Case Summary (G.R. No. 184145)
Procedural History
The CTA Second Division partially granted DEPI’s refund claim, reducing the VAT credit to ₱1,147,683.78, and held that DEPI’s petition was timely as it fell within the two-year prescriptive period. The CIR’s motion for reconsideration was denied on January 3, 2008. On CTA En Banc review, the Second Division’s decision was affirmed by a July 17, 2008 decision and an August 12, 2008 resolution. The CIR then sought certiorari relief before the Supreme Court.
Issues Presented
- Whether DEPI’s judicial claim before the CTA was filed within the prescriptive periods mandated by Section 112 of the NIRC.
- Whether DEPI sufficiently substantiated its input-VAT claim with proper documentary evidence.
Statutory Framework for Input-VAT Refunds
Under Section 112(A) NIRC, a VAT-registered taxpayer may apply for refund within two years after the close of the taxable quarter. Section 112(D) (now subparagraph C) imposes a mandatory “120-day plus 30-day” period: the CIR must act within 120 days of a complete application, and the taxpayer must file for judicial review within 30 days after either a denial or lapse of that period. Sections 204 and 229 provide general refund regimes but have been held inapplicable to excess input VAT, which is governed specifically by Section 112.
Analysis on Timeliness
The Court reiterated that Section 112’s 120-day decision period and the subsequent 30-day judicial-review period are mandatory and jurisdictional, pursuant to the Aichi and San Roque doctrines. Although BIR Ruling No. DA-489-03 had once suggested that premature CTA filing was permissible, the Supreme Court clarified that strict compliance applies except during the erroneous-ruling window (December 10, 2003–October 6, 2010) for premature filings. This case concerned late, not premature, filing: DEPI’s 120-day period expired on December 7, 2004, and its 30-day judicial window closed on January 6, 2005. DEPI’s petition on May 5, 2005 lay 119 day
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Facts
- Dash Engineering Philippines, Inc. (DEPI) is a corporation duly registered with the SEC, listed with the Philippine Economic Zone Authority as an ecozone IT export enterprise, VAT-registered, and engaged in export sales of computer-aided engineering and design services.
- DEPI filed its monthly and quarterly VAT returns for the period January 1 to June 30, 2003.
- On August 9, 2004, DEPI filed an administrative claim for tax credit or refund in the amount of ₱2,149,684.88, representing unutilized input VAT attributable to zero-rated sales.
- The Commissioner of Internal Revenue (CIR) did not act on the claim within the prescribed 120-day period, prompting DEPI to file a petition for review with the Court of Tax Appeals (CTA) on May 5, 2005.
- On October 4, 2007, the CTA Second Division partially granted the claim, reducing the refund to ₱1,147,683.78, and held that DEPI’s petition was timely filed within the two-year prescriptive period under Section 112(A) of the NIRC.
- Petitioner’s motion for reconsideration was denied on January 3, 2008.
- On July 17, 2008, the CTA En Banc upheld the Second Division Decision, ruling that the 30-day period for judicial recourse under Section 112(D) of the NIRC is directory (permissive) and that only the two-year prescriptive period is jurisdictional.
- The CTA En Banc denied petitioner’s motion for reconsideration on August 12, 2008.
- The CIR filed a Petition for Review on Certiorari under Rule 45 before the Supreme Court.
Issues
- Whether the CTA En Banc erred in holding that DEPI’s judicial claim for refund was filed within the prescriptive period provided under the NIRC.
- Whether the CTA En Banc erred in partially granting DEPI’s claim for refund despite alleged failure to substantiate the claim with sufficient documentary proof.