Upr - Em.e !court: 1'.tpublir of TBT Tlbilippints Manila
Upr - Em.e !court: 1'.tpublir of TBT Tlbilippints Manila
Upr - Em.e !court: 1'.tpublir of TBT Tlbilippints Manila
FIRST DIVISION
- versus -
GESMUNDO, C.J.,
Chairperson,
TAGANITO lYIINING CAGUIOA,
CORPORATION, LAZARO-JAVIER,
Respondent. LOPEZ, M., and
LOPEZ, J., JJ.
x:------------x
- versus -
Promulgated:
COMMISSIONER OF
INTERNAL REVENUE,
Respondent. DEC D7 2021
x---------------- J ----x
DECISION
GESMUNDO, C.J.:
Before the Court are two (2) petitions for review on certiorari under
Rule 45 of the Rules of Court, filed separately by the Commissioner of
Internal Revenue (CIR) and Taganito Mining Corporation (TMC), seeking
Decision 2 G.R. Nos. 219630-31
& 219635-36
the reversal of the Decision I dated December 16, 2014, and Resolution2
dated August 3, 2015 of the Court of Tax Appeals (CTA) En Banc in CTA
EB Case Nos. 935 and 936. In the assailed decision, the CTA En Banc
affirmed in toto the May 25, 2012 Decision3 of the CTA Second Division
(CTA Division) in CTA Case No. 8090 ordering the CIR to refund or
issue a Tax Credit Certificate (TCC) in favor of TMC in the reduced
amount of 1"3,981,970.05, representing the latter's unutilized input Value
Added Tax (VAT] on purchases of capital goods attributable to its zero-
rated sales for the calendar year 2008.
On December 1, 2009, TMC filed with the BIR a claim for refund
of excess input VAT paid on domestic purchases of taxable goods and
services and importation of goods in the total amount of 1"42,038,669.54,
covering the period of January 1 to December 31, 2008. TMC attached to
its letter-claim the following supporting documents:
2) Original and latest amended quarterly VAT Returns for the four (4)
quarters of 2008 vvith supporting schedules on Summary Lists of Sales and
Purchases for the year2008;
1 Rollo (G.R. Nos. 219630-31), pp. 35-60 and rollo (G.R. Nos. 219635-36), pp. 26-51; penned by Associate
Justice Lovell R. Bautista, with Presiding Justice Roman G. Del Rosario and Associate Justices Juanito C.
Castafieda, Jr., Erlinda P. Uy, Caesar A. Casanova, Esperanza R. Fabon-Victorino, Cielito N. Mindaro-
Grulla, Amelia R. Cotangco-Manalastas, and Ma. Belen M. Ringpis-Liban, concurring.
2 Rollo (G.R. Nos. 219630-31), pp. 62-71 and rollo (G.R. Nos. 219635-36), pp. 53-62; penned by Associate
Justice Lovell R. Bautista, with Presiding Justice Roman G. Del Rosario and Associate Justices Juanita C.
Castaneda, Jr., Erlinda P. Uy, Caesar A. Casanova, Esperanza R. Fabon-Victorino, Cielito N. Mindaro-
Grulla, and Amelia R. Cotangco-Manalastas, concun-ing; Associate Justice Ma. Belen M. Ringpis-Liban,
on leave.
3 Rollo (G.R. Nos. 219630-31), pp. 144-164; penned by Associate Justice Caesar A. Casanova, with
Associate Justice Juanita C. Castafieda, Jr., concun-ing; Associate Justice Cielito N. Mindaro-Grulla, on
leave.
Decision 3 G.R. Nos.219630-31
& 219635-36
6) Annual Income Tax Return For CY 2008 duly filed with the BIR;
After trial, the. CTA Division rendered its Decision 5 on May 25,
2012, partially granting the petition ofTMC.
4
Id. at 161-162.
5
Supra note 3.
Decision 4 G.R. Nos. 219630-31
& 219635-36
the capital goods does not exceed Pl Million, the full amount of input
VAT shall be allowed as credit/refund in the month of acquisition; or (b)
If the aggregate acquisition cost of the capital goods exceeds Pl Million,
the claim for input VAT would be spread over 60 months or the estimated
useful life of the capital goods, whichever is shorter. Since the judicial
claim of TMC only involved its purchases of capital goods with
aggregate acquisition cost exceeding Pl Million, the CTA Division
spread the f'.33,608,456.58 substantiated input VAT ofTMC in 2008 over
60 months or the estimated useful life of the capital goods, whichever
was shorter, to compute for the amount of input VAT
refundable/creditable by December 31, 2008, thus:
AllowablelnnutVAT
6
Rollo (G.R. Nos. 219630-31 ), p. 159.
Decision 5 G.R. Nos. 219630-31
& 219635-36
Still referring to Aichi, the CTA Division stated that the filing of a
judicial claim for refund/credit should comply with the provisions of
Sec. 112(D) [now Sec. 112(C)] of the same Code, which gives the CIR
120 days to act on the administrative claim, counted from the date of
submission by the taxpayer of complete documents in support of its
claim. Thereafter, the taxpayer should file its petition for review before
the CTA within 30 days, either from the receipt of the CIR's decision
denying its administrative claim or after the expiration of the 120-day
period for the CIR to act on its administrative claim. TMC filed its
administrative claim on December 1, 2009, together with the supporting
documents. The CIR did not inform TMC that it submitted incomplete
supporting documents or that it still needed to submit additional
documents, so that the 120-day period for the CIR to act on the-claim
started to run on December 1, 2009. The filing by TMC of its petition for
review before the CTA on April 21, 2010, was well within the 30-day
period after the lapse of the 120-day period for the CIR to act on the
administrative claim.
7
646 Phil. 710 (2010).
8 Rollo (G.R. Nos. 219630-31), p. 161.
Decision 6 G.R. Nos. 219630-3 I
& 219635-36
SO ORDERED. 9
The parties each filed an appeal before the CTA En Banc, with the
appeal of TMC being docketed as CTA EB Case No. 935, while that of the
CIR as CTA EB Case No. 936. The CTA En Banc, in its Decision 11 dated
December 16, 2014, denied both appeals and affirmed in toto the judgment of
the CTA Division. It also subsequently denied in its Resolution dated August
3, 2015, the respective motions for reconsideration of the parties for lack of
merit.
The parties sought recourse from the Court through the petitions for
review at bar.
9
Id. at 163.
" Id. at 192-204; penned by Associate Justice Caesar A. Casanova, with Associate Justices Juanita C.
Castaneda, Jr. and Cielito N. Mindaro-Grulla, concutTing.
11
Supra note 1.
12Checklist of Documents to be Submitted by a Taxpayer upon Audit of his Tax Liabilities as well as of the
Mandatory Reporting Requirements to be Prepared by a Revenue Officer, all ofwhich comprise a Complete Tax
Docket(June I, 1998).
I
'fo
Decision 7 G.R. Nos. 219630-31
& 219635-36
Sec. 112 of the Tax Code of 1997, as amended, 13 provides for the time
periods for the filing and processing of administrative claims for tax
refund/credit:
xxxx
(C) Period within which Refand 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. (emphases supplied)
As for the time period for filing of judicial claims for tax
refund/credit, reference may be made to Sec. 11 of Republic Act (R.A.) No.
1125 , 14 as amended15
13 Republic Act No. 9337, otherwise known as the Value Added Tax (VAT) Reform Act (May 24, 2005).
14 An Act Creating the Court of Tax Appeals (June I 6, I 954).
15 Republic Act No. 9282, otherwise known as An Act Expanding the Jurisdiction of the Court ofTax Appeals
(CTA), Elevating Its Rank to the Level of a Collegiate Court with Special Jurisdiction and Enlarging Its
Membership, Amending for the Purpose Certain Sections of Republic Act No. 1125, as Amended, Otherwise
Known as the Law Creating the Court of Tax Appeals, and for Other Purposes (March 30, 2004).
Decision 8 G.R. Nos. 219630-31
& 219635-36
xx x x ( emphases supplied)
16
724 Phil. 534 (2014).
17See Commissioner of Internal Revenue v. Aichi Forging Company qf Asia, Inc., supra note 7, at 731-732;
Commissioner of Internal Revenue v. San Roque Pm-ver Corp., 703 Phil. 310 (2013); Atlas Consolidated
M;ning Development Corp. v. Commissioner of Internal Revenue, 55 l Phil. 519 (2007).
Decision 9 G.R. Nos. 219630-31
& 219635-36
3. The only other rule is the Atlas ruling, which applied only
from 8 June 2007 to 12 September 2008. Atlas states that
the two-year prescriptive period for filing a claim for tax
refund or credit ofunutilized input VAT payments should be
counted from the date of filing of the VAT return and
payment of the tax. (San Roque)
I. The taxpayer can file an appeal in one of two ways: (1) file
the judicial claim within thirty days after the Commissioner
denies the claim within the 120-day period, or (2) file the
judicial claim within thirty days from the expiration of the
120-day period if the Commissioner does not act within the
120-day period.
The controversy lies in the 120+30 day period, with the CIR
insisting that the 120-day period had not commenced at all because TMC
did not submit the complete documents as listed in RMO No. 53-98.
18 Commissioner of Internal Revenue v. Mindanao fl Geothermal Partnership, supra note 16, at 562-563.
19
774 Phil. 473 (2015).
Decision 10 G.R. Nos. 219630-31
& 219635-36
xxxx
xxxx
xxxx
Total Gas, thus, timely filed its judicial claim on January 23,
20
2009 . ( emphases in the original)
In Total Gas, taxpayer Total Gas filed its administrative claim for
refund of its unutilized input VAT for the first two quarters of 2007,
inclusive of supporting documents, on May 15, 2008. It submitted additional
supporting documents to the BIR on August 28, 2008. Since Total Gas did
not receive any notice from the BIR that its submitted documents were in
any way inadequate, the Court found that Total Gas had submitted complete
documents in support of its claim on August 28, 2008, and started counting
the 120-day period from said date.
In the instant case, TMC filed its administrative claim for refund of
its excess input VAT for all four quarters of 2008, with the attached
supporting documents, on December 1, 2009. TMC did not state any
intention of filing additional documents and it had, in fact, made no
further submission of supporting documents. Consequently, TMC is
deemed to have already submitted its complete docmnents together with
its administrative claim on December 1, 2009. Similar to Total Gas,.the
BIR did not give any notice to TMC that it lacked supporting documents
and/or that TMC needed to submit additional documents. As the Court
also declared in Total Gas, such written notice fr01n the taxing authority
is essential. Hence, the 120-day period for the BIR to act on the
administrative claim of TMC commenced to run on December 1, 2009,
and expired on March 31, 2010. Given the inaction of the BIR by the
end of the period, TMC had 30 days from March 31, 2010, or until April
30, 2010, to file its judicial claim. TMC then timely filed its petition for
review with the CTA on April 21, 2010.
20 Id. at 488-497.
I
~
Decision 13 G.R. Nos. 219630-31
& 219635-36
employee that other documents are required. Granting that the BIR found
that the documents submitted by Total Gas were inadequate, it should have
notified the latter of the inadequacy by sending it a request to produce the
necessary documents in order to make a just and expeditious resolution of
the claim.
21 Id. at 499-500, citing Commissioner of Internal Revenue v. Team Sua! Corp., 739 Phil. 215 (2014).
Decision 15 G.R. Nos. 219630-31
& 219635-36
Sec. 110 of the Tax Code of 1997, as amended, quoted in full below,
provides for tax credits in general:
22 Consolidated Value-Added Tax Regulations of 2005, which took effect on November 1, 2005.
23 RR No. 4-2007, dated February 7, 2007.
Decision 16 G.R. Nos. 219630-31
& 219635-36
24
491 Phil. 3 17 (2005).
Decision 18 G.R. Nos. 219630-31
& 219635-36
The tax credit method still applies to zero-rated sales; and input VAT
attributable to such zero-rated sales also constitute creditable input VAT, i.e.,
input VAT evidenced by VAT invoice or official receipt which is creditable
against output VAT. Zero-rated sales are distinct only because with tax rate
set at zero percent, then no output tax shall be due on such sales. Without any
output VAT against which the input VAT can be credited, the VAT-registered
taxpayer is then allowed to apply for tax refund/credit of the input VAT from
such sales.
In fact, Sec. ll 2(A) of the Tax Code of 1997, as amended, states that,
"[a]ny VAT-registered person, whose sales are zero-rated or effectively zero-
rated may x x x apply for the issuance of a tax credit certificate or refund of
25 Id. at 331-333.
26 Id. at 334.
Decision 19 G.R. Nos. 219630-31
& 219635-36
creditable input tax due or paid attributable to such sales xx x to the extent
that such input tax has not been applied against output tax_;, This means
that input VAT attributable to zero-rated sales may, at the option of the
taxpayer, be (a) applied directly against output VAT due on other
transactions, or (b) claimed as tax refund/credit. The second option is the only
one available for taxpayers whose transactions are 100% zero-rated as it will
not have any output VAT against which it may apply its input VAT. It may
also be the more favorable option for taxpayers with mixed transactions as
the refunded amount will be cash on hand, while the TCC issued may be
applied to all national internal revenue taxes (not just limited to output VAT).
When the taxpayer avails itself of the second option, it must prove that it has
not previously availed itself of the first option. The necessary implication of
all this is that input VAT attributable to zero-rated sales is still creditable
input VAT, and having the second option available to the taxpayer does not
change its nature.
Per the mandate of Sec. ll0(A) of the Tax Code of 1997, as amended,
input VAT shall be amortized when: (a) the goods purchased or imported are
capital goods, i.e., used in the taxpayer's trade or business; (b) deduction for
depreciation of the capital goods are allowed under the Tax Code of 1997, as
amended; and ( c) the aggregate acquisition cost of the depreciable capital
goods for the calendar month they were purchased or imported exceeds i"l
Million. Notably, the provision refers to "input tax" in general, without
making any distinctions, exceptions, or exclusions.
For the same reasons as the foregoing, TMC herein is not deprived
of any of the input tax attributable to its zero-rated sales when the
aJ.11ount of tax refund or credit granted to it for the input VAT on
depreciable capital goods attributable to its zero-rated sales, with aggregate
acquisition cost exceeding Pl Million for the month of purchase or
importation, is amortized for 60 months or the estimated useful life of the
capital goods, whichever is shorter. Ultimately, TMC will still be able to
receive the full amount of the input VAT granted as tax refund or credit by
the end of the amortization period.
27
506 Phil. I (2005).
28
Id. at 125.
Decision 21 G.R. Nos. 219630-31
& 219635-36
xxxx
Decision 22 G.R. Nos. 219630-31
& 219635-36
In case of contract for the sale of service where only the labor
will be supplied by the contractor and the materials will be purchased
by the contractee from other suppliers, input tax credit on the labor
contracted shall still be recognized on the month the payment was made
based on a progress billings while input tax on the purchase of
materials shall be recognized at the time the materials were purchased.
Once the input tax has already been claimed while the
construction is still in progress, no additional input tax can be claimed
upon completion of the asset when it has been reclassified as a
depreciable capital asset and depreciated.
Lastly, the Court is well aware that with the further amendment of
Sec. 110 of the Tax Code of 1997, as amended, by R.A. No. 10963,32
which took effect on January 1, 2018, the amortization of input VAT shall
only be allowed until December 31, 2021; after which taxpayers with
unutilized input VAT on capital goods purchased or imported shall be
allowed to apply the same as scheduled until fully utilized. This latest
amendment of the Tax Code, however, will not apply retroactively to this
case which involves the question of the amount of amortized
refund/credit of excess or unutilized input VAT for the calendar year
2008.
31
Id. at 283.
32 Otherwise known as the Tax Reform for Acceleration and Inclusion (TRAIN).
•
SO ORDERED.
WE CONCUR:
AMY ~ ~ A V I E R
Associate Justice
JHOSEmPEZ
Associate Justice
CERTIFICATION
AL G. GESMUNDO