STEAG STATE POWER INC. v. COMMISSIONER OF INTERNAL REVENUE (Consolidated with Case No. 7554)

\l~,.vt~� REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON C ITY SPECIAL FIRST DIVISION STEAG STATE POWER, INC. CTA CASE No. 7458 (Formedy State Power Development Corporation), Petitioner, - versus - COMMISSIONER OF INTERNAL REVENUE, R espo ndent. X------------------------- -X STEAG STATE POWER, INC. CTA CASE No. 7554 (Formerly State Power Development Corporation), Members: Petitioner, Acosta, PJ, Bautista, and - versus - Casanova, JJ COMMISSIONER OF INTERNAL Promulgated: [ �' ~'~ � 0 ( /010 / 111v ~;n _________ :'_ REVENUE, x ___________ _ ___ ~ e:~o_n~~n: - - - - - - - - - - - -x AMENDED DECISION This resolves the following: 1. The Motion for Reconsideration (With Motion to Submit Supp lemental Evidence) filed by petitioner on September 22, 2009, which prays that the Decision promulgated on August 27, 2009 be reversed and set aside, and for the Court to issue an amended decision granti ng in its favor the refund in the amount ofP670,950,937.97; and 2. The Motion for Reconsideration fi led by respondent via registered mail on February 10, 2010, which prays that the Resolution dated January 5, 2010 be f~

A MEND ED DEC I SION CTA Case Nos. 7458 & 7554 Page 2 of7 reconsidered and set aside and a new judgment be rend ered di smi ssing the Petition for Review, taking into account petitioner's Comment (Re: Respondent' s Moti on for Reconsideration dated February 8, 2010) which was posted on March 19,20 10. As a backdrop, the Court rendered the Decision on August 27, 2009 denying the consolidated case due to insuffi cienc y of evid ence. Thereafter, the petiti oner fil ed on September 22, 2009 its Motion fo r Reconsideration (With Motion to Submit Supplemental Ev idence), praying the foll owing relief fro m the Court: 1. Reverse and set aside the Dec ision and issue an amended dec ision in its favor granting the refund of input tax on capital goods amounting to P67 0,950,93 7.97; 2. Grant its leave to submit and offer suppl emental evidence and allow the admi ssion of the attached documents and/or to recall the previously commissioned ICPA to supplement her report and identi fy the � documents examined in the course of her verification; and 3. On the basis of the supplemental evidence submitted, consider the same as suffici ent and competent to prove that its claim for refund of input tax on capital goods is dul y substantiated. � Subsequentl y, the Court, by a maj ority vo te, parti ally granted the forego ing Motion in a Resolution dated January 5, 2010 . In that Reso lution , thi s Co urt made a parti al ruling, applying the two-year prescripti ve period to fil e a claim, that both Petiti ons for Rev iew were timely fi led. However, as far as the substantiation issue of the case is concerned, the same was held in abeyance pending the formal offer of annexes relative to petitioner's Motion. The dispositive portion of thi s Court's Reso lution dated January 5, 2010 reads: "WHEREFORE , pet itio ner's Motion for Reconsideration (With Motion to Submit Supplemental Eviden ce) is hereby PARTIALLY GRANTED . Accordingly, let thi s case be set fo r hearing fo r the presentat ion of Ann exes "A" and "A- I" (in clu sive of sub-markings [Exhi bi ts EEE to ZZZ], inc lu sive of sub-markin gs) on January 29, 20 10 at 9:00a. m. Meanwhil e, the reso lution of pet itioner' s Moti on Reconsiderati on with regard to the iss ue of wh ether petitioner was able to substanti ate its claim for a refund or tax credit in the total amount of Php670,950,937 .97, alleged ly representing its unutilized input tax pai d on purchases an d importat ions of capita l goods from January I, 2004 to October 3 1, 2005 , is f~

AMENDED DECISION CTA Case Nos. 7458 & 7554 Page 3 of7 HELD IN ABEYANCE pending the formal offer of sa id Annexes . T hereafter the !v!otion sha ll be deemed submitted for resolution . Furthermore, respondent 's Motion to Ad mit Comment/Opposit ion is hereb y GRANTED and his Comment/ Opposition is hereby ADMITTED. SO ORDERED. " Pursuant to the foregoing Reso lution, the hearing was conducted on January 29, 2010 . T hereafter, petiti oner filed its Supplemental Formal Offer of Evidence on February 8, 20 10. Meanwhile, on February 10, 20 10 respondent posted hi s Motion for Reconsideration assailing the Resolution dated January 5, 20 10 on the fo llowing grounds: l . Petitioner's judicia l claim for refund of input VAT covering the four quarters of 2004 and January 2005 to May 2005 were fil ed beyond the prescripti ve period under Section 11 2(D) of the 1997 NIRC. Hence, this Honorable Court has no jurisdiction to entertain its judicial claim covering the said period; 2. The general ledger and 2005 income tax return submitted by petitioner are inadmi ssible as evidence since the same cannot be considered as newly discovered evidence but "fo rgotten ev idence"; 3. Petitioner fai led to establi sh the factual and legal bas is of its claim for tax credit or refund . Respondent, thus, prayed that the Resolution dated January 5, 2010 be reconsidered and set as ide and another one be rendered dismissing the Petition for Review for palpable lack of merit and for lack of jurisd iction to entertain the instant case. Within the extended period , petitioner posted on March 19, 2010 its Comment (Re: Respondent's Motion for Reconsiderati on dated February 8, 20 10) stating the following arg u m e nt s: 1. The Tax Code gives the taxpayer a fu ll 2-year period within which to file an administ~ative and judicial claim for refund ; 2. Republic Act (RA) No. 9337 took effect on November 1, 2005, hence, its claim for refund of input VAT on capital goods from Jul y 1, 2005 to October 3 1, 2005 has legal bas is; 3. The additional evidence cannot be considered as "forgotten ev idence"; Respondent's argument regarding the inapplicability of the BPI Famil y Savings Bank is baseless; and f~

AMEN DED DECISION CTA Case Nos. 7458 & 7554 Page 4 of7 4. It has suffic ientl y proven that it is entitl ed to a refund of or issuance of TCC in the total amount of Php670,950,93 7.3 7 representing its unutilized input VAT payments of Php101 ,569,776.82 and Php569,3 81,161.15 for the periods January 1, 2004 to December 31, 2004 and January 1, 2005 to October 31, 2005 , respectively. Petitioner therefore prayed that respondent' s Motion for Reconsideration be denied and a judgment be rendered ordering the respondent to make a cash refund of or issue a TCC in its favor in the total amount of P670 ,950,937.97, representing the unutilized input tax on capital goods from January 1, 2004 to October 3 1, 2005. The arguments of the parties boil down into a single issue of whether or not petitioner is entitled to its claim for refund or tax credit ofunuti lized input tax ofP670,950,937.97. After careful deliberation of this case, this Court is constrained to deny petitioner' s Motion for Reconsideration. Prior to the implementation of Republi c Act (RA) No. 9337 on November 1, 2005 , refund or tax cred it of input tax on capita l goods is all owed by RA No . 8424, otherwise known as the 1997 National Internal Revenue Code (NIRC) which took effect on January 1, 1998. Section 112(B) and (D) of the NIRC provides: "Sec. 11 2. Refunds or Tax Credits of Input Tax. - (B) Capital Goods. - A VAT-registered person may apply for the issuance of a tax credit certificate or refund of input taxes paid on capita l goods imp01ted or locally purchased, to the extent that such input taxes have not been app lied against output taxes. The app li cation may be made only within two (2) years after the close of the taxable quarter when the importation or purchase was made." XXX XXX XXX " (D) Period within which Refimd or Tax Credit of Input Taxes shall be Made. - In proper cases, the Commissioner shall grant a refund or issue the tax cred it certificate for creditab le input taxes within one hundred twenty ( 120) days from the date of subm ission of comp lete documents in support of the application fi led in accordance with Subsections (A) and (B) hereof. In case of ful l or partial denial of th e claim for ta x refund or tax credit, or th e fai lu re on the part of the Commissioner to act on the application within the period prescribed above, th e taxpayer affected may, within thirty (30) days from the receipt of the decision deny ing the claim or after the expiration of the one hundred twenty day-period , appea l the deci sion or the unacted claim with the Court of Tax Appeals." (u,

AMENDED DEC ISION CTA Case Nos. 7458 & 7554 Page 5 of7 Appl ying the forego ing provision of the N IRC in the case at hand reveals that petiti oner 's applications fo r refund of unutilized input tax with the BIR Revenue Di strict Offic e No. 50 (So uth Makati ) on June 30, 2005 covering the period fro m January 2004 to May 2005 in the amount of P408 ,768,002. 82 and on August 3 1,2005 , October 28,2005 and December 19, 2005 covering the period from June 2005 to October 200 5 in the aggregate amount of P262, 182,935. 15 1 were made within two yea rs after the close of the taxabl e quarter when the importation or purchase was made. As to its application for refund dated June 30, 200 5 is concerned, the Commi ssioner of Internal Revenue has one hundred twenty days or until October 28, 200 5 w ithin whi ch to decide on the claim. Aft er the lapse of the one hundred twenty day period, petitioner should have elevated its claim with the Court within thirty (3 0) days starting from October 29, 2003 to November 27, 2005 pursuant to Section 11 2(D) of the N IRC in relation to Secti on 11 of RA 11 25, as amended by Section 9 of RA No. 9282. Unfortunately, the Petiti on for Rev iew (docketed as CTA Case No. 74 58) coverin g the claimed input tax fo r the fo ur quarters of 2004 on April 20, 2006 and the other Petition for Rev iew (docketed as CTA Case No. 7554) covering in part the cl aimed input tax from January 2005 to May 200 5 were fil ed on December 27, 2006 , beyond the 30-day peri od set by law and therefore, the Court has no jurisdicti on to entertain the subj ect matter of the case considering that the 30-day appeal peri od provided under Section 11 of RA 11 25 is considered by the Supreme Court as a j uri sdicti onal requirement. 2 For this reason, its claimed input tax of P408,768,002. 82 should be denied considerin g that the Petitions fo r Review were fil ed beyo nd the thirty day period all owed by law. 1 Exh ibit K; page 69, Joi ntly Stipul ated Facts, CTA Case No . 7458 ; and page 62, Adm itted Facts in re lation to Annexes D, E, and F of the Petition for Rev iew, CTA Case No. 7554. ~ 2 Ker & Co., Ltd. vs. CoUJ1 ofTax Appeals, No. L- 12396, January 3 1, 1962.

AMENDED DECISION CTA Case Nos. 7458 & 75 54 Page 6 of7 On the other hand, petitioner's appeal to this Court on December 27, 2006 of its claimed input tax ofP262,182 ,935.15 covering the months from June 2005 to October 2005, as part of the Petition for Review docketed as CTA Case No. 7554, was premature. With respect to these applications for refund, the 120-day period provided in Section 112(D) of the NIRC ended on December 29, 2005; February 25, 2006 and April 18, 2006 reckoned from the respective dates when petitioner app lied for refund with the BIR on August 31, 2005, October 28, 2005 and December 19, 2005, respectively. Supposedly, after the lapse of the said 120-day period, petitioner had thirty days or until January 28, 2006, March 27, 2006 and May 18, 2006, respectively, within which to appeal to this Court pursuant to Section 112(D) of the NIRC. In view of the fact that petitioner elevated its claim before the 120-day period has ended, petitioner prematurely filed its appeal which warrants the dismissal of the Petition for Review inasmuch as no jurisdiction was acquired by the Court. This is in line with the recent pronouncement made by the Supreme Court in the case of Commissioner of Internal Revenue vs. Aichi Forging Company ofAsia, Inc. 3 WHEREFORE, respondent's Motion for Reconsideration is hereby GRANTED while petitioner's Motion for Reconsideration is hereby DENIED. Accordingly, these consolidated cases are hereby DISMISSED since the Court has no jurisdiction thereof. SO ORDERED. We concur: [____1o . LLv--L. Assbciate Justice ERNESTO D. ACOSTA Presiding Justice CAESAR~SANOVA Associate Justice 3 G.R. No. 184823 , October 6, 20 I0.

AMENDED DECISION CTA Case Nos. 7458 & 7554 Page7of7 CERTIFICATION I hereby certify that the above decision was reached after due consu ltation with the members of the Court of Tax Appeals, Special First Division in accordance with Section 13, Article VIII ofthe Constitution. Q__;:; ~ - ~ ERNESTO D. ACOSTA Presiding Justice