TAGANITO MINING vs. CIR (Tax 2)

G.R. No. 198076               November 19, 2014

TAGANITO MINING CORPORATION, Petitioner,

vs.

COMMISSIONER OF INTERNAL REVENUE, Respondent.

FACTS:

On December 30, 2003, Taganito filed with respondent Commissioner of Internal Revenue (CIR), through its Excise Taxpayers’ Assistance Division under the Large Taxpayers Division, an application for refund of its excess input VAT paid on its domestic purchases of taxable goods and services and importation of goods amounting to 4,447,651.32 for the period January 1, 2002 to December 3, 2002.

On February 19, 2004, 51 days after the filing ofits application with the CIR, Taganito filed with the CTA a petition for review. At that time, the CIR had not yet finally acted upon Taganito’s application for refund. The CIR answered that the claim for refund was still subject to investigation.

On October 27, 2009, the CTA Division partially granted Taganito’s petition and ordered the CIR to refund the amount of ₱3,636,854.07.

The CIR moved for reconsideration, arguing that the petition for review was prematurely filed because Taganito did not wait for the lapse of 120 days mandated by Section 112(D) of the National Internal Revenue Code of 1997 (NIRC). Therefore, the CTA was bereft of jurisdiction to rule on the petition. The said motion was denied.

The CIR then filed a petition for review before the CTA En Banc, claiming that Taganito failed to exhaust administrative remedies under Section 112(D) of the NIRC before resorting to judicial appeal, and that it failed to present concreteand convincing proof thatthe CIR did not have enough reason to deny its administrative claim for refund.

In the assailed Decision, dated April 18, 2011, the CTA En Banc granted the petition, reversed and set aside the decision and the resolution of the CTA Division, and ordered the case dismissed for being prematurely filed.

In the assailed Resolution, dated August 9, 2011, the CTA En Banc denied Taganito’s motion for reconsideration.

Hence, the present petition.

ISSUE:

The sole issue at hand is whether or not Taganito’s judicial claim for refund/credit was prematurely filed.

RULING:

No, accordingly, the general rule is that the 120+30 day period is mandatory and jurisdictional from the effectivity of the 1997 NIRC on January 1, 1998, up to the present. As an exception, judicial claims filed from December 10, 2003 to October 6, 2010 need not wait for the exhaustion of the 120-day period.12

From the foregoing, it is clear that the two-year period under Section 229 does not apply to claims for a refund or tax credit for unuti I ized creditable input VAT because it is not considered "excessively" collected. Instead, San Roque settled that Section l 12 applies to claims for a refund or tax credit for unutilized creditable input VAT, thereby making the 120+30 day period prescribed therein mandatory and jurisdictional in nature.

As an exception to the mandatory and jurisdictional nature of the 120+ 30 day period, judicial claims filed between December 10, 2003 or from the issuance of BIR Ruling No. DA-489-03, up to October 6, 2010 or the reversal of the ruling in Aichi, need not wait for the lapse of the 120+ 30 day period in consonance with the principle of equitable estoppel.

In the present case, Taganito filed its judicial claim with the CTA on February 19, 2004, clearly within the period of exception of December I 0, 2003 to October 6, 20 I 0. Its judicial claim was, therefore, not prematurely filed and should not have been dismissed by the CT A En Banc. WHEREFORE, the petition is GRANTED. 

MICROSOFT PHILS., INC. vs. CIR (Tax 2)

G.R. No. 180173               April 6, 2011

MICROSOFT PHILIPPINES, INC., Petitioner,

vs.

COMMISSIONER OF INTERNAL REVENUE, Respondent.

FACTS:

On 27 December 2002, Microsoft filed an administrative claim for tax credit of VAT input taxes in the amount of ₱11,449,814.99 with the BIR. The administrative claim for tax credit was filed within two years from the close of the taxable quarters when the zero-rated sales were made.

On 23 April 2003, due to the BIR's inaction, Microsoft filed a petition for review with the CTA. Microsoft claimed to be entitled to a refund of unutilized input VAT attributable to its zero-rated sales and prayed that judgment be rendered directing the claim for tax credit or refund of VAT input taxes for taxable year 2001.

On 16 June 2003, respondent Commissioner of Internal Revenue (CIR) filed his answer and prayed for the dismissal of the petition for review.

In a Decision dated 31 August 2006, the CTA Second Division denied the claim for tax credit of VAT input taxes. The CTA explained that Microsoft failed to comply with the invoicing requirements of Sections 113 and 237 of the NIRC as well as Section 4.108-1 of Revenue Regulations No. 7-957 (RR 7-95). The CTA stated that Microsoft's official receipts do not bear the imprinted word "zero-rated" on its face, thus, the official receipts cannot be considered as valid evidence to prove zero-rated sales for VAT purposes.

Microsoft filed a motion for reconsideration which was denied by the CTA Second Division in a Resolution dated 8 January 2007.

Microsoft then filed a petition for review with the CTA En Banc. In a Decision dated 24 October 2007, the CTA En Banc denied the petition for review and affirmed in toto the Decision dated 31 August 2006 and Resolution dated 8 January 2007 of the CTA Second Division. The CTA En Banc found no new matters that have not been considered and passed upon by the CTA Second Division and stated that the petition had only been a mere rehash of the arguments earlier raised.

Hence, this petition.

ISSUE:

The main issue is whether Microsoft is entitled to a claim for a tax credit or refund of VAT input taxes on domestic purchases of goods or services attributable to zero-rated sales for the year 2001 even if the word "zero-rated" is not imprinted on Microsoft's official receipts.

RULING:

Sec. 4.108-1. Invoicing Requirements. – All VAT-registered persons shall, for every sale or lease of goods or properties or services, issue duly registered receipts or sales or commercial invoices which must show:

1. the name, TIN and address of seller;

2. date of transaction;

3. quantity, unit cost and description of merchandise or nature of service;

4. the name, TIN, business style, if any, and address of the VAT-registered purchaser, customer or client;

5. the word "zero-rated" imprinted on the invoice covering zero-rated sales; and

6. the invoice value or consideration.

x x x

Only VAT-registered persons are required to print their TIN followed by the word "VAT" in their invoices or receipts and this shall be considered as a "VAT invoice." All purchases covered by invoices other than a "VAT invoice" shall not give rise to any input tax. (Emphasis supplied)

The invoicing requirements for a VAT-registered taxpayer as provided in the NIRC and revenue regulations are clear. A VAT-registered taxpayer is required to comply with all the VAT invoicing requirements to be able to file a claim for input taxes on domestic purchases for goods or services attributable to zero-rated sales. A "VAT invoice" is an invoice that meets the requirements of Section 4.108-1 of RR 7-95. Contrary to Microsoft's claim, RR 7-95 expressly states that "[A]ll purchases covered by invoices other than a VAT invoice shall not give rise to any input tax." Microsoft's invoice, lacking the word "zero-rated," is not a "VAT invoice," and thus cannot give rise to any input tax.

We have ruled in several cases11 that the printing of the word "zero-rated" is required to be placed on VAT invoices or receipts covering zero-rated sales in order to be entitled to claim for tax credit or refund. In Panasonic v. Commissioner of Internal Revenue,12 we held that 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 is actually paid. Absent such word, the government may be refunding taxes it did not collect.