PANAY POWER CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

n �~ ~ REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY EN BANC PANAY POWER CORPORATION, C.T.A . EB NO. 551 Petitioner, (C.T.A. Case Nos. 7353 & 7401) Members: - versus - ACOSTA, PJ CASTANEDA, JR. BAUTISTA, UY, CASANOVA, PALAN CA-E NRI QUEZ, FABON -VICTORINO, MINDARO - GRULLA, and COTANGCO - MANALASTAS,JJ. COMMISSIONER OF INTERNAL Promulgated: REVENUE, ~J~ AN~ 2 ~ 7 2~ 011 -/-l~~t1r~"~'-:'/~~ ' ~ � ~f -- Respondents. x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x DECISION Fabon - Victorino, J.: This is a Petition for Review 1 filed by petitioner Panay Power Corporation on October 23, 2009, seeking to set aside the (1) Decision 2 dated May 15, 2009 of the Court in Division in the 1 En Bane Case Docket, pp. 1- 55. / 2 Penned by Associa te Ju stice Olga Palan ca- Enriquez and concurred by Associate Justices Juanita C. Castaneda Jr. and Erlinda P. Uy.

Decision C. T.A. EB NO. 551 consolidated cases docketed as C.T.A. Cases Nos. 7353 and 7401, denying due course to petitioner's claim for refund of its alleged creditable and unutilized input Value-Added Tax ("VAT") in the amount of Nine Million Two Hundred Thirty Seven Thousand Eight Hundred Sixty and 07/100 Pesos (P9,237,860.07) for the third and fourth quarters of calendar year 2003; and (2) the Resolution 3 dated September 30, 2009, denying petitioner's Motion for Reconsideration for lack of merit. The respective dispositive portions of the assailed Decision and Resolution read as follows: WHEREFORE , prem ises considered, the petition is hereby DENIED DUE COURSE, and accordingly, DISMISSED. SO ORDERED . XXX XXX XXX WHEREFORE, premises considered, petition er 's "Motion for Reconsideration " is hereby DENIED fo r lack of merit. SO ORDERED. I 3 See Note 2.

Decision C. T.A. EB NO. 551 THE PARTIES Petitioner is a duly organized domestic corporation with principal office at the 2nd Floor, Benpres Building, Mera lco Avenue, Pasig Ci t y. It is into the business of power generation. and wholesale of electric power to the National Power Corporation (NPC), private electric utilities and electric cooperatives, and other businesses incident thereto, including but not limited to the sale of by-products of power generation. It is authorized to operate facilities for electric generation and is registered with the Energy Regulatory Commission ("ERC"). It is a registered VAT taxpayer with Tax Ident ification Number ("TIN") 004-964-861-VAT. Respondent, on the other hand, is the duly appointed Commissioner of Internal Revenue (CIR) with the authority to decide, . approve and grant or deny application for refunds or issuance of tax credit certificate of erroneously or excessively collected or paid taxes, with office address at the Bureau of Internal Revenu e (BIR) National Office Building, BIR Road,J'/ Diliman, Quezon City.

Decision C. T.A. EB NO. 551 Pa ge 4 of 2 9 THE FACTS The facts as found by the Court in Division are as follows: Petitioner filed its Quarterly VAT Returns for calendar year 2003 on the following dates: Pe riod s Date of Filing Ex hibit I 3ra Quarter October 27 2003 4th Quarter - Original Janua ry 26, 2004 "E" I February 20, 2004 Amended Jul_y 28,2004 "F" Second Amended "G" i - - - - -- - --- - - -- ! "H" On December 22, 2004, petitioner filed an administrative claim for refund of unutilized excess input VAT for the four (4) quarters of calendar year 2003 in the amount of P18,002,410.37 with the BIR Revenue District Office No. 043. Since respondent has not acted on petitioner's administrative claim for refund, petitioner elevated its claim before this Court by way of two separate Petitions for Review, docketed as C.T.A. Case No. 7353 and 7401. CTA Case No. 7353 / In C.T.A . Case No. 7353, in his Answer, respondent alleged by way of special and affirmative defenses:

Dec isio n C. T.A. EB NO. 5 51 "6. The claim for refund is still under examination by the respondent's Bureau; 7. The burden of proof is upon the petitioner to prove that it is entitled to the claim for refund; 8 . The grant of a claim for refund [is] tantamount to an exemption from taxation which is construed strictly against the claimant and in favor of the taxing authority; 9 . The taxes sought to be refunded were paid in accordance with law; the burden of proof to the contrary is upon the petitioner-claimant to show with clear and unambiguous provision of law supporting the same." CTA Case No. 7401 While in C.T.A. Case No. 7401, respondent alleged the following: "2 . He SPECIFICALLY DENIES the allegations in paragraphs 1, 3, 4, 5, 10, 11 and 12 of the petition for lack of knowledge or information sufficient to form a belief as to the truth thereof; 3. He SPECIFICALLY DENIES the allegations in paragraphs 6, 7, 8, 9, 13 and 14 of the petition for being, as a whole, mere opinions, gratuitous assertions 1 and erroneous conclusions or interpretations of fact and/or the law, the truth of the matter being those stated hereunder; 4. Petitioner's alleged claim for refund is subject to administrative routinary / investigation/examination by the Bureau of Internal Revenue;

Decisio n C. T.A. EB NO. 551 5. The amount of P6,916,039.97 being claimed by petitioner as alleged unutilized input VAT on domestic purchases of goods and services for the fourth quarter of 2003 is not properly documented; 6. In an action for refund/credit, the burden of proof is on the taxpayer to establish its right to refund, and failure to sustain the burden is fatal to the claim for refund/credit; 7. Petitioner must show that it has complied with the provisions of Sections 204 (C) and 229 of the 1997 Tax Code on the prescriptive period for claiming tax refund/credit; 8. Claims for refund are construed strictly against the claimant for the same partake the nature of exemption from taxation (Commissioner of Internal Revenue vs. Ledesma, 31 SCRA 95) and as such, they are looked upon with disfavor (Western Minolco Corporation vs. Commissioner of Internal Revenue, 124 SCRA 1211)." On April 27, 2006, petitioner filed a Motion for Consolidation, praying for the consolidation of CTA Case No. 7401 with CTA Case No. 7353, the case bearing the lower docket number, which the Court granted in a Resolution dated May 26, 2006. In view of th e consol idation, on July 18, 2006, the J parti es fil ed th eir "Joint Stipulation of Facts and Issues" and stipulated the following facts:

Decisio n C. T.A. EB NO. 551 1. Existence of VAT Ruling No. 050-03 dated December 1, 2003. 2. On 26 January 2004, petitioner filed its original quarterly VAT return for the fourth quarter of taxable year 2003. The said quarterly VAT return was amended and filed with the BIR on 20 February 2004 and 28 July 2004. 3. Existence of Section 112(A) and (D) of the Tax Code. 4. To date, respondent has not favourably acted upon petitioner's administrative claim for refund." In the course of the proceedings, petitioner presented several witnesses who identified documents in support of its claim for refund. On the other hand, respondent submitted the cases for decision without presenting any witness. On December 23, 2008, petitioner filed its Memorandum. On January 16, 2009, the cases were deemed submitted for decision sans the memorandum from respondent, who failed to file any despite the directive issued by the Court in Division on November 26, 2008. On May 15, 2009, the Court in Division rendered the / assailed Decision denying petitioner's judicial claim for

Decision C. T.A. EB NO. 551 refund/issuance of a TCC for its unutilized input VAT for the third and fourth quarters of calendar year 2003 for having been filed beyond the two-year prescriptive period reckoned from the close of the taxable quarter when the relevant sales were made as enunciated in the case of Commissioner of Internal Revenue vs. Mirant Pagbilao Corporation [Formerly Southern Energy Quezon, Inc., G.R. No. 172129, September 12, 2008 (the "Mirant Case")]. Believing otherwise, petitioner filed a "Motion for Reconsideration" on June 4, 2009, which the Court in Division denied for lack of merit in its Resolution of September 30, 2009. On October 23, 2009, petitioner 'filed the instant Petition for Review raising the following issues for the resolution of the Court En Bane, to wit: The I ssues I. WHETHER OR NOT THE PETITIONS FOR REVIEW FILED BY THE PETITIONER FOR C::.T.A. CASE NOS. 7353 AND 7401 ARE .ALREADY BARRED BY PRESCRIPTION. II. WHETHER OR NOT PETITIONER IS ENTITLED TO A REFUND AND/OR ISSUANCE OF TAX / CREDIT CERTIFICATE FOR THE UNUTILIZED

Decision C. T. A. EB NO. 551 INPUT VAT PAYMENTS IN THE AMOUNT OF pg ,237,860.07. In the Resolution dated December 15, 2009, respondent was granted ten (10) days from notice, within which to comment on the Petition for Review. On February 10, 2010, the instant petition was deemed submitted for decision without any comment from respondent whose second Motion for Extension of Time to File comment was denied. On March 3, 2010, respondent, instead of seeking a reconsideration of the foregoing resolution, filed a Motion to Admit Comment. In the attached Comment dated March 1, 2010, respondent agrees with the finding of the Court in Division that prescription had set in justifying the denial of the two Petitions for Review but on a different ground. He argues that judicial claims for refund of input VAT are dismissible as they were instituted after the lapse of the 30-day period to appeal prescribed under Section 112(D) of the NIRC, as amended, and not because they were filed beyond the two-year prescriptive J period.

Decision C. T.A. EB NO. 551 THE RULING OF THE COURT EN BANC Petitioner strongly rejects the finding of the Court in ' Division that prescription had already set in when it filed its judicial claims for refund for the third and fourth quarters of calendar year 2003 on October 26, 2005 and January 18, 2006, respectively . It argues that the two-year prescriptive period for filing a claim for refund of unutilized creditable input VAT should be reckoned from the date of the filing of the corresponding quarterly VAT return as held in Atlas Consolidated Mining & Development Corporation v. CIR 4 and not from the close of taxable quarter when the relevant sales were made as erroneously ruled by the Court in Division following the doctrine laid down in CIR v . Mirant Pagbilao Corporation. 5 According to petitioner, the former aimed to harmonize Sections 112(6), 114 and 229, all of the NIRC, as amended, and it was the prevailing doctrine at the time the two Petitions for Review were instituted in Court. Further, the Mirant Case has a different factual milieu, thus the principle laid therein cannot be considered as a precedent but a mere obiter dictum not binding upon petitioner. In contrast, j 4 G.R. Nos. 141104 and 148763, Jun e 8, 2007 . 5 G.R. No.l719, September 12, 2008 .

Decision C. T.A. EB NO. 551 the Atlas Case resolved the very same issue raised in this petition. There is also no substantial difference between the wording of Section 106 of the 1977 Tax Code and Section 112 of the 1997 Tax Code, as amended, that could justify a change in the interpretation of basically the same provisions. Although the doctrine in the Mirant case is in direct conflict with that of the Atlas Case, to the mind of petitioner, the former did not overturn the latter. Petitioner posits that only a decision of the Supreme Court En Bane can reverse or modify an existing principle promulgated by its Division like the two conflicting cases. It is also flawed to state that judicial interpretations become part of the law as of the date of its enactment as it merely establishes the contemporaneous legislative intent of the law, applying Senarillos v. Hermosisima. 6 The attendant circumstances of the cited case are different, therefore inapplicable in the case at bar. Even granting that the Mirant Case is now the prevailing doctrine, the same cannot be applied retroactively as to impair / 6 100 Phil 501.

Decisio n C. T.A. EB NO. 551 the vested rights of petitioner, who in good faith, relied on the old doctrine in pursuing its judicial claim for refund. Contrary to the opinion of the Court in Division, procedural laws may not be given retrospective effect if it would work injustice to those who would be affected. Besides, Section 112(A) is not a procedural legislation since it affects petitioner's substantive right to claim for a refund. If at all, the new doctrine enunciated in the Mirant Case should apply to cases filed after its promulgation on September 12, 2008 and not to those fi led prior thereto such as petitioner's cases. With all the foregoing, petitioner maintains that it is entitled to a refund and/or issuance of a tax credit for its unutilized input VAT payments in the total amount of Php9,237,860.07, having complied with all the requirements specified under the rules. Indeed, the primordial issue in a claim for refund or tax credit of creditable and unutilized input VAT attributable to zero- rated sales or effectively zero-rated sales is the timeliness of the filing of such claim, both in the administrative and judicial levels. Admittedly, the governing rule on the matter is Section 112 of j the NIRC, as amended. It fact, petitioner in its own pleading

Decision C. T.A. EB NO. 551 invokes the said provision in asking j ud icial interve ntio n in its petitions for review separately filed before the Court in Divisi on. The relevant portion of Section 112 of t he NIRC, as amen ded, reads as follows: "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(8)(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 th e ta x payer is engaged in zero - rated or effectively zero - rated sales and also in ta xable or exempt sale of goods or properties or serv ices, and the amount of creditable input ta x due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on th e basis of the volume of sal es ." XXX XXX XXX (D) Period within which Refund or Ta x Credit of Input Ta x es shall be Made. - In proper cases, the Commissioner shall grant a refund or issue the ta x credit certificate for / creditable input ta xes within one hundred

Decision C. T. A. EB NO. 551 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. "In case of full or partial denial of the claim fo r ta x refund or ta x 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, app eal the decision or the unacted claim with the Court of Tax Appeals." (Emphasis supplied) XXX XXX XXX Clearly, a VAT-registered person has two {2) years after the close of the taxable quarter when the pertinent sales were made, within which to apply with respondent a claim for refund or ta x credit of creditable input tax which remains unutilized. Respondent, on th e other hand, has 120 days from the date of submission of complete documents in support of the application for refund or tax credit of input tax to grant or deny th e same, pursuant to Section 112(0). Upon riotice of denial or expiration of the allowable period of 120 days without any action on the part of respondent, the VAT-registered person has 30 days, with in which to appeal the adverse decision or the inact ion of respond e nt with th e Court of J Ta x App ea ls via a petition for review.

Decision C. T.A. EB NO. 551 Note that the two-year prescriptive limit referred to in the provision is only for the filing of an ad ministrative claim for refund or tax credit with respondent and not resort to Court. It starts to run after the close of the taxable quarter when t he pertinent sales were made irrespective of when the payment w as made as enunciated in the case of Intel v. CIR, 7 where t he Supreme Court held, thus: Under Section 106 (A)(2)(a)(1) in relation to 112 (A) of the Tax Code, a ta x pay er engaged in zero-rated or effectively zero-rated transactions may apply for a refund or issuance of a tax credit certificate for input ta x es paid attributable to such sales upon complying with the following requisites: ( 1) th e ta xpayer is engaged in sales which are zero-rated (like export sales) or effectively ze ro-rated; (2) the taxpayer is VAT-registered; (3) the claim must be filed within two years after the close of the taxable quarter when such sale were made; (4) the creditable input tax due or paid must be attributable to such sales, except the transitional input tax, to the extent that such input ta x has not been applied against the output tax; and (5) in case of ze ro - rated sal es under Section 106(A)(2)(a)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with BSP rules and regulations. Since delay on the part of respondent will not in any w ay extend the allowable 120-day period to act on the application for/ 7 G.R. No. 166732, Apri l 27, 2007.

Decision C. T. A. EB NO. 551 refund, it is incumbent upon the aggrieved taxpayer - such as petitioner - to challenge respondent's inaction before the CTA via a petition for review filed under Rule 42 of the Rules of Court within 30 days from the lapse of the 120 days in the administrative level. 8 Failure to seasonably seek judicial recourse is fatal as it will deprive the Court of the authority to hear and determin e the claim in a trial de novo, where evidence are presented anew in support of the parties' respective positions. The Supreme Court echoed this ruling in the case of Commissioner of Internal Revenue vs. Mirant Pagbilao I, Corporation [Formerly Southern Energy Quezon, Inc.]9 and San Roque Power Corporation vs. Commissioner of Internal Revenue. 10 Thus, to eliminate all doubts in the application of the doctrine articulated in the foregoing cases, the Court En Bane in case of Mindanao II Geothermal Partnership vs. Commissioner of Internal Revenue 11 spelled out the reasons therefore, in this wisej 8 Section 4, Rule 8 of the Revised Rules of the CTA. 9 G.R . No . 172129, September 12, 2008, 565 SCRA 154, 171. 10 G.R. No. 180345, November 25, 2009. 11 C.T.A. EB No. 513, March 10, 2010.

Decision C. T.A. EB NO . 55 1 Page 17 of 2 9 "First, the applicable provision of law in the instant case which can be found under Section 112 of NIRC of 1997 is clear and unambiguous. Under the verba legis rule, if the words of the law are clear, plain, and free from ambiguity, it must be given its literal meaning and applied without any interpretation. 12 It is not within the province of the Court to inquire into the wisdom of the law, for indeed, we are bound by the words of the statute. 13 As in the case of Abello vs. Commissioner of Internal Revenue14 the Supreme Court enunciated: It bears stressing that the first and fundamental duty of the Court is to apply the law. When the law is clear and free from any doubt or ambiguity, there is no room for construction or interpretation. As has been our consistent ruling, where the law speaks in clear and categorical language, there is no occasion for interpretation; there is only room for application (Cebu Portland Cement Co. v. Municipality of Naga, 24 SCRA 708 [1968]) Where the law is clear and unambiguous, it must be taken to mean exactly what it says and the court has no choice but to see to it that its mandate is obeyed (Chartered Bank Employees Association v. Ople, 138 SCRA 273 [1985]; Luzon Surety Co ., Inc. v. De Garcia, 30 SCRA 111 [1969]; Quijano v. Development Bank of the Philippines, 35 SCRA 270 [1970]). XXX --- XXX --- XXX. Second, the Atlas ruling was not modified by Mirant. It is noteworthy that in the Atlas case, / petitioner claimed for a refund/credit of the 12 Com m iss io ner of I n te rn a l Revenu e vs. Central Lu zon Dr ug Corpo rati o n, G .R. No. 159610, June 12, 2008 , 554 SCRA 3 98. 13 Co mmi ss io ner of Custo m s vs . Ma nila Sta r Ferry, Inc., G.R. Nos. L-3 177 6 -78, October 21, 1993, 227 SCRA 3 17. 14 G.R . No . 120 721 , Februa ry 23, 2005 , 452 SC RA 162 cit ing th e case o& Rizal Commercial Ban k ing Co rpo ratio n vs. In te rm ed iate Ap pe ll ate Cou rt , G.R. No. 748 5 1, DeceMber 9, 1999, 320 SCRA 289.

Decision C. T.A. EB NO . 551 input VAT on its purchases of ca pital goods for the taxable quarters 1990 and 1992 where the applicable law was the then Tax Code of 1977. In contrast with the Mirant case where the present NIRC of 1997 was applied. Clearly, the cases involved different tax codes. Hence, there is no modification of ruling to speak of. If indeed there was modification of the Atlas ruling, the Supreme Court effected and adopted outright in the Mirant case the literal application of Section 112 (A) of the NIRC of 1997 notwithstanding the existence of a contrary rule in the Atlas case. Significantly, Mirant case itself confirmed the retroactive application of the Supreme Court's current view in the reckoning of the two-year prescriptive period in a claim for refund. Further, petitioner's contention of non- retroactivity of Mirant ruling runs counter to a more recent decision of the Supreme Court in the case of San Roque Power Corporation vs. Commissioner of Internal Revenue ("San Roque case"). 15 In San Roque case, petitioner San Roque filed a claim for refund of its unutilized input VAT for the period covering January to December 2002. It filed its judicial claim on April 15, 2004. In determining the reckoning of the two-year prescriptive period, the Supreme Court held: "The last requirement determines that the claim should be filed within two years after the close of the taxable quarter when such sales were made. The sale of electricity to NPC was reported at the fourth quarter of 2002, which closed on 31 December 2002. Petitioner had until 30 December 2004 to file its claim for refund or credit. For the period January to Ma rch 2002, petitioner filed an amended request for refund or tax credit on 30 May 2003; for the period July 2002 to September 2002, on 27 February 2003; and for the period October / J 2002 to December 2002, on 31 July 15 G.R . No. 180345, Novembe r 25, 2009 .

Decisio n C. T.A. EB NO . 5 51 Pa ge 19 of 29 2003. In these three quarters, petitioners seasonably filed its requests for refund and tax credit. However, for the period April 2002 to May 2002, the claim was filed prematurely on 25 October 2002, before the last quarter had closed on 31 December 2002." It should be emphasized that when Mirant case was promulgated, San Roque case was already and still pending before the Supreme Court. Yet, the Supreme Court in deciding San Roque case, it retroactively adopted Mirant ruling. Hence, We see no reason why We should not adopt the same ruling to the instant case. Moreso, assuming arguendo that the Mirant case modified Atlas ruling, it is nonetheless clear that the provision itself, standing alone, provides that input VAT payments attributable to zero-rated or effectively zero-rated sales not otherwise applied against output tax may be claimed within the two years after the close of the taxable quarter when the sales were made. And, where a provision of law spea ks categorically, the need for interpretation is obviated, no plausible pretense being entertained to justify non-compliance . All that has to be done is to apply it in every case that falls within its terms. 16 XXX - - - XXX --- XXX. " Third, the law takes effect from the time of its effectivity and not from t he time of the promulgation of a decision applying the law. Considering that the law applicable here is the 1997 Tax Code which took effect on January 1, 1998, 17 petitioner is very well within its coverage. Notably, it is only upon effectivity of the statute that legal rights and obligation become available to those entitled by the language of the statute. 18 The validity and 16 Ca r me lin o F. Pansaco la vs. Comm iss ioner of I nte rn al Reve nu e, G.R. No. 159991 , November 16, 200 6, 507 SCRA 81 citin g th e case of Alli ed Bro kerage Corpora t ion v s. Co mmi ss ioner of Custo ms, No. L-27641 , Au gust 31, 197 1, 40 SC RA 555, 559, 560. / 17 I bid. 18 Abakada Guro Party Li st, et.a l. vs. Cesar V. Pu risima , et. al., G.R. No. 1667 15, Au g ust 14, 2008, 562 SCRA 251.

Decisio n C. T.A. EB NO. 551 Page 2 0 of 29 obligatory force of a law proceed from a fact that it has first been promulgated. 19 Fourth, the Court's interpretation of the law is part of the law as of the date of its enactment since the Court's interpretation merely establishes contemporary legis lative intent that construed the law purports (sic) to carry into effect. 20 Such judicial doctrine does not amount to the passage of a new law, but consists merely of a construction or interpretation of a pre-existing one, and that is precise ly the situation obtaining in this case. 21 Significantly, in the very recent case of Commissioner of Internal Revenue vs. Aichi Forging Company of Asia, Inc., 22 t h e Final Arbiter, in an erudite disquisition interpreted Section 112 of the Tax Code, as amended, as referring only to the filing of the administrative claim for refund or credit with respondent and does not include judicial recourse, thus: " There is nothing in Section 112 of the NIRC to support respondent's 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 quarte r when the sales were m ade, apply for the issuance of a tax credit certificate or refund of creditable input ta x due or paid attributable to such sales." Th e phrase "within two (2) years xxx a pply for t he issuance of a tax 19 Mi g hty Corpor atio n vs. E. & J. Ga llo Winery, G. R. No. 154342, July 14, 20 04, 43 4 SCRA 4 73 . 20 Phili ppine Co nstitu t io n Association vs. Enriq uez , G. R. No . 113 105 , Augu st 19, 1994, 235 SCRA / 506 citin g Peop le vs . Li cera, 65 SCRA 270. 21 Kepco Ilija n Co rporati on vs. Com m issioner of In te rn al Revenue, C.T.A. Case No . 6590, Resolu t io n dated July 23, 2009 citing Se nari llos vs. Hermosisim a, et. al., No. L- 10662, December 14, 1956, 100 Phil. 50 1. 22 G. R. No. 184823, October 6, 2010 .

Decision C. T.A. EB NO. 551 Page 21 of 2 9 credit certificate or refund" refers to application for refund/credit filed with the CIR and not to appeals made to the CTA. T his is apparent in t he f irst paragra ph of Subsection (D) of t he sa m e provisio n, 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(0) 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 l12( 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 in stances, th e ta x payer has 30 days within which to fil e an appeal wit h t he CTA . As we see it then, the 120- day period is crucial in filing an app eal with the CTA. (Underscoring ours) Agai n, fo llowing the fore going j urispr ud ence, an agg rieved VAT- regi stered pe rso n, w hose clai m fo r t ax refund or ta x credit has bee n denied or has not bee n act ed upon in th e admin istrative level may, within 30 days from receipt of the adverse decision or after the ex piratio n of t he 120-day period without any action on the part of responde nt , seek j ud icia l reli ef / via a petition for revi ew with this Court seating in Division.

Decision C. T.A. EB NO. 551 Until and unless the Supreme Court reverses its own ruling, this Court is obliged to apply the prevailing jurisprudence as enunciated in the cited relevant cases. By tradition in our system of judicial administration, the Supreme Court, as the final Arbiter of any justiciable controversy, 23 has the last word on what the law is. There is only one Supreme c�ourt from whose decisions all other courts should take bearings. 24 Verily, petitioner's administrative claim for refund and/or tax credit for the third and fourth quarters of taxable year 2003 were seasonably filed on December 22, 2004. The same is however not true insofar as its judicial claims are concern. It was establish ed that respondent failed to act on petitioner's claims for refund or tax credit within the allowable period of 120 days reckoned from December 22, 2004 or until April 21, 2005. Henceforth, petitioner had 30 days or until May 21, 2005, within which to invoke this Court's competence via a petition for revi ew. But for reason only known to it, petitioner filed its judicial claims for the third and fourth quarters of taxable year 2003 only on October 26, 2005 and January 18, 2006, respectively. At that time, the Court was already deprived of its ~ " Dante Nacuray et, al. v. NLRC, 270 SCRA 59 24 Commissioner of Internal Revenue vs. Michael J. Lhuiller Pawnshop, I nc., G.R. No. 150947, July 15, 2003, 406 SCRA 178 citing the case of GS!S vs. Court of Appea ls, 334 Ph ils. 163, 175 .

Decision C. T.A. EB NO. 551 ju risdi ction t o entertain th e clai m s as t hey were fil ed way beyond t he 30-day period to appea l provid ed und er Section 112(D) of the 1997 Tax Code, as amended. Note that the 30-day period to appeal the decision or inaction of respondent is also express ly m an dated in Section 11 of Repub lic Act No. 9282, 25 whic h ame nd ed Re pu bli c Act No. 112526 , to wit: "SEC. 11. Who May Appeal; Mode of Appeal; Effect of Ap peal. - Any party adversely affected by a decision, ruling or inaction of the Commissioner of Internal Revenue, the Commissioner of Customs, the Secretary of Finance, the Secretary of Trade and Industry or the Secretary of Agriculture or the Central Board of Assessment Appeals or the Regional Trial Courts may file an appeal with the CTA within thirty (30) days after the receipt of such decision or ruling or after the expiration of the period fixed by law for action as referred to in Section 7(a)(2) herein. "Appeal shall be made by filing a petition for review under a procedure analogous to that provided for under Rule 42 of the 1997 Rules of Civil Procedure with the CTA within thirty (30) days from the receipt of the decision or ruling or in the . case of inaction as herein provided, from the expiration of the period fixed by law to / act thereon ." XXX XXX XXX ..c./ 25 An Act Expa nding the Ju risdiction of the Court of Tax Appea ls (CTA), Elevating its Rank to the Level of a Coll egia te Court with Special Jurisdiction and Enlarging its Membe rship , Am ending fo r th e Purpose Certain Sections of Rep ubli c Act No. 1125, as me nd ed, otherwi se known as the Law Creati ng the Court of Tax Appea ls, and for other purposes. 26 the La w Creating the Court of Tax Appea ls.

Decision C. T.A. EB NO. 551 Established is the rule that an appeal is neither a natural nor constitutional right but a mere statutory privilege. Hence, parties who seek to avail of the privilege must comply with the statutes or rules allowing it. 27 The perfection of an appeal in the manner and within the period set by law is not only mandatory, but as well jurisdictional. And failure to perfect an appeal within the reglementary period deprived the court otherwise competent - of jurisdiction to hear and determine it. In the 1996 case of Videogram Regulatory Board v. Court of Appeals 28 , the Supreme Court, no less, chronicled the inviolability of the period of perfecting an appeal in this fashion: x x x There are certain procedural rules that must remain inviolable, like those setting the periods for perfecting an appeal or filing a petition for review, fo r it is doctrinally entrenched that the right to appeal is a statutory right and one who seeks to avail of that right must comply with the sta t ute or rules. The rules, particularly the requirements for perfecting an appeal within the reglementary period specified in the law, must be strictly followed as they are considered indispensable interdictions against needless delays and for orderly discharge of judicial business. Furthermore, the perfection of an appeal in the manner and within the period permitted by law is not only mandatory but also jurisdictional and the failure to perfect the appeal renders the / judgment of the co urt final and executory. Just 27 Air France Philippines v. Leachon, 472 SCRA 439, 442-443 [2005]. 28 G.R. No. 106564, Novembe r 28, 1996.

Decision C. T.A. EB NO. 551 as a losing party has the right to file an appeal within the prescribed period, the winning party also has the correlative right to enjoy the finality of the resolution of his/her case. These periods are carefully guarded and lawyers are well-advised to keep track of their applications. After all, a denial of a petition for being time - barred is a decision on the merits. Irrefragably, the timeliness of an appeal is a jurisdictional caveat that not e~en the Supreme Court can trifle with. 29 Precisely this Court, in a number of cases, emphasized the pronouncement in Aichi Case that a taxpayer claimant must prove not only his entitlement to a refund, but also his compliance with the procedural due process which petitioner utterly failed to do. Non - observance of the prescriptive periods within which to file the administrative and judicial claims will result in the denial of the relief sought as should happen in this case. Note that procedural rules should be treated with utmost respect and due regard since they are designed to facilitate the adjudication of cases to remedy the worsening problem of delay in the resolution of rival claims and the administration of justice30 . There is no quarrel that litigation is not a game of technicality, but every case must be prosecuted in accordance with t h e / 29 BA vs. Gerochi, Jr. 230 SCRA 9 [1 994 ]. "' Fortech v. Corona, G.R. No. 131457, November 17, 1998.

De cis io n C. T.A. EB NO. 551 prescribed procedure to ensure an orderly and speedy administration of justice. Not only litigants but also the courts are enjoined to abide strictly by the rules. While there have been instances where the Supreme Court allowed relaxation in the application of the rules, but this flexibility was never intended to forge a bastion for erring litigants to violate the rules with impunity. 31 Far from petitioner's protestation, procedural rules should not to be belittled or dismissed simply because their non- observance would result in prejudice to a party's substantive rights. 32 In point is the ruling in Spouses Baniqued v. Teresita S. Ramos and the Register of Deeds o Manila, 33 where the Supreme Court held, thus: In a catena of cases, the Court has ruled that the right to appeal is neither a natural right nor a part of due process. It is merely a procedural remedy of statutory origin, a remedy that may be exercised only in the manner prescribed by the provisions of law authorizing such exercise. Hence, the legal requirements must be strictly complied with. It would be incorrect to consider the requirements of the rules on appeal as merely harmless and trivial technicalities that can be discarded. Indeed, deviations from the rules cannot be tolerated. In these times when 31 Norris v . Hon. Jose Parentela, Jr. et., al, G.R. No. 143216, February 27, 2003. / 32 Pedrosa vs. Hill, 257 SCRA 373 (1996]. 33 G.R. No. 158615, March 4, 2005.

Decision C. T.A. EB NO. 551 Pa ge 27 of 29 court dockets are clogged with numerous litigations, such rules have to be followed by parties with greater fidelity, so as to facilitate the orderly disposition of cases. After a judgment has become final, vested rights reacquired by the winning party. If the proper losing has the right to file an appeal within the prescribed period, then the former has the correlative right to enjoy the finality of the resolution of the case. Thus, we agree with the Court of Appeals that the trial court did not commit any grave abuse of discretion amounting to lack or excess of jurisdiction when it denied t he petitioners' motion to elevate the records to the CA. Hence, for failure to appeal within the prescribed period, petitioner is now barred from claiming a refund or issuance of a tax credit certificate for its alleged unutilized input VAT from its domestic purchases of taxable goods and services attributable to its zero-rated sales for the period covering the third and fourth quarters of calendar year 2003 in the aggregate amount of Php9,237,860.07. WHEREFORE , the instant Petition for Review filed by petitioner Panay Power Corporation is hereby DENIED . The Decision dated May 15, 2009 and the Resolution dated September 30, 2009 are AF FI RM ED, however, the dismissal is on the ground that C.T.A. Cases Nos. 7353 and 7401 were filed beyond the thirty (30)-day period to appeal pursuant to Section /

Decision C. T.A. EB NO. 551 Page 28 of 2 9 112(D) of the National Internal Revenue Code of 1997, as amended . SO ORDERED. ON-VICTORINO WE CONCUR: L~ . o~ ERNESTO D. ACOSTA Presiding Justice (On Leave) ~ JUANITO C. CASTANEDA, JR. CAESAR A. CASANOVA Associate Justice Associate Justice . ER~P. UY Associate Justice ~~~rW ~N.M~-G~ OLG.A: PALANCA- ENRIQU~ CIELITO N. MINDARO-GRULLA Associate Justice Associate Justice AMEL/~AN./ G~~A~ NAL~ ASTAS Associate Justice

Decision C. T.A. EB NO. 551 CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. LA: p. \L,.._ ERNESTO D. ACOSTA Presiding Justice i ,�