CTA Case No. 4654 (Decision)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY PHILIPPINE PHOSPHATE FERTILIZER C.T.A. CASE NO. 4654 CORPORATION, �i; Promulgated Petitioner, JAN 241996 - versus - - - - - - - - -X THE HOHORABLE COftftiSSIOHER OF IHTERHAL REVEHUE, Respondent. X- - - - - - - - - DECISION This case involves a claim �or re�und or tax credit o� Philippine Phosphate Fertilizer Corporation �or the �allowing periods and in the corresponding amounts: January to December 1988- P1,138,665.12 January 1989 to June 1990- 5,094,458.22 July 1990 to December 1990- 1,628,504.48 January 1991 to May 1991 - 867,417.00 ,;_ Total amount being claimed as re�undable - P8,729,044.82 103

DECISION - C.T.A. Case Ho. 4654 - 2- FACTS OF THE CASE Philippine Phosphate Fertilizer Corporation <Philphos for short> is a ~omestic corporation engaged in the business of manufacturing fertilizer for domestic and international distribution. It is an Export Processing Zone Authority <EPZA> registered enterprise. To maintain its operations, Philphos needs fuel and oil products which it buys from Petron Corporation <Pet ron>. The l a t t e r imports said lf..~el and oil products and therefore, pays customs duties to the Bureau of Customs ~nd ad valorem 'taxes to the Bureau o:f Internal Revenue <BIR >. In turn, Petron bills Philphos for the payment of these duties and taxes every time the latter purchases fuel needs from the former. Believing that it enjoys tax and non-tax incentives by virtue of its registration with EPZA, in a letter dated October 22, 1990, Philphos sought :from the BIR the refund of P5, 094, 458. 22 as ad valorem taxes it paid to Petron for the period from January 1989 to June 1990. The BIR, in its letter dated November 9, 1990, denied this claim of , Philphos in the amount of P5,094,458.22. Due to this denial, Philph~s filed a petition for review with this Court on October 9, 1991. 104

- - .., DECISION - C.T.A. Case Ho. 4654 ~3 - On November 14, 1991, petitioner Philphos .filed an Amended Petition for Review <pp. 26-33, CTA records> stating among others, the same allegations previously contained in its original petition .for � review and in addition thereto, as provided and underscored under paragraph 10 thereof, was the statement that Philphos was officially notified of the BIR denial o.f its claim on O=c'-'t:..:o::;.:b=e.:.r_...1.=-4.:.&.,--=1.,.9=-9~1 <Annex "F" to Amended Petition .for Review, pp. 46-47, Ibid> On November 29, 1991, peti~io1er .filed a Motion to ,. Withdraw Amended Petition for Review, using "inadvertence" as its ground (see par. 2 thereof') which allegedly caused the amended petition .for review to contain erroneous averments and inadequate allegations. In the said motion, petitioner prayed that it be allowed to submit not later than December 12, 1991 a corrected amended petition. True enough as it prayed on December 12, 1991, petitioner filed its second amended petition .for review <PP� 53-62, Supra. >. In this amended petition, petitioner made mention again of its re.fund letter to the BIR dated October 22, 1990 wherein it. sought. re.fund o.f the total amount of P5,094,458.22 <par. 7 o.f the second Amended Petition>. This time, however, petitioner 105

- ~. DECISION - C.T.A. Case No. 4654 -4- alleged that the letter of BIR dated November 9, 1990 denying the above-mentioned claim, was received by it only on January 18, 1991 <par. 8 : ,I- bi- d. >. Moreover, according to petitioner, it moved :for a reconsideration of the BIR denial in the former's letter dated January 28, 1991. Hence, it filed its petition :for review on October 9, 1991 (par. 9, Supra). On August 2, 1991, petitioner :filed additional ,; , i�' claims for refund of ad valorem taxes billed to it by Petron for the year 1988 and t~e ~Period :from July to 1 December 1990 in the total amount of P2,767,169.60. Then on October 3, 1991, petitioner again :filed a claim for refund of specific taxes billed to it also by Petron for the period covering January to May 1991 in the total amount of P867,417.00. The last two additional claims of petitioner were likewise denied by the BIR in a letter dated October 14, 1991, which letter was received by petitioner's counsel on November 12. 1991. For the reason that. the facts of the case are too confusing and difficult '~o remember, aa they involve numerous dates, this Court deemed it proper and useful as a guide for a more vivid analysis and accurate discussion 106

-- DECISION - C.T.A. Case No. 4654 - 5- of the issues, to prepare and/or present hereinunder a tabulated summary of the material facts of the case. �---------------------------------------------------------------------------------------------------� Date of A10unt Period Date of Date of Date of Adainistrative Claiaed as I Covered SIR's Receipt of Filing Claia for Refundable I Letter of Denial by Petition Refund I Denial Philphos for Revievl I I l------------------�-------------�-------------�------------------�-----------------�---------------1 !October 22, 1990 IP5~094,4S8.221January 1989 IKoveaber 9, 1990 !January 18, 1991 !October 9, 19911 Ilp. 63, CTA rec. I I I to Ilp. 65 CTA rec. I I I !See Original I I filed on I I June 1990 I I Petition for I !October 26, 1990 I I I Revier, p. 1 I I1-~----------------I�-------------I�-------------I�-------------~---�I-----------------�I---C-T-A--r-e-c-o-r-d-)--lI I I I I I I I !August 2, 1991 IP2,767,169.601Year 1988 andiOctober 14, 1991 IHoveaber 12, 19911 Dec. 12, 1991 I Ilp. 159, CTA rec. l I I July 1990 I I I filed on I I to I I IAugust 9, 1991 I IDeceaber 19901 I I I I l------------------�-------------�-------------�----------------~-�-----------------�---------------1 I I I . !August 30, 1991 IP 867,417.001January 1991 !October 14, 1991 IHoveaber 12, 19911 Dec. 12, 1991 I I!p. 162, CTA rec. lI I to Ilp. 165, CTA rec. l I !Ibid) I filed on I I nay 1991 I I ISepteaber 3, 1991 I I +---------------------------------------------------------------------------------------------------� ISSUES 1. Whether or not petitioner's right to appeal to this Cour~ has prescribed; and 2. Whether or not petitioner is entitled to the re.fund of the total amount o.f P8,729,044.82. Anent the first issue, respondent maintains that petitioner's right to appeal to this Court has 107

DECISION - C.T.A. Case No. 4654 -6- prescribed. Petitioner received on January 18, 1991 the denial letter of BIR dated November 9, 1990. It appealed judicially only on October 9, 1991 or a�ter the lapse o� ... almost nine <9> months �rom receipt o� BIR's denial letter. Since the date of judicial claim is beyond the thirty (30) day period required by Section 7 .in relation to Section 11 both of Republic Act 1125 the pertinent provisions of which are as quoted hereunder: "Sec. 7. Jurisdiction - The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review as herein provided: (1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, :fees or other charges, penalties imposed in relation thereto, or other matters arising under the National Internal Revenue Code or other law 9r part o� the law administered by the Bureau of Internal Revenue; (2) X X X (3) X X X "<Underscoring supplied) "Sec. 11. Who may appeal; e��ect o:f appeal. Any . person, association or corporation adversely affected by a decision or ruling of the Cpmmimsioner o:f Internal R~venue, the Collector of Customs or any provincial or city Board of Assessment Appeals mav file an appeal in the Court of Tax Appeals within thirty days after the receipt o� such decision or ruling. x x x " (Underscoring supplied> 108

.,> DECISION - C.T.A. Case No. 4654 -7- the petition confers no jurisdiction and respondent prays as contained in its Memorandum ( pp. 15-16 thereof; pp. 370-371, CTA rec. > that this Court dismiss the instant petition for having been filed out of time. To support its view that non-compliance with the aforequoted provisions of R. A. 1125 con:fers no jurisdiction, respondent cited Supreme Court decisions stating that: "The 30-day period fixed in Section 11 o:f Republic Act No. 1125 within which the taxpayer may question any ruling of th, Commissioner o:f Internal Revenue before ~h. Court o:f Tax Appeals is jurisdictional. � �Thus, where the petition was filed outside o:f �the 30-day period, the Court of Tax Appeals has no jurisdiction to entertain it, much less consider the right of the Government to collect the tax from the taxpayer. " (Acting CIR vs. Joseph, No. L-14034, August 30, 1962>. "The thirty-day period prescribed by Section 11 of Republic Act 1125, as amended, within which a taxpayer adversely a:f:fected by a decision of the Commissioner o:f Internal Revenue should file his appeal with the Tax Court, is a jurisdictional requirement, and the failure of a taxpayer to lodge his appeal within the prescribed period bars his appeal and renders the questioned decision :final and executory." <Surigao Electric Co., Inc. vs. Court of Tax Appeals, 57 SCRA 523) .... "Jurisdiction, over the subject matter is fundamental for a court to act � on a given controversy. It is conferred by law not by consent of the parties. It can be challenged at any stage of the proceedings and :for lack o:f it, a court can dismiss a case ex mero motu." <Co��issioner of Internal Revenue va. Villa, 22 SCRA 3). 109

I' I 'i DECISION - C.T.A. Case No. 4654 -8- The Court finds fo~ the respondent. No jurisdiction has been conferred to Us to try the Amended Petition for Review filed on December 12, 1991. The motion for reconsideration dated January 28, 1991 which petitioner allegedly filed with the BIR on the same date did not suspend the running of the 30-day period. It is NOWHERE TO BE FOUND in the three (3) folders of the BIR records <Folder I, 85 pages; Folder II, 87 pages~ and Folder III, 125 pages> submitted to this Court by the responde~t. .i �I ! Uncertified xerox copy of said mo~iof �or reconsideration appeared only for the first� az:ld last time in the CTA records, see Exh. PP� 157-158 thereo�, when !'1.� petitioner filed with this Court on June 16, 1994 a I I" written Formal Offer of Evidence, attaching thereto all his exhibits, among them was the a�orementioned Exh. "8". The Court, therefore, casts strong doubt on the authenticity or valid existence o� said document. Horeso, what has been attached or submitted in Court was not duly certified by the BIR. Although the existence o� this document waa admit ~ed by respondent in her Comment filed on July 18, 1994� the Court in its Resolution promulgated on September 2, 1994 likewise admitted the same subject to the qualifications made by respondent and subject also to the Court's final evaluation of its 110

. . '; ....: .��.,��J.. �- . ~ DECISION - C.T.A. Case No. 4654 -9- probative value. . Consequently, it is the Court' a .final evaluation that said document or exhibit has no probative value, therefore the running of the 30-day period is clearly not suspended from January 18, 1991, date o.f receipt by petitioner of BIR's denial. "And ' even if no answer or motion to dismiss is .filed, the Court may dismiss the case for want of jurisdiction" ( Andaya vs. Abadia, 228 SCRA 705). At this juncture, the court wants to clari.fy that inasmuch as only the amount of ,5,094,458.22 was the subject matter of BIR's denial dated November 9, 1990, received by petitioner on January 18, 1991, the Court lost jurisdiction only over said amount. As regards the other amounts being claimed by petitioner the judicial petition was just filed on time and this Court can try them on the merits. In the aforementioned case of Andaya vs. Abadia, 228 SCRA 711, it has been ruled that: "x x x While it may be said that the same corporate acts also give rise to civil liability for damages, it does not follow that the case is necessarily taken out of the jurisdiction of the~SEC as i t may award damages which can be considered consequential in the exercise o� it.s adjudicative powers. Besides, incidental issues that properly .fe11 within the authority o� a tribunal may also be considered by it to avoid multiplicity of actions. Consequently, in intra-corporate matters such as those affecting the corporation, ita 111

DECISION - �,. C.T.A. Case No. 4654 - 10 - directors, trustees, officers, shareholders, the issue of consequential damages may just as well be resolved and adjudicated by the SEC". Applying the abovequoted decision � to the case at bar, it follows that the other claims of petitioner may be tried by the Court on the merits. The Court, therefore, now comes to a consideration of the second issue, that is, if petitioner is entitled to the refund� of the total amount of P8, 729, 044. 82. As this Court has lost juri~diction over the amount of P5, 094, 458. 22, the remaining amounts to be decided upon are the amounts of: 4 P1,138,665.12 for January to.December 1988; 1,628,504.48 for January 1989 to June 1990; and 867,417.00 for January 1991 to May 1991. That petitioner has a legal basis in pursuing its judicial claim for refund has already been decided by this Court in the case of Philippine Associated S�e1ting And Refining Corporation <PASAR > vs. CIR, CTA Case No. 4709, which deci~:~ion was, in favor of the petitioner and was promulgated oo February 13, 1995. The PASAR depision was also patterned or based on an even earlier dec~sion involving the same issue as in the instant case. Tne case referred to is CTA case No. 4661 decided also in favor of the petitioner on May 31, 1993 which case is captioned as "Philippine Phosphate Fertilizer Corporation vs. The Honorable Co��issioner o� 112

DECISION - C.T.A. Case No. 4654 - 11 - These two latest decisions, have established that petitioner has sufficient legal. basis to ask for a refund/tax credit of the ad valorem taxes and specific taxes. In determining whether petitioner is entitled to the refund of the remaining amounts, the Court deletes again or disallows the total amount of Pl,l38,665.12 corresponding to period from January to December 1988. More than two (2) years have lapsed .�rom their dates of payment up to the date the pet~tiln was filed with this Court. Hence, right to clai~ a refund/tax credit of said amount has prescribed. The provision of the Tax Code, regarding this mandatory requirement is too clear. It provides that: �sEC. 230 Recovery of tax erroneously or �illegally collected No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or ~f any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for re:fund or credit has been du~y filed with the Commissioner; but such suit or pr~ceeding may be maintained, whether or not suph tax, penalty or sum has been paid under protest or duress. In any case, no such suit or proceeding shall be begun after the expiration o� two years from the date of payment o:f the tax or penalty regardless of any supervening cause that may arise ~fter payment: Provided, 113

- DECISION - C.T.A. Case No. 4654 - 1.2 - hoffever, That the Commissioner may, even. without a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid. <Underscoring supplied).� WHEREFORE, in view of all the foregoing, the refund/tax credit claim of �petiti.oner i.n the amount of PS, 094, 458. 22 as ad valorem taxes paid for the period from January 1989 to June 1990, is hereby DISMISSED for lack of jurisdiction. The claim of P1,138,665.12 as petitioner's ad valorem taxes for the year 1988 is DEHIED . for having prescribed � The Co~rtf GRANTS to petitioner, and hereby orders the Commissioner of Internal Revenue to issue a tax credit or refund i.n the amounts of P1,628,504.48 as its ad valorem taxes for the period from July 1990 to December 1990, and P867,417.00 as payments of similar taxes for the period from 1991 to May 1991. SO ORDERED. GRUBA Judge WE CONCUR: Associate Judg 114

DECISION - ..... C.T.A. Case No. 4654 '�� - 13 - CERTIFICATION I hereby certify that this decision was reached � after due consu~tation among the members of the Court of Tax Appea~s in accordance with Section 13, Artic~e VIII of the Constitution. r Q-.-c:-tQ .. ~ ERHESTO D. ACOSTA Presiding Judge Court of Tax Appea~s c..�.:.. '� . ,�� ... 115