[ G.R. No. 185432. June 04, 2014 ] 735 PHIL. 125
SECOND DIVISION
[ G.R. No. 185432. June 04, 2014 ]
MIRAMAR FISH COMPANY, INC., PETITIONER, VS. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. D E C I S I O N
PEREZ, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to reverse and set aside the 18 November 2008 Decision[1] of the Court of Tax Appeals (CTA) En Banc in C.T.A. EB No. 375 affirming in toto the 22 October 2007 Decision and the 19 February 2008 Resolution of the Second Division of the CTA (CTA in Division) in C.T.A. Case No. 6905, which denied due course and dismissed petitioner’s claim for the issuance of a tax credit certificate (TCC) in its favor representing the alleged unutilized and/or unapplied input Value Added Tax (VAT) on purchases of goods and services attributable to zero-rated sales in the amount of P12,741,136.81 for taxable years 2002 and 2003.
The Facts
The undisputed factual antecedents of the case, as stipulated by the parties,[2] are as follows: Petitioner is a corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines, with principal office located at Brgy. Recodo, Zamboanga City. It is registered with the Bureau of Internal Revenue (BIR) as a VAT taxpayer in accordance with Section 236 of the National Internal Revenue Code (NIRC) of 1997, as amended, with VAT Registration No. 01-930-001570-V and Tax Identification No. (TIN) 005-847-661. On the other hand, respondent is the duly appointed Commissioner of Internal Revenue empowered to perform the duties of said office including, among others, the power to decide, approve and grant refunds or tax credits of erroneously or excessively paid taxes. On 4 June 2002, petitioner was registered with the Board of Investments (BOI) as a new export producer of canned tuna and canned pet food with non-pioneer status, having been issued BOI Certificate of Registration No. EP 2002-077. Petitioner filed its Quarterly VAT Returns (BIR Form No. 2550Q) for taxable year 2002 with the BIR on the following dates:
Particular Quarter
Date of Filing of Quarterly VAT Return
First Quarter
25 April 2002
Second Quarter
8 July 2002
Third Quarter
22 October 2002
Fourth Quarter
27 January 2003
The administrative claim for refund in the form of a TCC of petitioner’s alleged unutilized input VAT in the amount of P6,751,751.65 for taxable year 2002 was filed with the BIR on 24 February 2003.[3] Petitioner filed its Quarterly VAT Returns (BIR Form No. 2550Q) for taxable year 2003 with the BIR on the following dates:
Particular Quarter
Date of Filing of Quarterly VAT Return
First Quarter
10 April 2003
Second Quarter
16 July 2003
Third Quarter
17 October 2003
Fourth Quarter
26 January 2004
Its administrative claim for refund in the form of a TCC of the alleged unutilized input VAT in the amount of P5,895,912.38 for taxable year 2003 was thereafter filed on 15 March 2004.[4] Subsequently, an administrative claim for the refund or issuance of a TCC in the aggregate amount of P12,741,136.81 allegedly representing unutilized or unapplied VAT input taxes attributable to petitioner’s zero-rated transactions or its export sales for taxable years 2002 and 2003, was filed on 25 March 2004.[5] Consequently, since no final action has been taken by respondent on petitioner’s various administrative claims, the latter filed a Petition for Review before the CTA on 30 March 2004 docketed as C.T.A. Case No. 6905.
The Ruling of the CTA in Division
In a Decision dated 22 October 2007,[6] the CTA in Division denied due course and dismissed petitioner’s claim for the issuance of a TCC on the sole ground that the sales invoices presented in support thereof did not comply with the invoicing requirements provided for under Section 113[7] of the NIRC of 1997, as amended, and Section 4.108-1 of Revenue Regulations (RR) No. 7-95.[8] The court a quo explained that petitioner’s failure to indicate that it is a VAT-registered entity and/or to imprint the word “zero-rated” on the subject invoices or receipts were fatal to its claim; hence, it was left with no other recourse but to deny petitioner’s claim. Having rendered such ruling, the CTA in Division decided not to pass upon other incidental issues raised before it for being moot.[9] On 19 February 2008, the CTA in Division denied petitioner’s Motion for Reconsideration for lack of merit. Aggrieved, respondent appealed to the CTA En Banc by filing a Petition for Review under Section 18 of Republic Act (RA) No. 1125, as amended by RA No. 9282, on 2 April 2008, docketed as C.T.A. EB No. 375.
The Ruling of the CTA En Banc
The CTA En Banc ruled in its 18 November 2008 Decision,[10] that the contentions raised by petitioner are mere reiterations of its arguments contained in its Motion for Reconsideration of the 22 October 2007 Decision in C.T.A. Case No. 6905. Simply put, it dismissed the petition and affirmed in its entirety the subject Decision and Resolution of the CTA in Division considering that it found no cogent reason and justification to disturb the findings and conclusion spelled out therein. Consequently, this Petition for Review wherein petitioner seeks the reversal of the aforementioned Decision for being not in accord with the law and the applicable Decisions of this Court, constituting a departure from the accepted and usual course of judicial proceedings as to call for an exercise of the power of supervision, based on the following grounds:
PETITIONER HAS COMPLIED WITH THE STATUTORY REQUIREMENTS FOR CLAIMING A REFUND OF EXCESS AND UNUTILIZED INPUT VAT UNDER SECTION 112(A), IN RELATION TO SECTION 106(A)(2)(A)(1), TAX CODE. COMPLIANCE WITH THE INVOICING REQUIREMENTS UNDER THE TAX CODE AND RR NO. 7-95 IS NOT A CONDITION PRECEDENT FOR CLAIMING A REFUND OF EXCESS AND UNUTULIZED INPUT VAT UNDER SECTION 106(A)(2)(A)(1), IN RELATION TO SECTION 112(A) OF THE TAX CODE. THERE IS NOTHING IN THE TAX CODE AND IN RR NO. 7-95 WHICH STATES THAT FAILURE TO COMPLY WITH THE BIR’S INVOICING REQUIREMENTS WILL NULLIFY THE VAT ZERO-RATING OF AN EXPORT SALE UNDER SECTION 106(A)(2)(A)(1) OF THE TAX CODE. BASED ON THE SUPREME COURT’S RULING IN INTEL CASE, FAILURE TO INDICATE THE WORDS “TIN-V” AND “ZERO-RATED” ON THE INVOICES COVERING EXPORT SALES IS NOT FATAL TO A TAXPAYER’S CLAIM FOR REFUND OF EXCESS INPUT VAT UNDER SECTION 112(A), IN RELATION TO SECTION 106(A)(2)(A)(1) OF THE TAX CODE. REVENUE MEMORANDUM CIRCULAR NO. 42-03 IS INVALID BECAUSE IT OVERRIDES THE CLEAR PROVISION OF THE TAX CODE.[11]
The Issue
The issue for this Court’s consideration is whether or not petitioner is entitled to a TCC in the amount of P12,741,136.81 allegedly representing its excess and unutilized input VAT for the taxable years 2002 and 2003, in accordance with the provisions of the NIRC of 1997, as amended, other pertinent laws, and applicable jurisprudential proclamations.
Our Ruling
In view of the recent pronouncements made in the consolidated cases of Commissioner of Internal Revenue v. San Roque Power Corporation,[12] which has finally settled the issue on proper observance of the prescriptive periods in claiming for refund of creditable input tax due or paid attributable to any zero-rated or effectively zero-rated sales, we find a need for this Court to review the factual findings of the CTA in order to attain a complete determination of the issue presented. At the outset, this Court is not unaware that in a petition for review on certiorari under Rule 45 of the Rules of Court, only questions of law may be raised.[13] The Court is not a trier of facts and does not normally undertake the re-examination of the evidence presented by the contending parties during the trial of the case considering that the findings of facts of the [CTA] are conclusive and binding on the Court[14] – and they carry even more weight when the [CTA En Banc] affirms the factual findings of the trial court.[15] However, this Court had recognized several exceptions to this rule,[16] including instances when the appellate court manifestly overlooked relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion. Records of this case reveal that the CTA in Division in C.T.A. Case No. 6905 merely focused on the strict compliance with the invoicing and accounting requirements set forth under Sections 113 and 237 of the NIRC of 1997, as amended, in relation to Section 4.108-1 of Revenue Regulations (RR) No. 7-95. These same findings were adopted and affirmed in toto by the CTA En Banc in the assailed 18 November 2008 Decision.[17] While the invoicing requirements is a valid issue, we find it imperative to first and foremost determine whether or not the CTA properly acquired jurisdiction over petitioner’s claim covering taxable years 2002 and 2003, taking into consideration the timeliness of the filing of its judicial claim pursuant to Section 112 of the NIRC of 1997, as amended, and consistent with the pronouncements made in the San Roque case. Clearly, the claim of petitioner for the TCC can proceed only upon compliance with the jurisdictional requirement. Section 7 of RA No. 1125,[18] which was thereafter amended by RA No. 9282,[19] clearly defined the appellate jurisdiction of the CTA:
Section 7. Jurisdiction. - The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by appeal, as herein provided.
(1) Decisions of the Collector of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters arising under the National Internal Revenue Code or other law or part of law administered by the Bureau of Internal Revenue;[20] (Emphasis supplied)
x x x x
Relative thereto, Section 11 of the same law prescribes how the said appeal should be taken, to wit:
Section 11. Who may appeal; effect of appeal. – Any person, association or corporation adversely affected by a decision or ruling of the Collector of Internal Revenue, the Collector of Customs or any provincial or city Board of Assessment Appeals may file an appeal in the Court of Tax Appeals within thirty days after the receipt of such decision or ruling. [21] (Emphasis and underscoring supplied) x x x x
The timeliness in the administrative and judicial claims can be found in Section 112 of the NIRC of 1997, as amended. It reads:
SEC. 112. Refunds or Tax Credits of Input Tax. - (A) Zero-rated or Effectively Zero-rated Sales. – Any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) 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, except transitional input tax, to the extent that such input tax has not been applied against output tax: x x x x x x x (D)[22] 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 Subsections (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. x x x x (Emphasis and underscoring supplied)
As earlier stated, the proper interpretation of the above-quoted provision was finally settled in the San Roque case[23] by this Court sitting En Banc. The relevant portions of the discussion pertinent to the focal issue in the present case are quoted hereunder as follows:
To repeat, a claim for tax refund or credit, like a claim for tax refund 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. Thus, strict compliance with the 120+30 day periods is necessary for such a claim to prosper, whether before, during, or after the effectivity of the Atlas doctrine, except for the period from the issuance of BIR Ruling No. DA-489-03 on 10 December 2003 to 6 October 2010 when the Aichi doctrine was adopted, which again reinstated the 120+30 day periods as mandatory and jurisdictional.[24] (Emphasis supplied)
In Mindanao II Geothermal Partnership v. Commissioner of Internal Revenue, ,[25] the Second Division of this Court, in applying therein the ruling in the San Roque case, provided a Summary of Rules on Prescriptive Periods Involving VAT as a guide for all parties concerned, to wit:
We summarize the rules on the determination of the prescriptive period for filing a tax refund or credit of unutilized input VAT as provided in Section 112 of the 1997 Tax Code, as follows: (1) An administrative claim must be filed with the CIR within two years after the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made. (2) The CIR has 120 days from the date of submission of complete documents in support of the administrative claim within which to decide whether to grant a refund or issue a tax credit certificate. The 120-day period may extend beyond the two-year period from the filing of the administrative claim if the claim is filed in the later part of the two-year period. If the 120-day period expires without any decision from the CIR, then the administrative claim may be considered to be denied by inaction. (3) A judicial claim must be filed with the CTA within 30 days from the receipt of the CIR’s decision denying the administrative claim or from the expiration of the 120-day period without any action from the CIR. (4) All taxpayers, however, can rely on BIR Ruling No. DA-489-03 from the time of its issuance on 10 December 2003 up to its reversal by this Court in Aichi on 6 October 2010, as an exception to the mandatory and jurisdictional 120+30 day periods.[26] (Emphasis supplied)
Certainly, it is evident from the foregoing jurisprudential pronouncements that a taxpayer-claimant only had a limited period of thirty (30) days from the expiration of the 120-day period of inaction of the Commissioner of Internal Revenue (CIR) to file its judicial claim with the CTA, with the exception of claims made during the effectivity of BIR Ruling No. DA-489-03 (from 10 December 2003 to 5 October 2010).[27] Failure to do so, the judicial claim shall prescribe or be considered as filed out of time. Applying the foregoing discussion in the case at bench, although it appears that petitioner has indeed complied with the required two-year period within which to file a refund/tax credit claim with the BIR by filing its administrative claims on 24 February 2003 and 25 March 2004 (within the period from the close of the taxable quarters for the years 2002 and 2003, respectively, when the relevant sales or purchases were made), this Court finds that petitioner’s corresponding judicial claim insofar as to the four quarters of taxable year 2002 was filed beyond the 30-day period, detailed hereunder as follows:
Taxable year (close of taxable quarters)
Filing date of the administrative claim (within the 2-year period)
Last day of the 120-day period under Section 112(D) from the date of submission of complete documents in support of its application
Last day of the 30-day period to judicially appeal said inaction
Filing date of the Petition for Review
Taxable year 2002 1st Quarter (31 March 2002) 2nd Quarter (30 June 2002) 3rd Quarter (30 September 2002) 4th Quarter (31 December 2002)
24 February 2003[28]
24 June 2003
24 July 2003
30 March 2004
Taxable year 2003 1st Quarter (31 March 2003) 2nd Quarter (30 June 2003) 3rd Quarter (30 September 2003) 4th Quarter (31 December 2003)
25 March 2004[29]
23 July 2004
22 August 2004
30 March 2004
Section 112(D) specifically states that in case of failure on the part of the respondent to act on the application within the 120-day period prescribed by law, petitioner only has thirty (30) days after the expiration of the 120-day period to appeal the unacted claim with the CTA. Since petitioner’s judicial claim for the aforementioned quarters for taxable year 2002 was filed before the CTA only on 30 March 2004,[30] which was way beyond the mandatory 120+30 days to seek judicial recourse, such non-compliance with the mandatory period of thirty (30) days is fatal to its refund claim on the ground of prescription. Distinctly, in its attempt to justify the timeliness of its judicial claim covering taxable year 2002, petitioner made it appear in its Letter dated 25 March 2004 that there has been an amendment on its administrative claim covering taxable year 2002. It explained:
We wish to make it clear that this letter, insofar as the 2002 claim is concerned, amends the original claim for refund or issuance of TCC filed on February 24, 2003. Please note that the difference between the amount claimed in the original administrative claim filed (P6,751,751.65) and that claimed in this letter (P6,845,224.42) is in view of the fact that the original claim merely took into consideration the amount which, at that time, could be supported by the “Summary Name of Suppliers, Invoices and Official Receipts”. As abovementioned, the amount for 2002 subject of the instant claim is based on the figures reflected in the VAT returns filed for 2002.[31] (Emphasis supplied)
However, we are not persuaded by such allegation considering that while there was a supposed difference in the amounts being claimed for refund in the Letter of Request for VAT Claim dated 24 February 2003 and in the Letter dated 25 March 2004, a scrutiny of the subject letters reveals that both rely on the figures reflected in the VAT returns filed for 2002. Contrary to petitioner’s assertion, the Transmittal Receipt attached to the 24 February 2003 Letter visibly shows that it has simultaneously submitted various documents in support of its 2002 claim, including a copy of the VAT return for 2002.[32] Thus, this Court cannot consider the subsequent Letter dated 25 March 2004 to have amended the previous one covering its refund claim for taxable year 2002. For this reason, failure of petitioner to observe the 30-day period under Section 112 of the NIRC of 1997, as amended, through its belated filing of the Petition for Review before the CTA warrants a dismissal with prejudice for lack of jurisdiction. On the other hand, this Court has allowed the amendment of petitioner’s refund claim covering taxable year 2003 contained in the 25 March 2004 Letter since there was a statement therein that there were amended quarterly VAT returns filed on 12 March 2004.[33] Such undisputed factual allegation is considered a valid justification in amending its earlier administrative letter dated 15 March 2004. The aforesaid rationalization is not without any legal basis as can be gleaned from the declaration in the San Roque case, wherein the High Court considered the administrative claims for refund of San Roque properly amended by reason of the amended quarterly VAT returns.[34] As a result, the 120+30 day prescriptive periods to seek judicial recourse for petitioner’s refund claim involving taxable year 2003 shall commence only on 25 March 2004, and not on 15 March 2004. Parenthetically, even if it is shown that petitioner did not strictly comply with the mandatory 120+30 day prescriptive periods[35] under Section 112 of the NIRC of 1997, as amended, its administrative claim covering taxable year 2003 falls within the effectivity of BIR Ruling No. DA-489-03 (10 December 2003 to 5 October 2010), being an exception thereto. Hence, there is no more need for petitioner to wait for the 120-day period to expire before it can file its appropriate judicial claim before the CTA. Accordingly, the CTA indeed acquired jurisdiction over petitioner’s refund claim for taxable year 2003. It must be emphasized that jurisdiction over the subject matter or nature of an action is fundamental for a court to act on a given controversy,[36] and is conferred only by law and not by the consent or waiver upon a court which, otherwise, would have no jurisdiction over the subject matter or nature of an action. Lack of jurisdiction of the court over an action or the subject matter of an action cannot be cured by the silence, acquiescence, or even by express consent of the parties.[37] If the court has no jurisdiction over the nature of an action, its only jurisdiction is to dismiss the case. The court could not decide the case on the merits.[38] Having ruled on the jurisdictional aspect of this case, we next discuss the significance of strict compliance with the invoicing requirements under existing laws and prevailing jurisprudence in order to be entitled to a refund claim of excess and/or unutilized input VAT. This is not novel. It is worth mentioning that the High Court already ruled on the significance of imprinting the word “zero-rated” for zero-rated sales covered by its receipts or invoices, pursuant to Section 4.108-1 of Revenue Regulations No. 7-95.[39] Thus, in Panasonic Communications Imaging Corporation of the Philippines v. Commissioner of Internal Revenue,[40] the Second Division of this Court enunciated:
But when petitioner Panasonic made the export sales subject of this case, i.e., from April 1998 to March 1999, the rule that applied was Section 4.108-1 of RR 7-95, otherwise known as the Consolidated Value-Added Tax Regulations, which the Secretary of Finance issued on December 9, 1995 and took effect on January 1, 1996. It already required the printing of the word “zero-rated” on the invoices covering zero-rated sales. When R.A. 9337 amended the 1997 NIRC on November 1, 2005, it made this particular revenue regulation a part of the tax code. This conversion from regulation to law did not diminish the binding force of such regulation with respect to acts committed prior to the enactment of that law. Section 4.108-1 of RR 7-95 proceeds from the rule-making authority granted to the Secretary of Finance under Section 245 of the 1977 NIRC (Presidential Decree 1158) for the efficient enforcement of the tax code and of course its amendments. The requirement is reasonable and is in accord with the efficient collection of VAT from the covered sales of goods and services. As aptly explained by the CTA’s First Division, the appearance of the word “zero-rated” on the face of invoices covering zero-rated sales prevents buyers from falsely claiming input VAT from their purchases when no VAT was actually paid. If, absent such word, a successful claim for input VAT is made, the government would be refunding money it did not collect. Further, the printing of the word “zero-rated” on the invoice helps segregate sales that are subject to 10% (now 12%) VAT from those sales that are zero-rated. Unable to submit the proper invoices, petitioner Panasonic has been unable to substantiate its claim for refund. x x x x This Court held that, since the “BIR authority to print” is not one of the items required to be indicated on the invoices or receipts, the BIR erred in denying the claim for refund. Here, however, the ground for denial of petitioner Panasonic’s claim for tax refund—the absence of the word ‘zero-rated’ on its invoices—is one which is specifically and precisely included in the above enumeration. Consequently, the BIR correctly denied Panasonic’s claim for tax refund.[41] (Emphasis supplied)
For emphasis, the settled rule is that absence or non-printing of the word “zero-rated” in petitioner’s invoices is fatal to its claim for the refund and/or tax credit representing its unutilized input VAT attributable to its zero-rated sales. Equally essential herein, Section 113 of the NIRC of 1997, as amended, categorically provides that a VAT-registered entity, like petitioner, shall issue a duly registered VAT invoice or official receipt, which must contain “a statement that the seller is a VAT-registered person.” Therefore, as correctly articulated by the CTA En Banc, compliance with the aforesaid invoicing requirements is mandatory. Thus:
It bears stressing that the law and regulations are explicit in emphasizing strict compliance with the invoicing requirements because for the same transactions the output VAT of the seller becomes the input VAT of the purchaser. Pursuant to Sections 106(D)(1) and 108(C) of the NIRC of 1997, as amended, in relation to Section 110 of the same Code, the output or input tax on the sale or purchase of goods is determined by the total amount indicated in the invoice, while the output or input tax on the sale or purchases of services is determined by the total amount indicated in the official receipt. Since petitioner is engaged in the sale of goods, specifically, canned tuna and canned pet food (Joint Stipulation of Facts and Issues, par. 3), its output tax, if any, will be determined by the total amount indicated in the invoices. Thus, as required by Section 113 of the NIRC of 1997, as amended, petitioner’s sales invoices must indicate that it is a VAT-registered person, which in this case was not complied with by petitioner.[42] (Emphasis supplied)
At this juncture, and to settle strictness in compliance, we go to the textbook lesson that if the language of the law is clear, explicit and unequivocal, it admits no room for interpretation but merely application. A statute clear and unambiguous on its face need not be interpreted; stated otherwise, the rule is that only statutes with an ambiguous or doubtful meaning may be the subject of statutory construction.[43] The provisions of Sections 113 and 237 of the NIRC of 1997, as amended, and Section 4.108-1 of RR No. 7-95, are clear in enumerating the invoicing requirements necessary to be shown in order to qualify as duly registered receipts or sales or commercial invoices issued by VAT-registered entities, such as petitioner herein, for the purpose of claiming for refund of creditable input tax due or paid attributable to any zero-rated or effectively zero-rates sales. Absent compliance, the unavoidable result is immediate denial of the claim. By way of reiteration, the CTA has no jurisdiction over petitioner’s judicial appeal covering its refund claim for taxable year 2002 on the ground of prescription, consistent with the ruling in the San Roque case. While as to its refund claim for taxable year 2003, the same shall likewise be denied for failure of petitioner to comply with the mandatory invoicing requirements provided for under Section 113 of the NIRC of 1997, as amended, and Section 4.108-1 of RR No. 7-95. WHEREFORE, the petition is DENIED. No costs. SO ORDERED. Carpio, (Chairperson), Brion, Del Castillo, and Perlas-Bernabe, JJ., concur.