KELPHIL., INC. v. COMMISSIONER OF INTERNAL REVENUE

~\}'v~% REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION KELPHIL, INC., CTA CASE No. 7749 Petitioner, Members: ~ versus~ Acosta, PJ, Bautista, and Casanova, JJ COMMISSIONER OF i INTERNAL REVENUE, P. romL.Jlg.ated: . ~ Q/ ~'V\f'b . _ . _ . _ .. ~ �~ ~ '~: �I Respondent. X HI ' j-J II \f ) I . l i J J J .:> - - X ���� ���� ���� � � � � � � � � � � � � � � � � � � � � � � � � u : . : . '. . . . . : . . . . '. AMENDED DECISION ACOSTA,PJ: This reso lves petitioner's "Mot ion for Recons ideration/New Trial" fi led on A ugust 4, 20 10 on the assa il ed Decision dated Jul y 12, 20 10, th e di spos iti ve part thereof reads: "WHEREFORE, premises cons idered, the instant� Petition for Review is hereby PARTIALLY GRANTED. Accord ingly, respondent is hereby ORDERED TO REFUND in favor of petiti oner the reduced amo unt of P48,850 .34, representing excess or unutilized input VAT on domest ic purchases of goods and services, attributab le to zero- rated sa les o f serv ices fo r ta xa ble yea rs 2006 and 2007. SO ORDERED." In this Motion, petiti oner fau lts th e Court in ho ldin g th at it fai led to prove that the services it rendered in taxable years 2006 and 2007 V11ere made to non-resident fo reign clients doing business outs ide of the P hilippines. A ll eged ly, it has presented more th an adequate documentary and testimoni a l ev idence to prove th at the recipients of the se rvi ces that it rend ered were doing business outside of the Philippines. f~

AMENDED DECISION CTA Case No. 7749 Page2of7 Moreove r, petitioner attached to its Motion the cop ies of "Certifi cati on of No n- Registration of Company" issued by the Company R egistrati on a nd Mo nitoring Department of the Securities and Exc han ge Comm iss ion and .. Official Receipt No. 0448534" issued by SEC for certification fee to conoborate the fact th at the rec ipi en t of its services \Vas not doing business in the Philippines. Petitioner states tha t its failure to adduce in ev ide nce such certification durin g th e presentat ion of its evidence was due to its honest belief that on th e basis of the docum entary and testim oni al evidences presented, it had already adduced suffic ient ev idence to prove that th e non-resident fo reign rec ipi ents of its services were do ing business outs ide of the Philippines. It th erefore prays, in the alternati ve, to ord er a new tri al to affo rd it th e opportunity to present th e forego in g documents as ev idence. The forego ing Motion for Reconsideration is bereft of merit. The argum ents presented therein had already been len gthily considered and passed up on in the assailed Decision. In fact, petiti oner's alternative Motion for New Trial in o rd er to offer additi onal documents as evidence belie its own assertion th at it v,ras ab le to present enough evid e nce. Beside this point th e Court, however, wou ld like to modify th e ruling in the assai led Decision regarding the discussion on the timeliness of the Petition for Review. This wo uld not however, affect the conclusion that petitioner is e ntitl ed to its claim for refund in the reduced amount of P48 ,850 .34 representing the excess o r unutilized input tax on purchases of.goods and servic es attributable to zero-rated sa les of serv ice for taxable yea rs 2006 and 2007. The judicial re medy for th e refund of input tax attributable to zero-rated sa les is laid down in Section 11 2(D) of th e 1997 Nati onallntern al Revenue Code (N I R C) 1 w hi ch s ta tes: , f~ 1 As am ended by Sect io n 10 , Republic Act No. 9337.

AMEN DED DEC ISI ON CTA Case No. 7749 Page 3 of7 "(D) Period w ithin which Rejimd or Tax Credit of lnpul Tccws shall be .Made. - In proper cases, the Co mmi ss ione r s h ;:~ ll grant a refun d or issue the tax cred it certi fica te for creditabl e input taxes within one hundred twenty ( 120) days from the el ate of submi ss ion of compl ete docum ents in support of th e app li cati on fi led in acco rdance with Subsecti ons (A) and ( 8 ) hereof. In case of full or pa11ial de ni al of the claim for tax refu nd or tax credit , or th e fa ilure on the part of the Co mmi ss ioner to act on th e appli cati on within the peri od prescribed above, th e taxpayer affected may, withi n thirty (30) days fi�o m the rece ipt of the dec ision denying the claim or after the expirati on of the one hun dred twe nty day-peri od, appea l the dec ision or th e unacted claim with the Court of Tax Appea ls." In Co mmission er of Internal R evenue v. A ic!ti Forging Comp any of Asia, Jn c. ,2 th e Supreme Court exp lained Secti on 11 2(D) in thi s w ise: "Secti on 112(0) of the N1RC clearl y prov ides th at th e ClR has '' 120 days, from the date of th e submiss ion of the comp lete doc uments in suppo rt of the appli cati on [for tax refund/c redit] ," within whi ch to grant or deny the claim . In case of full or parti al deni al by the CIR, th e taxpayer's reco urse is to fi le an ap pea l before th e CTA within 30 days from rece ipt of the dec ision of th e CIR. However, if after th e 120-day pe ri od th e CIR fa ils to ac t on the appli cati on fo r tax refund/credit, th e remedy of the taxpaye r is to appea l th e in ac ti on of the CIR to CTA within 30 days." XXX XXX XXX "xxx The seco nd paragrap h of Secti on 11 2(0) of the NIRC envisions two scenari os: ( 1) when a dec ision is iss ued by the CJR before the lapse of the 120-day peri od; and (2) when no dec ision is made afte r th e 120-da): pe ri od. In bot h ins tances, th e taxpayer has 30 days within whi ch to tile an appea l with the CTA. As we see it th en, th e 120-day peri od is cru cial in fi lin g an appea l with the CTA." App lying th e fo rego ing prOVISIOns of law and juri sp rud ence in thi s in stant case would appear th at th e Co mmi ssioner of Internal Reve nue has one hundred twent y ( 120) days or unti l Jul y 23, 2008 , w ithin w hi ch to decide on th e c laim , recko ned from March 25, 200 8, th e date of petiti oner 's applicati on for refund w ith th e Burea u oflnt ern a l Revenue and presum a bly the date of its submi ss ion of comp lete supportin g docum ents of th e sa id app licati on. Thereafter, petiti oner may appeal w ith thi s CoU11 w ithin thirty (3 0) days aft er receipt of the dec ision of the Commissioner or from inac ti o n afte r th e lapse of the said 120- day peri od. ~~ 2 G.R. No. 184823, Oc tober 6, 20 I0.

AMENDED DE C I SION CTA Case No. 7749 Page 4 of7 Here, petitioner h owever imm ediately fi led its Petiti on for Review on April 2, 2008, barely seven d ays from its administrative cl a im , without wa itin g for th e dec is io n of the Commi ss ioner or th e lapse of the 120-day period. C lea rl y, the Petition for Review was premature in accordance with th e fo regoing jurisprud ence. Such premature filing of th e Petition for Review is a violation of the rul e on ex hausti o n of ad mini strati ve remedies . The rul e on ex hausti on of admini strati ve rem ed ies before reso rtin g to th e co urt means that the re should be an orderl y procedure \V hi ch favors a pre liminary administrative sifting process, particularl y with respec t to m atters peculiarly \Vithin th e competence of th e administrative age ncy, avoidance of interfe rence w ith functions of the ad mini strati ve agency by withholding judi cial acti on until th e admini strati ve process has run its cause, and prevention of attempts to S\Vamp the co urts by a resort to them in th e first instance. 3 A party seeking an administrative remedy mu st not merely initi ate the prescribed administrative procedure to obta in relief, but also pursue it to it s approp ri ate conc lu sion before seeking judi cial intervention in ord er to give the ad mini strat ive age ncy a n opportunity to dec ide the matter itself correctly a nd preve nt unnecessary and prem ature reso rt to co urt ac ti on .4 Settled is th e rul e th at th e non-ex hausti on of admini strati ve rem edi es is not jurisdictional and it renders only th e acti on premature, i.e., th e c laim ed ca use of ac ti on is not ripe for judicial determinati on and for that re ason a party has no cause of action to ventilate in co urt. 5 The prema ture invocati on of the co un 's intervention is fatal to one's cause of ac tion ; and absent any finding of waiver or estoppe l, the case is susceptibl e of dismissal for fa ilure to state a cause of acti on. 6 Co nverse ly, if th e defense of failure to state a cause of acti on due to premature invocation of the court 's intervention was not ra ised in a m oti on to 3 Abe-A be vs. Manta, L-4827, May 3 1, 1979; 90 SC RA 524. 4 Commi ss ioner of lntemal Revenue vs. Rosemarie Acosta, G.R. No. 154068, August 3, 2007 . 5 Carate vs. Abarintos, G. R. No. 120704, March 3, 1997. 6 llo- il o City Zo nin g Boa rd of Adj ustme nt and Appea ls vs. Gega ro-Abec ia Funeral Homes, Inc. G.R . No. 157 11 8, December 8, 2003 . t(,~

AMENDED DEC ISION CTA Case No. 7749 Page5of7 di smiss or as an spec ial and affirm ati ve defe nse in th e answe r, like th e case at bar ; such de fense was therefore wa ived7 by respond ent pursuant to Section 1, Rul e 9 of th e Rul es of Co un .8 There fore, the Court co rrect ly entertained the case and exercised juri sdi cti on thereof. On the oth er ha nd , petitioner's altern ati ve Mo ti o n fo r New T ri al cann ot likewise be granted . Secti o n 5 of Rul e 15 of the Rev ised Rul es of th e Court of Tax A ppea ls (RRCT A) prov ides: "SEC. 5. Grounds of motion for nell' trial. - A mori on fo r new tr ial may be based on one or more of th e fo ll ow in g causes materi all y affec tin g th e subsra nti al ri ghts of th e mova nt: (a) Fraud, acc id ent, mi srake or exc usab le neg li ge nce whi ch ordina ry prudence co ul d nor have guarded aga in sr and by reason of whi ch the rights of such aggrieved pa rty has probab ly bee n im pa ired in his ri ght s; or (b) New ly di scovered ev id ence, which th e party co ul d not, with reasonabl e dili gence, have di scove red and prod uced at th e trial and, whi ch if presented, wo ul d probably alter the res ult." The instant Motion for N ew T ri al of th e petiti oner does no t specifi call y state th e ground for its motion . HO\vever, the argum ents presented impl y th at petiti oner is in vokin g th e fir st ground , \�Vhi ch is 'mi stake or excusa bl e negli ge nce', as it states th at its failure to adduce such certifi cati on was cl ue to its hones t beli ef th a t it had already addu ced suffi cient ev idence to prove th at th e non-resid ent foreign rec ipi ent s of its serv ices we re do in g business outside of th e Philippines. M oti on fo r new tri al based o n thi s ground requires th at the same shall be supported by affid av its of merits pursuant to th e second paragraph of 7 Nippon Express (Phil s) Corporation vs . Co mmi ss ioner of Internal Reye nu e, CTA Case No. 6688, Amended Dec ision promulga ted on March 24, 2009. 8 Rule 9. Effect of Failure to Pl ea d: Secti on I . Defenses and obj ecti ons not pl eaded. - Defenses and obj ecti ons nor pleaded either in a moti on to dismi ss or in th e answer are deemed wa ived. Howeve r, when it appears fro m the pl eadings or the evidence on record th at the court has no jurisdi cti on ove r the subj ect matter, th at there is another ac ti on pendin g between th e sa me parti es fo r the same ca use, or that the acti on is barred by a pri or judgment or by statute of limitati ons, the court shall dismi ss th e�claim. ftt,

AMENDED DECIS I ON CTA Case No. 7749 Page 6 of7 Secti on 6, Rul e 15 of RRCTA. S ince petiti oner has fa il ed to a ttac h the forego ing affid av it of m erits, th e M oti on shall be deemed pro for ma pursuant to th e third parag raph of Secti on 6, Rul e 15 of RRCTA. Even if we based petiti oner 's Moti on for New T ri al on the seco nd gro un d, \Vhi ch is newly di scovered evidence, since it mentioned and attac hed the SEC Certi ficati on of Non- Registrati on togeth e r w ith the Offi cial Receipt as part of its Mot ion, th e same wo uld still fa il. A moti on for new tri al on th e gro und of ne\:vly di scovered ev id ence shall be granted when the concurrence of the fo ll o wing requi sites is estab li shed : (a) th e ev idence is di scovered aft er tri al; (b) th e evidence could not have bee n d iscovered and p rodu ced durin g tri al even w ith th e exercise of reasona bl e dili ge nce; and (c) the ev idence is materi al and not merely con oborative, cumul a tive or im peac hin g and is of such we ight th at if admitted, wo ul d probabl y change th e j udg mentY The forego ing requirem ents are no t present in thi s case. The SEC Certifi cati on of No n- Reg istrati on, w hich is so ught to be offered as add itional ev idence, is not newly di scovered evidence but merely fo rgotte n ones . T he sa id docum ent is not discovered after tri al but was already ava il abl e to petitione r durin g tri al. It is we ll -settl ed that fo rgotten evidence, not presented duri ng the tri al nor fo rm all y o ffered, is not newly found evidence that m erits a new tri al. 10 As id e fro m the fac t that th e SEC Certiti cati on of Non- Registrati on is cons idered as forgotten evid ence, the sam e is also not m aterial and , if eve r ad mitted, wo uld not change th e outcome of the case. T he said Certifi cati on merely proves th at its cli ent is not 9 Bernaldez vs. Francia, G. R. No. 143929, February 28, 2003. 't., 10 Atl as Conso lidated Minin g & Dev.e lopment Corporati on vs . Comm iss ioner of Interna l Reven ue, G.R. No . 159490, Febru ary 18, 2008.

AMENDED DECISION CTA Case No. 7749 Page7of7 registered in the Philippines and it does not prove that the sam e is not do ing business in the Philippin es. WHEREFORE, petitioner's Motion for Reconsideration/ New Tria l is hereby deni ed. T he assa iled Deci sion promul ga ted on Jul y 12,20 10 is here by modified insofar as the discussion on the timeliness of the Petiti on for Review is co ncern ed . SO ORDERED. ~l# - 0--.--"- ERNESTO D. ACOSTA Presiding Justi ce -------~ ,.. -- ~--- CAESAR A. CASANOVA Assoc iate Justice CERTIFICATION I hereby certify that the above decision was reached after due consultation w ith the members of the Court of Tax Appeals, Special First Di vision in acco rd ance w ith Secti on 13, Article VIII of the Constitution. (\ fu .I:.:.._.,l1!6, _ '(.......____,l.- (,<. ERNESTO D. ACOSTA Presidi ng Justi ce

REPUBLIC OF THE PHILIPPINES COURT OFTAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION KELPHIL, INC., CTA CASE NO. 7749 Pe titioner, Members: ACOSTA, Chairperson - versus- BAUTISTA, and CASANOVA, JL COMMISSIONER OF INTERNAL Promulgated: ~~ 1 REVENUE, I \ d'10 ' - ' <. 2' I1 . (; ' UJ ~"'"''' ~N' Resp ondent. I rI ' ,- 1 J 1 L '� J ' ------X X- - -- -- ------ - --- --- - --~------------ -- -- ----------- - -- - ---- - -------- -- -- - - ----- ------------ - - ------- - - - SEPARATE OPINION R4UTISTA, [.: {�: �� I con cur w ith the d enial of p etition er's M o tion fo r Recon sidera tion j Ne'iv T rial inasmuch as n on e of the grounds for the allowan ce of a Mo tion for Recon sidera tion has been observed by p etition er; likewise, the alternative Motion for New Trial lacks m erit since the d ocument sou ght to be presented canno t be con sid ered as n ewly discovered evidence. H ow ever, I must express m y sep arate stand inso far as the A n'lended Decision m odified the reck onin g of the two (2)-year prescriptive p erio d w ithin w hich to fil e the administrative and judicial claims for refund . In the Decision1 d a ted Ju ly 12, 2010, the Court discu ssed the m a tter as follows: .� y //) t Records, pp . 129-150. I / (

I Se para te O pinion CT A CASE NO . 7749 Pa ge 2 of 6 Lastly, anent the issu e of w h e ther or n o t the claim fo r refund / tax credit certificate was fil ed w ithin the two-year p rescriptive p eriod , the answer is in the affirm ative . Th e reckoning of the two-year prescriptive p eriod for the filin g of a claim for input VAT refund starts from the d ate of filin g of the corresp onding Q u arterly VAT Return. Th e present claim. p ertains to input VAT incurred for th e firs t to fourth qu arters of 2006 and 2007. Reckon ed fr om A pril 20, 2006, July 19, 2006, O ctob er 18, 2006, January 18, �2007, A pril 20, 2007, July 23, 2007, October 22, 2007 and January 25, 2008, p etition er had until April 20, 2008, July 19, 2008, Oc tob er 18, 2008, Janu ary 18, 2009, April 20, 2009, July 23, 2009, October 22, 2009 and January 25, 2010 w ithin w hich to file its claim bo th in the administrative and judicial levels. A pparently, the administrative claim fil ed on M arch 25, 2008 and the Petition for Review filed with this Cour't on A pril 2, 2008 are well w ithin the two-year prescriptive p eriod 2 Being the ponen te o f the assailed Decision and in keeping w ith m y v iew that there is no n eed to wait fo r the d eni al of the cl aim by the Commission er of Internal Revenu e or its inaction a fter the ex pira tion of the on e hundred twenty (1 20)-day p eriod before the taxp ayer can lod ge its appeal with this Cou r t,3 as lon g as the recourse is m ad e w ithin the 2-year prescriptive p eriod p rov ided und er Section s 112 and 229 of the 1997 Na tion al Internal Revenu e Cod e ("NIRC" ). 4 Th e Court En Bnnc, in the case of Commission er of In ternal Re�venu e 11 . To ledo Power, Inc.,s aptly p enned as fo llows: It is true that Section 112(D) [now Section 112(C)] of the abovementioned provision applies to the present case. However, what the petitioner failed to consider is Section 112(A) of the same provision. The respondent is also covered by the two (2) year prescriptive period. We have repeatedly held that the claim for refund with the BIR and the subsequent appeal to the Court of Tax Appeals must be filed within the two-year period. 2 !d., a t p. 146. 3 Comm iss ioner of In ternal Revenu e v. CE Cebu Geo therma l Powe r Co m pany, Inc., CT A EB No . 426, Ma y 29, j 2009. <Commission er of Interna l Revenue v . Aichi Forg in g Compan y of Asi a, Inc., CT A EB No. 416, Februa ry 4, 2009. s CTA EB N o. 321 (CT A Cas e Nos. 6805 & 6851), l\�Iay 7, 2008 . ; �/

Separate Op inio n CT A CASE NO . 7749 Accordin gly, the Su p rem e Court held in the case of Atlas Conso lida ted Min ing mzd Development Corpora tion vs. Commissioner of In ternnl Revenu e that the two-yea r prescriptive p eriod for filin g a claim for input tax is reckon ed fr om the d a te of the filin g of the quarterly VAT return and p aym ent of the tax d ue. If the said period is about to expire but the BIR has not yet acted on the application for refund, the taxpayer may interpose a petition for review with this Court within the two year period. In the case of Gibbs vs. Collec tor, the S~preme Court h eld tha t if, h owever, the Collec tor (n ow Commission er) takes time in d eciding the claim, and the p eriod of two years is about to en d, the suit or proceedin g mus t be started in the Court of Tax Appeals before the end o f the two- year p eriod w ithout aw aiting the d ecision of the Coll ec tor . Furtherm ore, in the case of Co mmiss ioner of Custo/1l s nll d Com missioner of Intemnl Revenue vs. The Honorable Court of Tnx Appenls nnd Plnnters Products, In c., the Supren>e Court h eld that the tax p aye r n eed n o t wa it ind efinitely for a d ecision or ruling w h ich m ay or m ay n o t be forthcoming and w hich h e has n o legal right to ex p ect. It is dish eartenin g en ou gh to a ta xp ayer to keep him waiting for an ind efinite p eriod of time for a ruling o r d ecision of the Coll ector (now Commission er) of Internal Revenue on his claim fo r refund. It .would make m a tters m ore exasp erating for the taxpayer if we were to close the d oors of the courts of justice for su ch a relief until after the Collec tor (n ow Commission er) o f Internal Revenue, would h ave, at his p ersonal con venien ce, given his go sign al. This Court ruled in seve ral cases tha t on ce the p etition is fil ed, the Court h as alread y acquire d jurisdicti on over the claims and the Court is n ot bound to wait ind efinitely for n o reason for w hatever action respondent (herein p etition er) m ay take. A t stake are claims for refund and unlike disputed assessm ents, n o d ecision of resp ondent (herein petition er) is required before on e can go to this Court. (Bo ldfn cing supplied) And in the case of Com missioner of In ternnl Revenue v. Snn Roque Power Corpomtion,6 the same w as furth er bols tered as follows: Corollary there to, the H onorable Court of A ppea ls has ruled that when the 2-year prescriptive period is about to prescribe and the claim for refund with the Commissioner of Internal Revenue has not been 6 CTA EB No . 408 (CT A Case No . 6647), l\�'larch 25, 2009. ~; /)1 / i !

Se pa ra te O p inion CTA CASE NO. 7749 acted upon by him, for the protection of the interest of the taxpayer, the latter should file a Petition for Review with the Court of Tax Appeals within the said 2-year period; otherwise, if the decision of the Commissioner is adverse to the taxpayer and it was made after the 2- year period, he can no longer appeal the same to the Court of Tax Appeals . Th e Court of A ppeals ra tiocina ted in this w ise: "It appears therefore, tha t it is n o t n ecessary fo r the Commission er of Internal 'Revenue to firs t ac t unfavorably on the claim for refund before the Cou rt of Tax Appeals could validly � take cognizan ce of the case . This is so becau se of the p ositive m andate of Sec tion 230 of the Tax Cod e and also by virtu e of the d octrine tha t the d elay of the Commis~ioner in renderin g his d ecision d oes n o t extend the reglem entary p eriod prescribed by sta tute. Incidentally, the taxpayer could not be faulted for taking advantage of the full two-year period set by law for filing his claim for refund. Indeed, no provision in the tax code requires that the claim for refund be filed at the earliest instance in order to give the Commissioner an opportunity to rule on it and the court to review the ruling of the Commissioner of Internal Revenue on appeal. Th e law fi xe d the sam e p eri od - two years - fo r filin g a claim for refund w ith the Commission er (Sec. 204, par. 3), and for filin g of suit in court (Sec. 230), unlike in pro tests of assessm ent under Sec. 229 w hich fixed the p eriod (thirty d ays fro m receipt of the d ecision ) before an appeal could be m ad e in court. Ind eed , only the latter case presupp oses the exis ten ce of a prior d ecision of the Commissioner w hich could be subj ected to review by the court. In fact, the Court of Tax Appeals itself acknowled ges that the claim fo r refund w ith the Commission er could be pending simultaneously w ith a suit for refund filed before the former (Commissioner of In ternal Revenue vs. Ban k of the Philippine Islands as Liquida tor of Paramount Acceptan ce Corporation and the Court of Tax Appeals, CA-G.R. SP No. 34102, September 19, 1994) ." Even the Bureau of Internal Revenu e cited the foregoin g disquisition of the Court of A ppeals as basis w h en it m ad e the following ruling: "In reply, please be informed .tha t a taxp ayer- claimant n ee d n ot wait for the lapse of the 120-d ay p eriod / l '/' / )/ / I

Separa te Op inion CTA CASE NO. 7749 before it could seek judicial relief with the CTA by way of Petition for Review . Ne ither is it required that the Commissioner should first act on the clairn of a particular taxpayer before the CTA may acquire jurisdiction, particularly if the claim is about to prescribe. The Tax Code fixed the period of two (2) years for filin g a claim for refund with the Commissioner [Sec. 112(A) in relation to Sec. 204(c)] and for filing a case in court [Section 229]. Hence, a decision of the Commissioner is not a condition or requisite before the taxpayer can �resort to the judicial remedy afforded by law." (Boldfacing supplied) In addition, Revenue Memorandum Circular No. 49-03,7 dated August 15, 2003, provides as follows : In response to request of selected taxpayers for adoption of procedures in handling refund cases that are aligned to the stah1tory requirements that refund cases should be elevated to the Court of Tax Appeals before the lapse of the period prescribed by law, certain provisions of RMC No. 42-2003 are hereby am ended and new provisions are added thereto. In consonance therewith, the following amendments are being introduced to RMC No. 42-2003, to wit: I.) A-17 of Revenue Memorandum Circular No. 42-2003 IS hereby revised to read as follows: In cases where the taxpayer has filed a " Petition for Review" with the Court of Tax Appeals involving a claim for refund / TCC that is pending at the administrative agency (Bureau of Internal Revenue or OSS-DOF), the administrative agency and the tax court may act on the case separately. While the case is pending in the tax court and at the same time is still under process by the administrative agency, the litigation lawyer of the BIR, upon receipt of the summons from the tax court, shall request from the head of the investigating/ processing office for the docket containing certified true copies of all the docmnents pertinent to the claim. The docket shall be presented to the court as evidence for the BIR in its defense on the tax credit/ refund case filed by the taxpayer. In 7 Ame nding Answer to Question Number 17 of Revenue Memorandum C ircu lar No. 42-2003 and Providing Additional Guidelines on Issues Relative to the Processing of C la ims for Value-Add ed Tax (VAT) Credi t/ Refund, Including Those Filed with the Tax and Revenue Group, One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center, Department of Finance (OSS-DOF) by Direct Exporters. ,1 ' r~/I I

. Se parate O p inion CTA CASE NO . 7749 the m eantime, the investi gating/ processing offi ce of the administra tive agency shall continue processing the refund / TCC case until such time that a final d ecision h as been reach ed by either the CTA or the administrative agency. If the CTA is abl e to release its d ecision ah ead of the ev alua tion of the administra tive agency, th e latter shall cease fro m p rocessing the claim. On the o ther h and, if the administrative agen cy is able to process the claim of the taxpayer ah ea d of the CTA and the tax p ayer is amen able to the findings thereo( the con cerned taxp ayer must file a m o tion to w ithdraw the claim w ith the CTA. A copy of the p ositive resolution or approval of the m otion mu st be furnish ed the-administrative agency as a prerequisite to the release of the tax credit certificate/ tax refund processed administratively. H owever, if the taxp ayer is n o t agreeabl e to the findin gs of the administrative agen cy or d oes n o t resp ond accordingly to the action of the agen cy, the agen cy shall n o t release the refund / TCC unless the taxp ayer sh ows proof of w ithdrawal o f the case fil ed w ith the tax court. I( d espite the termina tion of the processing of the refund / TCC a t the administrative levet the tax p ayer d ecid es to continu e w ith the case fil ed at the tax court, the litiga tion lavvy er of the BIR, up on the initia tive of either the Legal Offi ce or the Processing O ffice of th e Adminis tra tive Agen cy, shall present as eviden ce against the claim of the taxpayei� the result of investigation of the investi gating/ processing office . Based on the foregoing, it is m y considered v iew that the judicial recourse within thirty (30) day s after the lapse of the 120-day p eriod is direc tory and pe rmissive, and n o t mand a tory n or jurisdictional as lon g as the said p eriod is w ithin the 2-yea r prescriptive p eriod provided und er Sec tion s 112 and 229 of the 1997 N IRC.8 Accordingly, I v ote for the DENIAL of pe tition er' s Motion for Recon sid eration / N ew Trial. ~ -, ,/ AUTISTA B Sztp nl no te 4.