KEPCO PHILIPPINES CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC KEPCO PHILIPPINES CTA EB NO. 1161 CORPORATION, (CTA Case No. 8112) Petitioner, -versus- COMMISSIONER OF INTERNAL REVENUE, Respondent. X----------------------------------X COMMISSIONER OF CTA EB NO. 1166 INTERNAL REVENUE, (CTA Case No. 8112) Petitioner, Present: -versus- DEL ROSARIO, ill KEPCO PHILIPPINES CASTANEDA, JR., CORPORATION, BAUTISTA, UY, Respondent. CASANOVA, FABON-VICTORINO, MINDARO-GRULLA, COTANGCO-MANALASTAS, and RINGPIS-LIBAN , JJ. Promulgated : -tJI - JUl 11 2016 a:as-/""'- x- - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x RESOLUTION DEL ROSARIO, PJ.: This resolves Kepco Philippines Corporation (Kepco )'s "MOTION FOR RECONSIDERATION" filed on December 21 , 2015,

RESOLUTION Kepco Philippines Corporation vs. Commissioner of Internal Revenue CTA EB Nos. 1161 & 1166 (CTA Case No. 8112) Page 2 of6 without the Commissioner of Internal Revenue (CIR)'s comment, despite notice. The motion is anchored on the following grounds: 1) the Petition for Review filed in Court of Tax Appeals(CTA) Case No. 8112 was duly filed on time; that May 25, 2010 was merely the last day of the 180 day period and not the expiration or the lapse of the 180th day for the CIR to decide on the protest. The expiration or the lapse of the 180 da~ period was on May 26, 2010, or the day following the 180t day (May 25, 201 0). Thus, the 30 day period to appeal to the CTA must be counted from May 26, 2010; 2) that reckoning the 30 day period to appeal on May 25, 2010 violates the principle of exhaustion of administrative remedies as the taxpayer must wait for the lapse of the 180 day period before filing an appeal with the CTA; and, 3) that Kepco will suffer grave injustice and its case is meritorious. After a careful and thorough evaluation of the points and arguments raised in the motion, the Court En Bane finds no cogent reason to warrant the reconsideration sought. Section 228 of the National Internal Revenue Code (NIRC) of 1997, as amended, provides: SEC. 228. Protesting of Assessment.- xxx XXX XXX XXX Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation within thirty (30) days from receipt of the assessment in such form and manner as may be prescribed by implementing rules and regulations. Within sixty (60) days from filing of the protest, all relevant supporting documents shall have been submitted; otherwise, the assessment shall become final. If the protest is denied in whole or in part, or is not acted upon within one hundred eighty (180) days from submission of documents, the taxpayer adversely affected by the decision or inaction may appeal to the Court of Tax Appeals within thirty (30) days from receipt of said decision, or from the lapse of

RESOLUTION Kepco Philippines Corporation vs. Commissioner of Internal Revenue CTA EB Nos. 1161 & 1166 (CTA Case No. 8112) Page 3 of6 one-hundred eighty (180)-day period; otherwise, the decision shall become final, executory and demandable. (Emphasis supplied) From the afore-quoted provision, it is clear that a taxpayer has 30 days from the lapse of the 180-day period within which to appeal to the CTA. The Court agrees with Kepco that the last day of the 180 day period for the CIR to decide the protest was on May 25, 2010. Thus, at 11 :59:59pm on May 25, 2010, the 180-day period lapsed. The following day, May 26, 2010, was the start of the 30-day period for Kepco to file an appeal with the CTA. Hence, the 30-day period to appeal expired on June 24, 2010, and not on June 25, 2010, as claimed by Kepco. The foregoing pronouncement that the counting of the 30-day period to appeal starts from the day after the 180th day is consistent with the doctrine laid down by this Court as early as in 2008 in the case of ABN-AMRO Savings Bank Corporation (now ABN AMRO Bank, Inc.) v. Commissioner of Internal Revenue, 1 cited by KEPCO in its motion, viz: The case at bar reveals that the petitioner filed its letter protest on January 28, 2004, therefore, it has sixty (60) days, until March 28, 2004, within which to submit the relevant supporting documents. Records of the case, however, is bereft of proof that petitioner had submitted the relevant documents on or before March 28, 2004, therefore, applying the pronouncement in the Oceanic case, the 180-day period shall be reckoned from the filing of the protest on January 28, 2004, which ends on July 26, 2004. XXX XXX XXX Here, from the expiry of the 180 day period, petitioner opted to appeal to this Court the inaction of the Commissioner involving the subject deficiency documentary stamp tax assessment by way of filing the Petition for Review on October 25, 2004. Section 228 of the Tax Code clearly provides that an appeal to this Court should be made within 30 days from the lapse of the 180-day period, which as earlier mentioned is reckoned from the filing of the protest considering that there was no relevant supporting documents submitted within the 60-day period. Thus, the petitioner has thirty (30) days from lapse of the 180-day period, which starts on July 27, 2004 up to August 25, 2004 within which to appeal before this Court. (Emphases supplied) 1 C.T.A. Case No. 7089, September 10, 2008.

RESOLUTION Kepco Philippines Corporation vs. Commissioner of Internal Revenue CTA EB Nos. 1161 & 1166 (CTA Case No. 8112) In Rizal Commercial Banking Corporation v. Commissioner of Internal Revenue, 2 the Supreme Court sustained the manner by which the CTA computated the 30-day period within which an appeal by way of a petition for review may be made, that is -- from the day following the 180th day the CIR may decide the protest, viz: The CTA Second Division held: Following the periods provided for in the aforementioned laws, from July 20, 2001, that is, the date of petitioner's filing of protest, it had until September 18, 2001 to submit relevant documents and from September 18, 2001, the Commissioner had until March 17, 2002 to issue his decision. As admitted by petitioner, the protest remained unacted by the Commissioner of Internal Revenue. Therefore, it had until April 16, 2002 within which to elevate the case to this court. Thus, when petitioner filed its Petition for Review on April 30, 2002, the same is outside the thirty (30) [day] period. As provided in Section 228, the failure of a taxpayer to appeal from an assessment on time rendered the assessment final, executory and demandable. Consequently, petitioner is precluded from disputing the correctness of the assessment. In Ker & Company, Ltd. v. Court of Tax Appeals, the Court held that while the right to appeal a decision of the Commissioner to the Court of Tax Appeals is merely a statutory remedy, nevertheless the requirement that it must be brought within 30 days is jurisdictional. If a statutory remedy provides as a condition precedent that the action to enforce it must be commenced within a prescribed time, such requirement is jurisdictional and failure to comply therewith may be raised in a motion to dismiss. In fine, the failure to comply with the 30-day statutory period would bar the appeal and deprive the Court of Tax Appeals of its jurisdiction to entertain and determine the correctness of the assessment. (Emphases supplied) In the case at bar, records show that Kepco filed its Petition for Review only on June 25, 2010, which is one (1) day beyond the 30- day reglementary period. Settled is the rule that the failure to comply with the 30-day statutory period would bar the appeal and deprive the Court of Tax Appeals of its jurisdiction to entertain and determine the correctness of the assessment.3 2 G.R. No. 168498, June 16, 2006. 3 Rizal Commercial Banking Corporation v. Commissioner of Internal Revenue, G.R. No. 168498, June 16, 2006.

RESOLUTION Kepco Philippines Corporation vs. Commissioner of Internal Revenue CTA EB Nos. 1161 & 1166 (CTA Case No. 8112) Page 5 of6 Moreover, in AT&T Communications Services Philippines, Inc. v. Commissioner of Internal Revenue,4 the Supreme Court reiterated the long standing doctrine that without jurisdiction, the court may only dismiss the case and not decide it on the merits, viz: At this juncture, it bears emphasis that jurisdiction over the subject matter or nature of an action is fundamental for a court to act on a given controversy, and is conferred only by law and not by the consent or waiver upon a court which, otherwise, would have no jurisdiction over the subject matter or nature of an action. Lack of jurisdiction of the court over an action or the subject matter of an action cannot be cured by the silence, acquiescence, or even by express consent of the parties. If the court has no jurisdiction over the nature of an action, its only jurisdiction is to dismiss the case. The court could not decide the case on the merits. Needless to state, to obviate the possibility that its decision may be rendered void, the Court can, by its own initiative, raise the question of jurisdiction, although not raised by the parties. As a corollary thereto, to inquire into the existence of jurisdiction over the subject matter is the primary concern of a court, for thereon would depend the validity of its entire proceedings. Therefore, even if there was no jurisdictional issue raised by any party, the Court may look into it at anytime of the proceedings, even during this appeal. (Emphases supplied) Lastly, the right to appeal is a mere statutory privilege that requires strict compliance with the conditions attached by the statute for its exercise.5 Resort to a liberal application, or suspension of the application of procedural rules may not simply be invoked to disregard the jurisdictional and mandatory period of appeal. CIR v. San Roque Power Corporation,6 elucidates: This Court should not establish the precedent that non- compliance with mandatory and jurisdictional conditions can be excused if the claim is otherwise meritorious, particularly in claims for tax refunds or credit. Such precedent will render meaningless compliance with mandatory and jurisdictional requirements, for then every tax refund case will have to be decided on the numerical correctness of the amounts claimed, regardless of non-compliance with mandatory and jurisdictional conditions. 4 G.R. No. 185969, November 19, 2014. 5 Hedcor, Inc. v. Commissioner of Internal Revenue, G.R. No. 207575 , July 15, 2015. 6 G.R. Nos. 187485, 196113 & 197156, February 12, 2013.

RESOLUTION Kepco Philippines Corporation vs. Commissioner of Internal Revenue CTA EB Nos. 1161 & 1166 (CTA Case No. 8112) Page 6 of6 WHEREFORE, premises considered, Kepco Philippines Corporation's "MOTION FOR RECONSIDERATION" filed on December 21, 2015 is hereby DENIED for lack of merit. SO ORDERED. WE CONCUR: Presiding Justice 9u~:k, c.__ QT"-~ I Q.. 'g L(WOiVthEDLisLs~tt~AOUpTinIioSnT)A JUANITO C. CASTANEDA, ~R. Associate Justice Associate Justice (On Leave) .. CAESAR A. CASANOVA ER~P.UY Associate Justice Associate Justice ~~~~~ �(on Leave) CIELITO N. MINDARO-GRULLA AMELIA R. COTANGCO-MANALASTAS Associate Justice Associate Justice MA. BELEN M. RINGPIS-LIBAN Associate Justice

REPUBLIC OF THE PHILIPPINES Court ofTax Appeals QUEZON CITY KEPCO PHILIPPINES CTA EB No.1161 CORPORATION, (CTA Case No. 8112) Petitioner, -versus- COMMISSIONER OF CTAEB No.1166 INTERNAL REVENUE, (CTA Case No. 8112) Respondent. Present: x------------------------------------------x Del Rosario, P.]. COMMISSIONER OF Castaneda, Jr., INTERNAL REVENUE, Bautista, Uy, Petitioner, Casanova, Fa bon-Victorino, -versus- Mindaro-Grulla, Cotangco-Manalastas, and Ringpis-Liban, ]]. KEPCO PHILIPPINES Promulgated: CORPORATION, Respondent. JUL 11 2016 ~-- x-------------------------------------------------------------------------------------------- ~----x DISSENTING OPINION BAUTISTA,[.: With due reverence to the ponente, I respectfully disagree with the denial of the Motion for Reconsideration filed by petitioner.

DISSENTING OPINION CTA EB Nos.1161 & 1166 Page 2of5 Section 228 of the National Internal Revenue Code of 1997 ("1997 NIRC") is the relevant provision on this matter, viz.:1 SECTION 228. Protesting ofAssessment. - xxx XXX XXX XXX If the protest is denied in whole or in part, or is not acted upon within one hundred eighty (180) days from submission of documents, the taxpayer adversely affected by the decision or inaction may appeal to the Court of Tax Appeals within thirty (30) days from receipt of the said decision, or from the lapse of the one hundred eighty (180)- day period; otherwise, the decision shall become final, executory and demandable. From the foregoing, it is evident that upon filing of the protest, the Commissioner of Internal Revenue ("CIR") has 180 days to act thereon. Should she fail to act on the protest within the 180-day period, the taxpayer may file its appeal with the Court of Tax Appeals ("CTA") within 30 days from the lapse of the said 180 days. Article 13 of the New Civil Code sheds light on how periods are counted, as follows:2 ARTICLE 13. When the laws speak of years, months, days or nights, it shall be understood that years are of three hundred sixty-five days each; months, of thirty days; days, of twenty-four hours; and nights from sunset to sunrise. If months are designated by their name, they shall be computed by the number of days which they respectively have. In computing a period, the first day shall be excluded, and the last day included. In the case at bar, petitioner filed its protest on November 26, 2009. Hence, the CIR had 180 days therefrom or until May 25, 2010 within which to act on the protest. Following Article 13 of the New Civil Code, excluding the first day (November 26, 2009), including the 1 Underscoring ours. 2 Underscoring ours.

DISSENTING OPINION CTA EB Nos. 1161 & 1166 last day (May 25, 2010), and using the actual number of days in each month involved, counting is as follows: DAY COUNT DATE DAY COUNT DATE DAY COUNT DATE 1 0 11/26/2009 62 61 1/26/2010 123 122 3/28/2010 2 1 11/27/2009 63 62 1/27/2010 124 123 3/29/2010 3 2 11/28/2009 64 63 1/28/2010 125 124 3/30/2010 4 3 11/29/2009 65 64 1/29/2010 126 125 3/31/2010 5 4 11/30/2009 66 65 1/30/2010 127 126 4/1/2010 6 5 12/1/2009 67 66 1/31/2010 128 127 4/2/2010 7 6 12/2/2009 68 67 129 128 4/3/2010 8 7 12/3/2009 69 68 2/1/2010 130 129 4/4/2010 9 8 12/4/2009 70 69 2/2/2010 131 130 4/5/2010 10 9 12/5/2009 71 70 2/3/2010 132 131 4/6/2010 11 10 12/6/2009 72 71 2/4/2010 133 132 4/7/2010 12 11 12/7/2009 73 72 2/5/2010 134 133 4/8/2010 13 12 12/8/2009 74 73 2/6/2010 135 134 4/9/2010 14 13 12/9/2009 75 74 2/7/2010 136 135 4/10/2010 15 14 12/10/2009 76 75 2/8/2010 137 136 4/11/2010 16 15 12/11/2009 77 76 2/9/2010 138 137 4/12/2010 17 16 12/12/2009 78 77 2/10/2010 139 138 4/13/2010 18 17 12/13/2009 79 78 2/11/2010 140 139 4/14/2010 19 18 12/14/2009 80 79 2/12/2010 141 140 4/15/2010 20 19 12/15/2009 81 80 2/13/2010 142 141 4/16/2010 21 20 12/16/2009 82 81 2/14/2010 143 142 4/17/2010 22 21 12/17/2009 83 82 2/15/2010 144 143 4/18/2010 23 22 12/18/2009 83 2/16/2010 145 144 4/19/2010 24 23 12/19/2009 84 2/17/2010 146 145 4/20/2010 25 24 12/20/2009 84 2/18/2010 147 146 4/21/2010 26 25 12/21/2009 85 2/19/2010 148 147 4/22/2010 27 26 12/22/2009 86 85 2/20/2010 149 148 4/23/2010 28 27 12/23/2009 87 86 2/21/2010 150 149 4/24/2010 29 28 12/24/2009 88 87 2/22/2010 151 150 4/25/2010 30 29 12/25/2009 89 88 2/23/2010 152 151 4/26/2010 31 30 12/26/2009 90 89 2/24/2010 153 152 4/27/2010 32 31 12/27/2009 91 90 2/25/2010 154 153 4/28/2010 33 32 12/28/2009 92 91 2/26/2010 155 154 4/29/2010 34 33 12/29/2009 93 92 2/27/2010 156 155 4/30/2010 35 34 12/30/2009 94 93 2/28/2010 157 156 5/1/2010 36 35 12/31/2009 95 94 3/1/2010 158 157 37 36 1/1/2010 96 95 3/2/2010 159 158 5/2/2010 38 37 1/2/2010 97 96 3/3/2010 160 159 5/3/2010 39 38 1/3/2010 98 97 3/4/2010 161 160 5/4/2010 40 39 1/4/2010 99 98 3/5/2010 162 161 5/5/2010 41 40 1/5/2010 100 99 3/6/2010 163 162 5/6/2010 42 41 1/6/2010 101 100 3/7/2010 164 163 5/7/2010 43 42 1/7/2010 102 101 3/8/2010 165 164 5/8/2010 44 43 1/8/2010 103 102 3/9/2010 166 165 5/9/2010 45 104 103 3/10/2010 167 166 5/10/2010 46 44 1/9/2010 105 104 168 167 5/11/2010 47 45 1/10/2010 3/11/2010 169 168 5/12/2010 48 46 1/11/2010 106 105 3/12/2010 170 169 5/13/2010 49 47 1/12/2010 107 106 3/13/2010 171 170 5/14/2010 50 48 1/13/2010 108 107 3/14/2010 172 171 5/15/2010 49 1/14/2010 109 108 3/15/2010 5/16/2010 110 109 3/16/2010 111 110

DISSENTING OPINION CfA EB Nos. 1161 & 1166 Page4 ofS 51 50 1/15/2010 112 111 3/17/2010 173 172 5/17/2010 52 51 1/16/2010 113 112 3/18/2010 174 173 5/18/2010 53 52 1/17/2010 114 113 3/19/2010 175 174 5/19/2010 54 53 1/18/2010 115 114 3/20/2010 176 175 5/20/2010 55 54 1/19/2010 116 115 3/21/2010 177 176 5/21/2010 56 55 1/20/2010 117 116 3/22/2010 178 177 5/22/2010 57 56 1/21/2010 118 117 3/23/2010 179 178 5/23/2010 58 57 1/22/2010 119 118 3/24/2010 180 179 5/24/2010 59 58 1/23/2010 120 119 3/25/2010 180 5/25/2010 60 59 1/24/2010 121 120 3/26/2010 61 60 1/25/2010 122 121 3/27/2010 The ponencia provides the same last day of May 25, 2010, but continued counting the 30-day period therefrom, without skipping a day to account for the word "lapse" in Section 228 of the 1997 NIRC. Based on Section 228 of the 1997 NIRC in relation to Article 13 of the New Civil Code, the CIR had until the whole day of May 25, 2010 to grant or deny petitioner's protest. Considering that by the end of May 25, 2010, the CIR failed to act on petitioner's protest, petitioner had 30 days from the LAPSE of the 180 day period to file its appeal. Therefore, in counting the 30-day period, the first day cannot fall on May 25, 2010 since the 180-day period has not yet ended. Hence, the first day falls on May 26, 2010, when the period was indeed completed. Following Article 13 of the New Civil Code, excluding the first day (May 26, 2010), including the last day Gune 25, 2010), and using the actual number of days in each month involved, counting should be as follows: DAY COUNT DATE DAY COUNT DATE DAY COUNT DATE 1 0 5/26/2010 12 11 6/6/2010 23 22 6/17/2010 2 1 5/27/2010 13 12 6/7/2010 24 23 6/18/2010 3 2 5/28/2010 14 13 6/8/2010 25 24 6/19/2010 4 3 5/29/2010 15 14 6/9/2010 26 25 6/20/2010 5 4 5/30/2010 16 15 6/10/2010 27 26 6/21/2010 6 5 5/31/2010 17 16 6/11/2010 28 27 6/22/2010 7 6 6/1/2010 18 17 6/12/2010 29 28 6/23/2010 8 7 6/2/2010 19 18 6/13/2010 30 29 6/24/2010 9 8 6/3/2010 20 19 6/14/2010 30 10 9 6/4/2010 21 20 6/15/2010 6/25/2010 11 10 6/5/2010 22 21 6/16/2010

DISSENTING OPINION CTA EB Nos. 1161 & 1166 Based on the records, petitioner filed its Petition for Review with the CTA on June 25,2010, the last day provided by law. Hence, it was filed within the statutory period. Having said the foregoing, I vote to grant petitioner's Motion for Reconsideration. LOVELL(.BAUTISTA Associate Justice