Case Summary (G.R. No. 123486)
Applicable Law
The primary legal framework governing this case is the National Internal Revenue Code, specifically Section 112, which deals with the refund or tax credit of input tax. The legal provisions outline the timelines and requirements for filing claims related to Value Added Tax (VAT).
Administrative Claims Filed
Taihei filed administrative claims for VAT refund in two instances: on September 30, 2013, for the third quarter, and on December 23, 2013, for the fourth quarter of 2011. The applications, however, were eventually deemed denied due to the subsequent issuance of Revenue Memorandum Circular No. 54-2014, which retroactively changed the conditions for claims related to VAT refunds.
Revenue Memorandum Circular No. 54-2014
This circular clarified issues regarding VAT refund applications and established stricter requirements for the submission of supporting documents. It stated that the Commissioner of Internal Revenue had 120 days to decide on claims, and failure to act within this timeframe would be considered a denial.
Revenue Regulations No. 1-2017
The Respondent later issued RR 1-2017, which aimed to correct the retroactive application of RMC 54-2014. It clarified that claims filed before the effectivity of RMC 54-2014 would continue to be processed based on previously established guidelines, bringing into question whether this new regulation could revive previously denied claims.
Court of Tax Appeals Proceedings
After the Commissioner denied Taihei's administrative claims, the Petitioner filed a Petition for Review with the Court of Tax Appeals (CTA) on July 10, 2019, asserting that they were still eligible for the refunds based on RR 1-2017. The CTA, however, dismissed Taihei's petition on the basis that it was filed out of time.
Jurisdictional Issues and Timeliness
The CTA ruled that the 120-day period set for the Commissioner to act on the claims had lapsed, making the claims effective as denied. Under Section 112(C) of the National Internal Revenue Code, Taihei had only 30 days post-denial to bring the judicial claims to the CTA, which it did not do, resulting in the CTA lacking jurisdiction over the case.
Ruling of Court of Tax Appeals En Banc
The CTA En Banc upheld the earlier decisions, affirming that the judicial claims were filed beyond the stipulated timelines, thereby rendering the CTA without jurisdiction ove
...continue readingCase Syllabus (G.R. No. 123486)
Parties and Nature of the Case
- Petitioner: Taihei Alltech Construction (Phil.) Inc., a domestic VAT-registered corporation engaged primarily in the construction of industrial plants.
- Respondent: Commissioner of Internal Revenue (CIR).
- The case is a Petition for Review on Certiorari seeking reversal of the Court of Tax Appeals (CTA) En Banc's dismissal of Taihei's judicial claims for refund of unutilized excess input VAT credit amounting to P19,345,434.54 for the 3rd and 4th quarters of 2011.
Procedural History
- Taihei filed administrative claims for VAT refund before the Department of Finance's One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center within the two-year prescriptive period under Section 112(A) of the National Internal Revenue Code (NIRC).
- CIR issued Revenue Memorandum Circular (RMC) No. 54-2014 clarifying the filing and processing of VAT refund applications, establishing the 120-day period for decision, and the deemed denial rule after 120 days of inaction.
- CIR issued Revenue Regulations No. 1-2017 responding to the "erroneous retroactive application" of RMC 54-2014, prescribing rules for processing VAT claims filed prior to RMC 54-2014.
- CIR eventually denied Taihei's administrative claims due to lack of factual and legal basis.
- Taihei filed a Petition for Review before the CTA.
- CTA Second Division dismissed the petition for lack of jurisdiction due to late filing beyond the mandatory 120+30-day period under Section 112(C), NIRC.
- CTA En Banc affirmed the dismissal and denial of motion for reconsideration.
Applicable Law on VAT Refund Claims
- Section 112(A), NIRC: A VAT-registered person with zero-rated sales may apply for tax credit or refund within two years after the close of the taxable quarter.
- Section 112(C), NIRC: The CIR must act on the claim within 120 days from complete submission of documents. Failure to act within 120 days is deemed denial.
- Taxpayer has 30 days from receipt of denial or expiration of 120-day period to file judicial claim with CTA (120+30-day rule).
- RMC 54-2014 introduced stricter documentary requirements and mandated submission of complete documents at the time of filing, barring later submission of additional documents.
- RMC 49-2003 allowed 30 days (with possible extension) for submission of supporting documents after initial filing, with 120-day period starting after submission of complete documents.
- RR 1-2017 clarified that claims filed before June 11, 2014 (date of RMC 54-2014 effectivity) were to be processed under prior rules, and that RMC 54-2014 should not be applied retroactively.
Core Legal Issues
- Whether Taihei's judicial claims were filed beyond the 120+30-day jurisdictional period, rendering CTA without jurisdiction.
- Whether RMC 54-2014 was retroactively applied to Taihei's claims and improperly affected the reckoning of the 120-day pe