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SECOND DIVISION

TAIHEI ALL TECH G.R. No. 258791

CONSTRUCTION (PHIL.)
INC.,
.
Petitioner, Members :

LEONEN, SAJ., Chairperson,

LAZARO-JAVIER,
-versus- LOPEZ, M.,
LOPEZ, J., and
KHO, JR.,JJ

COMMISSIONER OF Promulgated :
INTERNAL REVENUE,
Respondent. DEC O7 2022
x-----------------------------------------------------------------------------------------x

DECISION

LAZARO-JAVIER, J.:

The Case

This Petition ·for Review on Certiorari 1 seeks to reverse and set aside
the following dispositions of the Court of Tax Appeals En Banc in CTA EB
No. 2331 (CTA Case No. 10108):

1
Under Ru le 45 of the Rules ofCou1t. Rollo, pp. 16-47.
'
Decision 2 G.R. No. 258791

2
1) Decision dated July 19, 2021 affirming the dismissal on
jurisdictional ground of the judicial claims for refund of petitioner
Taihei Alltech Construction (Phil.) Inc. (Taihei) in the total amount
of Pl9,345,434.54 representing unutilized excess tax credit for the
3rd and 4 th quarters of calendar year 2011; and

2) Resolution3 dated February 3, 2022, denying the motion for

reconsideration of the Commissioner of Internal Revenue.

The Proceedings before the Bureau of Internal Revenue

Taihei is a domestic corporation4 primarily engaged in the construction

of industrial plants. 5 It is Value Added Tax (VAT)-registered with the Bureau
of Internal Revenue under Certificate of Registration OCN 9RC0000361302
dated June 22, 1994 with TIN 000-146-092-000. 6

Within the mandatory two-year period under Section l 12(A),7 National

Internal Revenue Code, as amended, Taihei filed the following administrative
claims for refund before the One-Stop Shop Inter-Agency Tax Credit and
Duty Drawback Center of the Department of Finance in the total amount of
Pl9,345,434.54 representing unutilized excess tax credit for the 3rd and 4th
quarters of calendar year 2011, together with all the supporting documents: 8

2
Penned by Presiding Justice Roman G. Del Rosario, concurred in by Associate Justices Juanita C.
Castaneda, Jr., Erlinda P. Uy, Ma. Belen M .• Ringpis-Liban, Catherine T. Manahan, Jean Marie A.
Bacorro-Villena, and Maria Rowena Modesto-San Pedro, id at 51--63.
Id at 65--67.
4
Id. at 52. Petitioner Taihei Alltech Construction (Phil.), Inc. (Taihei) is a domestic corporation duly
organized and existing under Philippine laws, with office address at 154 Cityland IO Tower II, 2108 HV
Dela Costa St., Salcedo Village, Makati City under Securities and Exchange Commission (SEC)
Registration No. 71309. See also id at 18.
5
Taihei's primary purpose is to engage in the construction of any industrial plant, such as processing
plants, power plants, chemical plants, involving the installation of any mechanical, electrical, electronics,
nuclear machinery, and equipment in SEC Registration No. 71309. Id
6
Id at 19.
7
Section 112, National Internal Revenue Code (N!RC). Refunds or Tax Credits oflnput Tax. (A) Zero-
Rated or Effectively Zero-Rated Sa]es. - 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: Provided, however, That in the case of zero-rated sales under
Section 106(A)(2)(a)(l), (2) and (b) and Section 108 (B)(l) and (2), the acceptable foreign currency
exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of
the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-
rated or effectively zero-rated sale and also in taxable or exempt sale of goods of properties or services,
and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one
of the transactions, it shall be allocated proportionately on the basis of the volume of sales: Provided,
finally, That for a person making sales that are zero-rated under Section 108 (B)(6), the input taxes shall
be aIIocated ratably between his zero-rated and,.non-zero-rated sales.
8
Taihei alleged that it filed the said application "together with all the supporting documents as required
under Section 112, NIRC. .. ," rollo, p. 19.
 Decision 3 G.R. No. 258791

a) September 30, 2013 - For excess input VAT for the 3 rd Quarter (July
to September) of calendar year 2011 in the amount of
P6,649,651.47. 9

b) December 23, 2013 - For excess input VAT for the 4th Quarter
(October to December) of calendar year 2011 in the amount of
'1"12,695,783.07. 10

Meantime, on June 11, 2014, the Commissioner of Internal Revenue

issued Revenue Memorandum Circular No. 54 (RMC 54-2014) following the
decision in CIR v. San Roque Power Corporation 11 and Mindanao II
Geothermal Partnership v. CIR, 12 viz.:

REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE
BUREAU OF INTERNAL REVENUE

June 11, 2014

REVENUE MEMORANDUM CIRCULAR NO. 54-2014

SUBJECT : Clarifying Issues Relative to the Application for Value

Added Tax (VAT) Refund/Credit under Section 112 of the
Tax Code, as amended

TO All Internal Revenue Officers and Others Concerned

Clarification on the issues concerning the application for VAT

refund/tax credit has been made by the Supreme Court in Commissioner of
lntemal Revenue vs. San Roque Power Corporation and in Mindanao II
Geothermal Partnership vs. Commissioner of Internal Revenue. As such,
this Circular is issued to summarize the rules on filing and processing of
applications for VAT refund/tax credit.

I. Prescriptive Period within which Administrative Claim for Refund

or Tax Credit of Input Taxes shall be Made

Section 112 (A) of the Tax Code, as amended, provides that 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 sales
were made, apply for the issuance of tax credit certificate or refund of
creditable input tax due or attributable to such sales, except transitional
input tax, to the extent that such input tax has not been applied against
output tax. As such, the taxpayer can file his administrative claim for VAT
refund or credit at anytime within two-year prescriptive period.

' id. at 89-93.

10
Id. at 94--96.
11 CIR v. San Roque Power Corµurufiun, Taganiio Afining Corporation v. CIR, and Philex }vfining
Corporationv. CIR, 703 Phil. 310 (2013).
12
706 Phil. 48(2013).
Decision 4 G.R. No. 258791

The Commissioner shall have one hundred twenty (120) days from
the date of submission of complete documents to decide whether or not to
grant the claim for refund or issuance of the Tax Credit Certificate (TCC)
for creditable input taxes. If the claim for VAT refund or credit is not acted
upon by the Commissioner within 120-day period as required by law, such
"inaction shall be deemed a denial-" of the application for tax refund or
credit.

II. Filing and Processing of Administrative Claims

The application for VAT refund/tax credit must be accompanied by

complete supporting documents as enumerated in Annex "A" hereof. In
addition, the taxpayer shall attach a statement under oath attesting to the
completeness of the submitted documents (Annex "B"). The affidavit shall
further state that the said documents are the only documents which the
taxpayer will present to support the claim. If the taxpayer is a juridical
person, there should be a sworn statement that the officer signiug the
affidavit (i.e., at the very least, the Chief Financial Officer) has been
authorized by the Board of Directors of the company.

Upon submission of the administrative claim and its supporting

documents, the claim shall be processed and no other documents shall be
accepted/required from the taxpayer in the course of its evaluation. A
decision shall be rendered by the Commissioner based only on the
documents submitted by the taxpayer. The application for tax refund/tax
credit shall be denied where the t~payer/claimant failed to submit the
complete supporting documents. For this purpose, the concerned
processing/investigating office shall prepare and issue the corresponding
Denial Letter to the taxpayer/claimant.

III.Mandatory 120+30 Day Period

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 (120) day-period, appeal the
decision or the unacted claim with the CTA. Verily, a judicial claim must
be filed with the CTA within 30 days from the receipt of the Commissioner's
decision denying the administrative claim or from the expiration of the 120-
day period without any action from the Commissioner, as the case may be.
In this regard, the taxpayer/claimant is required to observe the 120+30 day
rule before lodging a petition for review with the CTA.

In sum, the taxpayer can file ;the 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.

IV.Exception to the Mandatory and Jurisdictional Nature of the

120+30 day Period (BIR Ruling No. DA-489-03 dated 10 December
2003)

As an exception to the mandatory and jurisdictional 120+30 day

period, it was emphasized that from the time of issuance of BIR Ruling No.
DA-489-03 on December 10, 2003 up to its reversal by the Supreme Court
Decision 5 G.R. No. 258791

in the Aichi case on October 6, 2010 (or a period of almost 7 years),

taxpayers/claimant need not wait for the lapse of the 120-day period before
it could seek judicial relief with tbe CTA by way of Petition for Review.
This exception, however, is limited to cases of premature filing (filing of
judicial claim prior to tbe lapse of thel20-day period) and does not extend
to late filing of a judicial claim.

V. Pending Administrative Claim

In cases where the taxpayer has filed a "petition for review" with the
CTA, the Commissioner loses jurisdiction over the administrative claim.
However, the Processing Office of the Administrative Agency shall still
evaluate internally the administrative claim for purposes of intelligently
opposing the taxpayer's judicial claim.

Indubitably, failure to file a judicial claim with the CTA within

thirty (30) days from the expiration of the 120-day period rendered the
Commissioner's decision, or inaction "deemed a denial", final a.,d
unappealable. This applies to all currently pending administrative claim for
refund/tax credit.

All other issuances inconsistent herewith are hereby repealed or

modified accordingly.

All concerned are hereby enjoined to be guided accordingly and give

this Circular as wide a publicity as possible.

This Circular shall take effect immediately.

(SGD). KIM S, JACINTO-HENARES

Commissioner of Internal Revenue

Taihei asserted that its pending administrative claims for refund were
deemed denied by virtue of the retroactive application of RMC 54-2014. 13

Thereafter, the Commissioner of Internal Revenue issued Revenue

Regulations No. 1-2017 (RR 1-2017) dated January 3, 2017 on the "supposed
erroneous retroactive application" ofRMC 54-2014, viz.:

REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE
BUREAU OF INTERNAL REVENUE

January 3, 2017

REVENUE REGULATIONS NO. 1-2017

SUBJECT : Prescribing the Regulations Governing Applications for

Value-Added Tax (VAT) Credit/Refund Filed Under
Section 112 of the Tax Code, as Amended, Prior to
Revenue Memorandum Circular No. 54-2014 dated
Jllne 11, 2014
13
Rollo, pp. 19-20.
Decision 6 G.R. No. 258791

TO: All Internal Revenue Officers and Others Concerned

SEC. 1. BACKGROUND. - On August 27, 2003, Revenue

Memorandum Circular (RMC) No. 49-2003 dated August 15,2003, was
issued to allow taxpayers to file the complete documents to enable the
Commissioner of Internal Revenue to properly process the administrative
claims for tax credit or tax refund. It provided that upon filing of his
application for tax credit/refu..1'.ld, the taxpayer-claimant is given thirty (30)
days within which to complete the required documents unless given further
extension by the head of the processing unit but such extension shall not
exceed thirty (30) days. The claim shall be officially received only upon
submission of complete documents. It is only upon such submission that the
120-day period would begin to run'. In this sense, it is the taxpayer "who
ultimately determines when complete documents have been submitted for
the purpose of commencing and continuing the running of the 120-day
period."

RMC No. 54-2014 dated June 11, 2014, was issued which provides
that the Commissioner shall have one hundred twenty (120) days from date
of submission of complete documents to decide whether or not to grant the
claim for tax credit/refund. If the claim is not acted upon by the
Commissioner within the statutory 120-day period, such "inaction shall be
deemed a denial" of the application for tax credit or refLIIld. Further it
requires that the application or claim must already be accompanied by
complete supporting documents and the taxpayer is barred from submitting
additional documents after he has filed his administrative claim. This takes
away from the taxpayer-claimant the reckoning of the 120-day period.

It appears that Rl'1C No. 54-2014 was being given retroactive

effect because pending claims were deemed denied upon expiration of
the 120-day period from the date the claims were filed even though the
taxpayer-claimants are still in the process of submitting the complete
documents which was allowed under RMC No. 49-2003. It presumed
that the pending claims had been filed with complete documents and
the same have remained unacted upon beyond the 120-day period.

On December 8, 2016, the Supreme Court, in the case Pilipinas

Total Gas, Inc. vs. The Commissioner of Internal Revenue (G.R. No.
207112), decreed that taxpayers "have every right to pursue their claims in
the manner provided by existing regulations at the time it was filed," and,
therefore, RMC No. 54-2014 cannot be applied retroactively as this would
prejudice taxpayers whose VAT claims for tax creclit or tax refund were
filed and pending before June 11, 2014, the date RMC No. 54-2014 took
effect. This juclicial declaration compels the need to clarify the tax treatment
aud processing of applications for VAT tax credit/refund filed and pending
prior to RMC 54-2014.

SEC. 2. SCOPE. - Pursuant to the provisions of Section 244, in

relation to Section 246 and Section 112 of the Tax Code, as amended, these
Regulations are issued to give effect to the doctrinal rule laid down in the
aforecited Pilipinas Total Gas case and to afford fair and adequate relief to
taxpayer-claimants whose claims were "deemed denied" as a result of the
retroactive application of RMC No. 54-2014. For this purpose, and
consistent with the judicial "summation of rules" decreed to be "made
applicable to claims of tax credit/refund filed before June 11, 2014," such

1
Decision 7 G.R. No. 258791

claims filed prior to RMC No. 54-2014 shall continue to be processed

administratively.

SEC. 3 PROCESSING OF ADMINISTRATIVE CLAIMS. -

VAT claims filed and pending prior to the effectivity ofRMC 54-2014, the
claims solely covered by these Regulations, shall be processed and
approved in accordance with the following rules:

1. The claimant-taxpayer, under Section 112 (A) of the Tax Code,

as amended, has two (2) years after the close of the taxable
quarter when the sales were made, to apply for the issuance of a
tax credit certificate.or refund of creditable input tax due or paid
attributable to such sales. Thus, before the administrative claim
is barred by prescription, the taxpayer must have submitted his
complete documents in support of the application filed. This is
because, it is upon the complete submission of his documents in
support of his application that it can be said that the application
was, "officially received" as clarified under RMC No. 49-2003.

2. In all cases, whatever documents a taxpayer intends to file to

support his claim must be completed within the two-year period
under Section 112 (A) of the Tax Code, as amended, and the
Commissioner, or his duly authorized representative, should
have decided on the claim for tax credit or refund within 120
days from the date of submission of complete documents, or
from the date filing of the application, if the claimant-taxpayer
did not submit additional documents.

Hence, pending administrative claims prior to the effectivity of

RMC No. 54-2014 shall be processed by the concerned offices
based on available documents submitted by the claimant-
taxpayer within the aforesaid statutory two-year period. For this
purpose, the result shall be communicated in writing by the
concerned revenue official.

SEC. 4. CLAIMS NOT COVERED. - The following claims filed

and pending before the effectivity ofRMC 54-2014 are not covered by these
Regulations:

1. Those claims filed beyond the two-year statutory prescriptive

period under Section 112 (A) of the Tax Code, as explained in
Sec. 3 hereof;

2. Those denied in writing by the approving authority;

3. Those approved or granted fully or partially by the approving

authority; and

4. Those already appealed to and pending with the CTA unless

there is proof of withdrawal of the case filed with the CTA.

SEC. 5. REPEALING CLAUSE. - Any revenue issuances

inconsistent herewith are hereby repealed or modified accordingly.

I
I
Decision 8 G.R. No. 258791

SEC. 6. EFFECTIVITY CLAUSE. - These regulations shall take

effect fifteen (15) days after publication in a newspaper of general
circulation.

(SGD.) CARLOS G. DOMINGUEZ III

Secretary of Finance

RECOMMENDING APPROVAL:

(SGD). CAESAR R. DULAY

Commissioner of Internal Revenue

By virtue of RR 1-2017, Taihei alleged that its administrative claim was

deemed revived. 14 Subsequently, on June 10, 2019, 15 OIC-Assistant
Commissioner for Assessment Service Ma. Luisa I. Belen denied Taihei's
administrative claim under Letter 16 dated February 6, 2019, viz.:

XXX XXX

The said applications were deemed denied as a result of the

retroactive application of Revenue Memorandum Circular (RMC) No. 54-
2014 dated June 11, 2014. However, pursuant to Revenue Regulations No.
1-2017 dated January 3, 2017, ciaims filed prior to RMC No. 54-2014 shall
continue to be processed administratively, to wit:

"Hence, pending administrative claims prior to the

effectivitv ofRMC No. 54-2014 shall be processed by the
concerned office based on available documents submitted
by the claimant-taxpayer within the xxx statutory two-year
period xxx".

The examination conducted by this Office on the available

documents submitted supporting the said applications, resulted in excess
deductions over input VAT claimed, as computed hereunder:

Amount of claims P19,345.434.54

Deductions:
Violation of invoicing requirements
per Sec. 113 ofNIRC of 1997 Pl 7,150,738.30
Input VAT not supported
with ORs/invoices • 1,333,099.23
Input VAT on importations
without proof of payment of VAT 908 065.00
Total Deductions P19,391,902.53
Excess Deductions over
Input VAT Claimed (P46.467.99)

In view of the foregoing, we regret to inform that your claims for

VAT credit aggregating Pl9,345,434.54 are DENIED for lack of factual
and legal bases.

14
Id. at 20.
15
Id.
16 Id. at 97.
Decision 9 G.R. No. 258791

XXX XXX

In view of the mandatory rule that "{i]n case offull 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" prescribed under Section l 12(C), 17 National Internal Revenue Code,
as ~mended, Taihei filed a Petition for Review with the Court of Tax Appeals
entitled Taihei Alltech Construction (Phil.) Inc. v. CIR docketed as CTA Case
No.10108onJuly 10,2019.

Proceedings before the Court of Tax Appeals Second Division

In its Petition for Review, 18 Taihei asked the Court of Tax Appeals
Second Division to grant its claims for refund in the total amount of
Pl 9,345,434.54 representing unutilized excess tax credit for the 3rd and 4th
quarter of calendar year 2011.

In support of its claims, Taihei alleged: (I) The claims for refund with
all the supporting documents were filed in accordance with Section 112,
National Internal Revenue Code, as amended; (2) While the Commissioner of
Internal Revenue had 120 days within which to act on Taihei's claims for
refund, the same were "deemed denied" by virtue of · the retroactive
application ofRMC 54-2014. Nevertheless, these claims for refund were "re-
processed" administratively when the Commissioner of Internal Revenue
subsequently issued RR 1-2017, effectively reviving the claims; and (3)
Despite the subsequent denial thereof, it remained entitled to the refund
thereof.

Under its Answer dated July 31, 2019, 19 the Commissioner of Internal
Revenue riposted: (a) The Petition for Review was filed out of time and the
Court of Tax Appeals had no jutisdiction over the same; (b) RJ'v1C 54-2014
mentioned only one exception to the 120+30-day rule which is Bureau of
Internal Revenue Ruling No. DA-489-03 dated December 10, 2003 effective
up to October 6, 2010 only, relating to premature filing of judicial claim, as

17 Section l 12(C), NIRC. Refunds or Tax Credits or Input Tax. (C) Period within which Refund or Tax
Credit ofinput Taxes shali be Made. In proper cases, the Commissioner shall grant a _refund or issue the
tax credit certificate for creditabie input taxes within one hundred twenty (120) days from the date of
submission of complete documents in suppo1i of the application filed in accordance with Subsection (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
mav within thirty (30) days from the receipt of the decision denying the claim or after the
exP/rat!on of the one h~ndred twenty day-periOd, appeal the decision or the unacted claim with the
Court of Tax Appeals.
18 Rollo, pp. 69-i 2 !.
19
Id. at 122--137.
Decision G.R. No. 258791

emphasized in Mindanao II Geothermal Partnership v. CIR. 20 It does not

extend to late filing of a judicial claim; (c) The subsequent denial of Taihei' s
claims for refund have no bearing as the 30-day jurisdictional period from the
120-day period under Section 112(C), National Internal Revenue Code, as
amended, had already expired; and (d) Taihei failed to substantiate its
administrative claims for refund.

Taihei, in its Reply21 dated August 8, 2019, maintained that it is entitled

to the refund since RR 1-2017 already repealed RMC 54-2014, hence, its
claims were deemed revived by the Commissioner of Internal Revenue itself.
If its claims were denied, the noble intentions of the Commissioner of Internal
Revenue to rectify its "erroneous" misapplication of law shall be useless.

By its Motion for Early Resolution22 dated October 11, 2019, the
Commissioner of Internal Revenue asked the Court of Tax Appeals Second
Division to resolve the issue of jurisdiction, which on the face of the petition
itself, may already be done.

The Commissioner of Internal Revenue reasoned: (1) The

administrative claims for refund for excess input VAT got filed: (i) on
September 30, 2013 for the 3 rd Quarter, 2011 in the amount of 1'6,649,651.47;
and (ii) on December 23, 2013 for the 4th Quarter, 2011 in the amount of
1'12,695,783.07; (2) The judicial claims for refund or petition for review
were filed only on July 10, 2019, way beyond the period of30 days from the
expiration of the 120 days ordained under Section 112(C), National Internal
Revenue Code, as amended; and (3) 'J'he right to appeal is not a natural right.
It is a statutory privilege and may be exercised only in the manner provided
by law. Failure to do so often leads to the loss of the right to appeal. 23

In its Comment24 dated November 12, 2019, Taihei averred: (a) It was
affected by the misapplication ofRMC 54-2014; (b) RR 1-2017 has the force
oflaw and should be followed so long as it does not contravene any statute or
the Constitution; and (c) The government is not exempt from the application
of solutio indebiti. It expects fair dealings from them and the duty to refund
without unreasonable delay what it has erroneously collected. It should not
unjustly enrich itself at the expense of the taxpayer.

20
Supra note 12 at 85.
21 Rollo, pp. 138-167.
22 Id. at 168-177.
23 Id.
24 Id. at 178-183.
Decision 11 G.R. No. 258791

Ruling of the Court of Tax Appeals Second Division

Under Resolutiori 25 dated February 3, 2020, the Court of Tax Appeals

Second Division dismissed the Petition, ruling that Taihei's judicial claim was
filed out of time.

One, based on Section l 12(C), National Internal Revenue Code, the

Commissioner of Internal Revenue has 120 days to decide on the claim
for refund from the submission of complete documents, which in this case
should be reckoned from September 30, 2013 for the ya Quarter, 2011 and on
December 23, 2013 for the 4 th Quarter, 2011, the last day of which was
January 28, 2014 for the 3 rd Quarter and April 22, 2014 for the 4 th
Quarter. Thereafter, due to inaction of the Commissioner of Internal
Revenue, Taihei had 30 days to file a judicial claim before the Court of
Tax Appeals. Taihei's two claims expired on February 27, 2014 and May
22, 2014, respectively, long before Taihei actually filed its judicial claims
on July 10, 2019, way beyond the period contemplated by law.

Two, the 120-day period starts from the date of submission of complete
documents or the date of filing of application if the taxpayer, as in this case,
did not submit any additional documents. RR 1-2017 bears the same rule.

Three, the 30-day period should be reckoned from the Commissioner

of Internal Revenue decision or from the expiration of the 120 days,
whichever comes first. Any judicial claim filed outside the 120+30-day
periods does not fall within the jurisdiction of the Court of Tax Appeals .
•

Four, thus, it resolved the jurisdictional issue based on relevant laws

and jurisprudence and not on the retroactive application of RMC 54-2014.

The petitioner's subsequent Motion for Reconsideration26 was denied

under Resolution27 dated July 14, 2020.

Ruling of the Court of Tax Appeals En Banc

The Court of Tax Appeals En Banc affirmed by Decision28 dated July

19, 2021 and Resolution29 dated February 3, 2022. It pronounced that since
Taihei's judicial claims for refund were clearly filed out of time, the court was
devoid of jurisdiction over the same.

25 Penned bv Associate Justice Juanito C. C::astafieda, Jr., concurred in by Associate Justices Cielito N.
Mindaro-Grulla and Jean Marie A. Bacorro-Villena. Id, pp. 184-190.
26 Jd. at I 9 I-20 I. Commissioner of Internal Revenue filed an opposition thereto, see rollo, pp. 202-206.
27 Penned by Associate Justice Juanito C. Castaneda, Jr. and concurred in by Associate Justice Jean Marie
A. Bacorro-Vil!ena, id. at 208-214.
" Id at 51---63.
29
id at 65-67.

h
Decision 12 G.R. No. 258791 ·

For one, Section 112 (C), National Internal Revenue Code, as amended,
speaks of two (2) periods: (1) the 120-day period, which serves as a waiting
period to give time for the Commissioner of Internal Revenue to act on the
administrative claim for a refund or credit; and (2) the 30-day period, which
refers to the period for filing a judicial claim with the Court of Tax Appeals.

For another, complementing Section 112, National Internal Revenue

Code, as amended, Republic Act No. 1125, as amended by Republic Act No.
9282, confers exclusive appellate jurisdiction to the Court of Tax Appeals to
review by appeal, only the decisions or inaction of the Commissioner of
Internal Revenue in cases for refund of internal revenue taxes. 30

Verily, the taxpayer may file the appeal within 30 days after the
Commissioner of Internal Revenue denies the administrative claim within the
120-day waiting period; or it may file the appeal within 30 days from the
expiration of the 120-day period if there is inaction on t.1-ie part of the
Commissioner oflntemal Revenue, whichever comes first.

The inaction of the Commissioner of lnte111al Revenue on the claim

during the 120-day period is, by express provision oflaw, "deemed a denial"
of the claim, and the taxpayer has 30 days to file its judicial claim with the
Court of Tax Appeals; otherwise such denial shall be deemed final and
inappealable. A taxpayer must no longer wait for the Commissioner of
Internal Revenue to come up with a decision as his 120-day inaction is the
decision itself. Any claim filed beyond the 120+30-day period provided by
the National Intemai Revenue Code is outside the jurisdiction of the Court of
Tax Appeals.

tviore, R...TZ l ~2017 did not repeal RMC 54-2014 and did not effectively
revive Taihei's claims for refund as this regulation did not create any
exception to the 120+30-day mandatory and jurisdictional period. It was
issued to give effect to the doctrinal·rule laid down in Pilipinas Total Gas,
Inc. v. Commissioner of Internal Revenue 31 which only afforded relief to
taxpayers whose claims were deemed denied as a result of the retroactive

30 Republic Act No. 1125, as amended by RA. 9282, Section 7. Jurisdiction. - The CTA shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
J Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments,
refunds of imemc.i revenue taxes, fees or other charges, penalties in relation thereto, or other
matters arising- u~der the National Internal Revenue or other laws administered by the Bureau
of Intenu1 Revenue;
2- 1nactlon h\ the C0mmis5,ioner of Internal Revenue in ca~es involving disputed assessments,
;efunds C{inter?1al revenue taxes, fees or other charges, penalties in relations therero, or other
matters arising -under the National Internal Revenue Code or other laws admi~istered by ~he
Burvau of Imernal Revenue, where the National Internal Revenue Code provides a specific
periOd 0L.1;.;do•1, in whiCh C1.se the inaction shall be deemed a denial.
XXX XXX
31
774 Phil. 473,496 (1015).
Decision 13 G.R. No. 258791

application ofRMC 54-2014 by providing that claims for refund filed before
June 11, 2014 shall continue to be processed administratively.

The Present Petition

Taihei now asks the Court to exercise its discretionary appellate

jurisdiction to reverse the dispositions of the Court of Tax Appeals. It insists
that the 120-day timeline has been invalidated by the retroactive application
ofRMC 54-2014, thus, it can still avail of the judicial remedies for the grant
of its claim for refund even beyond this timeline. At any rate, RR 1-2017
repealed RMC 54-2014 and effectively revived its claims for refund. 32 By
jurisprudence though, compliance with the jurisdictional periods for filing a
claim has been excused in cases where the taxpayers relied on a Bureau of
Internal Revenue ruling of general interpretative order. Surely, the Court will
apply this exception here since what has been relied upon is RR 1-20 I 7, a
revenue issuance far superior to a general interpretative order.

In its Comment33 dated September 7, 2022, the Commissioner of

Internal Revenue defends the dispositions of the Court of Tax Appeals and
ripostes that the 120+30-day period within which to elevate judicial claims is
mandatory and jurisdictional for VAT claims for refund. The dispositions of
the Court of Tax Appeals did not use RMC 54-2014 to dismiss its petition,
nor apply it retroactively. RMC 54-2014 and RR 1-2017 did not create a
peculiar circumstance that warrants an exception to Section l 12(C), National
Internal Revenue Code, as amended. More, RR 1-2017, being an
administrative regulation, could not amend the provisions of Section 112,
National Internal Revenue Code, as amended.

Core Issues

1) Were Taihei's judicial claims for refund filed out of time?

2) Did RMC 54-2014 retroactively invalidate Taihei's 120-day period

to file a judicial claim under Section 112(C), National Internal
Revenue Code, as ameqded?

3) Did RR 1-2017 revive Taihei's claims for refund?

4) Did RMC 54-2014 and RR 1-2017 create an exception to the

120+30-day period?

32 Rollo, pp. I 6--49.

33 Comment dated September 7, 2022 of the CIR, id. at 332-343.

1
Decision 14 G.R. No. 258791

Our Ruling

We affirm.

Nine years after CIR v. San Roque Power Corporation, 34 questions

regarding the mandatory and jurisdictional nature of 120+30-day rule under
Section 112, National Internal Revenue Code, as amended would have been
already been settled. Unfortunately, however, some taxpayers continue to
question the doctrinal ruling in an effort to stretch its interpretation or add new
exceptions insofar as their judicial claims for refunds are concerned. To recall,
San Roque explained the 120+30-day prescriptive periods under Section
l 12(A) and (C), National Internal Revenue Code:

II. Prescriptive Periods under Section l 12(A) and (C)

There are three compelling reasons why the 30-day period need not
necessarily fall within the two-year prescriptive period, as long as the
administrative claim is filed within the two-year prescriptive period.

First, Section l 12(A) clearly, plainly, and

unequivocally provides that the taxpayer "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 the creditable input tax due or paid
to such sales." In short, the law states that the taxpayer may
apply with the Commissioner for a refund or credit "within
two (2) years," which means at anytime within two years.
Thus, the application for refund or credit may be filed by the
taxpayer with the Commissioner on the last day of the two-
year prescriptive period and it will still strictly comply with
the law. The two-year prescriptive period is a grace period
in favor of the taxpayer and he can avail of the full period
before his right to apply for a tax refund or credit is barred
by prescription.

Second, Section 112(C) provides that the

Commissioner shall decide the application for refund or
credit "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)." The
reference in Section l 12(C) of the submission of documents
"in support of the application filed in accordance with
Subsection A" means that the application in Section l 12(A)
is the administrative claim. that the Commissioner must
decide within the 120-day period. In short, the two-year
prescriptive period in Section l 12(A) refers to the period
within which the taxpayer can file an administrative claim
for tax refund or credit. Stated otherwise, the two-year
prescriptive period does not refer to the filing of the

34 Supra note l 1.

fl
Decision 15 G.R. No. 258791

judicial claim with the CTA but to the filing of the

administrative claim with the Commissioner. As held in
~chi, the "phrase 'within two years x x x apply for the
issuance of a tax credit or refund' refers to applications for
refund/credit with the CIR and not to appeals made to
the CTA."

Third, if the 30-day period, or any part of it, is

required to fall within the two-year prescriptive period
(equivalent to 73 0 days), then the taxpayer must file his
administrative claim for refund or credit within the first 61 0
days of the two-year prescriptive period. Otherwise, the
filing of the administrative claim beyond the first 610
days will result in the appeal to the CTA being filed
beyond the two-year prescriptive period. Thus, if the
taxpayer files his administrative claim on the 611 th day, the
Commissioner, with his 120-day period, will have until the
731 st day to decide the claim. If the Commissioner decides
only on the 731st day, or does not decide at all, the taxpayer
can no longer file his judicial claim with the CTA because
the two-year prescriptive period (equivalent to 730 days) has
lapsed. The 30-day period granted by law to the taxpayer to
file an appeal before the CTA becomes utterly useless, even
if the taxpayer complied with the law by filing his
administrative claim within the two-year prescriptive period.

The theory that the 30-day period must fall within the two-year
prescriptive period adds a condition that is not found in the law. It results in
truncating 120 days from the 730 days that the law grants the taxpayer for
filing his administrative claim with the Commissioner. This Court cannot
interpret a law to defeat, wholly or even partly, a remedy that the law
expressly grants in clear, plain, and unequivocal language.

Section l 12(A) and (C) must be interpreted according to its clear,

plain, and unequivocal language. The taxpayer can file his administrative
claim for refund or credit at anytime within the two-year prescriptive
period. If he files his claim on the last day of the two-year prescriptive
period, his claim is still filed on time. The Commissioner will have 120 days
from such filing to decide the claim. If the Commissioner decides the claim
on the 120th day, or does not decide it on that day, the taxpayer still has 30
days to file his judicial claim with the CTA. This is not only the plain
meaning but also the only logical interpretation of Section l 12(A) and (C).

The Court had to restate this doctrinal ruling on the 120+30-day period
in subsequent cases to address any perceived "loopholes" in its interpretation.
In CIR v. Mindanao II Geothermal Partnership, 35 the Court ruled that the 30-
day period applied not only to actual denial of claims but to the Commissioner
of Internal Revenue's inaction as well. The Court even summarized the rules
on prescriptive period as to what should be filed within the prescriptive period
and when it should be reckoned, thus:

A. 30°Day Period Also Applies to Appeals from Inaction

35 724 Phil. 534 (2014).

1
Decision 16 G.R. No. 258791

Section I l2(D) of the 1997 Tax Code states the time requirements
for filing a judicial claim for refund or tax credit of input VAT:

(D) 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
Subsection (A) and (B) 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.

Section I 12(D) speaks of two periods: the period ofl20 days, which
serves as a waiting period to give time for the CIR to act on the
administrative claim for refund or credit, and the period of 30 days, which
refers to the period for interposing an appeal with the CTA. It is with the
30-day period that there is an issue in this case.

The CTA En Bane's holding is that, since the word "or" - a

disjunctive term that signifies dissociation and independence of one thing
from another-is used in Section I 12(D), the taxpayer is given two options:
1) file an appeal within 30 days from the CIR's denial of the administrative
claim; or 2) file an appeal with the CTA after expiration of the 120-day
period, in which case the 30-day appeal period does not apply. The judicial
claim is seasonably filed so long as it is filed after the lapse of the 120-day
waiting period but before the lapse of the two-year prescriptive period under
Section I 12(A).

We do not agree.

The 30-day period applies not only to instances of actual denial by

the CIR of the claim for refund or t:3¥ credit, but to cases of inaction by the
CIR as well. This is the conect interpretation of the law, as held in San
Roque:

Section l l 2(C) also expressly grants the taxpayer a 30-day

period to appeal to the CTA the decision or inaction of the
Commissioner, thus:

x x x the taxpayer aJ:focted 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.

This law is clear, plain, and unequivocal. Following the well-settled

verba /egis doctrine_ this law should be applied exactly as worded since it
is clear, plain, and unequivocal. As this law states, the taxpayer may, ifhe
wishes, appeal the decision of the Commissioner to the CTA within 30 days
from receipt of the Commissioner's decision, or if the Commissioner does
Decision 17 G.R. No. 258791

not act on the taxpayer's claim within the 120-day period, the taxpayer may
appeal to the CTA within 30 days from the expiration of the 120-day period.

The San Roque pronouncement is clear. The taxpayer can file the
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 day~ from the expiration of the 120-day period
if the Commissioner does not act within the 120-day period.

XXX xxx36

SUMMARY OF RULES ON PRESCRIPTIVE PERIODS FOR

CLAIMING REFUND OR CREDIT OF INPUT VAT

The lessons of this case may be summed up as follows:

A. 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 to 12 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)

B. 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 IO 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. 37 (San Roque)
(Emphases supplied)

36 Id. at 553-555.
7
' Id. at 562-563.
Decision 18 G.R. No. 258791

In Rohm Apollo Semiconductor Phils. v. Commissioner of Internal

38
Revenue, the Court ruled that the taxpayer should not wait for the decision
of the Commissioner of Internal Revenue as the 30-day period is triggered
upon the expiration of the 120-day period:

Section 112(0) 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.

XXX XXX

xxx In other words, Rohm Apollo e1Toneously thought that the 30-
day period does not apply to cases 9fthe CIR's inaction after the lapse of
the 120-day waiting period, and that a judicial claim is seasonably filed so
long as it is done within the two year period. Thus, it filed the Petition for
Review with the CTA only on 11 September 2002.

These mistaken notions have already been dispelled by

Commissioner oflntemal Revenue v. Aichi Forging Company of Asia, Inc.
(Aichi) and San Roque. Aichi clarified that it is only the administrative
claim that must be filed within the two-year prescriptive period. San Roque,
on the other hand, has ruled that the 30-day period always applies, whether
there is a denial or inaction on the part of the CIR.

Justice Antonio Carpio, writing for the Court in San Roque,

explained that the 30-day period is a 1997 Tax Code innovation that does
away with the old rule where the taxpayer could file a judicial claim when
there is inaction on the part of the CIR and the two-year statute oflimitations
is about to expire. 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, ca..nnot
apply because that rule was adopted before the enactment of
the 30-day period. The 30-day peliod 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 docs not act at aH during the 120-day
period. "\Vith the 30-day period always available to the

38
750 Phil. 624 (20 I 5).
Decision 19 G.R. No. 258791

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. DA-489-03 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. xxx

XXX XXX

In fine, our finding is that the judicial claim for the refund or credit
of unutilized input VAT was belatedly filed. Hence, the CTA lost
jurisdiction over Rohm Apollo's claim for a refund or credit. The foregoing
considered, there is no need to go into the merits of this case.

XXX XXX

A final note, the taxpayers are reminded that that when the 120-day
period lapses and there is inaction on the part of the CIR, they must no
longer wait for it to come up with a decision thereafter. The CIR's
inaction is the decision itself. It is already a denial of the refund claim.
Thus, the taxpayer must file an appeal within 30 days from the lapse of
the 120-day waiting period. 39 (Emphases and italics supplied)

In Silicon Philippines, Inc. v. Commissioner ofInternal Revenue, 40 the

Court likewise ordained that a judicial claim for refund shall be filed within a
period of 30 days after the receipt of Commissioner of Internal Revenue's
decision/ruling or after the expiration of the 120-day period, "whichever is
sooner," thus, further solidifying.the rule.

Taihei's judicial claims were filed out of

time

Following these doctrinal rulings, the 120+30-day period for Taihei's

judicial claims for refund should reckon with the following dates relevant to
its earlier administrative claims for refund, thus:

Administrative End of End of

2011 Claim Filed 120-dav Period 30-dav Period
rd Januarv 28, 2014 February 27, 2014
3 Ouarter September 30, 2013
4 th Ouarter December 23, 2013 Aoril 22, 2014 Mav 22, 2014

39
Id. at 630---633.
40 782 Phil. 44, 56 (20 I 6).

!U4{
Decision ,20 G.R. No. 258791 .

As it was, Taihei filed its judicial claims with the Court of Tax
Appeals only on July 10, 2019 way beyond the 120+30-day period. Thus:

End of Judicial
2011 120-dav Period Claim Filed No. ofDavs Late
rd
3 Quarter January 28, 2014 July 10, 2019 1,989 days (or 5
vrs. and 163 davs)
4 th Quarter April 22, 2014 July 10, 2019 1,905 days (or 5
vrs. and 79 davs)

The post facto denial ofTaihei 's administrative claims is irrelevant as

Commissioner of Internal Revenue's inaction for 120 days is already
considered "deemed denial" of the administrative claims for refund. Surely,
without a timely appeal, the "deemed denial" becomes final and
unappealable.

RMC 54-2014 was not retroactively

applied to Taihei's claims for refund

Citing Pilipinas Total Gas, Inc. v. CIR, 41 Taihei asserts that RMC 54-
2014 cannot be retroactively applied to its claims for refund already pending
before RMC 54-2014 took effect on June 11, 2014.

The argument is misplaced. Before RMC 54-2014 got issued, the

reckoning point of the 120-day period had always been "from the date of
submission of complete documents in support of the application filed." To
recall, as there were pending administrative claims which were not acted upon
by the Commissioner of Internal Revenue due to incomplete documentation,
there was a need to define the period within which the documentation process
should be completed as well as the period within which the Commissioner of
Internal Revenue should receive the claims. Thus, RMC 49-2003 42 was issued

41
Supra note 31.
42
RMC No. 49-2003 dated August 15, 2003, "Amending Answer to Question Number 17 of Revenue
Memorandum Circular No. 42-2003 and Providing Additional Guidelines on Issues Relative to the
Processing of Claims for Value-Added Tax (VAT) Credit/Refund, Including Those Filed with the Tax
and Revenue Group, One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center, Department
of Finance (OSS-DOF) by Direct Exporters.
XXX XXX
Q- J8: For pending claims with incomplete documents, what is the period within which to submit the
supporting documents required by the investigating/processing office? When should the
investigating/processing office officially receive claims for tax credit/refund and what is the period
required to process such claims?
A-18: For pending claims which have not been acted upon by the investigating/processing office due
to incomplete documentation, the taxpayer-claimants are given thirty (30) days within which to
submit the documentary requirements unless given further extension by the head of the processing
unit, but such extension should not exceed thirty (30) days.
For claims to be filed by claimants with the respective investigating/processing office of the
administrative shall be agency, the same officially received only upon submission of complete
documents.
For current and future claims for tax credit/refund. the same shall be processed within one hundred
twenty (J 20) days from receipt of the complete documents. If, in the course of the investigation and
processing of the claim, additional documents a.re required for the proper determination of the legitimate
amount of claim, the taxpayer-claimants shall submit such documents within thirty (30) days from
Decision 21 G.R. No. 258791

giving claimants with incomplete documentation a period of thirty (30) days

from the filing of the administrative claim to submit the documentary
requirements unless the Commissioner of Internal Revenue granted a further
extension of thirty (30) days. It is only after the expiration of this period shall
the 120-day period begin to run.

Pilipinas Total Gas43 merely expounded on the reckoning point of the

120-day period applying RMC 49-2003 prior to the issuance of RMC 54-
2014 for claimants with incomplete documents:

With the amendments only with respect to its place under Section
112, the Court finds that RMC No. 49-2003 should still be observed. Thus,
taking the foregoing changes to the law altogether, it becomes apparent that,
for purposes of determining when the supporting documents have been
completed - it is the taxpayer who · ultimately determines when
complete documents have been submitted for the purpose of
commencing and continuing the running of the 120-day period. After
all, he may have already completed the necessary documents the
moment he filed his administrative claim, in which case, the 120-day
period is reckoned from the date of filing.

xxxx

xxx After all, in a claim for tax credit or refimd, it is the taxpayer
who has the burden to prove his cause of action. As such, he enjoys
•
relative freedom to submit such evidence to prove his claim.

The foregoing conclusion is but a logical consequence of the due

process guarantee under the Constitution. Corollary to the guarantee that
one be afforded the opportunity to be heard, it goes without saying that
the applicant should be allowed reasonable freedom as to when and
how to present his claim within the allowable period.

xxxx

To summarize, for the just disposition of the subject controversy,

the rule is that from the date an administrative claim for excess
unutilized VAT is filed, a taxpayer has thirty (30) days within which to
submit the documentary requirements sufficient to support his claim,
unless given further extension by the CIR. Then, upon filing by the
taxpayer of his complete documents to support his application, or
expiration of the period given, the CIR has 120 days within which to
decide the claim for tax credit or refund. Should the taxpayer, on the
date of his filing, manifest that he no longer wishes to submit any other
[additional] documents to complete his administrative claim, the 120 day
period allowed to the CIR begins to run from the date of filing.

In all cases, whatever documents a taxpayer intends to file to support

his claim must be completed within the two-year period under Section
J 12(A) of tl1e NIRC. The 30-day period from denial of the claim or from

request of the investigating/processing office, which shall be construed as within the one hundred twenty
( 120) day period.
XXX XXX
43
Supra note 31.
Decision 22 G.R. No. 258791

the expiration of the 120-day period within which to appeal the denial or
inaction of the CIR to the CTA must also be respected.

It bears mentioning at this point that the foregoing summation of the

rules should only be made applicable to those claims for tax credit or
refund filed prior to June 11, 2014, such as the claim at bench. As it now
stands, RMC 54- 2014 dated June 11, 2014 mandates that:
•
The application for VAT refund/tax credit must
be accompanied by complete supporting documents as
enumerated in Annex "A" hereof. In addition, the
taxpayer shall attach a statement under oath attesting to
the completeness of the submitted documents (Annex B).
The affidavit shall further state that the said documents are
the only documents which the taxpayer will present to
support the claim. If the taxpayer is a juridical person, there
should be a sworn statement that the officer signing the
affidavit (i.e., at the very least, the Chief Financial Officer)
has been authorized by the Board of Directors of the
company.

Upon submission of the administrative claim and

its supporting documents, the claim shall be processed
and no other documents shall be accepted/required from
the taxpayer in the course of its evaluation. A decision
shall be rendered by the Commissioner based only on the
documents submitted by the taxpayer. The application for
tax refund/tax credit shall be denied where the
taxpayer/claimant failed to submit the complete supporting
documents. For this purpose, the concerned
processing/investigating office shall prepare and issue the
corresponding Denial Letter to the taxpayer/claimant.

Thus, under the current rule, the reckoning of the

120-day period has been withdrawn from the taxpayer
by RMC 54- 2014, since it requires him at the time he
files his claim to complete his supporting documents and
attest that he will no longer submit any other document
to prove his claim. Further, the taxpayer is barred from
submitting additional documents after he has filed his
administrative claim.

On this score, the Court finds that the foregoing issuance cannot be
applied retroactively to the case at bar since it imposes new obligations upon
taxpayers in order to perfect their administrative claim, that is, [l]
compliance with the mandate to submit the "supporting documents"
enumerated under RMC 54-2014 un'der its "Annex A"; and [2] the filing of
"a statement under oath attesting to the completeness of the submitted
documents," referred to in RMC 54-2014 as "Annex B." This should not
prejudice taxpayers who have every right to pursue their claims in the
manner provided by existing regulations at the time it was filed. 44
(Emphases supplied)

,, Id.

/(
Decision 23 G.R. No. 258791

Accordingiy, RMC 54-2014 (requiring taxpayer to file at once

complete supporting document simultaneously with its administrative claim
for refund) should not be retroactively applied to administrative claims with
incomplete documents pending as of June 11, 2014 as the same was deemed
to have been continuously governed by the old RMC 49-2003.

As for Taihei, it has been earlier illustrated that even long before RMC
54-2014 got issued on June 11, 2014, Taihei already lost its 30-day period
for filing its judicial claims on February 27, 2014 and May 22, 2014,
respectively. Thus, its allegation that RMC 54-2014 was retroactively applied
to its claims for refund is totally misplaced.

RR 1-2017 did not revive Taihei's claims

for refund

Taihei next argues that RR 1-2017 had revived its claims for refund as
it "reprocessed" the same due to the retroactive application ofRMC 54-2014.

Again, the argument is misplaced. To begin with, the Commissioner

of Internal Revenue has no power to revive lapsed claims for refund. What
Section 4, National Internal Revenue Code 45 grants to the Commissioner of
Internal Revenue is only the authority to interpret and decide tax cases; not
the power to alter the periods prescribed by law for filing of tax refunds. 46

To be clear, RR 1-2017 did not in any way provide that any claims for
refund had been "revived" or "reprocessed." While the regulation admittedly
provided that RMC 54-2014 retroactively applied to claimants whose
documentary requirements were already complete prior to its effectivity on
June 1, 2014, the issuance qualified that it should be consistent with the
judicial "summation of rules" decreed to be "made applicable to claims of tax
credit/refund filed before RMC 54-2014." It never ordained that lapsed claim
were "revived" or "reprocessed."

45
Section 4, NIRC. Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases. The power
to interpret the provisions of this Code and other tax laws shall be under the exclusive and original
jurisdiction of the Commissioner, subject to review by the Secretary of Finance.
The power to decide disputed assessments, refunds of internal revenue taxes, fees or other charges,
penalties imposed in relation thereto, or other matters arising under this Code or other laws or portions
thereof administered by the Bureau of Internal Revenue is vested in the Commissioner, subject to the
exclusive appellate jurisdiction of the Court of Tax Appeals.
46 In the Matter of Declaratory Reliefon the Validity of BIR Revenue Memorandum Circular No. 65-2012
"Clarifying the Taxability of Association Dues, Membership Fees and Other Assessments/Charges
Collected by Condominium Corporations," G.R. No. 215801, Bureau of Internal Revenue (BIR), as
herein represented by its Commissioner Kim S. Jacinto-Henares and Revenue District Officer (RDO)
Ricardo B. Espiritu v. First £-Bank Tower Condominium Corp., In the Matter of Declaratory Relief on
the Validity of BIR Revenue Memorandum Circular No. 65-2012 "Clarifying The Taxability Of
Association Dues, Membership Fees And Other Assessments/Charges Collected By Condominium
Corporations," First £-Bank Tower Condominium Corp. v. Bureau of Internal Revenue (BIR), as herein
represented by its Commissioner Kim S. Jacinto-Henares, G.R. No. 218924, January 15, 2020, citing
COURAGE v. Commissioner, Bureau of Internal Revenue, G.R. No. 213446, July 03, 2018.

I
Decision 24 G.R. No. 258791

In any event, RR 1-2017 is replete with prov1s10ns which clearly

referenced the 120+30-day rule, most telling of which is par. 2, Section 3
thereof stating that "[i]n all cases, whatever documents a taxpayer intends to
file to support his claim must be completed within the two-year period under
Section 112 (A) of the Tax Code, as amended, and the Commissioner, or his
duly authorized representative, should have decided on the claim for tax
credit or refund within 120 days from the date of submission of complete
documents, or from the date filing ofthe application, if the claimant-taxpayer
did not submit additional documents."

Inevitably, when Taihei received the Letter of Denial on a date far

removed from the 120+30-day rule, its judicial claims were already deemed
barred by the earlier lapse of the 120+30-day rule or the so-called "whichever
sooner" rule. '

RMC 54-2014 and RR 1-2017 did not

create an exceptiolll to the 120+30-day
period

Taihei claims, too, that both RMC 54-2014 and RR 1-2017 created an
exception to the 120+3 0-day rule. It argues that exceptions from jurisdictional
periods for filing a claim have been made in a case where the taxpayer relied
on a BIR ruling of general interpretative order. Here, it claims to have relied
on RR 1-2017, a revenue issuance far more superior than a general
interpretative order. On this score, we emphasize anew that the expiration of
Taihei's judicial claims for refund predates the two issuances. For sure, the
CIR cannot breathe life to a claim that had already expired.

At the time Taihei was required to file a judicial claim on January 28,
2014 and April 22, 2014, the 120+30-day rule had already been settled. San
Roque, 47 Mindanao J/4 8 and Rohm 49 had all exhaustively clarified and
explained what was then a difficult question of law. Consequently, Taihei
cannot feign ignorance relative to the 120+30-day rule as the aforesaid
jurisprudence repeatedly clarified that it had only 30 days from the lapse of
the 120 days to file a judicial claim. Its so called reliance on RR 1-2017, if
accepted by the Court, would not only sanction stubborn defiance by
administrative agencies of settled jurisprudence which are part of the law of
the land but worse, ailow taxpayers to misconstrue regulations, deliberately
or otherwise, and easily get away with it.

47
Supra note 11.
48 Supra note 12.
49 Supra note 38.

I(
Decision 25 G.R. No. 258791

When the law is clear and free from any doubt or ambiguity, there is no
room for construction or interpretation; there is only room for application. 50
But where the law is ambiguous, it is the first and fundamental duty of the
Court to apply the iaw in such a way that in the course of such application or
construction, it should not make or supervise legislation, or under the guise of
interpretation, modify, revise, amend, distort, remodel, or rewrite the law, or
give the law a construction which is repugnant to its terms. 51 The Court should
apply the law in a manner that would give effect to their letter and spirit,
especially when the law is clear as to its intent and purpose. 52

In Applied Food Ingredients Company, Inc. v. Commissioner of

Internal Revenue, 53 the Court ruled that a claim for tax refund or credit, like a
claim for tax exemption, is construed strictly against the taxpayer. One of the
conditions for a judicial claim of refund or credit under the VAT System is
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.

Here, Taihei was clearly negligent when it did not file its judicial claims
after the lapse of the 120-day period and within the 30-day window. So must
it be.

ACCORDINGLY, the Petition is DENIED. The Decision dated July

19, 2021 and Resolution dated February 3, 2022 of the Court of Tax Appeals
En Banc in CTA EB No. 2331 (CTA Case No. I OJ 08) are AFFIRJ\'IED.

SO ORDERED.

AMYt~VIER .A/!;sociate Justice

WE CONCUR:
Yt;f'.

Senior Associate Justice

Chairperson
so Coca-Cola Bottlers Philippines, inc. v. CIR, 326 Phil. 329 (20 18), citing Nippon £.->.:press (Philippines)
Corporation v. CIR, 706 Phil. 442, 450 (2013); citing Rizai Commercial Banking Corporation v.
Intermediate Appel/are Court and BF Homes, Inc., 378 Phil. I 0, 22 ( 1999).
51 Id., citing Corpuz v. People, 734 Phil. 353,416 (2014).
51
Id.
53 720 Phii. 782 (2013).
Decision 26 G.R. No. 258791 ·

JHOS~OPEZ
Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court's Division.

~~ff
MARVIC~~°LEONEN
«LJ'✓
Senior Associate Justice
Chairperson, Second Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the above
Division Chairperson's Attestation, I certify that the conclusions in the above
Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Court's Division.