HEDCOR SIBULAN, INC. v. COMMISSIONER OF INTERNAL REVENUE

IIEPUDUC OF TilE PHILIPPINES Ctn�n Of Tax AIIIIODIS QUEZON CITY lMIIHD DIVISION * v*************** t-IEDCOR SXBULAN, INC., CTA CASE NO. 8125 Petili o1 1Pr, Members: -versus- BAUTISTA, Chai1person PALANCA-ENRIQUEZ, and COTANGCO-MANALASTAS,J~ COMMISSIONER OF INTt::HNAl Promulgated: REVENUE, Respon< lent. x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x ESOlUTION For this Court's resolt rfion is respondent's special and affirmative def-ense of prematurity as infArposed in her ''Answer" "filed on August 5, 2010. Respondent avers th;Jt tile instant Petition for Review merits dismissal clue to the premature filing of lhe judicial claim for refund, in utter disregard of administrative procedure. r~es pondent maintains that the instant petition was filed barely four (4) days after petitioner filed its administrative claim, in violation of Section 112 (C) of f.he National Internal Revenue Code (NIRC) of 1997, as amended.

RESOLUTION CTA CASE NO. 8 125 Page 2 of6 Petitioner filed its "Commenr' on December 15, 2010, raising the following grounds: 1. The prern ~ Lurily of a petition is not a specific ground fnr (lk;missal of an action; 2. The petil.iott was filed within the period prescribed by law cili11q as its basis Section 112 in relation to Section /.2Y of the National Internal Revenue Code of 1997, as amended; 3. The obsPtVn iiCe of the 120-day rule should only be applied prospectively; and 4. Even as~t ll tling that there was prematurity in the filing of Ute petition, respondent is deemed to have abandon ed or waived the same. After a scrutiny of Ute averments raised by both parties, this Court To begin with, it is sis.J I tificant to emphasize that where the enabling statute indicates a procedu1 e for administrative review, and provides a system of administrative appeal, or reconsideration, the courts, for reason of law, comity and convenience, wi ll not entertain a case unless the available remedies have been resorted to and the appropriate authorities have been given an opportunity to ad. and correct the errors comm itted in the administrative forum .1 If a litigant goes to court without first pursuing his administrative remedies, his action is pre111 al.ure or he has no cause of action to ventilate in court. His case is not ripe for judicial determination. 2 Hence, petitioner's averment that the ground of prematurity of the judicial claim for refund or 1 Teotico vs. Agda, G.R. No. 8743 7, lvlay 29, 199 1. 2 Aboiti z vs. Coll ector of Cu stoms, I 1. 1\ 1-.Jo. L-29466, May 18, 1978 (83 SCRA 265).

R.ESOLUTION CTA CASE NO . 8 125 Page3of6 failure to exhaust adminisll 0 1ive remedies cannot be raised as a defense from which the dismissal of llle case may be based certainly deserves scant consideration. With respect to pel:ilinner's insistence that the instant Petition for Review was timely filed on U10 basis of Section 112 in relation to Section 229 of the NIRC of 1997, as a111 ended; the issue on the application of Section 229 of the NIRC of 1997, as arn eruJed, in determining the timeliness of claims for Value-Added Ta x (VAT) re ft111d llad already been settled in tile case of Commissioner of Internal Revenue vs. Aichi Forging Company of Asia Inc.3 The Supreme Court ruled: "The pivotal qu e �~ uon of wllen to reckon the running of the two-year prescriptive period, however, has already been resolved in Commissio11er of Internal Revenue v. Mirant Pagbilao Corporation, wllere we ruled that Section 112(A) of the NIRC is the flpplicable provision in determining the start of the two-year period for claiming a refund/credit of unutilized input VAT, and that Sections 204(C) aiul ~~29 of the NIRC are inapplicable as 'both provisions apply only to instances of erroneous payment or illegal collection of internal revenue taxes." It is clear from the above-quoted decision that Section 229 of the NIRC of 1997, as amended, is 11ul the applicable provision in determining the timeliness of the filing of judicial claims for unutilized input VAT refund. Rather, wllat is applicable is Section 112 (D) [now Section 112 (C)] of the NIRC of 1997, as amended, which provides: "SEC. 112. Rerunrfs or Tax Credits ofInput Tax. - 3 G.R. No. I84823, October 6, 20 lO

RESO LUTION CTA CASE NO . 8 125 Page 4 of6 x xxx (D) Period within which Refund or Tax Credit of Input Taxes shall be Made. - In proper cases, the Commissioner shall grant a refund or issue I he tax credit certificate for creditable input ta xes within one hundred twenty (120) days from the date of submission of r:omplete documents in support of the application filed in acco1 da nce with Subsections (A) and (B) l'l r:rt ~F' p f ft Jll 0r 11: " t i: tl rl<" l li;-j l nf II 11:1 r:l ;, inl rnr I :1~ p�- r1111 d n r lax u e uil, ur llle l a il u t ~ ott Ut e parl of til e Con11nissioner to act on the applicati oll within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denyi11 g !lie claim or after the expiration of the one hundred twenty dily-period, appeal the decision or the unacted claim with tlt P. c ourt of Tax Appeals." Significantly, in the aforecited case of Commissioner of Internal Revenue vs. Aichi Forging Company of Asia/ Inc./ 4 the Supreme Court expounded on the rnandato1y ltature of the periods provided in Section 112 (D) [now Section 11 2 (C)] of ri te NIRC of 1997, as amended . The Supreme Court ruled that failure to obse rve the said period is fatal to one's case and in case of premature filing, lhis Court will not be clothe with jurisdiction to entertain the appeal, to wit: "Section 11 ~ (0) of the NIRC clearly provides that the CIR has ' 1 :1.0 days, from the date of the submission of the cornplete documents in support of the application [for l ax refund/credit],' within which to grant or deny the claim . I n case of full or partial denial by the CIR, the taxpayer's recourse is to file an appeal before the CTA within 30 days fro 11 1 receipt of the decision of the CIR. However, if after the 120-day period the CIR fails to act on the application for Lax refund/credit, the remedy of the taxpayer is to appeal th e inaction of the CIR to CTA within 30 days. xxxx 4 Supra, note 3.

RES OLUTION CTA CASE NO . 8125 Page 5or 6 In fact, applying the tvvo-year period to judicial claims would render nugatory Secliun 112(0) of the NIRC, which already provides for a specific period within which a taxpayer should appeal the decision or inaction of the CIR. The 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-dny period; and (2) when no decision is made after the 120-day period. In both instances, the taxpayer has 30 days within which to file an appeal with the CTA. As we see it th P. n, the 120-day period is crucial in filing an appeal with t:he CTA. xxxx In fine, the prem<tl:me filing of respondent's claim for refund/credit of inp11t VAT before the CTA warrants a dismissal inasmuch <~s no jurisdiction was acquired by the CTA." (Emphases supplied) In this case, records sl1ow that petitioner filed its administrative claim for refund on June 25, 2010. The same date shall be the reckoning point in counting the 120-day period crmsidering that the records do not show when petitioner filed its supp01tiny documents. On June 29, 2010 or barely four (4) days from the filing of its administrative claim for refund, petitioner filed the instant Petition for Review. Thus, it is apparent that petitioner filed its judicial appeal without waili11 y for the lapse of the 120-day period provided for under Section 112(0) [now Section 112(C)] of the NIRC of 1997, as amended. Consequently, petitio11er's premature filing of the Petition for Review on June 29, 2010, failed to effectively clothe this Court with jurisdiction to take cognizance of the insta11t case.

R t S OL UTIO N CTA CASE NO . 8 125 � Page 6 of 6 WI-t ERE FORE, pren1ises considered the instant Malian iv Dismiss is hereby GRANTED. Accorclitl ~Jiy, the instant Petition for Review is hereby DISMISSED for having be~ 11 prematurely filed . SO ORDERED. (With Dissenting Opinion) lOVELL R. BAUTISTA Associate Justice ~/{.-;,~~ AMELI~ A R. C/OTA~ NG~~ 6-~A~~NA~L~ ASTA- S OLGA ~ALANCA-ENRIQUE7.: Associate Justice Associate Justice