San Roque Power Corp. v. Commissioner of Internal Revenue

THIRD DIVISION [C.T.A. CASE NOS. 7882 & 7937. September 4, 2012.] SAN ROQUE POWER CORPORATION , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . RESOLUTION PALANCA-ENRIQUEZ , J p : This resolves: 1) a) petitioner's "Motion for Reconsideration" of the Decision dated February 8, 2012, filed on February 27, 2012; b) respondent's "Comment (Re: Motion for Reconsideration)" filed on April 13, 2012; aHADTC 2) petitioner's "Supplemental Motion for Reconsideration (With Motion for Leave)" filed on March 16, 2012; and 3) petitioner's "Second Supplemental Motion for Reconsideration (With Motion for Leave of Court to Admit Evidence)" filed on April 18, 2012. Despite notice, respondent failed to file her comment to petitioner's "Supplemental Motion for Reconsideration (With Motion for Leave)" and "Second Supplemental Motion for Reconsideration (With Motion for Leave of Court to Admit Evidence)". Motion for Reconsideration Petitioner's "Motion for Reconsideration" is anchored on the following grounds: 1) At the time petitioner filed its Petition for Review, the existing jurisprudence was firm that a claim for refund of excess input VAT must be filed within the two-year prescriptive period; 2) Ai ch i effectively grants respondent unbridled discretion to deprive a taxpayer of the right to seek judicial redress; 3) The ruling in Aichi cannot be considered to have overturned the Supreme Court's doctrinal ruling in Atlas Consolidated Mining and Development Corporation vs. Commissioner of Internal Revenue , without violating the 1987 Constitution; 4) Any application of Ai ch i should be done prospectively; 5) The history of tax laws and jurisprudence clearly shows that the two-year prescriptive period was meant to apply to both administrative and judicial claims for refund; and cASTED 6) The Decision's impact on the entire power generation industry and other investors is indubitable and thus, it needs to be revisited. The Court finds no merit in the motion. Petitioner contends that at the time the administrative and judicial claims for refund were filed, the prevailing rule is that the 30-day period to appeal to the CTA following the expiration of the 120-day period, as provided under Section 112 (C) of the Tax Code , is neither mandatory nor compulsory, and may be dispensed with, as long as both the administrative and the judicial claims are filed within the two (2) year prescriptive period, under Section 229 of the Tax Code. The Court disagrees. Settled is the rule that the two-year prescriptive period under Section 229 of the NIRC of 1997 , as amended, is not applicable to claims for VAT refund [CIR v. Mirant Pagbilao Corporation (Formerly Southern Energy Quezon, Inc.), supra]. The two (2) year period is applicable only to administrative claims for VAT refund, pursuant to Section 112 (A) of the NIRC of 1997, as amended, and not to appeals made to the CTA. In the Aichi case, the Supreme Court ruled that the two-year period refers only to applications for refund/credit filed before the BIR and not to appeals made to the CTA and the application of the two-year period for judicial claims would render nugatory the rule laid down in Section 112 (c), which explicitly provides that a taxpayer may file an appeal with the CTA, within 30 days after the expiration of the 120-day period. In addition, the periods under Section 112 (D) are mandatory in nature. Thus, the claimant has no other option, but to appeal to the CTA the inaction of the CIR, within 30 days from the lapse of the 120-day period to decide. CacHES Petitioner also contends that it is only the Supreme Court sitting En Banc who may reverse or modify a doctrine or principle of law laid down in a decision rendered En Banc or in division. Therefore, any decision rendered by a division of the Supreme Court in violation of the above-mentioned constitutional provision would be in excess of jurisdiction and, therefore, invalid. It must be emphasized that the Aichi case did not overturn the doctrine laid down in the Atlas case. The Atlas case pertains to administrative and judicial claims for VAT refunds, under the NIRC of 1977, as amended; while the Aichi case pertains to judicial claims for VAT refund. Thus, Section 4 of Article VIII of the 1987 Constitution, which provides that no doctrine or principle of law laid down by the court in a decision rendered en banc or in division may be modified or reversed except by the court sitting en banc , does not apply in this case since the Aichi case did not reverse nor modify any previous doctrine regarding the interpretation of Section 112 of the NIRC of 1997, as amended. As to the argument that the Aichi case should not be applied to this case following the principle of prospectivity of statutes, the Court reiterates that in the Aichi case, the Supreme Court merely interpreted the provisions of Section 112 of the NIRC of 1997, as amended. Considering that Section 112 of the NIRC of 1997, as amended is the law in force and applicable to petitioner's claim for refund for the period covering taxable year 2007, it cannot claim that it is legally impossible to comply with the same, and that the Aichi case was still non-existent at the time petitioner filed its Petition for Review. It cannot be mistaken that the law itself is very clear and unambiguous. Hence, we cannot disregard the letter of the law on the pretext of pursuing its spirit (Tanada and Macapagal v. Cuenco, 103 Phil. 1051). Equally settled is the rule that judicial interpretation of the law retroacts to the date when the said law became effective. Thus, the ruling in the Aichi case retroacts to the date when Section 112 of the NIRC of 1997, as amended, took effect on January 1, 1998. DaIAcC Supplemental Motion for Reconsideration Petitioner's "Supplemental Motion for Reconsideration" is anchored on the following grounds: 1) Petitioner did not amend or supplant its January 27, 2009 administrative claim when it informed respondent of the correct figure of the claim; 2) Petitioner submitted the complete documents necessary to support its claim simultaneously with the administrative claim on January 27, 2009; and 3) Substantial justice is addressed if this Honorable Court considers this Supplemental Motion. The motion is devoid of merit. After a careful perusal of the records of this case, the Court finds that BIR Form 1914, Application for Tax Credits/Refunds (part of Annex "I" of the Petition for Review filed in C.T.A. Case No. 7937) shows that the BIR received said application for refund for the 3rd and 4th quarters of 2007 on March 30, 2009. It bears stressing that BIR Form 1914 is submitted by taxpayers whenever a claim for refund with the BIR is filed and forms part of the supporting documents in claims for refund. Section 112 (C) of the NIRC of 1997, as amended, provides that the 120-day period starts to commence once the complete supporting documents are submitted to the BIR. Thus, the 120-day period should start to commence on March 30, 2009, the time when the taxpayer submitted the complete supporting documents. Records show that the administrative claim filed on January 27, 2009, petitioner sought to be refunded the amount of P11,883,843.50, while in the administrative claim filed on March 30, 2009, the claim is P10,830,397.50. A difference of more than one (1) million is substantial in petitioner's claim for refund for the 3rd and 4th quarters of taxable year 2007. It is clear that the amendment on petitioner's administrative claim filed on March 30, 2009 supersedes its administrative claim filed on January 27, 2009 considering that petitioner effectively vacated part of its earlier claim. EScHDA More importantly, the basis of petitioner's claim for refund for the 3rd and 4th quarters of taxable year 2007 is the amount alleged in its administrative claim filed on its administrative claim filed on March 30, 2009. Accordingly, March 30, 2009 should be the reckoning point of the prescribed 120-day period for the Commissioner to act on petitioner's claim for refund. Thus, for failure of the petitioner to observe the prescribed period under Section 112 of the NIRC of 1997, as amended, the Court finds that petitioner's claim for refund for the 3rd and 4th quarters of taxable year 2007 was prematurely filed. Therefore, this Court has not acquired jurisdiction over the same. Finding no compelling reason or substantial argument to warrant the reconsideration sought, the Court has no recourse, but to deny petitioner's Motion for Reconsideration, Supplemental Motion for Reconsideration and Second Supplemental Motion for Reconsideration. WHEREFORE , premises considered, petitioner's "Motion for Reconsideration", "Supplemental Motion for Reconsideration" and "Second Supplemental Motion for Reconsideration" are hereby DENIED for lack of merit. SO ORDERED. (SGD.) OLGA PALANCA-ENRIQUEZ Associate Justice Lovell R. Bautista and Amelia R. Cotangco-Manalastas, JJ., concur.