CIR vs Mindanao II Geothermal Partnership
G.R. No. 191498
January 15,2014
FACTS:
* Mindanao II is a registered taxpayer whose sales to NAPOCOR are
all zero-rated pursuant to the EPIRA Law.
* On Oct 6 2005, it filed with the BIR an application for the refund or
credit of accumulated unutilized creditable input taxes for the
second, third, and fourth taxable quarters of the taxable year 2004.
* The administrative claim was not acted upon until Feb 3 2006, or
120 days after Oct 6 2005. Believing that a judicial claim must be filed
within the 2-year prescriptive period provided under Sec 112 (A) and
that it must be reckoned from the date of filing of its VAT returns,
Mindanao filed on July 26 2006 a petition for review before the CTA
claiming inaction on the part of the CIR.
* On Aug 12 2008, the CTA Division granted Mindanao II’s claim for
refund/credit and held that its judicial claim was timely filed within
the 2-year prescriptive period. The CIR opposed the rulings claiming
that prescription had already set in when Mindanao II filed its judicial
claim beyond the 30-day period fixed in Section 112 (C).
HELD:
Issue 1: W/N Mindanao II’s administrative claim for refund/credit
was timely filed
Yes. Pursuant to Section 112 (A) of the 1997 Tax Code, it is only the
administrative claim which is to be filed within the two-year
prescriptive period, and the two-year prescriptive period begins to
run from the close of the taxable quarter when the sales were made.
Here, Mindanao II filed its claim for refund/credit for the second,
third, and fourth quarters of 2004 on Oct 6 2005.
Such date is well within the two-year prescriptive period which runs
from June 30 2004 (2nd Quarter), Sept 30 2004 (3rd Quarter) and
Dec 31 2004 (4th Quarter).
[The Atlas and Mirant rulings are simply not applicable in this case
because Mindanao II’s application for refund/credit on Oct 6 2005
was filed before their promulgation. The Atlas ruling is held to be
applicable only on cases filed from June 8 2007, the date of its
promulgation, and up to Sept 12 2008, the date when the Mirant
case was promulgated.
In Atlas, the court laid down a rule that the 2-year prescriptive period
is reckoned from the date of filing of the return and payment of taxes.
In Mirant, such rule was abandoned.
Following the verba legis doctrine, Mirant held that in administrative
claims for refund/credit of unutilized input VAT, the 2-year
prescriptive period begins to run from the close of taxable quarter
when the relevant sales were made. This rule, which is obviously
consistent with the plain wordings of Section 112 (A), was also
affirmed in the recent case of San Roque.]
Issue 2: W/N Mindanao II’s judicial claim for refund/credit was timely
filed
No. Under Section 112 (C), the judicial claim must be filed by the
taxpayer within 30 days after the 120-day waiting period if its
administrative claim was not acted upon by CIR. Here, Mindanao II
filed its application for refund on Oct 6 2005.
When it was not acted upon, it filed a judicial claim but only on July
21 2006, or 138 days after the lapse of the 30-day period on 5 March
2006. Its petition for review before the CTA was therefore filed late.
Contrary to the erroneous contentions of the CTA En Banc, the
correct interpretation of Section 112, as held in San Roque, is that
the 30-day period applies not only to instances of actual denial by
the CIR of the claim for refund or tax credit, but to cases of inaction
by the CIR as well.
Also, following the verba legis doctrine, the 30-day period to appeal
is both mandatory and jurisdictional.
Section 112 (C) is clear, plain and unequivocal in expressly providing
that the taxpayer has a 30-day period to appeal the decision or
inaction of the Commissioner.
Summary of Rules on Prescriptive Periods for Claiming Refund or
Credit of Input Tax
Two-Year Prescriptive Period
1 It is only the administrative claim that must be filed within the
two-year prescriptive period. (Aichi)
2 The proper reckoning date for the two-year prescriptive period is
the close of the taxable quarter when the relevant sales were
made. (San Roque)
3 The only other rule is the Atlas ruling, which applied only from 8
June 2007 to12 September 2008. Atlas states that the two-
year prescriptive period for filing a claim for tax refund or
credit of unutilized input VAT payments should be counted
from the date of filing of the VAT return and payment of the
tax. (San Roque)
120 + 30 Day Period
1 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.
2 The 30-day period always applies, whether there is a denial or
inaction on the part of the CIR.
3 As a general rule, the 30-day period to appeal is both mandatory
and jurisdictional. (Aichi and San Roque)
4 As an exception to the general rule, premature filing is allowed
only if filed between 10 December 2003 and 5 October 2010,
when BIR Ruling No. DA-489-03 was still in force. (San Roque)
5 Late filing is absolutely prohibited, even during the time when BIR
Ruling No. DA-489-03 was in force. (San Roque)
ROHM APOLLO SEMICONDUCTOR PHILIPPINES, Petitioner
VS.
COMMISSIONER OF INTERNAL REVENUE, Respondent (G.R. No.
168950, January 14, 2015)
FACTS:
* Petitioner (Rohm Apollo) is a domestic corporation registered with
the Securities and Exchange Commission. It is also registered with
the Philippine Economic Zone Authority as an Ecozone Export
Enterprise. Petitioner is in the business of manufacturing
semiconductor products, particularly microchip transistors and
tantalium capacitors. Further, it is registered with the Bureau of
Internal Revenue (BIR) as a value-added taxpayer.
* Sometime in June 2000, prior to the commencement of its
operations on 1 September 2001, Rohm Apollo engaged the services
of Shimizu Philippine Contractors, Inc. (Shimizu) for the construction
of a factory. For services rendered by Shimizu, petitioner made initial
payments of P198,551,884.28 on 7 July 2000 and P132,367,923.58
on 3 August 2000.
* Petitioner treated the payments as capital goods purchases and
thus filed with the BIR an administrative claim for the refund or
credit of accumulated unutilized creditable input taxes on 11
December 2000. As the close of the taxable quarter when the
purchases were madewas 30 September 2000, the administrative
claim was filed well within the twoyear prescriptive period.
* Pursuant to Section 112(D) of the 1997 Tax Code, the
Commissioner of Internal Revenue (CIR) had a period of 120 days
from the filing of the application for a refund or credit on 11
December 2000, or until 10 April 2001, to act on the claim. The
waiting period, however, lapsed without any action by the CIR on the
claim.
* Instead of filing a judicial claim within 30 days from the lapse of the
120-day period on 10 April, or until 10 May 2001, Rohm Apollo filed a
Petition for Review with the CTA docketed as CTA Case No. 6534 on
11 September 2002. It was under the belief that a judicial claim had
to be filed within the two-year prescriptive period ending on 30
September 2002.
* On 27 May 2004, the CTA First Division rendered a Decision
denying the judicial claim for a refund or tax credit.
The CTA First Division held, among others, that petitioner must have
at least submitted its VAT return for the third quarter of 2001, since
it was in that period that it began its business operations.
The purpose was to verify if indeed petitioner did not carry over the
claimed input VAT to the third quarter or the succeeding quarters.
* On 14 July 2004, petitioner filed a Motion for Reconsideration, but
the tax court stood by its Decision.
On 18 January 2005, the taxpayer elevated the case to the CTA En
Banc via a Petition for Review.
On 22 June 2005, the CTA En Banc rendered its Decision denying
Rohm Apollo’s Petition for Review. Petitioner filed this Rule 45
Petition, arguing that it has satisfied all the legal requirements for a
valid claim for refund or tax credit of unutilized input VAT.
ISSUE:
** Whether or not the CTA acquired jurisdiction over the claim for
the refund or tax credit of unutilized input VAT?
RULING:
* The court denied the Petition on the ground that the petitioner’s
judicial claim for a refund/tax credit was filed beyond the
prescriptive period.
* Section 112(D) of the 1997 Tax Code states the time requirements
for filing a judicial claim for the refund or tax credit of input VAT. The
legal provision speaks of two periods:
 the period of 120 days, which serves as a waiting period to
give time for the CIR to act on the administrative claim for a
refund or credit;
 and the period of 30 days, which refers to the period for filing
a judicial claim with the CTA. It is the 30-day period that is at
issue in this case.
* The landmark case of Commissioner of Internal Revenue v. San
Roque Power Corporation has interpreted Section 112 (D). The Court
held that the taxpayer can file an appeal in one of two ways:
(1) file the judicial claim within 30 days after the Commissioner
denies the claim within the 120-day waiting period, or
(2) file the judicial claim within 30 days from the expiration of the
120-day period if the Commissioner does not act within that period.
* On 11 December 2000, petitioner filed with the BIR an application
for the refund or credit of accumulated unutilized creditable input
taxes. Thus, the CIR had a period of 120 days from 11 December
2000, or until 10 April 2001, to act on the claim. It failed to do so,
however.
Rohm Apollo should then have treated the CIR’s inaction as a denial
of its claim. Petitioner would then have had 30 days, or until 10 May
2001, to file a judicial claim with the CTA.
But Rohm Apollo filed a Petition for Review with the CTA only on 11
September 2002. The judicial claim was thus filed late.
Justice Carpio stated: “The old rule that the taxpayer may file the
judicial claim, without waiting for the Commissioner's decision if the
two-year prescriptive period is about to expire, cannot apply because
that rule was adopted before the enactment of the 30-day period.
he 30-day period was adopted precisely to do away with the old rule,
so that under the VAT System the taxpayer will always have 30 days
to file the judicial claim even if the Commissioner acts only on the
120th day, or does not act at all during the 120-day period.
With the 30-day period always available to the taxpayer, the
taxpayer can no longer file a judicial claim for refund or credit of
input VAT without waiting for the Commissioner to decide until the
expiration of the 120-day period. The 30-day period to appeal is
mandatory and jurisdictional.”
* As a general rule, the 30-day period to appeal is both mandatory
and jurisdictional.
The only exception to the general rule is when BIR Ruling No. DA489-
03 was still in force, that is, between 10 December 2003 and 5
October 2010, The BIR Ruling excused premature filing, declaring
that the 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.
Premature filing is allowed for cases falling during the time when BIR
Ruling No. DA-489-03 was in force; nevertheless, late filing is
absolutely prohibited even for cases falling within that period. The
petitioner filed its judicial claim with the CTA on 11 September 2002.
This was before the issuance of BIR Ruling No. DA-489-03 on 10
December 2003.
Thus, Rohm Apollo could not have benefited from the BIR Ruling.
Besides, its situation was not a case of premature filing of its judicial
claim but one of late filing. To repeat, its judicial claim was filed on
11 September 2002 – long after 10 May 2001, the last day of the 30-
day period for appeal.
The case thus falls under the general rule – the 30-day period is
mandatory and jurisdictional.
Hence, the CTA lost jurisdiction over Rohm Apollo’s claim for a
refund or credit.
CIR v Solidbank Corporation (G.R. No. 148191)
FACTS:
* Solidbank filed its Quarterly Percentage Tax Returns reflecting
gross receipts amounting to P1,474,693.44. It alleged that the total
included P350,807,875.15 representing gross receipts from passive
income which was already subjected to 20%final withholding tax
(FWT).
* The Court of Tax Appeals (CTA) held in Asian Ban Corp. v
Commissioner, that the 20% FWT should not form part of its taxable
gross receipts for purposes of computing the tax.
* Solidbank, relying on the strength of this decision, filed with the
BIR a letter-request for the refund or tax credit. It also filed a petition
for review with the CTA where the it ordered the refund.
* The CA ruling, however, stated that the 20% FWT did not form part
of the taxable gross receipts because the FWT was not actually
received by the bank but was directly remitted to the government.
* The Commissioner claims that although the FWT was not actually
received by Solidbank, the fact that the amount redounded to the
bank’s benefit makes it part of the taxable gross receipts in
computing the Gross Receipts Tax. Solidbank says the CA ruling is
correct.
ISSUE:
** Whether or not the FWT forms part of the gross receipts tax.
HELD:
Yes. In a withholding tax system, the payee is the taxpayer, the
person on whom the tax is imposed. The payor, a separate entity,
acts as no more than an agent of the government for the collection
of tax in order to ensure its payment. This amount that is used to
settle the tax liability is sourced from the proceeds constitutive of
the tax base.
* These proceeds are either actual or constructive. Both parties
agree that there is no actual receipt by the bank. What needs to be
determined is if there is constructive receipt. Since the payee is the
real taxpayer, the rule on constructive receipt can be rationalized.
* The Court applied provisions of the Civil Code on actual and
constructive possession. Article 531 of the Civil Code clearly provides
that the acquisition of the right of possession is through the proper
acts and legal formalities established. The withholding process is one
such act. There may not be actual receipt of the income withheld;
however, as provided for in Article 532, possession by any person
without any power shall be considered as acquired when ratified by
the person in whose name the act of possession is executed.
* In our withholding tax system, possession is acquired by the payor
as the withholding agent of the government, because the taxpayer
ratifies the very act of possession for the government. There is thus
constructive receipt.
* The processes of bookkeeping and accounting for interest on
deposits and yield on deposit substitutes that are subjected to FWT
are tantamount to delivery, receipt or remittance. Besides, Solidbank
admits that its income is subjected to a tax burden immediately upon
“receipt”, although it claims that it derives no pecuniary benefit or
advantage through the withholding process.
* There being constructive receipt, part of which is withheld, that
income is included as part of the tax base on which the gross receipts
tax is imposed.
BIR Ruling 079-2014
CIR v Shell GR 192398 September 29, 2014
***Documentary stamp tax applies only to the sale of real property,
not to all other kinds of transfers or conveyances of real properties.
***On April 27, 1999, a merger took place between two corporations
whereby all the assets and liabilities of the absorbed corporation
were transferred to the surviving entity. Among the assets
transferred were real properties. For the transfer of these real
properties, a documentary stamp tax was paid by the surviving
corporation under Section 196 of the 1997 Tax Code.
Realizing that the documentary stamp tax was erroneously paid on
the transfer of the real property as a result of the merger, the
surviving corporation applied for the refund of the DST paid. The
claim was granted by the CTA.
On appeal to the Supreme Court, the Supreme Court held that the
DST is only imposed on all conveyances, deeds, instruments or
writing where realty sold shall be conveyed to a purchaser or
purchasers for a consideration under Section 196 of Tax Code of
1997 Tax Code. Section 196 of the 1997 Tax Code does not apply to
all kinds of transfers and conveyances of real property for valuable
consideration.
It is imposed on the transfer of realty by way of sale and does not
apply to all conveyances of real property. The fact that Section 196
refers to words “sold”, “purchaser” and “consideration” undoubtedly
leads to the conclusion that only sales of real property are
contemplated therein.
In a merger, the real properties are not deemed “sold” to the
surviving corporation and the latter could not be considered as
“purchaser” of realty since the real properties subject of the merger
were merely absorbed by the surviving corporation by operation of
law and these properties are deemed automatically transferred to
and vested in the surviving corporation without further act or deed.
Therefore, this is not subject to DST. (Commissioner of Internal
Revenue vs. Pilipinas Shell Petroleum Corporation, G.R. No. 192398,
September 29, 2014)
Documentary stamp tax is in the nature of an excise tax because it is
imposed upon the privilege, opportunity or facility offered at
exchanges for the transaction of the business. Documentary stamp
tax is a tax on documents, instruments, loan agreements, and papers
evidencing the acceptance, assignment, or transfer of an obligation,
right or property incident thereto.
Documentary stamp tax is thus imposed on the exercise of these
privileges through the execution of specific instruments,
independently of the legal status of the transactions giving rise
thereto.
Pilipinas Shell Petroleum Corporation (PSPC) entered into a Plan of
Merger with its affiliate, Shell Philippine Petroleum Corporation
(SPPC).
In the Plan of Merger, it was provided that the entire assets and
liabilities of SPPC will be transferred to, and absorbed by PSPC as the
surviving entity. The Securities and Exchange Commission approved
the merger.
Pursuant to Section 196 of the Tax Code, PSPC paid to the Bureau of
Internal Revenue (BIR) documentary stamp tax (DST) amounting to
P22,101,407.64 on the transfer of real property from SPPC to PSPC.
Believing that it erroneously paid the DST, PSPC file a formal claim
for refund or tax credit.
ISSUE:
Should PSPC be entitled to a refund or tax credit for its erroneous
payment of DST on the transfer of real properties as effect of a plan
of merger?
RULING:
Yes. Documentary stamp tax is in the nature of an excise tax because
it is imposed upon the privilege, opportunity or facility offered at
exchanges for the transaction of the business.
Documentary stamp tax is a tax on documents, instruments, loan
agreements, and papers evidencing the acceptance, assignment, or
transfer of an obligation, right or property incident thereto.
Documentary stamp tax is thus imposed on the exercise of these
privileges through the execution of specific instruments,
independently of the legal status of the transactions giving rise
thereto.
Based on the foregoing, the transfer of real properties from SPPC to
respondent (PSPC) is not subject to documentary stamp tax
considering that the same was not conveyed to or vested in
respondent by means of any specific deed, instrument or writing.
There was no deed of assignment and transfer separately executed
by the parties for the conveyance of the real properties.
The conveyance of real properties not being embodied in a separate
instrument but is incorporated in the merger plan, thus, respondent
is not liable to pay documentary stamp tax and must be entitled to a
refund or tax credit for its erroneous payment.
Belle Corporation v. CIR
G.R. No. 181298
January 10, 2011
FACTS:
* Petitioner Belle, a domestic corporation engaged in the real estate
and property business, filed with the BIR its income tax return (ITR)
for the first quarter of 1997.
* Subsequently, it filed with the BIR its second quarter ITR, declaring
an overpayment of taxes. In view of the overpayment, no taxes were
paid for the second and third quarters of 1997.
* Instead of claiming the amount as a tax refund, petitioner decided
to apply it as a tax credit to the succeeding taxable year by marking
the tax credit option box in its 1997 ITR.
* On April 12, 200, petitioner filed with the BIR an administrative
claim for refund its unutilized excess income tax payments for the
taxable year 1997. Notwithstanding the filing of the administrative
claim for refund, petitioner carried over the excess amount to the
taxable year 1999.
*Due to the inaction of the respondent CIR and in order to toll the
running of the two-year prescriptive period, petitioner appealed its
claim for refund of unutilized excess income tax payments for the
taxable year 1997 via petition for review. The CTA denied the
petition.
ISSUE:
* Whether petitioner is entitled to a refund of its excess income tax
payments for the taxable year 1997
RULING:
No. In case the corporation is entitled to a refund of the excess
estimated quarterly income taxes paid, the refundable amount
shown on its final adjustment return may be credited against the
quarterly income tax liabilities for the taxable quarters of the
succeeding taxable years.
Once the option to carry over and apply the excess quarterly income
tax against income tax due for the taxable quarters of the succeeding
taxable years has been made, such option shall be considered
irrevocable for that taxable period and no application for tax refund
or issuance of tax credit certificate shall be allowed therefor.
Under Section 76 of the NIRC, in case of overpayment of income
taxes, the remedies are still the same; and the availment of one
remedy still precludes the other.
The carry-over of excess income tax payments is no longer limited to
the succeeding taxable year.
Unutilized excess income tax payments may now be accrued over to
the succeeding taxable years until fully realized.

* In this case, since the petitioner carried over its 1997 excess
income tax payments to the succeeding taxable year 1998, it may no
longer file a claim for refund of unutilized tax credits for taxable year
1997.

Once the option to carry over excess income tax payments to the
succeeding years has been made, it becomes irrevocable.

Thus, applications for refund of the unutilized excess income tax

payments may no longer be allowed.