THIRD DIVISION
[G.R. No. 211667. February 26, 2018.]
COMMISSIONER OF INTERNAL REVENUE,petitioner,vs. TEAM SUAL CORPORATION[Formerly Mirant Sual Corporation and Southern Energy Pangasinan, Inc.], respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, Third Division, issued a Resolution datedFebruary 26, 2018, which reads as follows:
"G.R. No. 211667 (Commissioner of Internal Revenue v. Team Sual Corporation [formerly Mirant Sual Corporation and Southern Energy Pangasinan, Inc.]) — This is a petition for review on certiorari seeking to reverse and set aside the August 13, 2013 Amended Decision 1 and the March 5, 2014 Resolution 2 of the Court of Tax Appeals En Banc (CTA En Banc) in CTA EB No. 691. The CTA En Banc reversed and set aside its March 4, 2013 Decision 3 and remanded the case to the Court of Tax Appeals Former Second Division (CTA Division) for further proceedings involving a claim for VAT refund.
Respondent Team Sual Corporation (respondent) is principally engaged in the business of power operation and subsequent sale thereof to the National Power Corporation (NPC) under a Build, Operate, Transfer (BOT) scheme. As such, it is principally registered with the Bureau of Internal Revenue (BIR) as a Value Added Tax (VAT) taxpayer.
On December 17, 2004, respondent filed with the BIR Audit Information Tax Exemption and Incentives Division an application for effective zero-rate of its supply of electricity to the NPC for the period of January 1, 2005 to October 31, 2005, which was subsequently approved.
On December 21, 2006, respondent filed an administrative case for refund of unutilized input VAT with BIR Revenue District Office No. 5, at Alaminos City in the total amount of P103,588,530.59 for the period of January 1, 2005 to October 31, 2005. ISHCcT
On April 18, 2007, respondent filed a petition for review for judicial claim for refund before the CTA without waiting for the Commission of Internal Revenue (petitioner) to resolve its administrative claim for refund.
In its answer, petitioner averred that the CTA has no jurisdiction over the petition because respondent failed to comply with Section 112 (C) of the National Internal Revenue Code (NIRC). 4 It argued that respondent filed its administrative claim for refund with the BIR on December 21, 2006 but it immediately filed its judicial claim for refund on April 18, 2007, before the lapse of the 120-day period given by law to petitioner to decide such administrative claim. For failure to comply with the 120-day period, petitioner concluded that respondent's judicial claim for refund was premature.
CTA Division Ruling
In its Decision 5 dated April 23, 2010, the CTA Division partially granted the petition. It found that respondent timely filed its administrative claim for refund within the 2-year prescriptive period for the two quarters and for the month of October in 2005. The CTA Division ruled that respondent must be refunded the amount of P77,519,684.00 representing the unutilized input VAT attributable to the substantiated zero-rated sales for the second and third quarters and the month of October of the taxable year 2005.
Both parties filed their respective motions for reconsideration.
In its Amended Decision 6 dated September 16, 2010, the CTA Division ruled that respondent's judicial claim for refund must be dismissed. It held that respondent filed its administrative claim on December 21, 2006 and petitioner had 120 days, or until April 20, 2007, within which to decide the said claim under Sec. 112 (C) of the NIRC. As respondent filed its judicial claim for refund on April 18, 2007, the CTA Division concluded that the said judicial claim was premature and that it failed to comply with the exhaustion of administrative remedies.
Aggrieved, respondent filed a petition for review before the CTA En Banc.
CTA En Banc Ruling
Initially, in its decision dated March 4, 2013, the CTA En Banc held that the judicial claim for VAT refund of respondent was premature because it did not comply with Sec. 112 (C) of the NIRC. Citing CIR v. Aichi Forging Co. 7(Aichi), it underscored that respondent should have waited for the lapse of the 120-day period for resolution of its administrative claim before filing its judicial claim within 30 days.
Undaunted, respondent filed a motion for reconsideration before the CTA En Banc. CAacTH
In its amended decision dated August 13, 2013, the CTA En Banc reversed and set aside its earlier March 4, 2013 decision and remanded the case to the CTA Division for further proceedings. Citing the consolidated cases of CIR v. San Roque, Taganito v. CIR and Philex v. CIR8(San Roque), it held that the judicial claim of respondent was not prematurely filed because it relied in good faith on BIR Ruling No. DA-489-03. The said BIR ruling stated that taxpayer-claimant need not wait for the lapse of the 120-day period before it could seek judicial relief with the CTA by way of petition for review. The CTA En Banc highlighted that pursuant to San Roque, all taxpayers can rely on BIR Ruling No. DA-489-03 from the time of its issuance on December 10, 2003 up to its reversal in Aichi on October 6, 2010. As the judicial claim of respondent was filed on April 18, 2007, it concluded that respondent could rely on BIR Ruling No. DA-489-03.
Unconvinced, petitioner filed a motion for reconsideration.
In its resolution dated March 5, 2014, the CTA En Banc denied petitioner's motion for reconsideration because San Roque clearly stated that BIR Ruling No. DA-489-03 may benefit those taxpayer-claimants of VAT refund provided that the judicial claim was filed before it was overturned in Aichi on October 6, 2010.
Hence, this petition.
Issues
I
RESPONDENT'S FAILURE TO OBSERVE THE 120-30 DAY PERIOD UNDER SECTION 112 OF THE 1997 NIRC IN FILING ITS JUDICIAL CLAIM FOR ISSUANCE OF TAX CREDIT CERTIFICATE WARRANTS THE DISMISSAL OF ITS PETITION FOR BEING PREMATURE AND, HENCE, BEYOND THE CTA'S JURISDICTION.
II.
THE EXCEPTION GRANTED BY THIS HONORABLE COURT EN BANC IN COMMISSIONER OF INTERNAL REVENUE VS. SAN ROQUE POWER CORPORATION IS NOT APPLICABLE TO RESPONDENT. 9
Petitioner argues that the CTA did not acquire jurisdiction over respondent's petition because of its failure to observe the 120+30 day rule in filing a judicial claim for refund or tax credit certificate. Moreover, it avers that BIR Ruling No. DA-489-03 cannot be invoked in good faith by taxpayer-claimants because it is an erroneous interpretative rule; that it was issued by a mere BIR Deputy Commissioner; and that it was already repealed and superceded by Revenue Regulation (R.R.) No. 16-2005, issued on September 1, 2005, which is more in line with Sec. 112 (C) of the NIRC.
In its Comment, 10 respondent counters that in San Roque, BIR Ruling No. DA-489-03 was acknowledged as a general interpretative ruling that can be relied upon by taxpayers; that in the resolution of San Roque dated October 8, 2013, the Court already held that the BIR Deputy Commissioner properly issued the said BIR ruling pursuant to its delegated authority; and that the Court is presumed to be aware of R.R. No. 16-2005 when it promulgated San Roque but it never said that it repealed BIR Ruling No. DA-489-03.
In its Reply, 11 petitioner reiterates that taxpayer-claimants cannot rely in good faith on BIR Ruling No. DA-489-03 because it is an erroneous interpretative ruling.
The Court's Ruling
The petition is bereft of merit.
BIR Ruling No. DA-489-03 may be San Roque.
Sec. 112 (C) of the NIRC states:
(C) Period within which Refund or Tax Credit of Input Taxes shall be Made. — In proper cases, the Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in accordance with Subsection (A) hereof.
In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from the 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. 12
The said provision was interpreted by BIR Ruling No. DA-489-03, issued on December 10, 2003, which stated that "a taxpayer-claimant need not wait for the lapse of the 120-day period before it could seek judicial relief with the CTA by way of Petition for Review. Neither is it required that the Commissioner should first act on the claim of a particular taxpayer before the CTA may acquire jurisdiction, particularly if the claim is about to prescribe." 13 IAETDc
This rule, however, was nullified in Aichi, promulgated on October 6, 2010. Aichi emphasized that the failure to await the decision of the Commissioner or the lapse of the 120-day period prescribed in Sec. 112 (C) amounted to a premature filing. 14
Nevertheless, San Roque clarified, once and for all, that BIR Ruling No. DA-489-03 was a general interpretative rule and it applies to each and every taxpayer. Even though it was subsequently declared invalid, the same can be invoked by all taxpayer-claimants of VAT refund in good faith before it was nullified by the Court. Thus, all taxpayers can rely on the said BIR ruling from the time of its issuance on December 10, 2003 up to its reversal in Aichi on October 6, 2010, where it was held that the 120+30 day periods were mandatory and jurisdictional. In other words, the Aichi ruling was prospective in application. 15San Roque put to rest any issue regarding the applicability of BIR Ruling No. DA-489-03.
As long as the judicial claim was filed within the interim period of December 10, 2003 up to October 6, 2010, the taxpayer is not required to wait for the 120-day period. 16 This doctrine has been consistently upheld in the recent decisions of the Court. 17
In this case, respondent filed its judicial claim for refund on April 18, 2007, or within the interim period of BIR Ruling No. DA-489-03's validity from December 10, 2003 to October 6, 2010. Thus, there was no need to wait for the lapse of 120 days prescribed in Sec. 112 (C) of the NIRC because it relied on good faith on BIR Ruling No. DA-489-03.
BIR Ruling No. DA-489-03 was
Petitioner argues that BIR Ruling No. DA-489-03 cannot be applied as a general interpretative rule because it was issued by only a BIR Deputy Commissioner.
The argument is specious.
Sec. 7 of the NIRC 18 clearly states that petitioner may delegate the powers vested in him to any or such subordinate officials with the rank equivalent to a division chief or higher, which includes a Deputy Commissioner. Accordingly, under Sec. 4 of the same law, 19 one of the powers that may be delegated to a Deputy Commissioner is the power to interpret the provisions of the NIRC and other tax laws. The same issue has already been settled in the Court's Resolution 20 in Roque, to wit:
In asking this Court to disallow Taganito's claim for tax refund or credit, the CIR repudiates the validity of the issuance of its own BIR Ruling No. DA-489-03. "Taganito cannot rely on the pronouncements in BIR Ruling No. DA-489-03, being a mere issuance of a Deputy Commissioner."
Although Section 4 of the 1997 Tax Code provides that the "power to interpret the provisions of this Code and other tax laws shall be under the exclusive and original jurisdiction of the Commissioner, subject to review by the Secretary of Finance," Section 7 of the same Code does not prohibit the delegation of such power. Thus, "[t]he Commissioner may delegate the powers vested in him under the pertinent provisions of this Code to any or such subordinate officials with the rank equivalent to a division chief or higher, subject to such limitations and restrictions as may be imposed under rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner." 21 [emphasis "supplied]
Thus, the Deputy Commissioner has the delegated authority to issue a BIR ruling that is a general interpretative rule, which may be relied upon by all taxpayers.
R.R. No. 16-2005 did not repeal
Finally, the Court does not agree with petitioner that R.R. No. 16-2005, issued on September 1, 2005, repealed BIR Ruling No. DA-489-03. Section 4.112-1 (d) of the said regulation states: DcHSEa
In proper cases, the Commissioner of Internal Revenue shall grant a tax credit certificate/refund of creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in accordance with subparagraph (a) above.
In case of full or partial denial of the claim for tax credit certificate/refund as decided by the Commissioner of Internal Revenue, the taxpayer may appeal to the Court of Tax Appeals (CTA) within thirty (30) days from the receipt of said denial, otherwise the decision shall become final. However, if no action on the claim for tax credit certificate/refund has been taken by the Commissioner of Internal Revenue after one hundred twenty (120) day period from the date of submission of the application with complete documents, the taxpayer may appeal to the CTA within 30 days from the lapse of the 120-day period.
As gleaned above, there is nothing therein which expressly mentions that BIR Ruling No. DA-489-03 is repealed. Absent any clear abandonment of the interpretation under BIR Ruling No. DA-489-03, R.R. No. 16-2005 does not expressly repeal the same.
Neither does R.R. No. 16-2005 impliedly repeal it. A repeal by implication is frowned upon in this jurisdiction unless it is convincingly and unambiguously demonstrated that the subject laws or orders are clearly repugnant and patently inconsistent that they cannot co-exist. 22
In this case, it is evident that Sec. 4.112-1 (d) of R.R. No. 16-2005 is a mere restatement of Sec. 112 (C) of the NIRC. There is nothing therein that would indicate that the interpretation under BIR Ruling No. DA-489-03 has been impliedly abandoned. The said provision does not at all mention that it is mandatory and compulsory that the 120-day period lapse before the judicial claim for refund may be instituted.
It was only when the Court promulgated Aichi that the interpretation under BIR Ruling No. DA-489-03 was expressly abandoned. Thus, taxpayer-claimants could still rely on the said ruling when it was issued on December 10, 2003 until it was invalidated by the Court in Achion October 6, 2010.
WHEREFORE, the petition is DENIED. The August 13, 2013 Amended Decision and the March 5, 2014 Resolution of the Court of Tax Appeals En Banc in CTA EB No. 691 are AFFIRMEDin toto. Accordingly, the case is REMANDED to the CTA Division for the proper determination of the refundable amount due to the respondent. SCaITA
SO ORDERED."
Very truly yours,
(SGD.) WILFREDO V. LAPITANDivision Clerk of Court
Footnotes
1.Rollo, pp. 42-47; penned by Associate Justice Cielito N. Mindaro-Grulla with Presiding Justice Roman G. Del Rosario and Associate Justices Juanito C. Castañeda, Jr., Lovell R. Bautista, Erlinda P. Uy, Caesar A. Casanova, Esperanza R. Fabon-Victorino, Amelia R. Cotangco-Manalastas and Ma. Belen M. Ringpis-Liban, concurring.
2.Id. at 48-59.
3.Id. at 263-280.
4. Section 112 of the National Internal Revenue Code of 1997 was amended by Republic Act No. 9337, which took effect on July 1, 2005; subsection (D) thereof now falls under subsection (C).
5.Id. at 71-107.
6.Id. at 108-114.
7. 646 Phil. 710 (2010).
8. 703 Phil. 310 (2013).
9.Rollo, p. 23.
10. Id. at 607-617.
11. Id. at 645-665.
12. As amended by Republic Act No. 9337, which took effect on July 1, 2005.
13. BIR Ruling No. DA-489-03, 5th paragraph.
14. Commissioner of Internal Revenue v. Air Liquide Phils., Inc., 765 Phil. 304 (2015).
15. Id. at 310.
16. Id. at 311.
17. CBK Power v. CIR, 749 Phil. 330 (2014); Mindanao II Geothermal v. CIR, 749 Phil. 485 (2014); Taganito Mining Corp. v. CIR, 748 Phil. 774 (2014); Taganito Mining Corp. v. CIR, 747 Phil. 469 (2014); AT&T Communications v. CIR, 474 Phil. 337 (2014); CIR v. Aichi Forging, 746 Phil. 85 (2014); and Taganito Mining Corp. v. CIR, 736 Phil. 591 (2014).
18. SEC. 7. Authority of the Commissioner to Delegate Power — The Commissioner may delegate the powers vested in him under the pertinent provisions of this Code to any or such subordinate officials with the rank equivalent to a division chief or higher, subject to such limitations and restrictions as may be imposed under rules and regulations to be promulgated by the Secretary of finance, upon recommendation of the Commissioner: x x x
19. SEC. 4. Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases. — The power to interpret the provisions of this Code and other tax laws shall be under the exclusive and original jurisdiction of the Commissioner, subject to review by the Secretary of Finance. x x x
20. 719 Phil. 137 (2013).
21. Id. at 163-164.
22. United Harbor Pilots' Association of the Philippines, Inc. v. Association of International Shipping Lines, Inc., et al., 440 Phil. 188, 199 (2002).