CBK POWER COMPANY LIMITED v. COMMISSIONER OF INTERNAL REVENUE

Re pub li c of the Philippin e s COURT OF TAX APPEALS Qu ezon City SECOND DIVISION CBK POWER COMPANY LIMITED , CTA CASE NO. 8043 Pe tili o ne r, For: C lai m fo r lh e issua nce o f a ta x c red it certifica te fo r unutilize d input -v e rsus - taxes o n local pu rc hases a nd/or importa ti o n o f goods a nd services, COMMISSIONER OF INTERNAL capito l goods a nd pay m e nts for REVENUE , se rvices rendered b y no n-resi d e nts, a ll attribut able to ze ro -ra te d so les Responde nt . fo r th e pe ri od Ja nuary 1, 2008 to X------------ ----------------------------------- X March 3 1, 2008 CBK POWER COMPANY LIMITED , CTA CASE NO. 8116 Pe titi o n e r, For: C la im for th e iss ua nce o f a tax c red it certifi ca te fo r unutilized in p ut - ve rsus- taxes fo r th e p e ri o d April 1, 2008 to Decembe r 3 1, 2008, a ll a ttributable to ze ro-ra ted so les fo r th e p e ri o d April 1, 2008 to Decemb e r 3 1, 2008 M e m b e rs: CASTANEDA, JR ., C ha irperso n CASANOVA, a nd MINDARO - GRULLA, JJ. COMMISSIONER OF INTERNAL Promulgated: REVENUE , MAR 0 3 2011 (2;u 4: 3o ,o� ,.-,., Respo n dent. X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X RESOLUTION Thi s reso lves respo n de nt' s "Motion to Dismiss " fil ed o n Dece mb e r ! 20 , 2010 , with pe titi o n e r' s "Comment On / Opposition to Respondeflt'S Motion to Dismiss " fil ed o n January 24, 20 11 .

., . RESOLUTION Gl Respo nd e nt prays that th e in stant Petition for Review 1n A Case No. 8 1 16 be dismissed for lo ck o f jurisd ic tion based o n the fo ll owing grounds 1 : "3. Based on the Pet iti on for Reviews and the records of the Honorab le Court, 3 days hod lapsed in relat ion to CTA Case No. 8 116 from th e filin g o f th e odm inistro tive claim for refund and ,':, th e filin g o f th e petition for review, thi s is in violation o f Section 11 2 (D) o f th e Tax Code of 1997, as amended xxx XXX XXX XXX 4. In the case of CIR vs. Aichi Forg in g Company of Asia, Inc. (GR No. 184823, October 6, 20 10), the Supreme Court hod decided that th e non-observanc e of the taxpayer on th e 120 day period of the Commissioner in deciding the claim for re fund , is fatal. XXX XXX XXX 5. This Honorable Court En Bone in its recent Ame nded Decision onCE Luzon Geothermal Power Co. vs. CIR (CTA EB No. 553 & 554 ), states tha t the filing of an administra tive c la im with Commissioner is a condition precedent to the filing o f a judicial c laim for refund . Failure to comply w ith Secti on 11 2 (D) , particularly the 120-day period is tantamount to non-exho'ustion o f administrative remedies and is fatal to the claim. 6. In fin e, the premature filing of respondent's claim for refund/credit of input VAT before the CTA warrants a dismissal inasmuc h as no jurisdiction was acquired by the CTA. (Aichi, ibid)" Pe titi o n e r opposes respo nd e nt' s M o ti on t o Dismiss o n the fo llowing grounds, to quo te: a. Responden t' s Motion to Dismiss shou ld be denied for having been fil ed in vio la ti on of Ru le 16, Section 1 of th e Revised Rules of Court which provid es that a Motion to Dismiss may be filed "w ithin th e tim e fo r but before filing the answer to the complaint o r a pleading asserti ng a c laim xxx;" b. Petitioner had timely and duly filed its administrative and judicial claims for th e issuance of a ta x credit certifi ca te amounting to 1 Motion to Dismiss, Docket, pp. 759 -760.

RESOLUTION P47,425,306.79, represe ntin g unutilized input taxes on its local purchases and importa ti ons of goods o th e r than capital goods, loca l purchases o f services, paymen ts fo r services rendered by no n-residents, local purchases o f capita l goods not exceeding P1 Milli on in c ludin g unutilized amortized input ta xes on capital goods exceedi ng P1 Million, for the pe ri od April 1, 2008 to December 3 1, 2008, a ll attributable to zero-ra ted sales for th e period Apri l 1, 2008 lo December 31, 2008, pursua nt to Section 11 2(A) of th e Tax Code of 1997, as amended; and c. Following th e principle o f p rospectivi ty of statutes, wh ic h had been applied to judicial decisions and considerin g th at [p] etitioner had fo ll owed in good faith the p reva iling jurisprudence w hen il fil ed its admini stra ti ve and judi c ial claims for its unutilized input taxes fo r the period of April 1, 2008 to December 3 1, 2008, the Supreme Court ruling in th e case o f Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc. w ith G.R. No. 184823 and promulgated o n Oc tobe r 6, 2010, wh ich ruled that th e filing of th e ju d icia l cla im th erein w ith th e CTA was prema ture since th e adm inistrative and th e judi c ial c la ims th erein were simul taneously filed, should not be applied in the instant case. (Albino S. Co, v. Court o f Appeals and People o f th e Ph ilippin es, G .R. No. 100776 da ted Oc tober 28, 1993) Th e Cou rt find s merit in th e Motion to Dismiss . With rega rd to petitioner's first coun te r a rgu m e nt, th e re quireme nt that a motion to dismiss sh ou ld be filed within th e tim e for filing th e answer is n o t absolute. Even after an answer ha s been fil ed, a defendant con sti ll file a m o ti o n to d ism iss o n th e fo llowing grounds: (1) lo ck o f juri sd ic ti on, (2 ) litis pendentio (3 ) lock of cause o f action, and (4) discove ry during tria l o f evid ence lh o l wou ld cons titul e a ground for dismisso 1.2 A lso, in the case o f Quiooit vs . Conso lo c ion3, th e Supre m e Court he ld thai - 2 Obando vs . Figueras, G.R. No. 134854, January 18, 2000. 3 G.R. No. L-41824, Sep lember 30. 1976.

RESOLUTI ON "A motion to dismiss may also be allowed for so me special reason even after th e trial o f th e case has already begun. Thus, this Court has a ll owed the filin g o f a motion to '' .i dismiss, even after de fendant's answer and a ft er hearing has been commenced, upon grounds other than plaintiff's failure to �,!t� state o cause of ac ti on or court's failure to acquire jurisdic ti o n {h .. I ove r th e subjec t matter of the action, i.e ., where evide nce that I wou ld constitute o g round for the dismissal o f th e comp laint was discovered during tri a l. " With respect t o petiti one r's argument th a t the c a se q f I Comm issio n er of Internal Revenue vs . Aich i Fo rg in g Compa ny o f Asid ln c. 4, sh ou ld n o t be app lied in th e present case; it is n o te worthy that in the case of Mindanao II Geo th ermal Partn ership vs. Com mission e r o f Inte rnal Revenue 5, the Cou rt sittin g En Bone. ci tin g th e Supreme Co urt, rul ed: "Furth er, petiti oner's con ten ti on o f non-retroactivity o f Miront ruling run s coun ter lo o more recen t decision o f the Supreme Court in the case o f Son Roque Power Corporation vs. Commissioner of Internal Revenue (Son Roque case] .6 In Son Roque case, petiti one r Son Roque filed o cla im for refund o f its unutilized input VAT fo r th e period covering January to December 2002 . It filed its judicial claim on April 5, 2004. In determining the reckoning of th e two-year prescriptive period, the Supreme Cour t he ld : 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 sole of electric ity to NPC was reported a t th e fourth quarter of 2002, wh ich closed on 31 December 2002. Pe titi oner hod un til 30 December 2004 to fil e its c la im fo r refund or credi t. For th e period January to March 2002, pe titioner fil ed o n amended request for refund or tax cred it on 30 May 2003; for the period July 2002 to September 2002, on 27 February 2003; and for th e period 4 G.R . No. 184823, Oc lober 6, 20 10. 5 CTA EB Case No. 5 13. March 10,2010 6 G.R . No. 180345, November 25,2009.

RESOLUT IO N October 2002 to December 2002, o n 31 July 2003 . In th ese three quarters, p etition e rs seasonably fil e d its req ues ts for re fund and ta x c redit. Howeve r, for th e period April 2002 to May 2002, the claim was fil e d prematurely on 25 Octo b er 2002, before th e lost quarter hod closed on 31 December 2002. It should be e mphasized that w he n Miront case was promulgat ed, Son Roque case was already and still pending before th e Supre me Cou rt. Yet, th e Supreme Cou rt in decidin g Son Roque case, it re troac tive ly adopted Miront ru ling . Noticeab ly, th e judicial c laim of So n Roque was fil e d eve n earli e r th an th e judic ial c la im s o f herein petitioner (April 5, 2004 for Son Roque a nd April 22, July 7, and Sep te mbe r 9, all in th e year 2005 for he re in petitio ne r). He nce, We see no reaso n why We sho uld not adopt th e some ruling to the instant case. " Like wi se, thi s Co urt sees n o reaso n why 1he c as e of Co mmissioner of Internal Reve nue vs. Aichi Fo rging Co mpany o f Asia, lnc. 7 ca nn o t be app lied in th e in stan t case . Finally, peti ti oner argues th at it fil ed its administrati ve and judi c ia l c laims on tim e. We c ann ot agree . In th e case of Co mmissioner o f Inte rnal Revenue vs. Aichi Forging Co mpany of Asia, /n cB, th e Supre m e Court ru le d: "The filing of the judicial claim was premature However, notwithstanding the timely filing of the administrative claim, we ore constrained to deny respondent 's claim for tax re fund/c redit for having been filed in violation of Section 11 2(0) o f the NIRC, w hic h provides that: SEC. 11 2. Refunds or Tax Credits o f Input Tax. - xxxx (D) Period w ithin w hic h Refund or Tax Credit of Input Taxes shall be Mode. - In proper cases, th e 7 Supra , not e 4. B id .

RESOLUTION Commissio ner sha ll g ra ni a refund or issue th e lax c redit certific ate for c reditable input taxes within one hundred 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 o f full or partial denial o f !he claim for tax re fu nd or tax c redit, or the fa ilure on the part o f th e Commissio ner i o act on th e applica tio n w ithin th e period p rescribed a b ove, 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, appeal the decision or the unacted claim with the Court of Tax Appeals. (Em phasis supplied. ) Seclio n 11 2(0 ) o f lhe NIRC clearly p rovides !ha t lhe CIR has ' 120 days, from the d ate of th e submissio n o f the complete docume nts in support o f the applica1io n [for tax re fund/credit],' w ithin whic h to g ra nt or deny th e claim . In case o f full or pa rtia l d enial b y the CIR, th e taxpayer' s recourse is to file a n appeal b e fore the CTA w ithin 30 days fro m receip t o f th e d ecisio n o f th e CIR . However, if after th e 120-d ay period !he CIR fa ils to act o n th e applica1ion for tax refund/credit, 1he remedy o f lhe laxpayer is to a ppeal the inactio n of th e CIR to CTA w il hin 30 days . In this case, the administra tive a nd the judicial cla ims were simulta neously fil ed o n Septe m ber 30, 2004. Obvio usly, respondent did not wail for th e d ecisio n o f th e CIR or 1he lapse o f th e 120-day p eriod. For this reason, we find th e fili ng o f the judic ia l c la im w ith the CTA p remature. XXX XXX XXX In fi ne, 1he pre ma ture filing of respondent 's cl a im for re fund/credit o f input VAT be fore the CTA warra n1s a dismissal inasm uch as no jurisdictio n was acquired by 1he CTA. " Ba se d o n th e foregoing , th e Co mmi ss io n e r o f Inte rnal Re v e nu e (CIR) h as o n e hun d red twe n1y ( 120 ) days from t h e d a t e o f submi ssio n o f c omp le t e d oc um e nt s in supp o rt o f th e ta xp a y e r 's a ppli c ati o n for re fund or iss u a n ce o f a ta x c re dit ce rtifi ca te, within whi c h to d ec id e

RESOL UTI ON th e said app lication pursuant to Section 112 (D) [n ow, Sec ti o n 112 (C)] o f th e NIRC o f 199 7, as am e nd ed. This 120 day p e riod as c haracterize d by th e Supreme Co url in th e above -m e ntio ned case is c ru c ial in filing an appeal to thi s Cou r1, to wi t: "xxx. Th e sec ond paragraph of Sec tion 112(0) of the NIRC envisions 1wo scenarios: (1) when o decision is issued by the CIR before the lapse of the 120-doy period; a nd (2) w hen no decision is mode after the 120-doy period. In both inslonces, the taxpayer has 30 days within w hic h to fil e on appeal with the CTA. As we see it then, the 120-doy period is c rucial in filing on appeal with the CTA." Wh erefore, no n - observan ce o f th e above mentio ned period will lead to th e loss o f th e ri g h I to appeal. We ll-se ftl ed is th e rul e that th e ri g ht to appea l is no t a na tu ra l ri g h I o r a part o f due process, as th e some is m e re ly a statu tory priv il ege, and may be exe rc ise d only in the manner and in accordance w ith th e provisio ns o f th e law . The party who seeks to avai l o f th e sa m e mu st comp ly with th e require ments 'o f th e law . Failing to do so, lea d s to th e loss o f th e right to appea l.? Petitioner fil ed th e Pe titi o n fo r Review, docketed as CTA Cqse No. 81 16 with thi s Court o n June 28, 20 10, no twithstanding th a t � its administra ti ve cla im was fil ed on ly o n Jun e 25, 2010 . Th e re fo re, its filing I th ereof was prema ture sin ce th e 120-day period for th e CIR to dec ibe I th e cla im fo r re fund h as no t yet ended. He nce, th e re was no decision ruling o r ina c tion o f th e Respo nd en t fo r this Court "to review". 'l !; ' ' �I I' 9 Producers Bonk of the Phil. vs . C ourt o f Appea ls, G .R. No . 126620 , Apri l 17, 2002, 3Sh ,tH' . SCRA 185. ,[! P a:. \

RESOLUTION Co nco mitantly, decisions, ruling s or ina c ti o n o f th e Co mmis s io~er ore necessa ry in o rd e r to vest th e Court o f Ta x Appea ls wi th jurisdic ti on to e nte rta in lh e appea l 1o . He nce CTA Case No . 8 11 6 being prematurely fil ed is dismissible on such grou nd for !hi s Court foi led to acquire jurisd iction to e nte rtain th e case pursuant to th e ruling o f th e Supreme Court in th e case o f Comm issioner o f Inte rnal Revenue vs. Aic hi Forgin g Compa ny o f Asia, In c. WHEREFORE , p remises cons id e red, respo nd e nt 's "Motion to Dismiss " is hereby GRANTED . According ly, th e Petition for Review docketed as CTA Case No. 81 16 is he re by DISMISSED fo r lo ck o f jurisdictio n. On th e o th e r hand, se t 1he hea ring on petitioner's "Motion for the Adoption of Procedures on the Presentation of Voluminous Docum'ents Pursuant to Rules 12 and 13 of The Revised Rules of the Court of Tax Appeals " and the initial presentation of evide nce for th e petitioner for CTA Case No. 8043 on Ap ril 11 , 20 11 at 9:00a.m. SO ORDERED . ~Nilcfc~-~~~~ - � Associate Ju sti ce �, # ~t<J. M~- 6'JM.. CAESAR A. CASANOVA CIELITO N. MINDARO - GRUEl~F~~ Associate Justice !' ,;jj! Assoc iate Justi ce I 10 Rizol Co mmercia l Bonking Corp. vs. Co mmissione r o f Internal Revenue. G.R. N~i- ;1'q!1~l-i.ll~!;\i'. 168498, Apri l 24, 2007, 522 SCRA 144 . '' !:)::,1: ~ ~~ .i!; ~~