Lapanday Foods Corp. v. Commissioner of Internal Revenue

EN BANC [C.T.A. EB CASE NO. 2369. March 9, 2022.] (C.T.A. CASE NO. 10122) LAPANDAY FOODS CORPORATION , petitioner , vs. COMMISSIONER OF INTERNAL REVENUE , respondent . DECISION CASTAEDA, JR. , J p : In this Petition for Review, petitioner Lapanday Foods Corporation seeks to reverse and set aside the Resolutions dated February 21, 2020 and October 14, 2020, respectively. Further, petitioner seeks to be refunded or issued a tax credit certificate in the total amount of Php12,389,839.79, representing unutilized input taxes attributable to zero-rated sales for the second to fourth quarters of the taxable year 2006. 1 For easy reference, the dispositive portion of the assailed Resolution dated February 21, 2020 reads: " WHEREFORE , premises considered, respondent's Motion for Early Resolution on the Issue of Jurisdiction of the Honorable Court is hereby GRANTED and petitioner's Manifestation is NOTED . Accordingly, the Petition for Review under CTA Case No. 10122 is DISMISSED for lack of jurisdiction by reason of prescription. SO ORDERED. " 2 On the other hand, the dispositive portion of the assailed Resolution dated October 14, 2020 reads: " WHEREFORE , premises considered, petitioner's Motion for Reconsideration (Of the Resolution dated 21 February 2020) is hereby DENIED . Accordingly, the assailed Resolution dated February 21, 2020 is AFFIRMED . SO ORDERED. " 3 THE FACTS On July 19, 2019, petitioner filed its Petition for Review before the Court in Division, seeking for the issuance of a tax credit certificate in the total amount of Php12,389,839.79. 4 On November 15, 2019, respondent filed his Motion for Early Resolution on the Issue of Jurisdiction of the Honorable Court. 5 In the said motion, respondent asserts that petitioner belatedly filed its judicial claim when it filed the Petition for Review only on July 19, 2019, as follows: Quarter 2010 Filing of Administrative Claim 120-day period (Deemed Denied) 30-days after the denial Date of Filing of Petition for Review Second 28 April 2008 26 August 2008 25 September 2008 19 July 2019 Third 28 April 2008 26 August 2008 25 September 2008 Fourth 11 July 2008 08 November 2008 08 December 2008 On February 21, 2020, the Court in Division issued the assailed Resolution 6 denying the Petition for Review for lack of jurisdiction. On March 13, 2020, petitioner filed through registered mail its Motion for Reconsideration (Of the Resolution dated 21 February 2020). 7 On October 14, 2020, the Court in Division issued a Resolution 8 denying the said motion for reconsideration. On November 4, 2020, petitioner filed the instant Petition for Review. 9 On January 26, 2021, the Court En Banc directed the respondent to file his comment. 10 On February 17, 2021, respondent, through counsels, filed his Motion to Admit Attached Comment with Comment/Opposition Re: Petitioner's Petition for Review. 11 On March 9, 2021, the Court issued a Resolution 12 submitting the case for decision. Hence, this Decision. THE ISSUE The primary issue to be decided by the Court En Banc is whether petitioner's judicial claim has already prescribed, which strips the CTA of its jurisdiction to decide on the merits of this case. THE RULING Petitioner asserts that the remedy of the 30-day filing period after receipt of respondent's denial of the claim for refund is a separate and distinct remedy from the 120+30-day period relating to respondent's inaction amounting to a "deemed denial." Moreover, petitioner adds that the Lascona case 13 is instructive to the effect that a taxpayer cannot be prejudiced if he or she chooses to wait for the final decision of respondent on the protested assessment instead of appealing respondent's inaction after the lapse of the prescribed period. In ruling against petitioner, the Court in Division held in this wise: "Now the question is whether the petitioner has the option either to file an appeal within 30 days after the lapse of the 120-period without action from the respondent or to wait until the latter issues a ruling on the said claims for VAT refund/credit? We rule in the negative. In Commissioner of Internal Revenue v. San Roque Power Corporation, Taganito Mining Corporation v. Commissioner of Internal Revenue, and Philex Mining Corporation v. Commissioner of Internal Revenue , the Supreme Court ruled that the 30-day period of filing an appeal is mandatory and jurisdictional after the expiration of the 120-day period if the applicant/claimant will opt to file an appeal, to wit: 'When Section 112(C) states that 'the taxpayer affected may , within thirty (30) days from receipt of the decision denying the claim or after the expiration of the one hundred twenty-day period, appeal the decision or the unacted claim with the Court of Tax Appeals,' the law does not make the 120+30-day periods optional just because the law uses the word 'may.' The word 'may' simply means that the taxpayer may or may not appeal the decision of the Commissioner within 30 days from receipt of the decision, or within 30 days from the expiration of the 120-day period. Certainly, by no stretch of the imagination can the word 'may' be construed as making the 120+30-day periods optional, . . . xxx xxx xxx To repeat, a claim for tax refund or credit, like a claim for tax exemption, is construed strictly against the taxpayer. One of the conditions for a judicial claim of refund or credit under the VAT System is compliance with the 120+30-day mandatory and jurisdictional periods. . .' The doctrine on the mandatory and jurisdictional nature of the 120+30-day period is also reiterated in several subsequent rulings of the Supreme Court. In Commissioner of Internal Revenue v. Mindanao II Geothermal Partnership (Mindanao II case) , the Supreme Court provides a summary of rules on prescriptive periods for claiming refunds or credit of input VAT, to wit: SUMMARY OF RULES ON PRESCRIPTIVE PERIODS FOR CLAIMING REFUND OR CREDIT OF INPUT VAT The lessons of this case may be summed up as follows: A. Two-Year Prescriptive Period 1. It is only the administrative claim that must be filed within the two-year prescriptive period. (Aichi) 2. The proper reckoning date for the two-year prescriptive period is the close of the taxable quarter when the relevant sales were made. (San Roque) 3. The only other rule is the Atlas ruling, which applied only from 8 June 2007 to 12 September 2008. Atlas states that the two-year prescriptive period for filing a claim for tax refund or credit of unutilized input VAT payments should be counted from the date of filing of the VAT return and payment of the tax. (San Roque) B. 120+30-Day Period 1. The taxpayer can file an appeal in one of two ways: (1) file the judicial claim within thirty days after the Commissioner denies the claim within the 120-day period, or (2) file the judicial claim within thirty days from the expiration of the 120-day period if the Commissioner does not act within the 120-day period. 2. The 30-day period always applies, whether there is a denial or inaction on the part of the CIR. 3. As a general rule, the 30-day period to appeal is both mandatory and jurisdictional. (Aichi and San Roque) 4. As an exception to the general rule, premature filing is allowed only if filed between 10 December 2003 and 5 October 2010, when BIR Ruling No. DA-489-03 was still in force. (San Roque) 5. Late filing is absolutely prohibited, even during the time when BIR Ruling No. DA-489-03 was in force. (San Roque) As shown above, the only exception to the doctrine of 120+30-day period is when the claim for refund or credit of input VAT was filed between December 10, 2003 and October 5, 2010, when BIR Ruling No. DA-489-03 was still in force. Although the instant case is within the period covered by the aforesaid ruling, the period for the submission of the complete documents to support the applications or claims for refund is not an issue in the instant case, hence, the application of the exception is not relevant. Likewise, petitioner is totally mistaken in relying on the Lascona case wherein the ruling was based on Section 228 of the 1997 NIRC, as amended, and the issue pertains to a tax assessment and not an input VAT refund or credit claim. In Section 228, the provision for the 30-day period to appeal is worded as 'the taxpayer adversely affected by the decision or inaction may appeal to the Court of Tax Appeals within (30) days from receipt of the said decision, or from the lapse of the one hundred eighty (180)-day period. ' The option given to the taxpayer is to file an appeal either from the lapse of the 180-day period or from the date of the receipt of the decision, which may occur during or after the 180-day period when the respondent may take action on taxpayer's protest on a particular tax assessment. Further, in Lascona case, one of the bases of such ruling is Section 3(a)(2), Rule 4 of the Revised Rules of the Court of Tax Appeals (RRCTA) which provides: SEC. 3. Cases within the jurisdiction of the Court in Divisions . The Court in Divisions shall exercise: (a) Exclusive original or appellate jurisdiction to review by appeal the following: (1) x x x (2) Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue, where the National Internal Revenue Code or other applicable law provides a specific period for action: Provided , that in case of disputed assessments, the inaction of the Commissioner of Internal Revenue within the one hundred eighty day-period under Section 228 of the National Internal Revenue Code shall be deemed a denial for purposes of allowing the taxpayer to appeal his case to the Court and does not necessarily constitute a formal decision of the Commissioner of Internal Revenue on the tax case; Provided, further , that should the taxpayer opt to await the final decision of the Commissioner of Internal Revenue on the disputed assessments beyond the one hundred eighty day-period abovementioned, the taxpayer may appeal such final decision to the Court under Section 3(al. * Rule 8 of these Rules ; and Provided, still further, that in the case of claims for refund of taxes erroneously or illegally collected, the taxpayer must file a petition for review with the Court prior to the expiration of the two-year period under Section 229 of the National Internal Revenue Code; (Underscoring supplied) Unlike such provision wherein the taxpayer can wait for the decision of the respondent on disputed assessment, the RRCTA did not provide for an equivalent provision for claims of refund/credit particularly on input VAT. Hence, Lascona is not applicable in this case. In the instant case, therefore, the petitioner had only 30 days to file its appeal from the last day of the 120-day period or until September 25, 2008 for the second and third quarters of TY 2006 while it had until December 8, 2008 for the fourth quarter of TY 2008. The filing of the petition for review on July 19, 2018 is beyond the 30-day period under Section 112(C) of the 1997 NIRC, as amended, and as provided in the Mindanao II case , the 'late filing is absolutely prohibited' even during the period covered by its exception. Thus, the Court has no jurisdiction to continue hearing the instant case." 14 The Court En Banc agrees with the conclusion of the Court in Division. Indeed, the San Roque 15 case and the subsequent Mindanao II 16 case categorically state that the 30-day period for filing an appeal is mandatory and jurisdictional after the expiration of the 120-day period if the applicant/claimant will opt to file an appeal. One of the conditions for a judicial claim for refund or credit under the VAT System is compliance with the 120+30-day mandatory and jurisdictional periods. Thus, under the law and prevailing jurisprudence, petitioner is not given an option to wait for the decision of respondent on the administrative claim after the 120-day period had already prescribed. After the 120-day period, petitioner only had 30 days from expiration thereof within which to file its judicial claim. In line with the above-pronouncements of the Supreme Court, it is clear that the judicial claim was belatedly filed on July 19, 2019. Specifically, the judicial claims for the second and third quarters of TY 2006 should have been filed until September 25, 2008, while the judicial claim for the 4th quarter of TY 2006 should have been filed on December 8, 2008, following the 120+30-day mandatory and jurisdictional periods. Meanwhile, the Court En Banc likewise agrees with the Court in Division that the Lascona case is inapplicable because it involves an assessment, unlike in this case which involves a claim for refund. Considering the foregoing, the Court En Banc need not discuss the other issues raised by petitioner in the instant Petition. WHEREFORE , the instant Petition for Review is DENIED , for lack of jurisdiction. SO ORDERED. (SGD.) JUANITO C. CASTAEDA, JR. Associate Justice Roman G. del Rosario, P.J., Erlinda P. Uy, Ma. Belen M. Ringpis-Liban, Catherine T. Manahan, Jean Marie A. Bacorro-Villena, Maria Rowena Modesto-San Pedro, Marian Ivy F. Reyes-Fajardo and Lanee S. Cui-David, JJ. , concur. Footnotes 1. Petition for Review, Court En Banc Docket, p. 1. 2. Resolution, Court En Banc Docket, pp. 45-46. 3. Resolution, Court En Banc Docket, p. 54. 4. See Note 1, pp. 5-6. 5. Division Docket, pp. 246-253. 6. See Note 2, pp. 37-46. 7. Division Docket, pp. 482-509. 8. See Note 3, pp. 47-54. 9. See Note 1, pp. 1-31. 10. Court En Banc Docket, pp. 118-119. 11. Court En Banc Docket, pp. 120-129. 12. Court En Banc Docket, pp. 131-132. 13. Lascona Land Co., Inc. v. Commissioner of Internal Revenue , G.R. No. 171251, March 5, 2012. 14. Resolution, Court En Banc Docket, pp. 41-45. 15. Commissioner of Internal Revenue v. San Roque Corporation, et seq. , G.R. Nos. 187485, 196113, February 12, 2013. 16. Commissioner of Internal Revenue v. Mindanao II Geothermal Partnership , G.R. No. 191498, January 15, 2014.