CBK POWER COMPANY LIMITED v. COMMISSIONER OF INTERNAL REVENUE

REPUDUCOF TilE PHILIPPINES e�u�n of Tax An11ea1s QUEZON CITY 'JIIIRD DIVISION * ** *******~***** CBI< POWER COMPANY U MITED, CTA CASE NO. 7887 PetitiOII Pr, Members: -versus - BAUTISTA, Chairperson PALANCA-ENRIQUEZ, and MANALASTAS, JJ. COMMISSIONER OF INTEHNAL Promulgated: REVENUE, JAN 2 8 2011 Respond ent. X ------ -- ----------- - .. - ----------- ~&~-,A,.- 5'.:�~9/- '~)(' RESOlUTION This resolves respond e11f:'s "Motion to Dismiss" filed on December 6, 2010, and petitioner's "Comment on/Opposition to Respondent's Motion to Dismiss" filed on Uecember 17, 2010. Respondent moves f01 the dismissal of the petition on the ground of lack of jurisdiction. Respon<l ~nt avers that petitioner prematurely filed the instant Petition for Review 011 March 27, 2010, or a day after it filed its administrative claim, which is in violation of Section 112 (C) of the National Internal Revenue Code (NIRC) of 1997, as amended. Conversely, petitioner opposes the instant motion on the following grounds: 1. respondent's Molion should be denied for having been filed in violation of Rul e 16, Section 1 of the Revised Rules of

R ES OLUTIO N CTA CASE NO. 788 7 Page 2 o f 5 Court which provi< les that a Motion to Dismiss may be filed "within the time for but before filing the answer to the complaint or a pleading asserting a claim xxx" 2. petitioner had tirn ~ ly and duly file its administrative and judicial claims for the issuance of a tax credit certificate for P58,802,851.18 fur its unutilized input taxes on its local purchases and/or irriportation of goods and services, capital goods and payments for services rendered by non-residents, which were all atlr il.1utable to petitioner's zero-rated sales for the period January t, 2007 to December 31, 2007, pursuant to Section 112(A) uf the Tax Code of 1997, as amended; and 3. following the prin cil de of prospectivity of statutes, which had been applied to judicial decisions and considering that petitioner had fnll owed in good faith the prevailing jurisprudence wher1 it filed its administrative and judicial claims for its unulilized input taxes for the period January 1, 2007 to December 31, 2007, the Supreme Court ruling in the case of Commissio11er of Revenue vs. Aichi Forging Company of Asia, Inc. willl G.R. No. 184823 and promulgated on October 6, 2010, which ruled that the filing of the judicial claim therein wif.ll this Court was premature since the administrative and the judicial claims therein were simultaneously fii Pcl, should not be applied in the instant case. (Albino S. Co vs. Court of Appeals and People of the Philippines/ G.R. NO. .10076 dated Octvber 28/ 1993). We find merit in the rn ol:ion . Section 112 (A), in rel ation to Section 112 (C) of the NIRC of 1997/ as amended, provides, as follows: "SEC. 112. Refunds or Tax Or?dits of Input Tax. - (A) Zero-rated or Effeclivd t' Zero-rated Sales. - Any VAT-registered person, whose sales are zero-raled or effectively zero-rated may, within two (2) years after the r:l,se of the taxable quarter when the sales were made, apply f�11 � the issuance of tax credit certificate or refund creditable ii'Pllt tax due or paid attributable to such sales, except transition;d input tax, to the extent that such input tax has not been applied agai w:t output tax: xxxx As amended by Republi c Act No . '11 37 entitl ed "A n Act Amending Sections 27, 28, 34, 106, 107, 108, 109, 110, Ill , 11 2, 11 3, 11 4, I 16, 117, 11 9, 121, 148, 151, 236, 237 and 288 of the National Internal Revenue Code of 199 7, as " mended, andfo r other Pw poses. "

RESOLUTION CTA CASE NO. 7887 Page 3 of5 (C) Period within which to Nefund or Tax Credit of Input Taxes shall be Made. - In proper casP.s, the Commissioner shall grant a refund or issue the tax credit certifie<1l e For creditable input ta xes within one hundred twenty days from ti1P date of submission of complete documents in support of the applica li on filed in accordance with subsection (A) hereof. In case of full or parlial denial of the claim for ta x refund or tax credit, or the failure on the part of the Commissioner to act on the application within I he period prescribed above, the taxpayer affected may, witl in thirty (30) days from the receipt of the decision denying tile claim or after the expiration of the one hundred twenty d:-o y -- period, appeal the decision or the unacted claim with the ColH' " f Tax Appeals. [Emphases supplied.]" From the foregoing, il. is clear that a taxpayer may apply for an administrative claim for refur1d of its unutilized input Value-added Tax (VAT) payments "within two (2) years reckoned from the close of the taxable quarter when the relevant so les were made." The Commissioner of Internal Revenue (CIR) has 120 days lo act on the claim and the taxpayer has 30 days to file a judicial claim before this Court, from the denial of its claim or expiration of the 120-day peri od, in case of the CIR's inaction. Thus, in the case of Commissioner ofInternal Revenue v. Aichi Forging Company ofAsia, Inc} the St rpreme Court ruled: "Section ll2(D)3 of t.h e IHRC clearly provides that the CIR has '120 days, from the date of tl�.e submission of the complete documents in support of the application [for tax refund/credit],' within which to grant or deny the claim. In casP of full or partial .denial by the CIR, the taxpayer's recourse is to file an appeal IJel'ore the CTA within 30 days from receipt of the decision of the CIR. Howew'r, if arter the 120-day period the CIR fails to act on the application for t:-ol( refund/ credit, the remedy of the taxpayer is to appeal the inaction of lit ~ em to ClA within 30 days. In this case, the adminisli r1tive and the judidal claims were simultaneously filed on September 30, 2004. Obviously, respondent did not wait for the dedsion of the CIR or the lapse of the 120-clily period. For this reason, we find the filing of the judicial claim with the fT/\ premature. G.R. No. 184823, October 6, 20 10. Now, Section I 12 (C) .

RESOLUTION CTA CASE NO. 7887 Respondent's assertio11 II lnt the non-observance of the 120-day period is not fatal to the filing of a judicial r ICJim as long as both the administrative and the judicial claims are filed within the twu year prescriptive period has no legal basis. T11ere is noU1ing in � SPCtion 112 of the NIRC to support respondent's view. Subsection (A) of the <::=Jid provision states that 'any VAT-registered person, whose sales are zero-rated r ,, effectively zero-rated may, within two years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit n>.�l.ificate or refund of creditable input tax due or paid attributable to such sales.' I he phrase 'within two (2) years x x x apply for the issuance of a tax credit cer lifi, ate or refund' refers to applications for refund/credit filed with the CIR and not tq e1ppeals made to the erA. This is apparent in the first paragraph of subsection (IJ) of the same provision, which states that the CIR has '120 days from the sul.llnission of complete documents in support of the application filed in acm r l;orr1Ce with Subsections (A) and (B)' within which to decide on tl1e claim. In fact, applying the two-year period to judicial claims would render nugatory Section 112(0) of t11e NIRC, wl rich already provides for a specific period within which a taxpayer should appeal l11e decision or inaction of t11e CIR. T11e second paragraph of Section 112(0) 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 pe1iocl . rri both instances, the taxpayer has 30 days within which to file an appeal with !he erA. As we see it then, U1e 120-day pe1iod is crucial in filing an appeal with the cr/\. >< x x x. " [ Empl1ases supplied.] In this case, it is clear that petitioner prematurely filed its Petition for Review when the Petition for l<.eview was filed a day after petitioner filed its administrative claim. Clearly, petitioner filed the instant Petition without waiting for the lapse of the LW-day period prescribed under Section 112(C) of the NIRC of 1997. LikewisP., the thirly-day period to appeal to this Court has not even commenced to 1"1111. Petitioner's allegation I l1 al: the instant motion to dismiss was filed out of time is devoid of merit. PPlil:ioner's allegation is rooted on its conclusion that the ground of respondenl 'c; motion to dismiss is that the instant petition failed to state a cause of acl ion. It bears stressing, however, that in the afore-cited case of Comm!-;sioner of Internal Revenue v. Aichi Forging

RESOLUTION CTA CASE NO. 78 87 Company ofAsia, Inc. 4 , the :~ ~ rpreme Court ruled that the premature filing of the therein petition failed to cluthe this Court with jurisdiction. Furthermore, well settled is the rule that a question of jurisdiction may be raised at anytime and car11 1ot be waived. Therefore, pursuant I t ' the aforesaid ruling of the Supreme Court in the Aichi case, the premature filing of the petition warrants the dismissal of the petition, as no jurisdiction 'Vas acquired by this Court WI-IEREFORE, prellli '~e s considered, respondent's "Motion to Dismiss" is hereby GRANTFD. Accordingly, the Pelilion rvr RevieW filed in the above-captioned cas"' is hereby DISMISSED for having been prematurely filed. SO ORDERED. ~<;? . ~~r:~~ OLGA PALANCA- ENRI?uEI.': AMELIA R. COTANGCO-MANALASTAS Associate Justice Associate Justice Supra, note 2.