The administrative claim for refund filed on June 9, 2004, August 12, 2004,

February 18, 2005 and May 11, 2005 has already prescribed. While the claim filed
on November 18, 2005 is premature for failure to wait for the 120-day period to
expire. It failed to exhaust administrative remedy therefore, it was prematurely
filed, however because of BIR Ruling DA 489-03 effective at the time of filing
shielded its dismissal. (Note: that BIR Ruling has been reversed in 2010)

REPUBLIC VS GST PHILIPPINES, INC

GR # 190870, October 17, 2013
FACTS:
GST is a domestic corporation engaged in the business of manufacturing
processing, selling and dealing in all kinds of iron, steel and other metals. It is a
VAT-registered enterprise which deals with companies registered with BOI, whose
manufactured products are 100% exported to foreign countries; and 2) PEZA. It
claims unutilized excess input VAT attributable to its zero rated sales. During the
taxable year 2004 and 2005, it filed the following returns and claim for refund:
Period
1st quarter of 2004
2nd quarter of 2004
3RD quarter of 2004
4th quarter of 2004
1st quarter of 2005
2nd quarter of 2005
3rd quarter of 2005

Date of filing of return

April 16, 2004
July 15, 2004
October 15, 2004
January 11, 2005
April 25, 2005
July 19, 2005
October 26, 2005

Date of filing of refund

June 9, 2004
August 12, 2004
February 18. 2005
February 18, 2005
May 11, 2005
November 18, 2005
November 18, 2005

For failure of the CIR to act on its administrative claims, GST filed a petition for
review before CTA on March 17, 2006. CTA 1st Division granted GSTs claim but
reduced the amount, the CIR was ordered to issue the corresponding tax credit
certificate. The motion for reconsideration filed by CIR was denied so it was
elevated to CTA En Bank, which affirmed the decision of CTA Division finding that
the claims for refund has been filed well within the prescribed periods. Hence, this
petition.

ISSUE:
W/N GST complied with the prescriptive periods required by the Tax code.

Held:
No, it did not comply with the required prescriptive period under the Tax code.

A table was prepared for easier reference:

Taxable
Period

1st
Quarter
2004

2nd
Quarter
2004
3rd
Quarter
2004
4th
Quarter
2004

Filing of
Administrative
claim

120th day

30th day

Remarks

Action on
Claim

November
6, 2004

Filing of
Judicial
Claim
March 17,
2006

October 7,
2004

Filed late

December
10, 2004

January 9,
2005

March 17,
2006

Filed late

June 18,
2005

July 18,
2005

March 17,
2006

Filed late

DENY
pursuant
to Section
112 (C),
NIRC of
1997
DENY
same
reason
DENY
same
ground

June 18,
2005

July 18,
2005

March 17,
2006

Filed late

June 9, 2004

August 12,
2004

February 18,
2005

February 18,
2005

1st
Quarter
2005

May 11, 2005

September
8,
2005

October 8,
2005

March 17,
2006

Filed late

2nd
Quarter
2005

November 18,
2005

March 18,
2006

April 17,
2006

March 17,
2006

Premature
ly
filed

DENY
same
ground
DENY
same
ground
GRANT
pursuant
to BIR
Ruling
No. DA489-03

3rd
Quarter
2005

November 18,
2005

March 18,
2006

April 17,
2006

March 17,
2006

Premature
ly
filed

GRANT
pursuant
to BIR
Ruling
No. DA489-03

The 120+30-day period are mandatory and jurisdictional. The CTA does not
acquire jurisdiction over a judicial claim that is filed before the expiration of the
120-day period. There are 2 exceptions to this, first is when the CIR, through a
specific ruling, misleads a particular taxpayer to prematurely file a judicial claim
with the CTA and second is where the CIR, through a general interpretative rule
misleads all taxpayer into filing prematurely judicial claims with CTA.
BIR Ruling no. DA 489-03, a general interpretative law, will however benefit GST
with respect to its claims for refund of unutilized excess input VAT for the 2 nd and
3rd quarter 2005 which were filed on Nov. 18, 2005 but elevated to CTA on Mar 16,
2006 before the expiration of the 120-day period. This ruling effectively shielded
the filing of GSTs judicial claim for the vice of prematurity. All taxpayers can rely
on the said ruling from the time of its issuance on December 10, 2003 up to its
reversal October 6, 2010 where it was held that the 120+30-day period are
mandatory and jurisdictional.
The 2year prescriptive period applies only to administrative claims and not to
judicial claims. NIRC envisions 2 scenarios: 1,) The CIR issues a decision before
the lapse of 120-day period; 2.) when no decision is made after the lapse of 120
days. In both instances, the taxpayer has 30 days within which to file an appeal
with the CTA. The taxpayer will always have 30 days to file the judicial claim even
if the CIR acts only on the 120 th 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 tax credit of unutilized excess input Vat
without waiting for the CIR to decide until the expiration of the 120-day period.
Failure to comply with the 120-day waiting period violates the doctrine of
exhaustion of administrative remedies and renders the petition premature and
thus without cause of action, with that the effect that the CTA does not acquire
jurisdiction over the taxpayers petition.

SAN ROQUE POWER CORPORATION VS CIR

GR 180345, November 25, 2009
FACTS:
Petitioner entered into a Power Purpose Agreement with NAPOCOR. Petitioner will
design, construct, install, complete and test the power station, NPC shall purchase
all the electricity generated by the power plant. Petitioner applied as zero rated
status from BIR from September 27, 1998-2002. Petitioner filed with BIR separate
administrative claims for refund for unutilized input VAT paid for the period of JanMarch 2002, April-June 2002, July-Sept 2002 and Oct-Dec 2002.
Respondent failed to act on the request for tax refund or credit of the petitioner,
which prompted the latter to file on April 5, 2004 with CTA Division, before it could
be barred by prescription. CTA division denied the petition, En Banc affirmed it
because it did not present any records of zero-rated or effectively zero-rated
transactions.

ISSUE:
W/N petitioner is entitled to refund or tax credit representing zero-rated or
effectively zero-rated sales.

HELD:
Yes, the evidence presented by the petitioner shows compliance with the
requirements for refund or credit of VAT.

Based on the evidences presented petitioner complied with the abovementioned

requirements, first, petitioner had adequately proved that it is a VAT-registered
taxpayer when it presented Certificate of Registration. Second, it is
unquestionable that petitioner is engaged in providing electricity for NPC, an
activity which is subject to zero-rate. Third, petitioner offered as evidence VAT
invoices and official receipts. Fourth, the input taxes claimed, which consisted of
local purchases and importations made in 2002, are not transitional taxes. Fifth,
the audit report affirms that the input VAT claimed for tax refund or credit is net of
the input VAT that was already offset against output VAT. Next, the VAT paid by
petitioner to local purchases is not transitional input tax. The requirement that to
be entitled to tax refund for zero-rated sales, the foreign exchange proceeds must
have duly accounted for per BSP rule does not apply where the sale of electricity
did not involve any foreign currency. Lastly, the claim for VAT refund was filed
within 2 years after the close of the taxable quarter when sales were made.
The main issue here is the compliance with 6 th requirement, the existence of zero
rated or effectively zero rated transaction to which creditable input tax may be
attributed. NIRC does not limit the definition of "sale" to commercial transactions
in the normal course of business, rather it extends the term to transactions that
are "deemed" sale, The fact that it was not transferred through a commercial sale
or in the normal course of business does not deflect from the fact that such
transaction is deemed as a sale under the law.
Petitioner was able to positively show that it was able to accumulate excess input
taxes on various importations and local, which were attributable to a transfer of
electricity in favor of NPC. The fact that it had filed its claim for refund or credit
during the quarter when the transfer of electricity had taken place, instead of at
the close of the said quarter does not make petitioner any less entitled to its
claim. Given the special circumstances of this case, wherein petitioner was
incorporated for the sole purpose of constructing or operating a power plant that
will transfer all the electricity it generates to NPC, there is no danger that
petitioner would try to fraudulently claim input tax paid on purchases that will be
attributed to sale transactions that are not zero-rated. Substantial justice, equity
and fair play are on the side of the petitioner. Technicalities and legalisms,
however, exalted, should not be misused by the government to keep money not
belonging to it, thereby enriching itself at the expense of its law abiding citizens.

Note:
To claim refund or tax credit under Section 112(A), 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 Section 106(A)(2)(1) and (2);
106(B); and 108(B)(1) and (2), the acceptable foreign currency exchange
proceeds have been duly accounted for in accordance with 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 two years
after the close of the taxable quarter when such sales were made.

BANK OF THE PHILIPPINE ISLADS V COMMISSIONER OF INTERNAL

REVENUE
GR 139736, October 17, 2005
FACTS:
BPI sold to Central Bank US$ 500,000 for the total amount of US$ 1,000,000. The
sale was made in two occasions, on June 6, 1985 and on June 14, 1985. Central
Bank was exempt from paying documentary stamp tax.
On October 10, 1989, BIR assessed BPI for deficiency DST on the ground of the
above-mentioned sale. BPI protested the assessment on November 17, 1989, but
BPI did not receive any immediate reply. On October 15, 1992, BPI issued a
warrant of distraint and levy against Bpi for the deficiency DST. BPI did not again
hear from BIR until Sept. 11, 1997 denying its letter/request for reconsideration.
BPI filed a petition for review in CTA raising the ground of prescription of the right
of BIR to collect the assessed amount.

ISSUE:
W/N CIRs right to collect deficiency DST for 1985 has prescribed.

W/N BPI is liable to pay DST.

HELD:
Yes, the CIRs right to collect the alleged deficiency DST is already barred by
prescription.
When BIR validly issues an assessment, within wither 3 years or 10 years, the BIR
has another 3 years after the assessment within which to collect the tax due. In
this case, the assessment was made on time, but the collection was barred
already. The assessment was made on October 10, 1989 and was received by PBI
on October 20, 1989. BIR has only until October 19, 1992 within which to collect
the deficiency DST. Although the warrant of levy was issued previous to the
expiration of the 3-yr period, it was receive the BPI only on October 3, 1992,
beyond the 30yr prescriptive period. The letter of demand and denial of the
request for reconsideration was dated August 1997 which is way beyond the 3yrprescriptive period.
It is well settled that it is request for reinvestigation and not request for
reconsideration which tolls the running of prescriptive period to assess or collect.
Here, the request made by BPI is only request for reconsideration therefore it did
not toll the running of the prescriptive period. Undoubtedly, request for
reinvestigation, which entails the reception and evaluation of additional evidence,
will take more time than a reconsideration of a tax assessment, which will be
limited to the evidence already at hand; this justifies why the former can suspend
the running of the statute of limitations on collection of the assessed tax, while
the latter cannot.
Though the statute of limitations on assessment and collection of national internal
revenue taxes benefits both the Government and the taxpayer, it principally
intends to afford protection to the taxpayer against unreasonable investigation.
The indefinite extension of the period for assessment is unreasonable because it
deprives the said taxpayer of the assurance that he will no longer be subjected to
further investigation for taxes after the expiration of a reasonable period of time.
Considering that the right of BIR to collect already prescribed, then there is no
more need to make a determination on the validity or correctness of the said DST
assessment foe the latter would be unenforceable.

Note:
It was also discussed in this case that the statute of limitations on assessment
and collection of national internal revenue taxes may be suspended if the
taxpayer executes a valid waiver thereof, as provided in paragraphs (b) and (d) of
Section 223 of the Tax Code of 1977, as amended; and in specific instances
enumerated in Section 224 of the same Code, which include a request for

reinvestigation granted by the BIR Commissioner. Outside of these statutory

provisions, however, this Court also recognized one other exception to the statute
of limitations on collection of taxes in the case of Collector of Internal Revenue v.
Suyoc Consolidated Mining Co. x x x In the Suyoc case, this Court expressly
conceded that a mere request for reconsideration or reinvestigation of an
assessment may not suspend the running of the statute of limitations. It affirmed
the need for a waiver of the prescriptive period in order to effect suspension
thereof. However, even without such waiver, the taxpayer may be estopped from
raising the defense of prescription because by his repeated requests or positive
acts, he had induced Government authorities to delay collection of the assessed
tax.