Tax

G.R. No.
197760
January 13, 2014
TEAM ENERGY CORPORATION (Formerly MIRANT PAGBILAO CORPORATION), Petitioner,

vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.
DECISION
PERALTA, J.:
The facts, as found by the CTA follow:
Petitioner is principally engaged in the business of power generation and subsequent sale thereof to the
National Power Corporation (NPC) under a Build, Operate, Transfer (BOT) scheme. As such, it is registered with the
BIR as a VAT taxpayer in accordance with Section 107 of the National Internal Revenue Code (NIRC) of 1977 (now
Section 236 of the NIRC of 1997), with Tax Identification No. 001-726-870-000, as shown on its BIR Certificate of
Registration No. OCN8RC0000017854.
On December 17, 2004, petitioner filed with the BIR Audit Information, Tax Exemption and Incentives
Division an Application for VAT Zero-Rate for the supply of electricity to the NPC from January 1, 2005 to December
31, 2005, which was subsequently approved.
Petitioner filed with the BIR its Quarterly VAT Returns for the first three quarters of 2005 on April 25, 2005,
July 26, 2005, and October 25, 2005, respectively. Likewise, petitioner filed its Monthly VAT Declaration for the month
of October 2005 on November 21, 2005, which was subsequently amended on May 24, 2006. On December 20,
2006, petitioner filed an administrative claim for cash refund or issuance of tax credit certificate corresponding to the
input VAT reported in its Quarterly VAT Returns for the first three quarters of 2005 and Monthly VAT Declaration for
October 2005 in the amount of P80,136,251.60, citing as legal bases Section 112 (A), in relation to Section 108 (B)(3)
of the NIRC of 1997, Section 4.106-2(c) of Revenue Regulations No. 7-95, Revenue Memorandum Circular No. 612005, and the case of Maceda v. Macaraig.
Due to respondents inaction on its claim, petitioner filed the instant Petition for Review before this Court on
April 18, 2007. In his Answer filed on May 27, 2007, respondent interposed among his defenses that petitioners claim
for tax credit or refund of the unutilized input tax (VAT) must have been filed within two (2) years after the close of the
taxable quarter when the sales were made in accordance with Section 112 (A) of the Tax Code of 1997, as amended
to which petitioner was not able to comply with.
On November 26, 2010, the CTA Special First Division rendered an Amended Decision granting
respondents Motion for Reconsideration. In light of this Courts ruling in Commissioner of Internal Revenue v. Aichi
Forging Company, Inc.6 (Aichi), it reversed and set aside the earlier decision of the CTA Special First Division.
Accordingly, petitioners claim for refund/credit of excess input VAT, covering the period January 1 to October 31,
2005, warrants a dismissal for having been prematurely filed.
Petitioner then filed a Petition for Review with the CTA En Banc arguing that the requirement to exhaust the
120-day period for respondent to act on its administrative claim for input VAT refund/credit under Section 112 (C) of
the NIRC is merely a species of the doctrine of exhaustion of administrative remedies and is, therefore, not
jurisdictional.
ISSUES:
1.
Whether or not the CTA has jurisdiction to take cognizance of the instant case.
2.
Whether the case false under the exception to the period provided by law to file a tax refund
HELD:
1.
(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: x x x.
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 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-period, appeal the
decision or the unacted claim with the Court of Tax Appeals.
From the foregoing, it is clear that a VAT-registered taxpayer claiming for refund or tax credit of their excess and
unutilized input VAT must file their administrative claim within two years from the close of the taxable quarter when
the sales were made. After that, the taxpayer must await the decision or ruling of denial of its claim, whether full or
partial, or the expiration of the 120-day period from the submission of complete documents in support of such claim.
Once the taxpayer receives the decision or ruling of denial or expiration of the 120-day period, it may file its petition
for review with the CTA within thirty (30) days.
In the Aichi case, this Court ruled that the 120-30-day period in Section 112 (C) of the NIRC is mandatory and its nonobservance is fatal to the filing of a judicial claim with the CTA. In this case, the Court explained that if after the 120day mandatory period, the Commissioner of Internal Revenue (CIR) fails to act on the application for tax refund or
credit, the remedy of the taxpayer is to appeal the inaction of the CIR to the CTA within thirty (30) days. The judicial
claim, therefore, need not be filed within the two-year prescriptive period but has to be filed within the required 30-day
period after the expiration of the 120 days. Thus:
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 taxpayers 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 [the] CTA within 30 days.
xxxx
There is nothing in Section 112 of the NIRC to support respondents view. Subsection (A) of the said provision states
that "any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two years after the
close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of
creditable input tax due or paid attributable to such sales." The phrase "within two 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.10 (Emphasis supplied)
Recently, however, in the case of Commissioner of Internal Revenue v. San Roque Power Corporation11 (San Roque),
the Court clarified that the mandatory and jurisdictional nature of the 120-30-day rule does not apply on claims for
refund that were prematurely filed during the interim period from the issuance of Bureau of Internal Revenue (BIR)
Ruling No. DA-489-03 on December 10, 2003 to October 6, 2010 when the Aichi doctrine was adopted. The
exemption was premised on the fact that prior to the promulgation of the Aichi decision, there was an existing
interpretation laid down in BIR Ruling No. DA-489-03 where the BIR expressly ruled that the taxpayer need not wait
for the expiration of the 120-day period before it could seek judicial relief with the CTA. It expounded on the matter in
this wise:
BIR Ruling No. DA-489-03 does provide a valid claim for equitable estoppel under Section 246 of the Tax
Code.1wphi1BIR Ruling No. DA-489-03 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." Prior to this ruling,
the BIR held, as shown by its position in the Court of Appeals, that the expiration of the 120-day period is mandatory
and jurisdictional before a judicial claim can be filed.
There is no dispute that the 120-day period is mandatory and jurisdictional, and that the CTA does not acquire
jurisdiction over a judicial claim that is filed before the expiration of the 120-day period. There are, however, two
exceptions to this rule. 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. 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. In these cases,
the Commissioner cannot be allowed to later on question the CTAs assumption of jurisdiction over such claim since
equitable estoppel has set in as expressly authorized under Section 246 of the Tax Code.
xxxx
Since the Commissioner has exclusive and original jurisdiction to interpret tax laws, taxpayers acting in good faith
should not be made to suffer for adhering to general interpretative rules of the Commissioner interpreting tax laws,
should such interpretation later turn out to be erroneous and be reversed by the Commissioner or this Court. Indeed,
Section 246 of the Tax Code expressly provides that a reversal of a BIR regulation or ruling cannot adversely
prejudice a taxpayer who, in good faith, relied on the BIR regulation or ruling prior to its reversal. Section 246
provides as follows:
Section 246. Non-retroactivity of Rulings. Any modification or reversal of any of the rules and regulations
promulgated in accordance with the preceding Sections or any of the rulings or circulars promulgated by the
Commissioner shall not be given retroactive application if the revocation, modification or reversal will be prejudicial to
the taxpayers, except in the following cases:
(a) Where the taxpayer deliberately misstates or omits material facts from his return or any document
required of him by the Bureau of Internal Revenue;
(b) Where the facts subsequently gathered by the Bureau of Internal Revenue are materially different from
the facts on which the ruling is based; or
(c) Where the taxpayer acted in bad faith. (Emphasis supplied)
Thus, a general interpretative rule issued by the Commissioner may be relied upon by the taxpayers from the time the
rule is issued up to its reversal by the Commissioner or this Court. Section 246 is not limited to a reversal only by the
Commissioner because this Section expressly states, "Any revocation, modification or reversal" without specifying
who made the revocation, modification or reversal. Hence, a reversal by this Court is covered by Section 246.
xxxx
Thus, the only issue is whether BIR Ruling No. DA-489-03 is a general interpretative rule applicable to all taxpayers
or a specific ruling applicable only to a particular taxpayer.
BIR Ruling No. DA-489-03 is a general interpretative rule because it is a response to a query made, not by a
particular taxpayer, but by a government agency tasked with processing tax refunds and credits, that is, the One Stop
Shop Inter-Agency Tax Credit and Drawback Center of the Department of Finance. This government agency is also
the addressee, or the entity responded to, in BIR Ruling No. DA-489-03. Thus, while this government agency
mentions in its query to the Commissioner the administrative claim of Lazi Bay Resources Development, Inc., the
agency was, in fact, asking the Commissioner what to do in cases like the tax claim of Lazi Bay Resources
Development, Inc., where the taxpayer did not wait for the lapse of the 120-day period.
Clearly, BIR Ruling No. DA-489-03 is a general interpretative rule.1wphi1 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 120-130 day periods are mandatory and jurisdictional.12
In the present case, petitioner filed its judicial claim on April 18, 2007 or after the issuance of BIR Ruling No. DA-48903 on December 10, 2003 but before October 6, 2010, the date when the Aichi case was promulgated. Thus, even
though petitioner s judicial claim was prematurely filed without waiting for the expiration of the 120-day mandatory
period, the CT A may still take cognizance of the instant case as it was filed within the period exempted from the 12030-day mandatory period.
WHEREFORE, the foregoing considered, the instant Petition for Review on Certiorari is hereby GRANTED. The May
2, 2011 and the July 15, 2011 Resolutions of the Court of Tax Appeals En Banc in CTA EB Case No. 706 are
REVERSED and SET ASIDE. Let this case be remanded to the Court of Tax Appeals for the proper determination of
the refundable amount.
SO ORDERED.
G.R. No.184360 & 184361
February 19, 2014
SILICON PHILIPPINES, INC., (formerly Intel Philippines Manufacturing, Inc.), Petitioner,

vs.
x-----------------------x
G.R. No. 184384
COMMISSIONER OF INTERNAL REVENUE, Petitioner,
vs.
SILICON PHILIPPINES, INC.,(formerly Intel Philippines Manufacturing, Inc.), Respondent.
DECISION
VILLARAMA, JR., J.:
Before us are three consolidated petitions for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure,
as amended, assailing (1) the Decision1 dated February 18, 2008 of the Court of Tax Appeals (CTA) En Banc in CTA
E.B. No. 219; (2) the Decision2 dated February 20, 2008 of the CTA En Banc in CTA E.B. Case No. 209; and (3) the
two Resolutions3 both dated September 2, 2008 of the CTA En Banc denying the motions for reconsideration from the
aforementioned assailed decisions.
The facts as summarized by the CTA in Division and adopted by the CTA En Banc are as follows:
Silicon Philippines, Inc. (formerly Intel Philippines Manufacturing, Inc.) is a corporation duly organized and existing
under the laws of the Republic of the Philippines. It is primarily engaged in the business of designing, developing,
manufacturing and exporting advance and large-scale integrated circuit components.4 It is registered with the Bureau
of Internal Revenue (BIR) as a Value-Added Tax (VAT) taxpayer with Certificate of Registration bearing RDO Control
No. 94-048-02621.5 It is likewise registered with the Board of Investments (BOI) as a preferred pioneer enterprise.6
On the other hand, the Commissioner of Internal Revenue (CIR) is the government official vested with the power and
authority to refund any internal revenue tax erroneously or illegally assessed or collected under the National Internal
Revenue Code of 1997, as amended7 (hereafter NIRC or Tax Code).
For the 1st quarter of 1999, Silicon seasonably filed its Quarterly VAT Return on April 22, 1999 reflecting, among
others, output VAT in the amount of P145,316.96; input VAT on domestic purchases in the amount ofP20,041,888.41;
input VAT on importation of goods in the amount of P44,560,949.00; and zero-rated export sales in the sum
of P929,186,493.91.8
On August 6, 1999, Silicon filed with the CIR, through its One-Stop-Shop Inter-Agency Tax Credit and Duty Drawback
Center of the Department of Finance (DOF), a claim for tax credit or refund of P64,457,520.45 representing VAT input
taxes on its domestic purchases of goods and services and importation of goods and capital equipment which are
attributable to zero-rated sales for the period January 1, 1999 to March 31, 1999.
Due to the inaction of the CIR, Silicon filed a Petition for Review9 with the CTA on March 30, 2001, to toll the running
of the two-year prescriptive period. The petition was docketed as CTA Case No. 6263.
The CIR filed its Answer10 dated June 1, 2001 raising, among others, the following special and affirmative defenses:
(1) that Silicon failed to show compliance with the substantiation requirements under the provisions of Section 16(c)
(3)11 of Revenue Regulations No. 5-87, as amended by Revenue Regulations No. 3-88; and (2) that Silicon has not
shown proof that the alleged domestic purchases of goods and services and importation of goods/capital equipment
on which the VAT input taxes were paid are attributable to its export sales or have not yet been applied to the output
tax for the period covered in its claim or any succeeding period and that the alleged total foreign exchange proceeds
have been accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas.
During the pendency of the case, Silicon manifested that it was granted by the DOF a tax credit certificate equivalent
to 50% of its total claimed input VAT on local purchases of P19,896,571.45 or for the amount ofP9,948,285.73.
Hence, the CTA Division limited its review on the amounts of P9,896,571.4512 andP44,560,949.00.13
Meanwhile, on August 10, 2000, Silicon filed a second claim for tax credit or refund in the amount of P20,411,419.07
for the period April 1, 2000 to June 30, 2000.
To toll the running of the two-year prescriptive period, Silicon filed on June 28, 2002 with the CTA a Petition for
Review,14 which was docketed as CTA Case No. 6493.
The CIR filed an Answer15 asserting, among others, that Silicons claim for refund/tax credit in the amount
ofP20,411,419.07 was not duly substantiated and that said claim for refund is not subject to zero-percent (0%) rate of
VAT under Sections 106(A)(2)(a)(1)16 and 108(B)(1)17 of the NIRC. Further, the claim for refund has already
prescribed pursuant to Section 112(A) and (B)18 of the NIRC.
CTA Case Nos. 6263 (Second Division) and 6493 (First Division)
On March 6, 2006, the CTA Second Division rendered a Decision19 in CTA Case No. 6263 denying Silicons claim for
refund or issuance of tax credit certificate for the first quarter of 1999 in the amount of P9,896,571.45 representing
the input VAT on its alleged domestic purchases of goods and services because it failed to substantiate its claimed
zero-rated export sales. The CTA Second Division held that the export sales invoices have no probative value in
establishing its zero-rated sales for VAT purposes as the same were not duly registered with the BIR and the required
information, particularly the BIR authority to print, was likewise not indicated therein in violation of the provisions of
Sections 113,20 23721 and 23822 of the NIRC. The other evidence presented by Silicon, i.e., the certification of inward
remittance, export declarations, and airway bills were likewise found to be insufficient to prove actual exportation of
goods.
With respect to the claim of P44,560,949.00 representing Silicons input VAT paid on imported goods, the same was
not granted by the CTA Second Division since Silicon did not present duly machine-validated Import Entry and
Revenue Declarations or Bureau of Customs official receipts or any other document proving actual payment of VAT
on the imported goods as required under Section 4.104-523 of Revenue Regulations No. 7-95. Neither did Silicon
submit any evidence to prove that the subject imported capital equipment qualify as capital goods pursuant to Section
4.106-1(b)24 of Revenue Regulations No. 7-95.
Silicon filed a motion for reconsideration from the aforementioned decision but the motion was denied in a
Resolution25 dated June 22, 2006.
Likewise, in a Decision26 dated June 14, 2006 in CTA Case No. 6493, the CTA First Division denied Silicons claim for
refund or tax credit of P20,411,419.07 for the second quarter of 2000 on the ground that its reported export sales did
not qualify for zero-rating under Section 106(A)(2)(a)(1) of the NIRC since the sales invoices were not duly registered
VAT sales invoices containing the required information, particularly the BIR authority to print, Silicons TIN-VAT
number and the imprinted word "zero-rated."
On October 5, 2006, Silicons motion for reconsideration was denied by the CTA First Division.27
Silicon appealed the two decisions of the CTA in Division to the CTA En Banc as CTA E.B. No. 209 and CTA E.B. No.
219.
Decision of the CTA En Banc (CTA E.B. Nos. 209 & 219)
On February 18, 2008, the CTA En Banc rendered the herein first assailed Decision in CTA E.B. No. 219 partially
granting the petition for review and ordering the CIR to refund or issue a tax credit certificate in favor of Silicon
Philippines in the reduced amount of P2,139,431.00 representing its unutilized input VAT attributable to its zero-rated
sales for the period April 1, 2000 to June 30, 2000. After reviewing the records, the CTA En Banc stated that the
amount of P13,916,752.43 may be a valid claim for tax credit or refund which is composed of input VAT on local
purchases of P11,777,321.43 and input VAT on importations of P2,139,431.00. However, because Silicon is a BOIregistered entity with 100% exports and sales of properties or services made by VAT-registered suppliers to Silicon
are automatically zero-rated, there is no VAT that has to be passed on to Silicon. Consequently, Silicon would not
gain input taxes on its purchases of goods, properties or services. Thus, the CTA En Banc ruled that in the absence
of any clear and convincing proof that Silicons local suppliers passed on or shifted the VAT on such domestic
purchases to Silicon, Silicon cannot claim the amount of P11,777,321.43 as input tax credits on its domestic
purchases for the period April 1, 2000 to June 30, 2000.
On February 20, 2008, the CTA En Banc also rendered the second assailed Decision in CTA E.B. No. 209 denying
the petition for review for lack of merit. After it reviewed and examined the invoices and other documentary evidence
of Silicon for the first quarter of 1999, the CTA En Banc found that Silicons valid input VAT for refund was
onlyP9,531,635.69. But since the DOF had already granted Silicon a tax credit certificate on January 24, 2002 in the
amount of P9,948,285.73, the CTA En Banc held that Silicon is no longer entitled to refund or issuance of a tax credit
certificate for its input tax for the first quarter of 1999.
The Consolidated Petitions before this Court
In G.R. No. 184360, petitioner Silicon assails the Decision dated February 20, 2008 and the Resolution dated
September 2, 2008 of the CTA En Banc in CTA E.B. Case No. 209.
In its Memorandum, Silicon discussed two important issues. One, whether the CTA En Banc erred in denying its claim
for refund of input VAT derived from domestic purchases of goods and services attributable to its zero-rated sales on
the ground of failure to imprint the words "TIN-VAT" and "ZERO-RATED" on its export sales invoices. And two,
whether the CTA En Banc erred in denying Silicons claim for refund on the ground that Silicon failed to prove its input
VAT derived from its importation of capital goods and equipment and in not considering the recommendation and
findings of the Court-commissioned Independent Certified Public Accountant that Silicon has substantially supported
its export sales, importation of capital goods/equipment and its input VAT on local purchases.
In G.R. Nos. 184384 & 184361, Silicon and the CIR assail the Decision dated February 18, 2008 and the Resolution
dated September 2, 2008 of the CTA En Banc in CTA E.B. No. 219 which ordered the CIR to refund, or issue a tax
credit certificate to Silicon for the amount of P2,139,431.00 (from the original claim of P20,411,419.07) representing
its unutilized excess input VAT on domestic purchases of goods and services and importation of goods/capital
equipment attributable to its zero-rated sales for the period April 1, 2000 to June 30, 2000.
The issues raised in the three petitions boil down to (1) whether the CTA En Banc correctly denied Silicons claim for
refund or issuance of a tax credit certificate for its input VAT for its domestic purchases of goods and services and
importation of goods/capital equipment attributable to zero-rated sales for the period January 1, 1999 to March 31,
1999; and (2) whether the CTA En Banc correctly ordered the CIR to refund or issue a tax credit certificate in favor of
Silicon for the reduced amount of P2,139,431.00 representing Silicons unutilized input VAT attributable to its zerorated sales for the period April 1, 2000 to June 30, 2000.
Notwithstanding the above issues, we emphasize that when a case is on appeal, this Court has the authority to
review matters not specifically raised or assigned as error if their consideration is necessary in reaching a just
conclusion of the case.28
In the present case, while the parties never raised as an issue the timeliness of Silicons judicial claims, we deem it
proper to look into whether the petitions for review filed by Silicon before the CTA were filed within the prescribed
period provided under the Tax Code in order to determine whether the CTA validly acquired jurisdiction over the
petitions filed by Silicon.
The pertinent provision, Section 112(C) (formerly subparagraph D)29 of the NIRC reads:
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 Subsection (A)
hereof.
act on the application within the period prescribed above, the taxpayer affected may, within (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.)
The above-mentioned provision expressly grants the CIR 120 days within which to decide the taxpayers claim for
refund or tax credit. In addition, the taxpayer is granted a 30-day period to appeal to the CTA the decision or inaction
of the CIR after the 120-day period.
Meanwhile, the charter of the CTA, Republic Act (R.A.) No. 1125, as amended, provides:
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 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 relation 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;
x x x x (Emphasis supplied.)
The CTA has exclusive appellate jurisdiction to review on appeal decisions of the CIR in cases involving refunds of
internal revenue taxes. Moreover, if the CIR fails to decide within the 120-day period provided by law, such inaction
shall be deemed a denial of the application for tax refund which the taxpayer can elevate to the CTA through a
petition for review. In the recently decided consolidated cases of Commissioner of Internal Revenue v. San Roque
Power Corporation,30 (San Roque for brevity) this Court stressed the mandatory and jurisdictional nature of the
120+30 day period provided under Section 112(C) of the NIRC. Therein, we ruled that
x x x The application of the 120+30 day periods was first raised in Aichi, which adopted the verba legis rule in holding
that the 120+30 day periods are mandatory and jurisdictional. The language of Section 112(C) is plain, clear, and
unambiguous. When Section 112(C) states that "the Commissioner shall grant a refund or issue the tax credit within
one hundred twenty (120) days from the date of submission of complete documents," the law clearly gives the
Commissioner 120 days within which to decide the taxpayers claim. Resort to the courts prior to the expiration of the
120-day period is a patent violation of the doctrine of exhaustion of administrative remedies, a ground for dismissing
the judicial suit due to prematurity. Philippine jurisprudence is awash with cases affirming and reiterating the doctrine
of exhaustion of administrative remedies. Such doctrine is basic and elementary.
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.
Certainly, by no stretch of the imagination can the word "may" be construed as making the 120+30 day periods
optional, allowing the taxpayer to file a judicial claim one day after filing the administrative claim with the
Commissioner.
The old rule that the taxpayer may file the judicial claim, without waiting for the Commissioners decision if the twoyear 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.31
In the case of Philex Mining Corporation v. Commissioner of Internal Revenue, which was consolidated with the case
of San Roque, this Court denied Philexs claim for refund since its petition for review was filed with the CTA beyond
the 120+30 day period. The Court explained:
Unlike San Roque and Taganito, Philexs case is not one of premature filing but of late filing.1wphi1 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 30
days after the expiration of the 120-day period. Philex filed its judicial claim long after the expiration of 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, Philexs 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, Philexs judicial claim was indisputably filed late.
The Atlas doctrine cannot save Philex from the late filing of its judicial claim. The inaction of the Commissioner on
Philexs claim during the 120-day period is, by express provision of law, "deemed a denial" of Philexs claim. Philex
had 30 days from the expiration of the 120-day period to file its judicial claim with the CTA. Philexs failure to do so
rendered the "deemed a denial" decision of the Commissioner 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. Philex failed to comply with the statutory conditions and must thus bear the consequences. 32
Also, in the recent case of Commissioner of Internal Revenue v. Dash Engineering Philippines, Inc.,33 this Court
likewise denied the claim for tax refund for having been filed late or after the expiration of the 30-day period from the
denial by the CIR or failure of the CIR to make a decision within 120 days from the submission of the documents in
support of its administrative claim. We held:
Petitioner is entirely correct in its assertion that compliance with the periods provided for in the abovequoted provision
is indeed mandatory and jurisdictional, as affirmed in this Courts ruling in San Roque, where the Court En Banc
settled the controversy surrounding the application of the 120+30-day period provided for in Section 112 of the NIRC
and reiterated the Aichi doctrine that the 120+30-day period is mandatory and jurisdictional. Nonetheless, the Court
took into account the issuance by the Bureau of Internal Revenue (BIR) of BIR Ruling No. DA-489-03 which misled
taxpayers by explicitly stating that taxpayers may file a petition for review with the CTA even before the expiration of
the 120-day period given to the CIR to decide the administrative claim for refund. Even though observance of the
periods in Section 112 is compulsory and failure to do so will deprive the CTA of jurisdiction to hear the case, such a
strict application will be made from the effectivity of the Tax Reform Act of 1997 on January 1, 1998 until the present,
except for the period from December 10, 2003 (the issuance of the erroneous BIR ruling) to October 6, 2010 (the
promulgation of Aichi), during which taxpayers need not wait for the lapse of the 120+30-day period before filing their
judicial claim for refund.34
After a careful perusal of the records in the instant case, we find that Silicons judicial claims were filed late and way
beyond the prescriptive period. Silicons claims do not fall under the exception mentioned above. Silicon filed its
Quarterly VAT Return for the 1st quarter of 1999 on April 22, 1999 and subsequently filed on August 6, 1999 a claim
for tax credit or refund of its input VAT taxes for the same period. From August 6, 1999, the CIR had until December
4, 1999, the last day of the 120-day period, to decide Silicons claim for tax refund. But since the CIR did not act on
Silicons claim on or before the said date, Silicon had until January 3, 2000, the last day of the 30-day period to file its
judicial claim. However, Silicon failed to file an appeal within 30 days from the lapse of the 120-day period, and it only
filed its petition for review with the CTA on March 30, 2001 which was 451 days late. Thus, in consonance with our
ruling in Philex in the San Roque ponencia, Silicons judicial claim for tax credit or refund should have been dismissed
for having been filed late. The CTA did not acquire jurisdiction over the petition for review filed by Silicon.
Similarly, Silicons claim for tax refund for the second quarter of 2000 should have been dismissed for having been
filed out of time. Records show that Silicon filed its claim for tax credit or refund on August 10, 2000. The CIR then
had 120 days or until December 8, 2000 to grant or deny the claim. With the inaction of the CIR to decide on the
claim which was deemed a denial of the claim for tax credit or refund, Silicon had until January 7, 2001 or 30 days
from December 8, 2000 to file its petition for review with the CTA. However, Silicon again failed to comply with the
120+30 day period provided under Section 112(C) since it filed its judicial claim only on June 28, 2002 or 536 days
late. Thus, the petition for review, which was belatedly filed, should have been dismissed by the CTA which acquired
no jurisdiction to act on the petition.
Courts are bound by prior decisions. Thus, once a case has been decided one way, courts have no choice but to
resolve subsequent cases involving the same issue in the same manner.35
As this Court has repeatedly emphasized, a tax credit or refund, like tax exemption, is strictly construed against the
taxpayer.36 The taxpayer claiming the tax credit or refund has the burden of proving that he is entitled to the refund by
showing that he has strictly complied with the conditions for the grant of the tax refund or credit. Strict compliance
with the mandatory and jurisdictional conditions prescribed by law to claim such tax refund or credit is essential and
necessary for such claim to prosper.37 Noncompliance with the mandatory periods, nonobservance of the prescriptive
periods, and nonadherence to exhaustion of administrative remedies bar a taxpayers claim for tax refund or credit,
whether or not the CIR questions the numerical correctness of the claim of the taxpayer.38 For failure of Silicon
comply with the provisions of Section 112(C) of the NIRC, its judicial claims for tax refund or credit should have been
dismissed by the CT A for lack of jurisdiction.
Considering the foregoing disquisition, we deem it unnecessary to rule upon the other issues raised by the parties in
the three consolidated petitions.
WHEREFORE, the assailed February 18, 2008 Decision and September 2, 2008 Resolution of the Court of Tax
Appeals En Banc in CTA E.B. No. 219 and the assailed February 20, 2008 Decision and September 2, 2008
Resolution of the Court of Tax Appeals En Banc in CTA E.B. No. 209 are REVERSED and SET ASIDE. Silicon's
judicial claims for refund for the 1st quarter of 1999 and the 2nd quarter of 2000 through its petitions for review
docketed as CT A Case Nos. 6263 and 6493 filed with the Court of Tax Appeals are hereby DISMISSED for having
been filed out of time.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 181459
June 9, 2014

vs.
MANILA ELECTRIC COMPANY (MERALCO), Respondent.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Revised Rules of Court which seeks to
annul and set aside the Decision1 of the Court of Tax Appeals, dated October 15, 2007, and its Resolution2 dated
January 9, 2008 denying petitioner's Motion for Reconsideration in the case entitled Commissioner of Internal
Revenue v. Manila Electric Company (MERALCO), docketed as C.T.A EB No. 262.
The facts of this case are uncontroverted.
On July 6, 1998, respondent Manila Electric Company (MERALCO) obtained a loan from Norddeutsche Landesbank
Girozentrale (NORD/LB) Singapore Branch in the amount of USD120,000,000.00 with ING Barings South East Asia
Limited (ING Barings) as the Arranger.3 On September 4, 2000, respondent MERALCO executed another loan
agreement with NORD/LB Singapore Branch for a loan facility in the amount of USD100,000,000.00 with Citicorp
International Limited as Agent.4
Under the foregoing loan agreements, the income received by NORD/LB, by way of respondent MERALCOs interest
payments, shall be paid in full without deductions, as respondent MERALCO shall bear the obligation of
paying/remitting to the BIR the corresponding ten percent (10%) final withholding tax.5 Pursuant thereto, respondent
MERALCO paid/remitted to the Bureau of Internal Revenue (BIR) the said withholding tax on its interest payments to
NORD/LB Singapore Branch, covering the period from January 1999 to September 2003 in the aggregate sum
ofP264,120,181.44.6
However, sometime in 2001, respondent MERALCO discovered that NORD/LB Singapore Branch is a foreign
government-owned financing institution of Germany.7 Thus, on December 20, 2001, respondent MERALCO filed a
request for a BIR Ruling with petitioner Commissioner of Internal Revenue (CIR) with regard to the tax exempt status
of NORD/LB Singapore Branch, in accordance with Section 32(B)(7)(a) of the 1997 National Internal Revenue Code
(Tax Code), as amended.8
On October 7, 2003, the BIR issued Ruling No. DA-342-2003 declaring that the interest payments made to NORD/LB
Singapore Branch are exempt from the ten percent (10%) final withholding tax, since it is a financing institution owned
and controlled by the foreign government of Germany.9
Consequently, on July 13, 2004, relying on the aforesaid BIR Ruling, respondent MERALCO filed with petitioner a
claim for tax refund or issuance of tax credit certificate in the aggregate amount of P264,120,181.44, representing the
erroneously paid or overpaid final withholding tax on interest payments made to NORD/LB Singapore Branch.10
On November 5, 2004, respondent MERALCO received a letter from petitioner denying its claim for tax refund on the
basis that the same had already prescribed under Section 204 of the Tax Code, which gives a taxpayer/claimant a
period of two (2) years from the date of payment of tax to file a claim for refund before the BIR.11
Aggrieved, respondent MERALCO filed a Petition for Review with the Court of Tax Appeals (CTA) on December 6,
2004.12 After trial on the merits, the CTA-First Division rendered a Decision partially granting respondent MERALCOs
Petition for Review in the following wise:
IN VIEW OF THE FOREGOING, petitioners claim in the amount of TWO HUNDRED TWENTY-FOUR MILLION
SEVEN HUNDRED SIXTY THOUSAND NINE HUNDRED TWENTY-SIX PESOS & SIXTY-FIVE CENTAVOS
(P224,760,926.65) representing erroneously paid and remitted final income taxes for the period January 1999 to July
2002 is hereby DENIED on the ground of prescription. However, petitioners claim in the amount of THIRTY-NINE
MILLION THREE HUNDRED FIFTY NINETHOUSAND TWO HUNDRED FIFTY-FOUR PESOS & SEVENTY-NINE
CENTAVOS (P39,359,254.79) is hereby GRANTED.
Accordingly, respondent is ORDERED TO REFUND or ISSUE A TAX CREDIT CERTIFICATE to petitioner in the
amount of THIRTYNINE MILLION THREE HUNDRED FIFTY-NINE THOUSAND TWO HUNDRED FIFTY-FOUR
PESOS & SEVENTY-NINE CENTAVOS (P39,359,254.79) representing the final withholding taxes erroneously paid
and remitted for the period December 2002 to September 2003.
SO ORDERED.13
On November 2, 2006, petitioner filed its Motion for Reconsideration with the CTA-First Division, while on November
7, 2006, respondent MERALCO filed its Partial Motion for Reconsideration.14 Finding no justifiable reason to overturn
its Decision, the CTA-First Division denied both the petitioners Motion for Reconsideration and respondent
MERALCOs Partial Motion for Reconsideration in a Resolution dated January 11, 2007.15
Unyielding to the Decision of the CTA, both petitioner and respondent MERALCO filed their respective Petitions for
Review before the Court of Tax Appeals En Banc (CTA En Banc) docketed as C.T.A. EB Nos. 264 and 262,
respectively.16 In a Resolution dated May 9, 2007, the CTA En Banc ordered the consolidation of both cases in
accordance with Section 1, Rule 31 of the Revised Rules of Court and gave due course thereto, requiring both parties
to submit their respective consolidated memoranda.17 Only petitioner filed its Consolidated Memorandum on July 2,
2007.18
In its Decision19 dated October 15, 2007, the CTA En Banc denied both petitions and upheld in toto the Decision of
the CTA-First Division, the dispositive portion of which states:
In the light of the laws and jurisprudence on the matter, We see no reason to reverse the assailed Decision dated
October 16, 2006 and Resolution dated January 11, 2007 of the First Division.
WHEREFORE, premises considered, both petitions are hereby DISMISSED.
SO ORDERED.20
In the same vein, the motions for reconsideration filed by the respective parties were also denied in a
Resolution21dated January 9, 2008.
Hence, the instant petition.
The sole issue presented before us is whether or not respondent MERALCO is entitled to a tax refund/credit relative
to its payment of final withholding taxes on interest payments made to NORD/LB from January 1999 to September
2003.
Petitioner maintains that respondent MERALCO is not entitled to a tax refund/credit, considering that its testimonial
and documentary evidence failed to categorically establish that NORD/LB is owned and controlled by the Federal
Republic of Germany; hence, exempted from final withholding taxes on income derived from investments in the
Philippines.22
On the other hand, respondent MERALCO claims that the evidence it presented in trial, consisting of the testimony of
Mr. German F. Martinez, Jr., Vice-President and Head of Tax and Tariff of MERALCO, which was affirmed by a
certification issued by the Embassy of the Federal Republic of Germany, dated March 27, 2002, through its Mr. Lars
Leymann, clearly defined the status of NORD/LB as one being owned by various German States.23 Respondent
MERALCO further argues that in the Joint Stipulation of Facts, petitioner admitted the fact that NORD/LB is a
financial institution owned and controlled by a foreign government.24
Petitioners argument fails to persuade.
After a careful scrutiny of the records and evidence presented before us, we find that respondent MERALCO has
discharged the requisite burden of proof in establishing the factual basis for its claim for tax refund.
First, as correctly decided by the CTA En Banc, the certification issued by the Embassy of the Federal Republic of
Germany, dated March 27, 2002, explicitly states that NORD/LB is owned by the State of Lower Saxony, SaxonyAnhalt and Mecklenburg-Western Pomerania, and serves as a regional bank for the said states which offers support
in the public sector financing, to wit:
x x x x.
Regarding your letter dated March 1, 2002, I can confirm the following:
NORD/LB is owned by the State (Land)of Lower Saxony to the extent of 40%, by the States of [Saxony-]Anhalt and
Mecklenburg-Western Pomerania to the extent of 10% each. The Lower Saxony Savings Bank and Central Savings
Bank Association have a share of [26.66%]. The Savings Bank Association Saxony-Anhalt and the Savings Bank
Association Mecklenburg-Western Pomerania have a share of [6.66%] each.
As the regional bank for Lower Saxony, Saxony-Anhalt and MecklenburgWestern Pomerania, NORD/LB offers
support in public sector financing. It fulfills as Girozentrale the function of a central bank for the savings bank in these
three states (Lander).
x x x25
Given that the same was issued by the Embassy of the Federal Republic of Germany in the regular performance of
their official functions, and the due execution and authenticity thereof was not disputed when it was presented in trial,
the same may be admitted as proof of the facts stated therein. Further, it is worthy to note that the Embassy of the
Federal Republic of Germany was in the best position to confirm such information, being the representative of the
Federal Republic of Germany here in the Philippines.
To bolster this, respondent MERALCO presented as witness its Vice-President and Head of Tax and Tariff, German F.
Martinez, Jr., who testified on and identified the existence of such certification. In this regard, we concur with the CTA
En Banc that absent any strong evidence to disprove the truthfulness of such certification, there is no basis to
controvert the findings of the CTA-First Division, to wit:
The foregoing documentary and testimonial evidence were given probative value as the First Division ruled that there
was no strong evidence to disprove the truthfulness of the said pieces of evidence, considering that the CIR did not
present any rebuttal evidence to prove otherwise. The weight of evidence is not a question of mathematics, but
depends on its effects in inducing belief, under all of the facts and circumstances proved. The probative weight of any
document or any testimonial evidence must be evaluated not in isolation but in conjunction with other evidence,
testimonial, admissions, judicial notice, and presumptions, adduced or given judicial cognizance of, and if the totality
of the evidence presented by both parties supports the claimants claim, then he is entitled to a favorable judgment.
(Donato C. Cruz Trading Corp. v. Court of Appeals, 347 SCRA 13).26
Consequently, such certification was used by petitioner as basis in issuing BIR Ruling No. DA-342-2003, which
categorically declared that the interest income remitted by respondent MERALCO to NORD/LB Singapore Branch is
not subject to Philippine income tax, and accordingly, not subject to ten percent (10%) withholding
tax.1wphi1 Contrary to petitioners view, therefore, the same constitutes a compelling basis for establishing the tax
exempt status of NORD/LB, as was held in Miguel J. Ossorio Pension Foundation, Incorporated v. Court of
Appeals,27 which may be applied by analogy to the present case, to wit:
Similarly, in BIR Ruling [UN-450-95], Citytrust wrote the BIR to request for a ruling exempting it from the payment of
withholding tax on the sale of the land by various BIR-approved trustees and tax-exempt private employees'
retirement benefit trust funds represented by Citytrust. The BIR ruled that the private employees benefit trust funds,
which included petitioner, have met the requirements of the law and the regulations and, therefore, qualify as
reasonable retirement benefit plans within the contemplation of Republic Act No. 4917 (now Sec. 28 [b] [7] [A], Tax
Code). The income from the trust fund investments is, therefore, exempt from the payment of income tax and,
consequently, from the payment of the creditable withholding tax on the sale of their real property.
Thus, the documents issued and certified by Citytrust showing that money from the Employees' Trust Fund was
invested in the MBP lot cannot simply be brushed aside by the BIR as self-serving, in the light of previous cases
holding that Citytrust was indeed handling the money of the Employees' Trust Fund. These documents, together with
the notarized Memorandum of Agreement, clearly establish that petitioner, on behalf of the Employees' Trust Fund,
indeed invested in the purchase of the MBP lot. Thus, the Employees' Trust Fund owns 49.59% of the MBP lot.
Since petitioner has proven that the income from the sale of the MBP lot came from an investment by the Employees'
Trust Fund, petitioner, as trustee of the Employees' Trust Fund, is entitled to claim the tax refund ofP3,037,500 which
was erroneously paid in the sale of the MBP lot.28
Second, in the parties Joint Stipulation of Facts, petitioner admitted the issuance of the aforesaid BIR Ruling and did
not contest it as one of the admitted documentary evidence in Court. A judicial admission binds the person who
makes the same, and absent any showing that this was made thru palpable mistake, no amount of rationalization can
offset it.29 In Camitan v. Fidelity Investment Corporation,30 we sustained the judicial admission of petitioners counsel
for failure to prove the existence of palpable mistake, thus:
x x x. A judicial admission is an admission, verbal or written, made by a party in the course of the proceedings in the
same case, which dispenses with the need for proof with respect to the matter or fact admitted. It may be
contradicted only by a showing that it was made through palpable mistake or that no such admission was made.
xxxx
Upon examination of the said exhibits on record, it appears that the alleged discrepancies are more imagined than
real. Had these purported discrepancies been that evident during the preliminary conference, it would have been
easy for petitioners' counsel to object to the authenticity of the owner's duplicate copy of the TCT presented by
Fidelity. As shown in the transcript of the proceedings, there was ample opportunity for petitioners' counsel to
examine the document, retract his admission, and point out the alleged discrepancies. But he chose not to contest
the document. Thus, it cannot be said that the admission of the petitioners' counsel was made through palpable
mistake.31
Based on the foregoing, we are of the considered view that respondent MERALCO has shown clear and convincing
evidence that NORD/LB is owned, controlled or enjoying refinancing from the Federal Republic of Germany, a foreign
government, pursuant to Section 32(B)(7)(a) of the Tax Code, as amended, which provides that:
Section 32. Gross Income.
x x x x.
(B) Exclusions from Gross Income. The following items shall not be included in gross income and shall be exempt
from taxation under this title:
xxxx
(7) Miscellaneous Items.
(a) Income Derived by Foreign Government. Income derived from investments in the Philippines in loans, stocks,
bonds or other domestic securities, or from interest on deposits in banks in the Philippines by (i) foreign governments,
(ii) financing institutions owned, controlled, or enjoying refinancing from foreign governments, and (iii) international or
regional financial institutions established by foreign governments.
x x x x.32
Notwithstanding the foregoing, however, we uphold the ruling of the CTA En Banc that the claim for tax refund in the
aggregate amount of Thirty-Nine Million Three Hundred Fifty-Nine Thousand Two Hundred Fifty-Four Pesos and
Seventy-Nine Centavos (P39,359,254.79) pertaining to the period from January 1999 to July2002 must fail since the
same has already prescribed under Section 229 of the Tax Code, to wit:
Section 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, of any sum alleged to have
been excessively or in any manner wrongfully 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.33
As can be gleaned from the foregoing, the prescriptive period provided is mandatory regardless of any supervening
cause that may arise after payment. It should be pointed out further that while the prescriptive period of two (2) years
commences to run from the time that the refund is ascertained, the propriety thereof is determined by law (in this
case, from the date of payment of tax), and not upon the discovery by the taxpayer of the erroneous or excessive
payment of taxes. The issuance by the BIR of the Ruling declaring the tax-exempt status of NORD/LB, if at all, is
merely confirmatory in nature. As aptly held by the CTA-First Division, there is no basis that the subject exemption
was provided and ascertained only through BIR Ruling No. DA-342-2003, since said ruling is not the operative act
from which an entitlement of refund is determined.34 In other words, the BIR is tasked only to confirm what is provided
under the Tax Code on the matter of tax exemptions as well as the period within which to file a claim for refund.
In this regard, petitioner is misguided when it relied upon the six (6)-year prescriptive period for initiating an action on
the ground of quasi contract or solutio indebiti under Article 1145 of the New Civil Code. There is solutio indebiti
where: (1) payment is made when there exists no binding relation between the payor, who has no duty to pay, and
the person who received the payment; and (2) the payment is made through mistake, and not through liberality or
some other cause.35 Here, there is a binding relation between petitioner as the taxing authority in this jurisdiction and
respondent MERALCO which is bound under the law to act as a withholding agent of NORD/LB Singapore Branch,
the taxpayer. Hence, the first element of solutio indebitiis lacking. Moreover, such legal precept is inapplicable to the
present case since the Tax Code, a special law, explicitly provides for a mandatory period for claiming a refund for
taxes erroneously paid.
Tax refunds are based on the general premise that taxes have either been erroneously or excessively paid. Though
the Tax Code recognizes the right of taxpayers to request the return of such excess/erroneous payments from the
government, they must do so within a prescribed period. Further, "a taxpayer must prove not only his entitlement to a
refund, but also his compliance with the procedural due process as non-observance of the prescriptive periods within
which to file the administrative and the judicial claims would result in the denial of his claim."36 In the case at bar,
respondent MERALCO had ample opportunity to verify on the tax-exempt status of NORD/LB for purposes of
claiming tax refund. Even assuming that respondent MERALCO could not have emphatically known the status of
NORD/LB, its supposition of the same was already confirmed by the BIR Ruling which was issued on October 7,
2003. Nevertheless, it only filed its claim for tax refund on July 13, 2004, or ten (10) months from the issuance of the
aforesaid Ruling. We agree with the CTA-First Division, therefore, that respondent MERALCO's claim for refund in the
amount of Two Hundred Twenty-Four Million Seven Hundred Sixty Thousand Nine Hundred Twenty-Six Pesos and
Sixty-Five Centavos (P224,760,926.65) representing erroneously paid and remitted final income taxes for the period
January 1999 to July 2002 should be denied on the ground of prescription.
Finally, we ought to remind petitioner that the arguments it raised in support of its position have already been
thoroughly discussed both by the CTA-First Division and the CTA En Banc. Oft repeated is the rule that the Court will
not lightly set aside the conclusions reached by the CT A 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.37 This Court recognizes that the CTA's findings can only be
disturbed on appeal if they are not supported by substantial evidence, or there is a showing of gross error or abuse
on the part of the Tax Court.38 In the absence of any clear and convincing proof to the contrary, this Court must
presume that the CT A rendered a decision which is valid in every respect.39 It has been a long-standing policy and
practice of the Court to respect the conclusions of quasi-judicial agencies such as the CT A, a highly specialized body
specifically created for the purpose of reviewing tax cases.40
WHEREFORE, the petition is DENIED. The October 15, 2007 Decision and January 9, 2008 Resolution of the Court
of Tax Appeals in C.T.A. EB No. 262 are hereby AFFIRMED.
SO ORDERED.
G.R. No. 197192
June 4, 2014

vs.
THE INSULAR LIFE ASSURANCE CO. LTD., Respondent.
DECISION
REYES, J.:
"Time and again, the Court has held that it is a very desirable and necessary judicial practice that when a court has
laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all
future cases in which the facts are substantially the same. Stare decisis et non quieta movere. Stand by the decisions
and disturb not what is settled. Stare decisis simply means that for the sake of certainty, a conclusion reached in one
case should be applied to those that follow if the facts are substantially the same, even though the parties may be
different. It proceeds from the first principle of justice that, absent any powerful countervailing considerations, like
cases ought to be decided alike. Thus, where the same questions relating to the same event have been put forward
by the parties similarly situated as in a previous case litigated and decided by a competent court, the rule of stare
decisisis a bar to any attempt to relitigate the same issue."1
The Case
This is a Petition for Review on Certiorari2 under Rule 45 of the Rules of Court filed by the Commissioner of Internal
Revenue (petitioner) against The Insular Life Assurance Co., Ltd. (respondent),challenging the Decision3 dated March
14, 2011 and Resolution4 dated June 13, 2011 of the Court of Tax Appeals (CTA) en banc in CTA EB Case No. 585
(CTA Case No. 7292).
Antecedent Facts
Petitioner Commissioner of Internal Revenue is the official duly authorized under Section 4 of the National Internal
Revenue Code (NIRC) of 1997, as amended, to assess and collect internal revenue taxes, as well as the power to
decide disputed assessments, subject to the exclusive appellate jurisdiction of this Court.
Respondent The Insular Life Assurance, Co., Ltd. is a corporation duly organized and existing under and by virtue of
the laws of the Republic of the Philippines, with principal office located at IL Corporate Center, Insular Life Drive,
FilinvestCorporate City, Alabang, Muntinlupa City. It is registered as a non-stock mutual life insurer with the Securities
and Exchange Commission.
On October 7, 2004, respondent received an Assessment Notice with Formal Letter of Demand both dated July 29,
2004, assessing respondent for deficiency DST on its premiums on direct business/sums assured for calendar year
2002, computed as follows:
Documentary Stamp Tax
Deficiency Documentary Stamp
Tax-Basic
Add: Increments (Interest and
Compromise Penalty)
Total Amount Due
P70,732,389.83
23,201,969.38
P93,934,359.21
Thereafter, respondent filed its Protest Letter on November 4, 2004, which was subsequently denied by petitioner in a
Final Decision, on Disputed Assessment dated April 15, 2005 for lack of factual and legal bases. Apparently,
respondent received the aforesaid Final Decision on Disputed Assessment only on June 23, 2005.
On July 15, 2005, respondent filed a Petition for Review before [the CTA].
On April 21, 2009, the former Second Division of the [CTA] rendered a Decision in favor of respondent, thus, granting
the Petition for Review and held, among others, that respondent sufficiently established that it is a cooperative
company and therefore, it is exempt from the DST on the insurance policies it grants to its members.
Consequently, on May 13, 2009, petitioner filed a Motion for Reconsideration.
On January 11, 2010, petitioner received a Resolution dated January 4, 2010 of the former Second Division of [the
CTA] denying [its] Motion for Reconsideration for lack of merit. It held, among others, that the Supreme Court in
Republic of the Philippines vs. Sunlife Assurance Company of Canada already laid down the rule that registration with
the Cooperative Development Authority is not essential before respondent may avail of the exemptions granted under
Section 199 of the 1997 NIRC, as amended.
Undaunted, petitioner filed a Petition for Review before the [CTA] en banc on January 26, 2010.5 (Citations omitted)
On March 14, 2011, the CTA en banc denied the petition and rendered the assailed decision, with the dispositive
portion as follows:
WHEREFORE, the instant Petition for Review is hereby DENIED for lack of merit. The assailed Decision dated April
21, 2009 and Resolution dated January 4, 2010 are AFFIRMED.
SO ORDERED.6
It is the petitioners contention that since the respondent is not registered with the Cooperative Development Authority
(CDA), it should not be considered as a cooperative company that is entitled to the exemption provided under Section
199(a) of the National Internal Revenue Code (NIRC) of 1997.7 Thus, the instant petition.
Issue
WHETHER OR NOT THE CTA EN BANC ERRED IN RULING THAT RESPONDENT IS A COOPERATIVE AND [IS]
THUS[,] EXEMPT FROM DOCUMENTARY STAMP TAX.8
Ruling
The Court has pronounced in Republic of the Philippines v. Sunlife Assurance Company of Canada9 that "[u]nder the
Tax Code although respondent is a cooperative, registration with the CDA is not necessary in order for it to be exempt
from the payment of both percentage taxes on insurance premiums, under Section 121; and documentary stamp
taxes on policies of insurance or annuities it grants, under Section 199."10
Section 199 of the NIRC of 1997 provides:
Sec. 199. Documents and Papers Not Subject to Stamp Tax. The provisions of Section 173 to the contrary
notwithstanding, the following instruments, documents and papers shall be exempt from the documentary stamp tax:
(a) Policies of insurance or annuities made or granted by a fraternal or beneficiary society, order, association or
cooperative company, operated on the lodge system or local cooperation plan and organized and conducted solely by
the members thereof for the exclusive benefit of each member and not for profit.
x x x x (Emphasis ours)
As regards the applicability of Sunlife to the case at bar, the CTA, through records, has established the following
similarities between the two which call for the application of the doctrine of stare decisis:
1. Sunlife Assurance Company of Canada and the respondent are both engaged in mutual life insurance
business in the Philippines;
2. The structures of both corporations were converted from stock life insurance corporation to non-stock
mutual life insurance for the benefit of its policyholders pursuant to Section 266, Title 17 of the Insurance
Code of 1978 and they were made prior to the effectivity of Republic Act (R.A.) No. 6938, otherwise known
as the "Cooperative Code of the Philippines";
3. Both corporations claim to bea purely cooperative corporation duly licensed to engage in mutual life
insurance business;
4. Both corporations claim exemption from payment of the documentary stamp taxes (DST) under Section
199(1) of the Tax Code (now Section 199[a] of the NIRC of 1997, as amended); and
5. Petitioner CIR requires registration with the CDA before it grants tax exemptions under the Tax Code.11
The CTA observed that the factual circumstances obtaining in Sunlife and the present case are substantially the
same. Hence, the CTA based its assailed decision on the doctrine enunciated by the Court in the said case. On the
other hand, the petitioner submitted that the doctrine in Sunlife should be reconsidered and not be applied because
the same failed to consider Section 3(e) of R.A No. 6939,12 which provides that CDA has the power to register all
cooperatives,13 to wit:
Section 3. Powers, Functions and Responsibilities. The Authority shall have the following powers, functions and
responsibilities:
xxxx
(e) Register all cooperatives and their federations and unions, including their division, merger, consolidation,
dissolution or liquidation. It shall also register the transfer of all or substantially all of their assets and liabilities and
such other matters as may be required by the Authority;
xxxx
The petitioner proposed that considering the foregoing provision, registration with the CDA is necessary for an
association to be deemed as a cooperative and to enjoy the tax privileges appurtenant thereto.14
A perusal of Section 3(e) of R.A. No. 6939 evidently shows that it is merely a statement of one of the powers
exercised by CDA. Neither Section 3(e) of R.A. No. 6939 nor any other provision in the aforementioned statute
imposes registration with the CDA as a condition precedent to claiming DST exemption. Even then, R.A. No. 6939 is
inapplicable to the case at bar, as will be discussed shortly.
The NIRC of 1997 defined a cooperative company or association as "conducted by the members thereof with the
money collected from among themselves and solely for their own protection and not for profit."15 Consequently, as
long as these requisites are satisfied, a company or association is deemed a cooperative insofar as taxation is
concerned. In this case, the respondent has sufficiently established that it conforms with the elements of a
cooperative as defined in the NIRC of 1997 in that it is managed by members, operated with money collected from
the members and has for its main purpose the mutual protection of members for profit.16
The Court presented three justifications in Sunlife why registration with the CDA is not necessary for cooperatives to
claim exemption from DST.
First, the NIRC of 1997 does not require registration with the CDA. No tax provision requires a mutual life insurance
company to register with that agency in order to enjoy exemption from both percentage and DST. Although a
provision of Section 8 of the Revenue Memorandum Circular (RMC) No. 48-91 requires the submission of the
Certificate of Registration with the CDA before the issuance of a tax exemption certificate, that provision cannot
prevail over the clear absence of an equivalent requirement under the Tax Code.17
The respondent correctly pointed out that in other provisions of the NIRC, registration with the CDA is expressly
required in order to avail of certain tax exemptions or preferential tax treatment18 a requirement which is noticeably
absent in Section 199 of the NIRC. Quoted below are examples of cooperatives which are expressly mandated by
law to be registered with the CDA before their transactions could be considered as exempted from value added tax:
Sec. 109. Exempt Transactions. The following shall be exempt from the value-added tax:
xxxx
(r) Sales by agricultural cooperatives duly registered with the Cooperative Development Authority to their
members as well as sale of their produce, whether in its original state or processed form, to non-members;
their importation of direct farm inputs, machineries and equipment, including spare parts thereof, to be used
directly and exclusively in the production and/or processing of their produce;
(s) Sales by electric cooperatives duly registered with the Cooperative Development Authority or National
Electrification Administration, relative to the generation and distribution of electricity as well as their
importation of machineries and equipment, including spare parts, which shall be directly used in the
generation and distribution of electricity;
(t) Gross receipts from lending activities by credit or multi-purpose cooperatives duly registered with the
Cooperative Development Authority whose lending operation is limited to their members;
(u) Sales by non-agricultural, non-electric and noncredit cooperatives duly registered with the Cooperative
Development Authority: Provided, That the share capital contribution of each member does not exceed
Fifteen thousand pesos (P15,000) and regardless of the aggregate capital and net surplus ratably distributed
among the members;
x x x x (Emphasis ours)
This absence of the registration requirement under Section 199 clearly manifests the intention of the Legislative
branch of the government to do away with registration before the CDA for a cooperative to benefit from the DST
exemption under this particular section.
Second, the provisions of the Cooperative Code of the Philippines do not apply.19 The history of the Cooperative
Code was amply discussed in Sunlife where it was noted that cooperatives under the old law, Presidential Decree
(P.D.) No. 17520 "referred only to an organization composed primarily of small producers and consumers who
voluntarily joined to form a business enterprise that they themselves owned, controlled, and patronized. The Bureau
of Cooperatives Development under the Department of Local Government and Community Development (later
Ministry of Agriculture) had the authority to register, regulate and supervise only the following cooperatives: (1)
barrio associations involved in the issuance of certificates of land transfer; (2) local or primary cooperatives
composed of natural persons and/or barrio associations; (3) federations composed of cooperatives that may or may
not perform business activities; and (4) unions of cooperatives that did not perform any business activities.
Respondent does not fall under any of the abovementioned types of cooperatives required to be registered under
[P.D. No.] 175."21
Thus, when the subsequent law, R.A. No. 6939, concerning cooperatives was enacted, the respondent was not
covered by said law and was not required to be registered, viz:
When the Cooperative Code was enacted years later, all cooperatives that were registered under PD 175 and
previous laws were also deemed registered with the CDA. Since respondent was not required to be registered under
the old law on cooperatives, it followed that it was not required to be registered even under the new law.
x x x Only cooperatives to be formed or organized under the Cooperative Code needed registration with the CDA. x x
x.22 (Emphasis ours)
"The distinguishing feature of a cooperative enterprise is the mutuality of cooperation among its memberpolicyholders united for that purpose. So long as respondent meets this essential feature, it does not even have to
use and carry the name of a cooperative to operate its mutual life insurance business. Gratia argumenti that
registration is mandatory, it cannot deprive respondent of its tax exemption privilege merely because it failed to
register. The nature of its operations is clear; its purpose well-defined. Exemption when granted cannot prevail over
administrative convenience."23
Third, the Insurance Code does not require registration with the CDA.1wphi1 "The provisions of this Code primarily
govern insurance contracts; only if a particular matter in question is not specifically provided for shall the provisions of
the Civil Code on contracts and special laws govern."24
There being no cogent reason for the Court to deviate from its ruling in Sunlife, the Court holds that the respondent,
being a cooperative company not mandated by law to be registered with the CDA, cannot be required under RMC
No. 48-91, a mere circular, to be registered prior to availing of DST exemption.
"While administrative agencies, such as the Bureau of Internal Revenue, may issue regulations to implement
statutes, they are without authority to limit the scope of the statute to less than what it provides, or extend or expand
the statute beyond its terms, or in any way modify explicit provisions of the law. Indeed, a quasi-judicial body or an
administrative agency for that matter cannot amend an act of Congress. Hence, in case of a discrepancy between the
basic law and an interpretative or administrative ruling, the basic law prevails. "25
WHEREFORE, premises considered, the petition is DENIED. Accordingly, the Decision dated March 14, 2011 and
Resolution dated June 13, 2011 of the Court of Tax Appeals en bane in CTA EB Case No. 585 (CTA Case No. 7292)
are hereby AFFIRMED.
SO ORDERED.
G.R. No. 197525
June 4, 2014
VISAYAS GEOTHERMAL POWER COMPANY, Petitioner,

vs.
DECISION
MENDOZA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the February 7,
2011 Decision1 and the June 27, 2011 Resolution2 of the Court of Tax Appeals En Banc (CTA En Banc) in CTA EB
Case Nos. 561 and 562, which reversed and set aside the April 17, 2009 Decision of the CT A Second Division in
CTA Case No. 7559.
The Facts:
Petitioner Visayas Geothermal Power Company (VGPC) is a special limited partnership duly organized and existing
under Philippine Laws with its principal office at Milagro, Ormoc City, Province of Leyte. It is principally engaged in the
business of power generation through geothermal energy and the sale of generated power to the Philippine National
Oil Company (PNOC),pursuant to the Energy Conversion Agreement.
VGPC filed with the Bureau of Internal Revenue (BIR)its Original Quarterly VAT Returns for the first to fourth quarters
of taxable year 2005 on April 25, 2005, July 25, 2005, October 25, 2006, and January 20, 2006, respectively.
On December 6, 2006, it filed an administrative claim for refund for the amount of 14,160,807.95 with the BIR District
Office No. 89 of Ormoc City on the ground that it was entitled to recover excess and unutilized input VAT payments
for the four quarters of taxable year 2005, pursuant to Republic Act (R.A.) No. 9136,3 which treated sales of
generated power subject to VAT to a zero percent (0%) rate starting June 26, 2001.
Nearly one month later, on January3, 2007, while its administrative claim was pending, VGPC filed its judicial claim
via a petition for review with the CTA praying for a refund or the issuance of a tax credit certificate in the amount of
14,160,807.95, covering the four quarters of taxable year 2005.
In its April 17, 2009 Decision, the CTA Second Division partially granted the petition as follows:
WHEREFORE, in view of the foregoing considerations, the Petition for Review is hereby PARTIALLY GRANTED.
Accordingly, respondent is ORDERED TO REFUND or, in the alternative, TO ISSUE A TAX CREDIT CERTIFICATE in
favor of petitioner the reduced amount of SEVEN MILLION SIX HUNDRED NINENTY NINE THOUSAND THREE
HUNDRED SIXTY SIX PESOS AND 37/100 (P7,699,366.37) representing unutilized input VAT paid on domestic
purchases of non-capital goods and services, services rendered by non-residents, and importations of non-capital
goods for the first to fourth quarters of taxable year 2005.
SO ORDERED.4
The CTA Second Division found that only the amount of 7,699,366.37 was duly substantiated by the required
evidence. As to the timeliness of the filing of the judicial claim, the Court ruled that following the case of
Commissioner of Internal Revenue (CIR) v. Mirant Pagbilao Corporation (Mirant),5 both the administrative and judicial
claims were filed within the two-year prescriptive period provided in Section 112(A) of the National Internal Revenue
Code of 1997 (NIRC),the reckoning point of the period being the close of the taxable quarter when the sales were
made.
In its October 29, 2009 Resolution,6 the CTA Second Division denied the separate motions for partial reconsideration
filed by VGPC and the CIR. Thus, both VGPC and the CIR appealed to the CTA En Banc.
In the assailed February 7, 2011 Decision,7 the CTA En Banc reversed and set aside the decision and resolution of
the CTA Second Division, and dismissed the original petition for review for having been filed prematurely, to wit:
WHEREFORE, premises considered:
i. As regards CTA EB Case No. 562, the Petition for Review is hereby DISMISSED; and
ii. As regards CTA EB Case No. 561, the Petition for Review is hereby GRANTED.
Accordingly, the Decision, dated April 17, 2009, and the Resolution, dated October 29, 2009, of the CTA Former
Second Division are hereby REVERSED and SET ASIDE, and another one is hereby entered DISMISSING the
Petition for Review filed in CTA Case No. 7559 for having been filed prematurely.
SO ORDERED.8
The CTA En Banc explained that although VGPC seasonably filed its administrative claim within the two-year
prescriptive period, its judicial claim filed with the CTA Second Division was prematurely filed under Section 112(D) of
the National Internal Revenue Code (NIRC).Citing the case of CIR v. Aichi Forging Company of Asia, Inc. (Aichi),9the
CTA En Banc held that the judicial claim filed 28 days after the petitioner filed its administrative claim, without waiting
for the expiration of the 120-day period, was premature and, thus, the CTA acquired no jurisdiction over the case.
The VGPC filed a motion for reconsideration, but the CTA En Banc denied it in the assailed June 27, 2011 Resolution
for lack of merit. It stated that the case of Atlas Consolidated Mining v. CIR (Atlas)10 relied upon by the petitioner had
long been abandoned.
Hence, this petition.
ASSIGNMENT OF ERRORS
I
The CTA En Banc erred in finding that the 120-day and 30-day periods prescribed under Section 112(D) of the 1997
Tax Code are jurisdictional and mandatory in the filing of the judicial claim for refund. The CTA-Division should take
cognizance of the judicial appeal as long as it is filed with the two-year prescriptive period under Section 229 of the
1997 Tax Code.
II
The CTA En Banc erred in finding that Aichi prevails over and/or overturned the doctrine in Atlas, which upheld the
primacy of the two-year period under Section 229 of the Tax Code. The law and jurisprudence have long established
the doctrine that the taxpayer is duty-bound to observe the two-year period under Section 229 of the Tax Code when
filing its claim for refund of excess and unutilized VAT.
III
The CTA En Banc erred in finding that Respondent CIR is not estopped from questioning the jurisdiction of the CTA.
Respondent CIR, by her actions and pronouncements, should have been precluded from questioning the jurisdiction
of the CTA-Division.
IV
The CTA En Banc erred in applying Aichi to Petitioner VGPCs claim for refund. The novel interpretation of the law in
Aichi should not be made to apply to the present case for being contrary to existing jurisprudence at the time
Petitioner VGPC filed its administrative and judicial claims for refund.11
Petitioner VGPC argues that (1) the law and jurisprudence have long established the rule regarding compliance with
the two-year prescriptive period under Section 112(D) in relation to Section 229 of the 1997 Tax Code; (2) Aichi did
not overturn the doctrine in Atlas, which upheld the primacy of the two-year period under Section 229; (3) respondent
CIR is estopped from questioning the jurisdiction of the CTA and Aichi cannot be indiscriminately applied to all VAT
refund cases; (4) applying Aichi invariably to all VAT refund cases would effectively grant respondent CIR unbridled
discretion to deprive a taxpayer of the right to effectively seek judicial recourse, which clearly violates the standards
of fairness and equity; and (5) the novel interpretation of the law in Aichi should not be made to apply to the present
case for being contrary to existing jurisprudence at the time VGPC filed its administrative and judicial claims for
refund. Aichi should be applied prospectively.
Ruling of the Court
Judicial claim not premature
The assignment of errors is rooted in the core issue of whether the petitioners judicial claim for refund was
prematurely filed.
Two sections of the NIRC are pertinent to the issue at hand, namely Section 112 (A) and (D) and Section 229, to wit:
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.
xxx
(D) 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.
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 period, appeal the
decision or the unacted claim with the Court of Tax Appeals.
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, of any sum alleged to have been
excessively or in any manner wrongfully 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.
[Emphases supplied]
It has been definitively settled in the recent En Banc case of CIR v. San Roque Power Corporation (San Roque),12that
it is Section 112 of the NIRC which applies to claims for tax credit certificates and tax refunds arising from sales of
VAT-registered persons that are zero-rated or effectively zero-rated, which are, simply put, claims for unutilized
creditable input VAT.
Thus, under Section 112(A), the taxpayer may, within 2 years after the close of the taxable quarter when the sales
were made, via an administrative claim with the CIR, apply for the issuance of a tax credit certificate or refund of
creditable input tax due or paid attributable to such sales. Under Section 112(D), the CIR must then act on the claim
within 120 days from the submission of the taxpayers complete documents. In case of (a) a full or partial denial by
the CIR of the claim, or (b) the CIRs failure to act on the claim within 120 days, the taxpayer may file a judicial claim
via an appeal with the CTA of the CIR decision or unacted claim, within 30 days (a) from receipt of the decision; or (b)
after the expiration of the 120-day period.
The 2-year period under Section 229 does not apply to appeals before the CTA in relation to claims for a refund or tax
credit for unutilized creditable input VAT.Section 229 pertains to the recovery of taxes erroneously, illegally, or
excessively collected.13 San Roque stressed that "input VAT is not excessively collected as understood under
Section 229 because, at the time the input VAT is collected, the amount paid is correct and proper."14 It is, therefore,
Section 112 which applies specifically with regard to claiming a refund or tax credit for unutilized creditable input
VAT.15
Upholding the ruling in Aichi,16 San Roque held that the 120+30 day period prescribed under Section 112(D)
mandatory and jurisdictional.17 The jurisdiction of the CTA over decisions or inaction of the CIR is only appellate in
nature and, thus, necessarily requires the prior filing of an administrative case before the CIR under Section
112.18The CTA can only acquire jurisdiction over a case after the CIR has rendered its decision, or after the lapse of
the period for the CIR to act, in which case such inaction is considered a denial.19 A petition filed prior to the lapse of
the 120-day period prescribed under said Section would be premature for violating the doctrine on the exhaustion of
administrative remedies.20
There is, however, an exception to the mandatory and jurisdictional nature of the 120+30 day period. The Court in
San Roque noted that BIR Ruling No. DA-489-03, dated December 10, 2003, expressly stated that the "taxpayerclaimant 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."21 This BIR Ruling was recognized as a general interpretative rule issued by the CIR under
Section 422 of the NIRC and, thus, applicable to all taxpayers. Since the CIR has exclusive and original jurisdiction to
interpret tax laws, it was held that taxpayers acting in good faith should not be made to suffer for adhering to such
interpretations. Section 24623 of the Tax Code, in consonance with equitable estoppel, expressly provides that a
reversal of a BIR regulation or ruling cannot adversely prejudice a taxpayer who in good faith relied on the BIR
regulation or ruling prior to its reversal. Hence, taxpayers can rely on BIR Ruling No. DA-489-03 from the time of its
issuance on December 10, 2003 up to its reversal by this Court in Aichion October 6, 2010, where it was held that the
120+30 day period was mandatory and jurisdictional.
Accordingly, the general rule is that the 120+30 day period is mandatory and jurisdictional from the effectivity of the
1997 NIRC on January 1, 1998, up to the present. As an exception, judicial claims filed from December 10, 2003 to
October 6, 201024 need not wait for the exhaustion of the 120-day period.
A review of the facts of the present case reveals that petitioner VGPC timely filed its administrative claim with the CIR
on December 6, 2006, and later, its judicial claim with the CTA on January 3, 2007. The judicial claim was clearly filed
within the period of exception and was, therefore, not premature and should not have been dismissed by the CTA En
Banc.
In the present petition, VGPC prays that the Court grant its claim for refund or the issuance of a tax credit certificate
for its unutilized input VAT in the amount of P14,160,807.95. The CTA Second Division, however, only awarded the
amount of P7,699,366.37. The petitioner has failed to present any argument to support its entitlement to the former
amount.
In any case, the Court would have been precluded from considering the same as such would require a review of the
evidence, which would constitute a question of fact outside the Courts purview under Rule 45 of the Rules of Court.
The Court, thus, finds that the petitioner is entitled to the refund awarded to it by the CTA Second Division in the
amount of P7,699,366.37.
Atlas doctrine has no relevance
to the 120+30 day period for
filing judicial claim
Although the core issue of prematurity of filing has already been resolved, the Court deems it proper to discuss the
petitioners argument that the doctrine in Atlas, which allegedly upheld the primacy of the 2-year prescriptive period
under Section 229,should prevail over the ruling in Aichi regarding the mandatory and jurisdictional nature of the
120+30 day period in Section 112.
In this regard, it was thoroughly explained in San Roque that the Atlas doctrine only pertains to the reckoning point of
the 2-year prescriptive period from the date of payment of the output VAT under Section 229, and has no relevance to
the 120+30 day period under Section 112, to wit:
The Atlas doctrine, which held that claims for refund or credit of input VAT must comply with the two-year prescriptive
period under Section 229, should be effective only from its promulgation on 8 June 2007 until its abandonment on 12
September 2008 in Mirant. The Atlas doctrine was limited to the reckoning of the two-year prescriptive period from the
date of payment of the output VAT. Prior to the Atlas doctrine, the two-year prescriptive period for claiming refund or
credit of input VAT should be governed by Section 112(A) following the verba legis rule. The Mirant ruling, which
abandoned the Atlas doctrine, adopted the verba legis rule, thus applying Section 112(A) in computing the two year
prescriptive period in claiming refund or credit of input VAT.
The Atlas doctrine has no relevance to the 120+30 day periods under Section 112(C) because the application of the
120+30 day periods was not in issue in Atlas. The application of the 120+30 day periods was first raised in Aichi,
which adopted the verba legis rule in holding that the 120+30 day periods are mandatory and jurisdictional. The
language of Section 112(C) is plain, clear, and unambiguous. When Section 112(C) states that "the Commissioner
shall grant a refund or issue the tax credit within one hundred twenty (120) days from the date of submission of
complete documents," the law clearly gives the Commissioner 120 days within which to decide the taxpayers claim.
Resort to the courts prior to the expiration of the 120-day period is a patent violation of the doctrine of exhaustion of
administrative remedies, a ground for dismissing the judicial suit due to prematurity. Philippine jurisprudence is awash
with cases affirming and reiterating the doctrine of exhaustion of administrative remedies. Such doctrine is basic and
elementary.25
[Underscoring supplied]
Thus, Atlas is only relevant in determining when to file an administrative claim with the CIR for refund or credit of
unutilized creditable input VAT, and not for determining when to file a judicial claim with the CTA. From June 8, 2007
to September 12, 2008, the 2-year prescriptive period to file administrative claims should be counted from the date of
payment of the output VAT tax. Before and after said period, the 2-year prescriptive period is counted from the close
of the taxable quarter when the sales were made, in accordance with Section 112(A). In either case, the mandatory
and jurisdictional 120+30 day period must be complied with for the filing of the judicial claim with the CTA, except for
the period provided under BIR Ruling No. DA-489-03, as previously discussed.
The Court further noted that Atlas was decided in relation to the 1977 Tax Code which had not yet provided for the
30-day period for the taxpayer to appeal to the CTA from the decision or inaction of the CIR over claims for unutilized
input VAT. Clearly then, the Atlas doctrine cannot be invoked to disregard compliance with the 120+30 day mandatory
and jurisdictional period.26 In San Roque, it was written:
The old rule that the taxpayer may file the judicial claim, without waiting for the Commissioners decision if the twoyear 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.27
At any rate, even assuming that the Atlas doctrine was relevant to the present case, it could not be applied since it
was held to be effective only from its promulgation on June 8, 2007 until its abandonment on September 12, 2008
when Mirant was promulgated. The petitioner in this case filed both its administrative and judicial claims outside the
said period of effectivity.
Aichi not applied prospectively
Petitioner VGPC also argues that Aichi should be applied prospectively and, therefore, should not be applied to the
present case. This position cannot be given consideration.
Article 8 of the Civil Code provides that judicial decisions applying or interpreting the law shall form part of the legal
system of the Philippines and shall have the force of law. The interpretation placed upon a law by a competent court
establishes the contemporaneous legislative intent of the law. Thus, such interpretation constitutes a part of the law
as of the date the statute is enacted. It is only when a prior ruling of the Court is overruled, and a different view
adopted, that the new doctrine may have to be applied prospectively in favor of parties who have relied on the old
doctrine and have acted in good faith.28
Considering that the nature of the 120+30 day period was first settled in Aichi, the interpretation by the Court of its
being mandatory and jurisdictional in nature retro acts to the date the NIRC was enacted. It cannot be applied
prospectively as no old doctrine was overturned.
The petitioner cannot rely either on the alleged jurisprudence prevailing at the time it filed its judicial claim. The Court
notes that the jurisprudence relied upon by the petitioner consists of CTA cases. It is elementary that CTA decisions
do not constitute precedent and do not bind this Court or the public. Only decisions of this Court constitute binding
precedents, forming part of the Philippine legal system.29
As regards the cases30 which were later decided allegedly in contravention of Aichi, it is of note that all of them were
decided by Divisions of this Court, and not by the Court En Banc.1wphi1 Any doctrine or principle of law laid down
by the Court, either rendered En Bancor in Division, may be overturned or reversed only by the Court sitting En
Banc.31Thus, the cases cited by the petitioner could not have overturned the doctrine laid down in Aichi.
CIR not estopped
The petitioners argument that the CIR should have been estopped from questioning the jurisdiction of the CTA after
actively participating in the proceedings before the CTA Second Division deserves scant consideration.
It is a well-settled rule that the government cannot be estopped by the mistakes, errors or omissions of its agents. 32It
has been specifically held that estoppel does not apply to the government, especially on matters of taxation. Taxes
are the nations lifeblood through which government agencies continue to operate and with which the State
discharges its functions for the welfare of its constituents.33 Thus, the government cannot be estopped from collecting
taxes by the mistake, negligence, or omission of its agents. Upon taxation depends the ability of the government to
serve the people for whose benefit taxes are collected. To safeguard such interest, neglect or omission of
government officials entrusted with the collection of taxes should not be allowed to bring harm or detriment to the
people.34
Rules on claims for refund or tax credit of unutilized input VAT
For clarity and guidance, the Court deems it proper to outline the rules laid down in San Roque with regard to claims
for refund or tax credit of unutilized creditable input VAT. They are as follows:
1. When to file an administrative claim with the CIR:
a. General rule Section 112(A) and Mirant Within 2 years from the close of the taxable quarter when the
sales were made.
b. Exception Atlas
Within 2 years from the date of payment of the output VAT, if the administrative claim was filed from June 8, 2007
(promulgation of Atlas) to September 12, 2008 (promulgation of Mirant).
2. When to file a judicial claim with the CTA:
a. General rule Section 112(D); not Section 229
i. Within 30 days from the full or partial denial of the administrative claim by the CIR; or
ii. Within 30 days from the expiration of the 120-day period provided to the CIR to decide on the
claim. This is mandatory and jurisdictional beginning January L 1998 ( effectivity of 1997 NI RC).
b. Exception - BIR Ruling No. DA-489-03
The judicial claim need not await the expiration of the 120-day period, if such was filed from December 10, 2003
(issuance of BIR Ruling No. DA-489-03) to October 6, 2010 (promulgation of Aichi).
WHEREFORE, the petition is PARTIALLY GRANTED. The February 7, 2011 Decision and the June 27, 2011
Resolution of the Court of Tax Appeals En Banc, in CT A EB Case Nos. 561 and 562 are REVERSED and SET
ASIDE. The April 17, 2009 Decision and the October 29, 2009 Resolution of the CTA Former Second Division in CTA
Case No. 7559 are REINSTATED.
Public respondent is hereby ORDERED TO REFUND or, in the alternative, TO ISSUE A TAX CREDIT CERTIFICATE,
in favor or the petitioner the amount of SEVEN MILLION SIX HUNDRED NINETY NINE THOUSAND THREE
HUNDRED SIXTY SIX PESOS AND 37/100 (P7,699,366.37) representing unutilized input VAT paid on domestic
purchases of non-capital goods and services, services rendered by nonresidents, and importations of non-capital
goods for the first to fourth quarters of taxable year 2005.
SO ORDERED.

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G.R. No.

January 13, 2014

TEAM ENERGY CORPORATION (Formerly MIRANT PAGBILAO CORPORATION), Petitioner,

G.R. No.184360 & 184361

February 19, 2014

SILICON PHILIPPINES, INC., (formerly Intel Philippines Manufacturing, Inc.), Petitioner,

G.R. No. 181459

COMMISSIONER OF INTERNAL REVENUE, Petitioner,

G.R. No. 197192

COMMISSIONER OF INTERNAL REVENUE, Petitioner,

G.R. No. 197525

VISAYAS GEOTHERMAL POWER COMPANY, Petitioner,

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