Thus, the CIR had 120 days or until January 28, 2004, after the submission of TPI’s administrative
claim and complete documents in support of its application, within which to decide on its claim.
Then, it is only after the expiration of the 120-day period, if there is inaction on the part of the CIR,
where TPI may elevate its claim with the CTA within 30 days.
In the present case, however, it appears that TPI’s judicial claims for refund of its unutilized input VAT
covering the third and fourth quarters of 2001 were prematurely filed on October 24, 2003 and January
22, 2004, respectively.
However, although TPI’s judicial claim for the fourth quarter of 2001 has been filed prematurely, the
most recent pronouncements of the Court provide for a window wherein the same may be entertained.
As held in the San Roque ponencia, strict compliance with the 120+30 day mandatory and jurisdictional
periods is not necessary when the judicial claims are filed between December 10, 2003 (issuance of
BIR Ruling No. DA-489-03 which states that the taxpayer need not wait for the 120-day period to expire
before it could seek judicial relief) to October 6, 2010 (promulgation of the Aichi doctrine).
Clearly, therefore, TPI’s refund claim of unutilized input VAT for the third quarter of 2001 was denied for
being prematurely filed with the CTA, while its refund claim of unutilized input VAT for the fourth quarter
of 2001 may be entertained since it falls within the exception provided in the Court’s most recent
rulings.
WHEREFORE, premises considered, the instant petition is PARTIALLY GRANTED. The
Commissioner of Internal Revenue is hereby ORDERED to refund or issue tax credit certificate in favor
of Toledo Power, Inc. only for the fourth quarter of 2001. This case is hereby REMANDED to the Court
of Tax Appeals for the proper computation of the refundable amount representing unutilized input VAT
for the fourth quarter of 2001.
Issue:
Whether repondent’s claim for refund or tax credit despite its non-compliance with the mandatory
periods under Sec. 112 of R.A. 8424.
Held: No.
Taxation Law Review - Atty. Tuazon
Facts:
● Burmeister is a corporation duly organized and existing under
the laws of the Philippines,
○ It is primarily engaged in the business of constructing,
erecting, assembling, commissioning, operating,
maintaining, rehabilitating, and managing industrial
and power-generating plants and related facilities for
the conversion into electricity of coal distillate, and
other fuels, provided by and under contract with the
Philippine Government, or any government-owned
and controlled corporations, or other entities engaged
in the development, supply, or distribution of
electricity.
○ It is registered as a value-added tax (VAT) taxpayer.
● Burmeister subcontracted from a consortium of non-resident
foreign corporations the actual operation and maintenance of
two 100-megawatt power barges owned by the National Power
Corporation.
○ Said services are subject to zero percent (0%) VAT,
pursuant to Bureau of Internal Revenue (BIR) Ruling
No. 023-95 issued on February 14, 1995, that was
reconfirmed on January 7, 1999 in its VAT Review
Committee Ruling No. 003-99.
● On January 21, 1999, Burmeister filed its Quarterly VAT Return
for the fourth quarter of taxable year 1998 indicating zero-rated
sales of P68,761,361.50 and input VAT of P1,834,388.55 paid
on its domestic purchases of goods and services for the same
period
● On July 21, 1999, Burmeister filed an Application for Tax
Credit/Refund of VAT Paid for the period July to December 1998
in the amount of P4,154,969.51,
○ This was not acted upon by herein petitioner, the
Commissioner of Internal Revenue (CIR).
● On January 9, 2001, Burmeister filed a petition for review before
the CTA, praying for the refund or the issuance of a tax credit
certificate in the amount of P1,834,388.55 representing its
alleged unutilized input VAT payment for the fourth quarter of
1998.
○ The petition was denied on January 29, 2003 due to
insufficiency of evidence.
● On appeal before the Court of Appeals (CA), the case was
remanded to the CTA on April 19, 2005 for the reception of
Burmeister's evidence consisting of VAT invoices and receipts
which had not been submitted earlier, but were already attached
to its motion for reconsideration of the denial of the CTA petition.
● The CTA First Division ordered the CIR to refund or issue a tax
credit certificate in favor of Burmeister for a reduced amount. It
was determined that:
○ the administrative claim filed on July 21, 1999 and the
petition for review filed on January 9, 2001 fell within
the two-year prescriptive period reckoned from
January 21, 1999, the date when Burmeister filed its
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Although the administrative claim was filed by Burmeister within the two-year prescriptive period, its
judicial claim was filed beyond the 120+30-day period, thus, the claim for refund must be denied.
The administrative claim filed by Burmeister on July 21, 1999 was filed within the two-year
prescriptive period reckoned from the close of the fourth taxable quarter, falling on Dec. 31, 1998, the
last day of filing being Dec. 31, 2000.
In fact, whether the two-year prescriptive period is counted from the date of payment (January 21,
1999) of the output VAT following Atlas, or from the close of the taxable quarter when the sales were
made (December 31, 1998) pursuant to Mirant, the conclusion that the administrative claim was timely
filed would equally stand.
The CIR insists, however, that both the administrative and judicial claims should fall within the two-year
prescriptive period. This argument is untenable.
CIR v. Aichi Forging: 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.
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
Burmeister's administrative claim was filed in 1999, so as to rid itself of the said section's mandatory
and jurisdictional application.
As the records would show, the CIR had 120 days from the filing of the administrative claim on July 21,
1999, or until November 18, 1999, to decide on Burmeister's application.
Since the CIR did not act at all, Burmeister had until December 18, 1999, the last day of the 30-day
period, to file its judicial claim.
However, Burmeister filed its petition for review with the CTA only on January 9, 2001 and, thus, was
one (1) year and 22 days late.
As a consequence of the late filing of said petition, the CTA did not properly acquire jurisdiction over
the claim.
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
 Taxation Law Review - Atty. Tuazon
Quarterly VAT Return for the fourth quarter of taxable
year 1998.
● Undaunted, the CIR elevated the case to the CTA En Banc on
petition for review lamenting the alleged failure on the part of
Burmeister to comply with the periods mandated under Section
112 of Republic Act No. (RA) 8424,16 otherwise known as the
Tax Reform Act of 1997.
● From the time the administrative claim for refund was filed on
July 21, 1999, the CIR had 120 days, or until November 18,
1999, to act on the application, failing in which, Burmeister may
elevate the case before the CTA within 30 days from
November 18, 1999, or until December 18, 1999.
However, Burmeister filed its judicial claim only on January 9, 2001.
The CTA En Banc dismissed the petition holding that the CIR could not
raise for the first time on appeal the issue of prescription in the filing of
Burmeister's judicial claim for refund.
45. CIR vs. Mindanao II FACTS:
Geothermal Partnership · Mindanao II is a partnership registered with the SEC. It is
engaged in the business of power generation and sale of electricity to
the NAPOCOR
· Mindanao II filed its Quarterly VAT Returns for the second, third
and fourth quarters of taxable year 2004 on the following dates:
Date filed Quarter Taxable
Year
Original Amended
26 July 2004 12 July 2005 2nd 2004
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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, Burmeister'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 non-compliance
with the mandatory periods at the earliest opportunity.
Nippon Express (Philippines) Corporation v. CIR: 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, Burmeister's contention on this score is of no moment.
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 Burmeister's claim for refund or tax credit
despite its non-compliance 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.
ISSUES
(1) Whether or not the application for refund or credit of unutilized input VAT was within the two-year
prescriptive period for filing
(2) Whether or not the CTA is correct - 120+30 day period for filing an appeal with the CTA
HELD:
We deny Mindanao II’s claim for refund or credit of unutilized input VAT on the ground that its judicial
claims were filed out of time, even as we hold that its application for refund was filed on time.
I. MINDANAO II’S APPLICATION FOR REFUND WAS FILED ON TIME
Taxation Law Review - Atty. Tuazon
22 October 2004 12 July 2005 3rd 2004
25 January 2005 12 July 2005 4th 2004
· On 6 October 2005, Mindanao II filed with the BIR an application
for the refund or credit of accumulated unutilized creditable input
taxes.
· In support of the administrative claim for refund or credit,
Mindanao II alleged that it is registered with the BIR as a value-added
taxpayer and all its sales are zero-rated under the EPIRA law.
· It further stated that for the second, third, and fourth quarters of
taxable year 2004, it paid input VAT in the aggregate amount of
P7M+ which were directly attributable to the zero-rated sales.
· The input taxes had not been applied against output tax.
· Pursuant to Section 112(D) of NIRC, CIR had a period of 120
days, or until 3 February 2006, to act on the claim.
o The administrative claim remained unresolved on 3 February
2006.
o Under the same provision, Mindanao II could treat the
inaction of the CIR as a denial of its claim, in which case, the
former would have 30 days to file an appeal to the CTA (on 5
March 2006).
§ Mindanao II did not file an appeal.
· Mindanao II believed:
o that a judicial claim must be filed within the two-year
prescriptive period provided under Section 112(A) and
o that such time frame was to be reckoned from the filing of its
Quarterly VAT Returns for the second, third, and fourth quarters
of taxable year 2004.
· Mindanao II, claiming inaction on the part of the CIR and that
the two-year prescriptive period was about to expire, filed a Petition
for Review with the CTA
· While the application for refund or credit of unutilized input VAT
was pending before the CTA, this Court promulgated Atlas
Consolidated Mining and Development Corporation v. CIR
(Atlas) 2007.
o Atlas held that the two-year prescriptive period for the filing of
a claim for an input VAT refund or credit is to be reckoned from
the date of filing of the corresponding quarterly VAT return and
payment of the tax.
· CTA ordered the CIR to grant a refund or a tax credit certificate,
o but only the unutilized input VAT incurred for the second,
third and fourth quarters of taxable year 2004.
o CTA held that Mindanao II complied with the twin requisites
for VAT zero-rating under the EPIRA law:
§ first, it is a generation company, and
§ second, it derived sales from power generation.
o It also ruled that Mindanao II satisfied the requirements for
the grant of a refund/credit under Section 112 of the Tax Code:
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We find no error in the conclusion of the tax courts that the application for refund or credit of
unutilized input VAT was timely filed.
The problem lies with their bases for the conclusion as to:
(1) what should be filed within the prescriptive period; and
(2) the date from which to reckon the prescriptive period
A. The Judicial Claim Need Not Be Filed Within the Two-Year Prescriptive Period
Both the CTA Second Division and CTA En Banc decisions held that the phrase "apply for the issuance
of a tax credit certificate or refund" in Section 112(A) is construed to refer to both the administrative
claim filed with the CIR and the judicial claim filed with the CTA. This view, however, has no legal
basis.
In Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc. (Aichi), 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. x x x. 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.
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.
B. Reckoning Date is the Close of the Taxable Quarter When the Relevant Sales Were Made.
Section 112(A) is the Applicable Rule
The issue posed is not novel. In the recent case of Commissioner of Internal Revenue v. San Roque
Power Corporation (San Roque), this Court resolved the threshold question of when to reckon the two-
year prescriptive period for filing an administrative claim for refund or credit of unutilized input VAT
under the 1997 Tax Code in view of our pronouncements in Atlas and Mirant. In that case, we
delineated the scope and effectivity of the Atlas and Mirant doctrines as follows:
Taxation Law Review - Atty. Tuazon
(1) there must be zero-rated or effectively zero-rated sales;
(2) input taxes must have been incurred or paid;
(3) the creditable input tax due or paid must be attributable to
zero-rated sales or effectively zero-rated sales;
(4) the input VAT payments must not have been applied against
any output liability; and
(5) the claim must be filed within the two-year prescriptive
period.
· CIR filed a Motion for Partial Reconsideration:
o prescription had already set in, since the appeal to the CTA
was filed only on 21 July 2006, which was way beyond the last
day to appeal – 5 March 2006 - Section 112(D) of the 1997 Tax
Code.
· On 12 September 2008, this Court promulgated CIR v. Mirant
Pagbilao Corporation (Mirant).
o Mirant fixed the reckoning date of the two-year prescriptive
period for the application for refund or credit of unutilized input
VAT at the close of the taxable quarter when the relevant sales
were made, as stated in Section 112(A).
· CTA denied the CIR’s Motion for Partial Reconsideration which
denied the same
o On the question whether the application for refund was timely
filed, it held that the CTA Second Division correctly applied the
Atlas ruling.
o It reasoned that Atlas remained to be the controlling doctrine.
o Mirant was a new doctrine and, as such, the latter should not
apply retroactively to Mindanao II who had relied on the old
doctrine of Atlas and had acted on the faith thereof.
· CIR filed this Rule 45 Petition, hence this petition.
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Furthermore, San Roque distinguished between Section 112 and Section 229 of the 1997 Tax Code:
Under Section 110(B) and Section 112(A), the prescriptive period for filing a judicial claim for "excess"
input VAT is two years from the close of the taxable quarter when the sale was made by the person
legally liable to pay the output VAT. This prescriptive period has no relation to the date of payment of
the "excess" input VAT.
The "excess" input VAT may have been paid for more than two years but this does not bar the filing of
a judicial claim for "excess" VAT under Section 112(A), which has a different reckoning period from
Section 229.
Moreover, the person claiming the refund or credit of the input VAT is not the person who legally paid
the input VAT. Such person seeking the VAT refund or credit does not claim that the input VAT was
"excessively" collected from him, or that he paid an input VAT that is more than what is legally due. He
is not the taxpayer who legally paid the input VAT.
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. x x x
Two things are clear from the above quoted San Roque disquisitions.
First, when it comes to recovery of unutilized input VAT, Section 112, and not Section 229 of the 1997
Tax Code, is the governing law.
Second, prior to 8 June 2007, the applicable rule is neither Atlas nor Mirant, but Section 112(A).
We present the rules laid down by San Roque in determining the proper reckoning date of the two-year
prescriptive period through the following timeline:
Thus, 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.
C. The Administrative Claims Were Timely Filed
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.
Taxation Law Review - Atty. Tuazon 33

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.

Second Quarter
Third Quarter
Fourth Quarter

II. MINDANAO II’S JUDICIAL CLAIMS WERE FILED OUT OF TIME

Notwithstanding the timely filing of the administrative claims, we find that the CTA En Banc
erred in holding that Mindanao II’s judicial claims were timely filed.

A. 30-Day Period Also Applies to Appeals from Inaction

Section 112(D) speaks of two periods: the period of 120 days, which serves as a waiting period to give
time for the CIR to act on the administrative claim for refund or credit, and the period of 30 days, which
refers to the period for interposing an appeal with the CTA. It is with the 30-day period that there is an
issue in this case.

The CTA En Banc’s holding x x x The judicial claim is seasonably filed so long as it is filed after the
lapse of the 120-day waiting period but before the lapse of the two-year prescriptive period under
Section 112(A).

We do not agree. The 30-day period applies not only to instances of actual denial by the CIR of the
claim for refund or tax credit, but to cases of inaction by the CIR as well. This is the correct
interpretation of the law, as held in San Roque:

Section 112(C) also expressly grants the taxpayer a 30-day period to appeal to the CTA the decision
or inaction of the Commissioner.

The San Roque pronouncement is clear. The taxpayer can file the appeal in one of two ways:
(1) file the 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.

B. The Judicial Claim Was Belatedly Filed

Mindanao II, however, filed a Petition for Review only on 21 July 2006, 138 days after the lapse of the
30-day period on 5 March 2006. The judicial claim was therefore filed late. (See timeline below.)

C. The 30-Day Period to Appeal is Mandatory and Jurisdictional

However, what is up for debate is the nature of the 30-day time requirement. The CIR posits that it is
mandatory.

Mindanao II contends that the requirement of judicial recourse within 30 days is only directory and
permissive, as indicated by the use of the word "may" in Section 112(D). 4

The answer is found in San Roque.

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Taxation Law Review - Atty. Tuazon 34

There, we declared that the 30-day period to appeal is both mandatory and jurisdictional: x x x x

When Section 112(C) states that "the taxpayer affected may, within thirty (30) days from 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," the law does not make the 120+30 day
periods optional just because the law uses the word " may." The word "may" simply means that the
taxpayer may or may not appeal the decision of the Commissioner within 30 days from receipt of the
decision, or within 30 days from the expiration of the 120-day period. x x x.

D. Exception to the mandatory and jurisdictional nature of the 120+30 day period not applicable

Nevertheless, San Roque provides an exception to the mandatory and jurisdictional nature of the
120+30 day period ─ BIR Ruling No. DA-489-03 dated 10 December 2003. The BIR ruling declares
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."

Thus, in San Roque, the Court applied this exception to Taganito Mining Corporation (Taganito), one of
the taxpayers in San Roque.

Taganito filed its judicial claim on 14 February 2007, after the BIR ruling took effect on 10 December
2003 and before the promulgation of Mirant. The Court stated:
Taganito, however, filed its judicial claim with the CTA on 14 February 2007, after the issuance of BIR
Ruling No. DA-489-03 on 10 December 2003. Truly, Taganito can claim that in filing its judicial claim
prematurely without waiting for the 120-day period to expire, it was misled by BIR Ruling No. DA-489-
03. Thus, Taganito can claim the benefit of BIR Ruling No. DA-489-03, which shields the filing of its
judicial claim from the vice of prematurity.

We sum up the rules established by San Roque on the mandatory and jurisdictional nature of the 30-
day period to appeal through the following timeline:

Bearing in mind the foregoing rules for the timely filing of a judicial claim for refund or credit of
unutilized input VAT, we rule on the present case of Mindanao II as follows:

As mentioned above, Mindanao II filed its judicial claim with the CTA on 21 July 2006. This was after
the issuance of BIR Ruling No. DA-489-03 on 10 December 2003, but before its reversal on 5 October
2010.

However, while the BIR ruling was in effect when Mindanao II filed its judicial claim, the rule cannot be
properly invoked. The BIR ruling, as discussed earlier, contemplates premature filing. The situation of
Mindanao II is one of late filing. To repeat, its judicial claim was filed on 21 July 2006 – long after 5
March 2006, the last day of the 30-day period for appeal. In fact, it filed its judicial claim 138 days after
the lapse of the 30-day period. (See timeline below)

E. Undersigned dissented in San Roque to the retroactive application of the mandatory and
jurisdictional nature of the 120+30 day period.

It is worthy to note that in San Roque, this ponente registered her dissent to the retroactive application
of the mandatory and jurisdictional nature of the 120+30 day period provided under Section 112(D) of
the Tax Code which, in her view, is unfair to taxpayers. It has been the view of this ponente that the
mandatory nature of 120+30 day period must be completely applied prospectively or, at the earliest,
only upon the finality of Aichi in order to create stability and consistency in our tax laws. Nevertheless,
this ponente is mindful of the fact that judicial precedents cannot be ignored. Hence, the majority view

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 Taxation Law Review - Atty. Tuazon 35

expressed in San Roque must be applied.

SUMMARY OF RULES ON PRESCRIPTIVE PERIODS FOR CLAIMING REFUND OR CREDIT OF

INPUT VAT
The lessons of this case may be summed up as follows:

A. Two-Year Prescriptive Period

1. It is only the administrative claim that must be filed within the two-year prescriptive period. (Aichi) 2.
The proper reckoning date for the two-year prescriptive period is the close of the taxable quarter when
the relevant sales were made. (San Roque)
3. The only other rule is the Atlas ruling, which applied only from 8 June 2007 to 12 September 2008.
Atlas states that the two-year prescriptive period for filing a claim for tax refund or credit of unutilized
input VAT payments should be counted from the date of filing of the VAT return and payment of the tax.
(San Roque)

B. 120+30 Day Period

1. The taxpayer can file an appeal in one of two ways:
(1) file the 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.
2. The 30-day period always applies, whether there is a denial or inaction on the part of the CIR.
3. As a general rule, the 3 0-day period to appeal is both mandatory and jurisdictional. (Aichi and San
Roque)
4. As an exception to the general rule, premature filing is allowed only if filed between 10 December
2003 and 5 October 2010, when BIR Ruling No. DA-489-03 was still in force. (San Roque)
5. Late filing is absolutely prohibited, even during the time when BIR Ruling No. DA-489-03 was in
force. (San Roque)

SUMMARY AND CONCLUSION

In sum, our finding is that the three administrative claims for the refund or credit of unutilized input VAT
were all timely filed, while the corresponding judicial claims were belatedly filed.

The foregoing considered, the CT A lost jurisdiction over Mindanao Il’s claims for refund or credit. The
CTA EB erred in granting these claims.

WHEREFORE, we GRANT the Petition. A new ruling is entered DENYING respondent s claim for
a tax refund or credit ofP6,791,845.24.

46. Silicone Philippines, FACTS: ISSUE:

Inc. vs CIR
Petitioner is a corporation engaged in the business of designing,
G.R. No. 182737. March 2, developing, manufacturing and exporting integrated circuit components.
2016 It is a preferred pioneer enterprise registered with the Board of
Investments. It is likewise registered with the Bureau of Internal
Ponente: Sereno Revenue (BIR) as a VAT taxpayer by virtue of its sale of goods and
services with a permit to print accounting documents like sales invoices
and official receipts.
Whether or not the Court of Tax Appeals has acquired jurisdiction over the case
HELD:
No, the CTA did not acquire jurisdiction over the case ergo their rulings are not decisions in contemplation
of law. However, the Honorable Supreme Court has ruled that the judicial claims were filed beyond the
120+30 day period.

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Taxation Law Review - Atty. Tuazon
Petitioner sought to recover the VAT it paid on imported capital goods
for the 2nd, 3rd and 4th quarters of 2001, therefore, it filed for a tax credit
/ refund to the CIR.
Due to the continuous inaction by respondent on the administrative
claims of petitioner for a tax credit/refund, petitioner filed separate
petitions for review before the CTA.
CTA 2nd Division and En Banc: Dismissed the petition for lack of merit.
Petitioner had failed to prove its capital goods purchases for the 2nd
quarter of the year 2001. The CTA En Banc emphasized the evidentiary
nature of a claim that a VAT-registered person made capital goods
purchases. It is necessary to ascertain the treatment of the purported
capital goods as depreciable assets, which can only be determined
through the examination of the detailed general ledgers and audited
financial statements, including the person's income tax return. In view
of petitioner's lack of evidence on this point, the claim for the refund or
the issuance of tax credit certificates must be denied.
Block G04 and G05 (First Semester, 2019 - 2020)
36
Under the foregoing provision, the administrative claim of a VAT-registered person for the issuance by
respondent of tax credit certificates or the refund of input taxes paid on zero-rated sales or capital goods
imported may be made within two years after the close of the taxable quarter when the sale or
importation/purchase was made.
In the case of petitioner, its administrative claim for the 2nd quarter of the year 2001 was filed on 16 October
2001, well within the two-year period provided by law. The same is true with regard to the administrative
claims for the 3rd and the 4th quarters of 2001, both of which were filed on 4 September 2002.
“Upon the filing of an administrative claim, respondent is given a period of 120 days within which to (1)
grant a refund or issue the tax credit certificate for creditable input taxes; or (2) make a full or partial denial
of the claim for a tax refund or tax credit. Failure on the part of respondent to act on the application within
the 120-day period shall be deemed a denial.
Note that the 120-day period begins to run from the date of submission of complete documents supporting
the administrative claims. If there is no evidence showing that the taxpayer was required to submit – or
actually submitted – additional documents after the filing of the administrative claim, it is presumed that the
complete documents accompanied the claim when it was filed.
Considering that there is no evidence in this case showing that petitioner made later submissions of
documents in support of its administrative claims, the 120-day period within which respondent is allowed to
act on the claims shall be reckoned from 16 October 1 and 4 September 2002.
Whether respondent rules in favor of or against the taxpayer — or does not act at all on the administrative
claim — within the period of 120 days from the submission of complete documents, the taxpayer may resort
to a judicial claim before the CTA.
SECTION 7. Jurisdiction. — The CTA shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
1. Decisions of the Commissioner of Internal Revenue in cases involving disputed
assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation
thereto, or other matters arising under the National Internal Revenue Code or other laws
administered by the Bureau of Internal Revenue;
2. Inaction by the Commissioner of Internal Revenue in cases involving disputed
assessments, refunds of internal revenue taxes, fees or other charges, penalties in relations
thereto, or other matters arising under the National Internal Revenue Code or other laws
administered by the Bureau of Internal Revenue, where the National Internal Revenue Code
provides a specific period of action, in which case the inaction shall be deemed a denial;
The judicial claim shall be filed within a period of 30 days after the receipt of respondent’s decision or ruling
or after the expiration of the 120-day period, whichever is sooner.
Aside from a specific exception to the mandatory and jurisdictional nature of the periods provided by the law,
any claim filed in a period less than or beyond the 120+30 days provided by the NIRC is outside the
jurisdiction of the CTA.
In this case petitioner’s judicial claims were filed beyond the 120+30 day period
Taxation Law Review - Atty. Tuazon 37

Tax Quarter Admin Claim End of 120 End of 30 Judicial # of days

2001 Filed day period day period Claim Filed late

2nd Oct. 16, Feb 13, Mar. 15, Jul. 30, 2003 502 days
2001 2002 2002

3rd Sept. 4, Jan. 2, 2003 Feb. 1, 2003 Oct. 20, 261 days
2002 2003

4th Sept. 4, Jan. 2, 2003 Feb. 1, 2003 Dec. 30, 332 days
2002 2003

Block G04 and G05 (First Semester, 2019 - 2020)