CIR vs.

Burmeister & Wain Scandanavian, GR 190021, October 22, 2014-

Doctrine: The taxpayer can file its administrative claim for refund or credit at any time within the two-year
prescriptive period. If it files its claim on the last day of said period, it is still filed on time. The CIR will have
120 days from such filing to decide the claim. If the CIR decides the claim on the 120th day, or does not decide
it on that day, the taxpayer still has 30 days to file its judicial claim with the CTA; otherwise, the judicial claim
would be, properly speaking, dismissed for being filed out of time and not, as the CTA En Banc puts it,
prescribed.
Facts:
1. Respondent is a corporation duly organized and existing under the laws of the Philippines, and primarily engaged in the
business of constructing, erecting, assembling, commissioning, operating, maintaining, rehabilitating, and managing
industrial and power-generating plants and related facilities for the conversion into electricity of coal distillate, and other
fuels, provided by and under contract with the Philippine Government, or any government-owned and controlled corporations,
or other entities engaged in the development, supply, or distribution of electricity. It is registered as a value-added tax (VAT)
taxpayer.
2. Respondent subcontracted from a consortium8 of non-resident foreign corporations the actual operation and maintenance
of two 100-megawatt power barges owned by the National Power Corporation, which services are subject to zero percent (0%)
VAT, pursuant to Bureau of Internal Revenue (BIR) Ruling No. 023-95 issued on February 14, 1995, that was reconfirmed on
January 7, 1999 in its VAT Review Committee Ruling No. 003-99.
3. On January 21, 1999, respondent filed its Quarterly VAT Return for the fourth quarter of taxable year 1998 indicating zero-
rated sales of P68,761,361.50 and input VAT of P1,834,388.55 paid on its domestic purchases of goods and services for the
same period

On July 21, 1999, respondent filed an Application for Tax Credit/Refund of VAT Paid for the period July to December 1998
in the amount of P4,154,969.51, which was not acted upon by herein petitioner, the Commissioner of Internal Revenue (CIR).
5. On January 9, 2001, respondent filed a petition for review before the CTA, praying for the refund or the issuance of a tax
credit certificate in the amount of P1,834,388.55 representing its alleged unutilized input VAT payment for the fourth quarter
of 1998. The petition was denied on January 29, 2003 due to insufficiency of evidence. However, on appeal before the Court
of Appeals (CA), docketed as CA-G.R. SP No. 79272, the case was remanded to the CTA on April 19, 2005 for the reception of
respondent's evidence consisting of VAT invoices and receipts which had not been submitted earlier, but were already
attached to its motion for reconsideration of the denial of the CTA petition.
6. The CTA First Division ordered the CIR to refund or issue a tax credit certificate in favor of respondent for a reduced
amount. It was determined that the administrative claim filed on July 21, 1999 and the petition for review filed on January 9,
2001 fell within the two-year prescriptive period reckoned from January 21, 1999, the date when respondent filed its Quarterly
VAT Return for the fourth quarter of taxable year 1998.
7. Undaunted, the CIR elevated the case to the CTA En Banc on petition for review, docketed as C.T.A. EB No. 487, lamenting
the alleged failure on the part of respondent to comply with the periods mandated under Section 112 of Republic Act No. (RA)
8424,16 otherwise known as the Tax Reform Act of 1997. From the time the administrative claim for refund was filed on July
21, 1999, the CIR had 120 days, or until November 18, 1999, to act on the application, failing in which, respondent may
elevate the case before the CTA within 30 days from November 18, 1999, or until December 18, 1999. However,
respondent filed its judicial claim only on January 9, 2001.
8. The CTA En Banc dismissed the petition holding that the CIR could not raise for the first time on appeal the issue of
prescription in the filing of respondent's judicial claim for refund.
Issue: Whether or not the CTA en banc committed reversible error when it granted repondents claim for refund or tax credit
despite its non-compliance with the mandatory periods under Sec. 112 of R.A. 8424.
Held: Yes. Although the administrative claim was filed by respondent within the two-year prescriptive period, its judicial claim
was filed beyond the 120+30-day period, thus, the claim for refund must be denied.
The administrative claim filed by respondent on July 21, 1999 was filed within the two-year prescriptive period reckoned
from the close of the fourth taxable quarter, falling on Dec. 31, 1998, the last day of filing being Dec. 31, 2000.
In fact, whether the two-year prescriptive period is counted from the date of payment (January 21, 1999) of the output VAT
following Atlas, or from the close of the taxable quarter when the sales were made (December 31, 1998) pursuant to Mirant,
the conclusion that the administrative claim was timely filed would equally stand.
The CIR insists, however, that both the administrative and judicial claims should fall within the two-year prescriptive period.
This argument is untenable.
It should be pointed out that on October 6, 2010, the Court held in the case of CIR v. Aichi Forging Company of Asia, Inc.
(Aichi) that the phrase "within two (2) years x x x apply for the issuance of a tax credit certificate or refund"
refers to applications for refund/credit filed with the CIR and not to appeals made to the CTA.
In fine, the taxpayer can file its administrative claim for refund or credit at any time within the two-year
prescriptive period. If it files its claim on the last day of said period, it is still filed on time. The CIR will have
120 days from such filing to decide the claim. If the CIR decides the claim on the 120th day, or does not decide
it on that day, the taxpayer still has 30 days to file its judicial claim with the CTA; otherwise, the judicial claim
would be, properly speaking, dismissed for being filed out of time and not, as the CTA En Banc puts it,
prescribed.
It bears emphasis that Section 112 (D) (now renumbered as Section 112[C]) of RA 8424, which is explicit on the mandatory
and jurisdictional nature of the 120+30-day period, was already effective on January 1, 1998. Hence, it is of no consequence
that the Aichi and San Roque rulings were not yet in existence when respondent's administrative claim was filed in 1999, so
as to rid itself of the said section's mandatory and jurisdictional application.
That being said, and notwithstanding the fact that respondent's administrative claim had been timely filed, the
Court is nonetheless constrained to deny the averred tax refund or credit, as its judicial claim therefor was filed
beyond the 120+30-day period, and, hence - as earlier stated - deemed to be filed out of time.

As the records would show, the CIR had 120 days from the filing of the administrative claim on July 21, 1999, or until
November 18, 1999, to decide on respondent's application. Since the CIR did not act at all, respondent had until
December 18, 1999, the last day of the 30-day period, to file its judicial claim. However, respondent filed its
petition for review with the CTA only on January 9, 2001 and, thus, was one (1) year and 22 days late. As a
consequence of the late filing of said petition, the CTA did not properly acquire jurisdiction over the claim.
The inaction of the CIR on the claim during the 120-day period is, by express provision of law, "deemed a
denial" of such claim, and the failure of the taxpayer to file its judicial claim within 30 days from the expiration
of the 120-day period shall render the "deemed a denial" decision of the CIR final and inappealable. The right to
appeal to the CTA from a decision or "deemed a denial" decision of the Commissioner is merely a statutory privilege, not a
constitutional right. The exercise of such statutory privilege requires strict compliance with the conditions attached by the
statute for its exercise. Thus, respondent's failure to comply with the statutory conditions is fatal to its claim. This is so,
notwithstanding the fact that the CIR, for his part, failed to raise the issue of non-compliance with the mandatory periods at
the earliest opportunity.
In the case of Nippon Express (Philippines) Corporation v. CIR, the Court ruled that, because the 120+30-day period is
jurisdictional, the issue of whether the taxpayer complied with the said time frame may be broached at any
stage, even on appeal. Well-settled is the rule that the question of jurisdiction over the subject matter can be raised at any
time during the proceedings. Jurisdiction cannot be waived because it is conferred by law and is not dependent on the
consent or objection or the acts or omissions of the parties or any one of them. Therefore, respondent's contention on this
score is of no moment.
Indeed, it has been pronounced time and again that taxes are the lifeblood of the government and, consequently, tax laws
must be faithfully and strictly implemented as they are not intended to be liberally construed. Hence, with this in mind and in
light of the foregoing considerations, the Court so holds that the CTA En Banc committed reversible error when it
granted respondent's claim for refund or tax credit despite its non-compliance with the mandatory periods
under Section 112 (D) (now renumbered as Section 112[C]) of RA 8424. Accordingly, the claim for refund/tax
credit must be denied.

CIR vs. Mindanao II Geothermal Partnership, GR 191498, January 15, 2014

Topic: Regarding periods of filing for administrative and judicial claims for unused input taxes
Facts:
1. Mindanao II is a partnership registered with the SEC engaged in the business of power generation and sale of electricity to
the NAPOCOR.
2. Filing of the Quarterly VAT Returns: Mindanao filed its Quarterly VAT Returns for the following quarters on the following
dates:
Quarter Date of Filing
Second Quarter July 26, 2004
of 2004
Third Quarter of October 22,
2004 2004
Fourth Quarter January 25,
of 2004 2005

Filing of Administrative Claim for refund: on October 6, 2005, Mindanao II filed with the BIR an application for the credit
of unutilized creditable input taxes.
4. Inaction by the CIR: the CIR then had 120 days or until 3 February 2006, to act on the claim. The administrative claim,
however, remained unresolved on 3 February 2006.
5. Filing of judicial Claim with the CTA, 138 days after the 30 day period: on 21 July 2006, Mindanao II, claiming
inaction on the part of the CIR and that the twoyear prescriptive period was about to expire, filed a Petition for Review with
the CTA.
6. Decision of the CTA 2nd division: the CTA division rendered a decision in favour of Mindanao II ruling that Mindanao II
complied with the requisites of the EPIRA law as well as the requirements for the grant of refund/credit under Sec. 112 of the
Tax Code.
a. It determined that both the administrative claim filed on 6 October 2005 and the judicial claim filed on 21 July
2006 fell within the twoyear prescriptive period
b. It also applied the Atlas doctrine, reckoning the 2-year period from the date of filing of the Vat Returns
7. The CTA En Banc affirmed the decision of the Second division and ruled that the division correctly applied the Atlas
doctrine. It ruled that the Mirant Case, which held that the 2-year prescriptive period should be reckoned from the close of the
taxable quarter, cannot be given retroactive effect.

As to the judicial claim, it also ruled that such was filed on time. It ratiocinated that the 30-day period for filing an
appeal with the CTA is only mandatory if the CIR denied the application for refund through a decision, and that in cases of
inaction, such rule cannot apply. Hence, the judicial claim with the CTA may be made within anytime before the lapse of the 2-
year period.
8. Hence, the present action by the petitioner CIR.
Main issue: May Mindanao II claim for refund?
Controlling issue: how to apply the 2- year prescriptive period and the 120+30 day rule
1. Were the Administrative claims timely filed?
2. Was the judicial claim timely made?

Held: Mindanao IIs claim for refund or credit of unutilized input VAT on the ground that its judicial claims were filed out of
time, even as we hold that its application for refund was filed on time.
Ratio:
1st Issue: The Administrative claims were timely filed.
A. When is the reckoning date for the 2-year prescriptive period for filing of Administrative claims?
Applying the verba legis rule on construing Sec. 112 (A), it should be reckoned from the close of the taxable quarter when
the sales were made.

B. Prior to 8 Jun Sept. 12

Effect Atlas 2007 to 2008 to
of the 12 Sept. present
Atlas 2008
and
Mirant
Ruling
Date of
Effectivit
y
Rule Verba Atlas Mirant
Applicab legis Doctrine Doctrine
le rule of
Sec. 112
Doctrine Reckone Reckone Overtur
d from d from ned
the date paymen Atlas
of the t of and
close of returns applied
the pursuan the
taxable t to Sec. verba
quarter 229 (for legis
excessiv rule
e

What rule should be applied then?

 The verba Legis rule because In this case, Mindanao II filed its administrative claims for refund or credit for the second,
third and fourth quarters of 2004 on 6 October 2005. The case thus falls within the first period as indicated in the
above timeline. In other words, it is covered by the rule prior to the advent of either Atlas or Mirant.

Pursuant Date of End of Date of Made

to the the the 2 filing within
above Close of year the
verba Quarter period period?
legis (start of
rule, the
were the reckonin
administ g period)
rative
claims
filed on
time?
YES. QT
OF 04
2nd 30 June until 30 October YES
2004 June 6, 2005
2006
3rd 30 Sept 30, 6 Yes
Septemb 2006 October
er 2004 2005
4th 31 Dec. 31, October Yes
Decemb 2006 6, 2005
er 2004
2ND ISSUE: WERE THE JUDICIAL CLAIMS FILED ON TIME?
RULING: NO.
1. The 30day period applies not only to instances of actual denial by the CIR of the claim for refund or tax credit, but to cases
of inaction by the CIR as well. This is the correct interpretation of the law, as held in San Roque, the taxpayer can file the
appeal in one of the two ways:
a. (1) file the judicial claim within thirty days after the Commissioner denies the claim within the 120day period, or
b. (2) file the judicial claim within thirty days from the expiration of the 120day period if the Commissioner does not act within
the 120day period.
2. Applying said rules in this case:
a. Mindanao II filed its administrative claim for refund or credit for the second, third, and fourth quarters of 2004 on 6 October
2005. The CIR, therefore, had a period of 120 days, or until 3 February 2006, to act on the claim. The CIR, however, failed to
do so. Mindanao II then could treat the inaction as a denial and appeal it to the CTA within 30 days from 3 February 2006, or
until 5 March 2006.
b. Mindanao II, however, filed a Petition for Review only on 21 July 2006, 138 days after the lapse of the 30day period on 5
March 2006. The judicial claim was therefore filed late

What is the effect of DA-489-03 on the cause of Mindanao II?

None. It cannot apply in favour of Mindanao II because such rule only applies for those who prematurely filed,
not those who filed after the lapse of the mandatory 30- day rule.
San Roque provides an exception to the mandatory and jurisdictional nature of the 120+30 day period BIR Ruling No.
DA48903 dated 10 December 2003. The BIR ruling declares that the "taxpayerclaimant need not wait for the lapse of the
120day period before it could seek judicial relief with the CTA by way of Petition for Review."
taxpayers can rely on it from the time of its issuance on 10 December 2003 until its reversal by this Court in Aichi on 6
October 2010, when the 120+30 day periods were held to be mandatory and jurisdictional
in this case, Mindanao II filed its judicial claim with the CTA on 21 July 2006. This was after the issuance of BIR Ruling No.
DA48903 on 10 December 2003, but before its reversal on 5 October 2010.
However, while the BIR ruling was in effect when Mindanao II filed its judicial claim, the rule cannot be properly invoked. The
BIR ruling, as discussed earlier, contemplates premature filing. The situation of Mindanao II is one of late filing. To repeat, its
judicial claim was filed on 21 July 2006 long after 5 March 2006, the last day of the 30day period for appeal. In fact, it filed
its judicial claim 138 days after the lapse of the 30day period.

SUMMARY OF RULES ON PRESCRIPTIVE PERIODS FOR CLAIMING REFUND OR CREDIT OF INPUT VAT (Copy paste
from the decision itself, so you dont have to refer to the full text)
A. Two-Year Prescriptive Period
1. It is only the administrative claim that must be filed within the two-year prescriptive period. (Aichi)
2. The proper reckoning date for the two-year prescriptive period is the close of the taxable quarter when the relevant sales
were made. (San Roque)
3. The only other rule is the Atlas ruling, which applied only from 8 June 2007 to 12 September 2008. Atlas states that the
two-year prescriptive period for filing a claim for tax refund or credit of unutilized input VAT payments should be counted from
the date of filing of the VAT return and payment of the tax. (San Roque)

B. 120+30 Day Period

1. The taxpayer can file an appeal in one of two ways: (1) file the judicial claim within thirty days after the Commissioner
denies the claim within the 120-day period, or (2) file the judicial claim within thirty days from the expiration of the 120-day
period if the Commissioner does not act within the 120-day period.

2. The 30-day period always applies, whether there is a denial or inaction on the part of the CIR.

3. As a general rule, the 3 0-day period to appeal is both mandatory and jurisdictional. (Aichi and San Roque)
4. As an exception to the general rule, premature filing is allowed only if filed between 10 December 2003 and 5 October
2010, when BIR Ruling No. DA-489-03 was still in force. (San Roque)
5. Late filing is absolutely prohibited, even during the time when BIR Ruling No. DA-489-03 was in force. (San Roque)