Rules and Regulations Implementing Executive Order No. 159

FIRST DIVISION [C.T.A. CASE NO. 7759. April 8, 2011.] DAICOLOR PHILIPPINES, INC. , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE and ONE-STOP-SHOP INTER-AGENCY TAX CREDIT AND DUTY DRAWBACK CENTER, DEPARTMENT OF FINANCE , respondents . RESOLUTION UY , J p : This resolves petitioner's "Motion for Reconsideration" filed on January 17, 2011, seeking for the reconsideration of the Decision promulgated on December 16, 2010, the dispositive portion of which reads: TCIEcH " WHEREFORE , the instant Petition for Review is hereby DISMISSED for lack of jurisdiction." Petitioner seeks recourse to this Court based on the following grounds: A. SECTION 229 OF THE TAX CODE REQUIRES THAT ANY SUIT OR PROCEEDING SHALL BE FILED WITHIN TWO (2) YEARS FROM THE DATE OF PAYMENT OF THE TAX; B. A NEW DECISION OR INTERPRETATION OF THE TAX CODE CANNOT BE MADE A BASIS FOR CLAIMS ANCHORED ON THE PREVAILING LAWS AND INTERPRETATIONS AT THE TIME OF THE FILING OF THE SAID CLAIM; C. A DOCTRINE OR PRINCIPLE OF LAW RENDERED BY THE SUPREME COURT EN BANC OR IN DIVISION MAY BE MODIFIED OR OVERTURNED ONLY BY THE COURT SITTING EN BANC; and D. THE CTA FIRST DIVISION HAS ACQUIRED JURISDICTION OVER THE PETITION FOR REVIEW. Respondents filed their "Joint Comment (On Petitioner's Motion for Reconsideration dated January 17, 2011)" on January 31, 2011, praying for the denial of the instant Motion on the ground that the same is pro forma. Respondents contend that petitioner raises the same issues which have been considered and correctly resolved by this Court. As to the first ground, petitioner insists that Section 229 of the National Internal Revenue Code (NIRC) of 1997, as amended, should be applied in relation to the periods provided in Section 112 of the same Code as regards claims for Value-Added Tax (VAT) refund/tax credit certificate. Aside from previous rulings of this Court related to the said issue, petitioner also cited the ruling of the Supreme Court in the case of Atlas Consolidated Mining and Development Corp. vs. CIR 1 (Atlas Case) which allegedly confirm the consistent application of the two-year period provided under Section 229 of the NIRC of 1997, as amended. We are not persuaded. First, it must be noted that the ruling in the Atlas Case pertains to therein petitioner's claim for refund/credit of the input VAT on its purchases of capital goods and on its zero-rated sales for the taxable quarters of the years 1990 and 1992. As such, the High Court interpreted and applied Sections 106, 110 and 230 (now Section 229) of the 1977 Tax Code in rendering its Decision. TAHcCI On the other hand, the provision of law applicable in the instant case is Section 112 (A) of the NIRC of 1997, as amended, considering that the instant claim involves zero-rated transactions for the period covering January to December 2006; hence, the interpretation and application made by the Supreme Court of Sections 106, 110 and 230 of the 1977 Tax Code in the Atlas Case clearly does not apply to the present case. Furthermore, the issue as to the applicability of Section 229 of the NIRC of 1997, as amended, on claims for VAT refund has already been settled in the case of Commissioner of Internal Revenue vs. Mirant Pagbilao Corporation (Formerly Southern Energy Quezon, Inc.) , 2 which was later on upheld in the recent case of Commissioner of Internal Revenue vs. Aichi Forging Company of Asia, Inc. 3 (Aichi case) . In the latter case, the Supreme Court held: "The pivotal question of when to reckon the running of the two-year prescriptive period, however, has already been resolved in Commissioner of Internal Revenue v. Mirant Pagbilao Corporation , where we ruled that Section 112(A) of the NIRC is the applicable provision in determining the start of the two-year period for claiming a refund/credit of unutilized input VAT, and that Sections 204(C) and 229 of the NIRC are inapplicable as 'both provisions apply only to instances of erroneous payment or illegal collection of internal revenue taxes. " (Emphasis supplied.) In the above-quoted jurisprudence, it is the Supreme Court itself which categorically ruled that Section 229 is inapplicable in determining the start of the two-year period for claiming a refund/credit of unutilized input VAT. Thus, petitioner's contention on the applicability of Section 229 in the instant case must necessarily fail. As to the remaining grounds, it must be emphasized that in support of the assailed Decision, this Court cited, among others, the Supreme Court ruling in the Aichi case. In our system of judicial administration, the Supreme Court has the last word on what the law is, and that its decisions applying or interpreting the laws or the Constitution form part of the legal system of the country, all other courts should take their bearings from the decisions of the Supreme Court. 4 It is the duty of lower courts to obey the decisions of the Supreme Court and render obeisance to its status as the apex of hierarchy of courts. 5 In other words, this Court cannot deviate from the pronouncement of the Supreme Court in the Aichi case , which set forth the outright application of Section 112 (C) of the NIRC of 1997, as amended. Finally, let it be stressed that tax exemptions are construed in strictissimi juris against the taxpayer and liberally in favor of the taxing authority. Tax refunds in relation to the VAT are in the nature of such exemptions. The general rule is that claimants of tax refunds bear the burden of proving the factual basis of their claims. 6 Considering that petitioner failed to comply with the periods provided by law, the ruling of this Court in dismissing the instant Petition for Review on such ground is proper. DHTECc WHEREFORE , finding no reversible error committed by this Court in rendering the assailed Decision, the instant Motion for Reconsideration is hereby DENIED for lack of merit. SO ORDERED. (SGD.) ERLINDA P. UY Associate Justice Ernesto D. Acosta, P.J. and Esperanza R. Fabon-Victorino, J., concur. Footnotes 1. G.R. Nos. 141104 and 148763, June 8, 2007. 2. G.R. No. 172129, September 12, 2008. 3. G.R. No. 184823, October 6, 2010. 4. Caram Resources Corp. vs. Judge Maximo C. Contreras , A.M. No. MTJ-93-849, October 26, 1994. 5. Commission on Higher Education vs. Atty. Felina S. Dasig , G.R. No. 172776, December 17, 2008. 6. Panasonic Communications Imaging Corporation of the Philippines (formerly Matsushita Business Machine Corporation of the Philippines) vs. Commissioner of Internal Revenue , G.R. No. 178090, February 8, 2010.