So Ordered.: Velasco, JR., Peralta, Mendoza and Sereno, JJ.
So Ordered.: Velasco, JR., Peralta, Mendoza and Sereno, JJ.
So Ordered.: Velasco, JR., Peralta, Mendoza and Sereno, JJ.
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* FIRST DIVISION.
423
424
appeal the inaction of the CIR to CTA within 30 days. In this case,
the administrative and the judicial claims were simultaneously filed
on September 30, 2004. Obviously, respondent did not wait for the
decision of the CIR or the lapse of the 120-day period. For this
reason, we find the filing of the judicial claim with the CTA
premature.
Same; Same; Same; Words and Phrases; The phrase „within two
(2) years x x x apply for the issuance of a tax credit certificate or
refund‰ in Section 112(A) of the National Internal Revenue Code
(NIRC) refers to applications for refund/credit filed with the
Commission of Internal Revenue (CIR) and not to appeals made to
the Court of Tax Appeals (CTA)·applying the two-year period to
judicial claims would render nugatory Section 112(D) of the NIRC,
which already provides for a specific period within which a taxpayer
should appeal the decision or inaction of the CIR.·There is nothing
in Section 112 of the NIRC to support respondentÊs view. Subsection
(A) of the said provision states that „any VAT-registered person,
whose sales are zero-rated or 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 certificate
or refund of creditable input tax due or paid attributable to such
sales.‰ The phrase „within two (2) years x x x apply for the issuance
of a tax credit certificate or refund‰ refers to applications for
refund/credit filed with the CIR and not to appeals made to the
CTA. This is apparent in the first paragraph of subsection (D) of the
same provision, which states that the CIR has „120 days from the
submission of complete documents in support of the application
filed in accordance with Subsections (A) and (B)‰ within which to
decide on the claim. In fact, applying the two-year period to judicial
claims would render nugatory Section 112(D) 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(D) 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
period. In both instances, the taxpayer has 30 days within which to
file an appeal with the CTA. As we see it then, the 120-day period is
crucial in filing an appeal with the CTA.
425
DEL CASTILLO, J.:
A taxpayer is entitled to a refund either by authority of a
statute expressly granting such right, privilege, or
incentive in his favor, or under the principle of solutio
indebiti requiring the return of taxes erroneously or
illegally collected. In both cases, a taxpayer must prove not
only his entitlement to a refund but also his compliance
with the procedural due process as non-observance of the
prescriptive periods within which to file the administrative
and the judicial claims would result in the denial of his
claim.
This Petition for Review on Certiorari under Rule 45 of
the Rules of Court seeks to set aside the July 30, 2008
Decision1 and the October 6, 2008 Resolution2 of the Court
of Tax Appeals (CTA) En Banc.
Factual Antecedents
Respondent Aichi Forging Company of Asia, Inc., a
corporation duly organized and existing under the laws of
the Republic of the Philippines, is engaged in the
manufacturing, producing, and processing of steel and its
by-products.3 It is registered with the Bureau of Internal
Revenue (BIR) as a Value-Added Tax (VAT) entity4 and its
products, „close im-
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426
_______________
5 Id.,
6 CTA Second Division Rollo, pp. 26-27.
7 Rollo, pp. 79-90.
8 Id., at p. 82.
9 SEC. 106. Value-added Tax on Sale of Goods or Properties.·
(A) Rate and Base of Tax.·There shall be levied, assessed and
collected on every sale, barter or exchange of goods or properties, a value-
added tax equivalent to ten percent (10%) of the gross selling price or
gross value in money of the goods or properties sold, bartered or
exchanged, such tax to be paid by the seller or transferor.
xxxx
(2) The following sales by VAT-registered persons shall be subject to
zero percent (0%) rate:
(a) Export Sales.·The term Âexport salesÊ means:
(1) The sale and actual shipment of goods from the Philippines to a
foreign country, irrespective of any shipping ar-
427
that for the said period, it incurred and paid input VAT
amounting to P3,912,088.14 from purchases and
importation attributable to its zero-rated sales;10 and that
in its application for refund/credit filed with the DOF One-
Stop Shop Inter-Agency Tax Credit and Duty Drawback
Center, it only claimed the amount of P3,891,123.82.11
In response, petitioner filed his Answer12 raising the
following special and affirmative defenses, to wit:
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428
7. Petitioner must prove that the claim was filed within the two (2)
year period prescribed in Section 229 of the Tax Code;
8. In an action for refund, the burden of proof is on the taxpayer to
establish its right to refund, and failure to sustain the burden is
fatal to the claim for refund; and
9. Claims for refund are construed strictly against the claimant for
the same partake of the nature of exemption from taxation.13
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13 Id., at p. 92.
429
The Court finds that the first three requirements have been
complied [with] by petitioner.
With regard to the first requisite, the evidence presented by
petitioner, such as the Sales Invoices (Exhibits „II‰ to „II-262,‰ „JJ‰
to „JJ-431,‰ „KK‰ to „KK-394‰ and „LL‰) shows that it is engaged in
sales which are zero-rated.
The second requisite has likewise been complied with. The
Certificate of Registration with OCN 1RC0000148499 (Exhibit „C‰)
with the BIR proves that petitioner is a registered VAT taxpayer.
In compliance with the third requisite, petitioner filed its
administrative claim for refund on September 30, 2004 (Exhibit
„N‰) and the present Petition for Review on September 30, 2004,
both within the two (2) year prescriptive period from the close of the
taxable quarter when the sales were made, which is from
September 30, 2002.
As regards, the fourth requirement, the Court finds that there
are some documents and claims of petitioner that are baseless and
have not been satisfactorily substantiated.
xxxx
In sum, petitioner has sufficiently proved that it is entitled to a
refund or issuance of a tax credit certificate representing unutilized
excess input VAT payments for the period July 1, 2002 to September
30, 2002, which are attributable to its zero-rated sales for the same
period, but in the reduced amount of P3,239,119.25, computed as
follows:
430
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431
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432
the case at bar, the taxable quarter involved was for the period of
July 1, 2002 to September 30, 2002. Applying Section 114 of the
1997 NIRC, respondent has until October 25, 2002 within which to
file its quarterly return for its gross sales or receipts [with] which it
complied when it filed its VAT Quarterly Return on October 20,
2002.
In relation to this, the reckoning of the two-year period provided
under Section 229 of the 1997 NIRC should start from the payment
of tax subject claim for refund. As stated above, respondent filed its
VAT Return for the taxable third quarter of 2002 on October 20,
2002. Thus, respondentÊs administrative and judicial claims for
refund filed on September 30, 2004 were filed on time because
AICHI has until October 20, 2004 within which to file its claim for
refund.
In addition, We do not agree with the petitionerÊs contention that
the 1997 NIRC requires the previous filing of an administrative
claim for refund prior to the judicial claim. This should not be the
case as the law does not prohibit the simultaneous filing of the
administrative and judicial claims for refund. What is controlling is
that both claims for refund must be filed within the two-year
prescriptive period.
In sum, the Court En Banc finds no cogent justification to
disturb the findings and conclusion spelled out in the assailed
January 4, 2008 Decision and March 13, 2008 Resolution of the CTA
Second Division. What the instant petition seeks is for the Court En
Banc to view and appreciate the evidence in their own perspective
of things, which unfortunately had already been considered and
passed upon.
WHEREFORE, the instant Petition for Review is hereby
DENIED DUE COURSE and DISMISSED for lack of merit.
Accordingly, the January 4, 2008 Decision and March 13, 2008
Resolution of the CTA Second Division in CTA Case No. 7065
entitled, „AICHI Forging Company of Asia, Inc. petitioner vs.
Commissioner of Internal Revenue, respondent‰ are hereby
AFFIRMED in toto.
SO ORDERED.‰22
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433
Issue
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24 Id., at p. 19.
25 Id.
26 Supra note p. 17.
27 Rollo, p. 21.
28 Id., at p. 22.
29 Id.
30 Id., at p. 24.
434
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31 Id.
32 Id., at p. 25.
33 Id., at pp. 161-162.
34 Id., at p. 164.
35 Id., at p. 166.
36 CTA Second Division Rollo, p. 26.
37 Id., at p. 27.
38 Rollo, p. 166.
435
Our Ruling
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39 Id., at p. 166.
40 130 Phil. 12; 22 SCRA 12 (1968).
41 Id., at p. 16; p. 16.
42 Rollo, p. 167.
436
437
„The above proviso [Section 112 (A) of the NIRC] clearly provides
in no uncertain terms that unutilized input VAT payments not
otherwise used for any internal revenue tax due the
taxpayer must be claimed within two years reckoned from
the close of the taxable quarter when the relevant sales
were made pertaining to the input VAT regardless of
whether said tax was paid or not. As the CA aptly puts it, albeit
it erroneously applied the aforequoted Sec. 112 (A), „[P]rescriptive
period commences from the close of the taxable quarter when the
sales were made and not from the time the input VAT was paid nor
from the
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43 Id.
44 G.R. No. 172129, September 12, 2008, 565 SCRA 154.
45 Id., at p. 173.
438
439
440
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441
„Both Article 13 of the Civil Code and Section 31, Chapter VIII,
Book I of the Administrative Code of 1987 deal with the same
subject matter·the computation of legal periods. Under the Civil
Code, a year is equivalent to 365 days whether it be a regular year
or a leap year. Under the Administrative Code of 1987, however, a
year is composed of 12 calendar months. Needless to state, under
the Administrative Code of 1987, the number of days is irrelevant.
There obviously exists a manifest incompatibility in the manner
of computing legal periods under the Civil Code and the
Administrative Code of 1987. For this reason, we hold that Section
31, Chapter VIII, Book I of the Administrative Code of 1987, being
the more recent law, governs the computation of legal periods. Lex
posteriori derogat priori.
Applying Section 31, Chapter VIII, Book I of the Administrative
Code of 1987 to this case, the two-year prescriptive period (reckoned
from the time respondent filed its final adjusted return on April 14,
1998) consisted of 24 calendar months, computed as follows:
Year 2 13th calendar month April 15, 1999 to May 14, 1999
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50 Id., at p. 444.
442
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443
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52 Rollo, p. 166.
444
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445