Taihei Alltech Construction v. Commissioner of Internal Revenue
REITERATIONFacts
1. The Antecedents: Taihei Alltech Construction (Phil.) Inc. (Taihei) is a domestic, VAT-registered corporation engaged in the construction of industrial plants. Taihei filed administrative claims for refund of unutilized excess input tax credits for the third and fourth quarters of calendar year 2011, totaling P19,345,434.54. These claims were filed within the two-year prescriptive period under Section 112(A) of the National Internal Revenue Code (NIRC), as amended. 2. Procedural History: Taihei filed its administrative claims for refund on September 30, 2013, and December 23, 2013. The Commissioner of Internal Revenue (CIR) issued Revenue Memorandum Circular (RMC) No. 54-2014 on June 11, 2014, which clarified the 120-day period for the CIR to act on claims and the subsequent 30-day period for judicial appeal. Taihei asserted that its claims were deemed denied due to the retroactive application of RMC 54-2014. Subsequently, Revenue Regulations No. 1-2017 (RR 1-2017) was issued on January 3, 2017, which Taihei argued revived its claims. On February 6, 2019, the CIR denied Taihei's administrative claim. Taihei then filed a Petition for Review with the Court of Tax Appeals (CTA) Second Division on July 10, 2019. The CTA Second Division dismissed the petition, finding it filed out of time. The CTA En Banc affirmed this decision, and a subsequent motion for reconsideration was denied. 3. The Petition: Taihei filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to reverse the CTA En Banc's decision. Taihei argues that the 120-day timeline for the CIR to act on claims was invalidated by the retroactive application of RMC 54-2014, allowing it to still avail of judicial remedies. Taihei also contends that RR 1-2017 repealed RMC 54-2014 and effectively revived its claims. The CIR, in its Comment, defends the CTA's dispositions, asserting that the 120+30-day period is mandatory and jurisdictional, and that RMC 54-2014 and RR 1-2017 did not create exceptions to this rule.
Issue(s)
Whether Taihei's judicial claims for refund were filed out of time. Whether RMC 54-2014 retroactively invalidated Taihei's 120-day period to file a judicial claim under Section 112(C) of the National Internal Revenue Code (NIRC), as amended. Whether RR 1-2017 revived Taihei's claims for refund. Whether RMC 54-2014 and RR 1-2017 created an exception to the 120+30-day period.
Ruling
The Supreme Court affirmed the decision of the Court of Tax Appeals En Banc, holding that Taihei's judicial claims for refund were filed out of time and that the CTA therefore lacked jurisdiction.
Ratio Decidendi
On the issue of whether Taihei's judicial claims for refund were filed out of time: The Court reiterated the mandatory and jurisdictional nature of the 120+30 day period under Section 112(C) of the NIRC, as amended. The administrative claims for the 3rd and 4th quarters of 2011 were filed on September 30, 2013, and December 23, 2013, respectively. The 120-day period for the CIR to act would have expired on January 28, 2014, and April 22, 2014, respectively. Consequently, Taihei had 30 days from these dates to file its judicial claims, which would have been February 27, 2014, and May 22, 2014. However, Taihei filed its judicial claims only on July 10, 2019, which was significantly beyond the prescribed periods. The Court emphasized that the Commissioner's inaction for 120 days is considered a "deemed denial," and without a timely appeal, this "deemed denial" becomes final and unappealable. On the issue of whether RMC 54-2014 retroactively invalidated Taihei's 120-day period: The Court found this argument misplaced. Even before RMC 54-2014 was issued, Taihei had already lost its 30-day period to file its judicial claims. The Court clarified that RMC 54-2014 did not retroactively apply to Taihei's claims in a manner that would invalidate its already expired appeal period. The Court noted that the reckoning point of the 120-day period had always been from the submission of complete documents, and RMC 54-2014 merely clarified that the taxpayer must submit complete documents at the time of filing. The Court distinguished this from the situation in Pilipinas Total Gas, Inc. v. CIR, where the rule prior to RMC 54-2014 allowed more flexibility in submitting documents. On the issue of whether RR 1-2017 revived Taihei's claims for refund: The Court held that the Commissioner of Internal Revenue has no power to revive lapsed claims for refund. RR 1-2017 did not provide for the revival or reprocessing of lapsed claims; it merely clarified the processing of claims filed before RMC 54-2014, consistent with existing jurisprudence. The Court pointed out that RR 1-2017 itself referenced the 120+30-day rule, underscoring that it did not create an exception to the mandatory periods. Therefore, Taihei's claims, having already expired, could not be revived by RR 1-2017. On the issue of whether RMC 54-2014 and RR 1-2017 created an exception to the 120+30-day period: The Court found this argument untenable because Taihei's judicial claims had already expired before these issuances. The Court reiterated that the 120+30-day rule had been settled by jurisprudence, particularly in CIR v. San Roque Power Corporation, CIR v. Mindanao II Geothermal Partnership, and Rohm Apollo Semiconductor Phils. v. CIR. These cases consistently held that the 30-day period to appeal is mandatory and jurisdictional, with the only exception being premature filing during the period when BIR Ruling No. DA-489-03 was in force (December 10, 2003, to October 5, 2010). Taihei's reliance on RR 1-2017 was deemed misplaced, as administrative regulations cannot override settled jurisprudence establishing mandatory and jurisdictional periods.
Main Doctrine
The 120+30 day period for filing a judicial claim for VAT refund is mandatory and jurisdictional. Failure to file within this period results in the loss of jurisdiction by the Court of Tax Appeals, regardless of subsequent administrative issuances or denials.