Miramar Fish Company, Inc. vs. Commissioner of Internal Revenue

Strict compliance with the 120+30 day mandatory and jurisdictional periods under Section 112 of the NIRC is required for judicial claims of VAT refund or tax credit, and the absence of the word "zero-rated" on invoices covering zero-rated sales is fatal to a taxpayer's claim for refund of unutilized input VAT under Section 112(A) in relation to Section 106(A)(2)(A)(1) of the NIRC of 1997, as amended, and Section 4.108-1 of RR No. 7-95.

Petitioner Miramar Fish Company, Inc. is a corporation duly organized under Philippine law, engaged in the manufacture and export of canned tuna and canned pet food, with its principal office in Zamboanga City. It is registered with the BIR as a VAT taxpayer under VAT Registration No. 01-930-001570-V and TIN 005-847-661. On 4 June 2002, petitioner was registered with the Board of Investments as a new export producer with non-pioneer status under BOI Certificate of Registration No. EP 2002-077. Respondent is the duly appointed Commissioner of Internal Revenue, empowered to decide, approve, and grant refunds or tax credits of erroneously or excessively paid taxes.

Petitioner Miramar Fish Company, Inc. is a VAT-registered corporation engaged in the manufacture and export of canned tuna and canned pet food, with its principal office in Zamboanga City. On 4 June 2002, it was registered with the Board of Investments as a new export producer with non-pioneer status under BOI Certificate of Registration No. EP 2002-077. Petitioner filed its Quarterly VAT Returns (BIR Form No. 2550Q) for taxable year 2002 on 25 April 2002 (first quarter), 8 July 2002 (second quarter), 22 October 2002 (third quarter), and 27 January 2003 (fourth quarter). On 24 February 2003, petitioner filed with the BIR an administrative claim for refund in the form of a tax credit certificate (TCC) representing alleged unutilized input VAT in the amount of ₱6,751,751.65 for taxable year 2002, simultaneously submitting supporting documents including a copy of its VAT return for 2002, as evidenced by a Transmittal Receipt.

For taxable year 2003, petitioner filed its Quarterly VAT Returns on 10 April 2003 (first quarter), 16 July 2003 (second quarter), 17 October 2003 (third quarter), and 26 January 2004 (fourth quarter). An administrative claim for refund of alleged unutilized input VAT in the amount of ₱5,895,912.38 for taxable year 2003 was filed on 15 March 2004. Thereafter, on 25 March 2004, petitioner filed another administrative claim seeking a TCC in the aggregate amount of ₱12,741,136.81, representing unutilized or unapplied input VAT attributable to zero-rated export sales for both taxable years 2002 and 2003. In this letter, petitioner stated that the claim for 2002 amended its earlier 24 February 2003 letter, citing a difference in the amount claimed (₱6,751,751.65 versus ₱6,845,224.42), and that the claim for 2003 was amended because amended quarterly VAT returns had been filed on 12 March 2004.

Because no final action was taken by the BIR on any of the administrative claims, petitioner filed a Petition for Review before the CTA on 30 March 2004, docketed as C.T.A. Case No. 6905. The CTA in Division, in its 22 October 2007 Decision, denied the claim on the sole ground that the sales invoices presented did not comply with the invoicing requirements under Section 113 of the NIRC and Section 4.108-1 of RR No. 7-95 — specifically, the invoices failed to indicate that petitioner was a VAT-registered entity and did not bear the word "zero-rated." The CTA En Banc affirmed this ruling in toto on 18 November 2008, finding no cogent reason to disturb the Division's findings.

• Statutory Compliance: Petitioner argued that it had complied with the statutory requirements for claiming a refund of excess and unutilized input VAT under Section 112(A), in relation to Section 106(A)(2)(A)(1) of the Tax Code, and that compliance with invoicing requirements is not a condition precedent for such a claim.
• No Nullification of Zero-Rating: Petitioner maintained that nothing in the Tax Code or RR No. 7-95 states that failure to comply with invoicing requirements will nullify the VAT zero-rating of an export sale under Section 106(A)(2)(A)(1).
• Intel Case Precedent: Petitioner contended that, based on the Supreme Court's ruling in the Intel case, failure to indicate the words "TIN-V" and "zero-rated" on invoices covering export sales is not fatal to a taxpayer's claim for refund of excess input VAT.
• Invalidity of RMC No. 42-03: Petitioner argued that Revenue Memorandum Circular No. 42-03 is invalid because it overrides the clear provision of the Tax Code.

• Jurisdiction and Prescriptive Period: Whether the CTA acquired jurisdiction over petitioner's judicial claim for refund of unutilized input VAT for taxable years 2002 and 2003, in light of the mandatory 120+30 day prescriptive periods under Section 112 of the NIRC as settled in Commissioner of Internal Revenue vs. San Roque Power Corporation.
• Invoicing Requirements: Whether petitioner's failure to imprint the word "zero-rated" and to indicate its VAT-registered status on the sales invoices covering its zero-rated export sales is fatal to its claim for refund or issuance of a TCC representing unutilized input VAT.

• Jurisdiction and Prescriptive Period: No, in part. The CTA did not acquire jurisdiction over the judicial claim for taxable year 2002, which was filed on 30 March 2004 — beyond the thirty-day period from the expiration of the 120-day period for CIR inaction. The CTA did acquire jurisdiction over the claim for taxable year 2003, because the administrative claim fell within the effectivity of BIR Ruling No. DA-489-03 (10 December 2003 to 5 October 2010), which served as an exception to the mandatory 120+30 day periods.
• Invoicing Requirements: Yes, the omission is fatal. The absence of the word "zero-rated" on invoices covering zero-rated sales, and the failure to indicate VAT-registered status, are fatal to a claim for refund of unutilized input VAT, pursuant to Section 4.108-1 of RR No. 7-95 and Section 113 of the NIRC of 1997, as amended.

• Jurisdiction and Prescriptive Period: Section 112(D) of the NIRC of 1997, as amended, provides that the CIR has 120 days from submission of complete documents to decide an administrative claim for refund or tax credit, and that the taxpayer may appeal the CIR's decision or inaction to the CTA within thirty days from receipt of the decision or from expiration of the 120-day period. The Supreme Court sitting En Banc in Commissioner of Internal Revenue vs. San Roque Power Corporation settled that strict compliance with the 120+30 day periods is mandatory and jurisdictional, whether before, during, or after the effectivity of the Atlas doctrine, with the sole exception of claims made during the effectivity of BIR Ruling No. DA-489-03 (10 December 2003 to 5 October 2010). Applying this framework, petitioner's administrative claim for taxable year 2002 was filed on 24 February 2003, and complete documents were submitted simultaneously. The 120-day period expired on 24 June 2003, giving petitioner until 24 July 2003 to file its judicial claim. Petitioner, however, filed its Petition for Review with the CTA only on 30 March 2004 — more than eight months late. Petitioner's attempt to treat its 25 March 2004 letter as an amendment of its 2002 administrative claim was rejected: both the 24 February 2003 letter and the 25 March 2004 letter relied on the same figures reflected in the VAT returns for 2002, and the Transmittal Receipt attached to the 24 February 2003 letter showed that complete supporting documents, including the VAT return, had already been submitted. The 25 March 2004 letter therefore could not reset the prescriptive period for the 2002 claim. For taxable year 2003, the Court allowed the amendment of the administrative claim because the 25 March 2004 letter stated that amended quarterly VAT returns had been filed on 12 March 2004, constituting a valid justification for amendment consistent with the ruling in San Roque. The 120+30 day periods thus commenced on 25 March 2004. However, even without strict compliance, the 2003 administrative claim fell within the effectivity of BIR Ruling No. DA-489-03, under which the taxpayer-claimant need not wait for the lapse of the 120-day period before seeking judicial relief. The CTA accordingly acquired jurisdiction over the 2003 claim.

• Invoicing Requirements: Section 4.108-1 of RR No. 7-95, issued by the Secretary of Finance on 9 December 1995 and effective 1 January 1996, expressly requires that the word "zero-rated" be imprinted on invoices covering zero-rated sales. This regulation proceeds from the rule-making authority of the Secretary of Finance under Section 245 of the 1977 NIRC and is reasonable and in accord with the efficient collection of VAT. The requirement prevents buyers from falsely claiming input VAT from purchases when no VAT was actually paid; absent the word "zero-rated," a successful claim for input VAT would result in the government refunding money it did not collect. Section 113 of the NIRC of 1997, as amended, independently requires that a VAT-registered person's invoices contain a statement that the seller is a VAT-registered person, followed by his TIN. In Panasonic Communications Imaging Corporation of the Philippines vs. Commissioner of Internal Revenue, the Court held that the absence of the word "zero-rated" on invoices covering zero-rated sales is a ground specifically included in the enumeration of required invoice contents, and the BIR correctly denied the claim for refund on that basis. The provisions of Sections 113 and 237 of the NIRC and Section 4.108-1 of RR No. 7-95 are clear and unambiguous, admitting no room for interpretation but merely application. Because petitioner's invoices neither bore the word "zero-rated" nor indicated that it was a VAT-registered entity, its claim for refund of unutilized input VAT attributable to zero-rated sales for taxable year 2003 was denied.

• 120+30 Day Mandatory and Jurisdictional Periods for VAT Refund Claims — Under Section 112 of the NIRC of 1997, as amended, a VAT-registered taxpayer whose sales are zero-rated or effectively zero-rated may, within two years after the close of the taxable quarter when the sales were made, apply for a TCC or refund of creditable input tax. The CIR has 120 days from submission of complete documents to decide the claim. If the CIR fails to act within the 120-day period, the taxpayer has thirty days from the expiration of that period to appeal to the CTA. Strict compliance with the 120+30 day periods is mandatory and jurisdictional. The sole exception is for claims made during the effectivity of BIR Ruling No. DA-489-03 (10 December 2003 to 5 October 2010), during which taxpayers could rely on the ruling's statement that they need not wait for the lapse of the 120-day period before filing a judicial claim. In this case, the 2002 judicial claim was filed beyond the 30-day window, depriving the CTA of jurisdiction; the 2003 claim fell within the exception period, conferring jurisdiction.

• Strict Compliance with Invoicing Requirements for Zero-Rated Sales — Section 4.108-1 of RR No. 7-95 requires that the word "zero-rated" be imprinted on invoices covering zero-rated sales. Section 113 of the NIRC of 1997, as amended, requires that invoices issued by VAT-registered persons contain a statement that the seller is a VAT-registered person, followed by his TIN. Failure to comply with these invoicing requirements is fatal to a claim for refund or tax credit of unutilized input VAT attributable to zero-rated sales. The rationale is that the appearance of the word "zero-rated" on invoices prevents buyers from falsely claiming input VAT when no VAT was actually paid, and helps segregate sales subject to VAT from those that are zero-rated.

• Amendment of Administrative VAT Refund Claims — An administrative claim for VAT refund may be validly amended where amended quarterly VAT returns are filed, justifying a corresponding amendment of the refund claim. This is consistent with the Court's ruling in Commissioner of Internal Revenue vs. San Roque Power Corporation. However, a subsequent letter will not be treated as an amendment where both the original and subsequent letters rely on the same VAT returns and supporting documents, and complete documents were already submitted with the original claim.

• "Thus, strict compliance with the 120+30 day periods is necessary for such a claim to prosper, whether before, during, or after the effectivity of the Atlas doctrine, except for the period from the issuance of BIR Ruling No. DA-489-03 on 10 December 2003 to 6 October 2010 when the Aichi doctrine was adopted, which again reinstated the 120+30 day periods as mandatory and jurisdictional." — This passage, quoted from Commissioner of Internal Revenue vs. San Roque Power Corporation, states the controlling rule on prescriptive periods for VAT refund claims and defines the sole exception based on BIR Ruling No. DA-489-03.

• "The appearance of the word 'zero-rated' on the face of invoices covering zero-rated sales prevents buyers from falsely claiming input VAT from their purchases when no VAT was actually paid. If, absent such word, a successful claim for input VAT is made, the government would be refunding money it did not collect." — This passage, quoted from Panasonic Communications Imaging Corporation of the Philippines vs. Commissioner of Internal Revenue, articulates the rationale for the invoicing requirement and is the canonical formulation of why the absence of "zero-rated" is fatal to a VAT refund claim.

• "For this reason, failure of petitioner to observe the 30-day period under Section 112 of the NIRC of 1997, as amended, through its belated filing of the Petition for Review before the CTA warrants a dismissal with prejudice for lack of jurisdiction." — This passage applies the 120+30 day rule to the 2002 claim and states the consequence of non-compliance: dismissal for lack of jurisdiction.

• "If the court has no jurisdiction over the nature of an action, its only jurisdiction is to dismiss the case. The court could not decide the case on the merits." — This passage states the fundamental principle that jurisdiction over the subject matter is conferred only by law and cannot be cured by consent or waiver, and that a court without jurisdiction may only dismiss.

• Commissioner of Internal Revenue vs. San Roque Power Corporation, G.R. Nos. 187485, 196113, and 197156, 12 February 2013, 690 SCRA 336 — Controlling precedent. The En Banc ruling settled the proper interpretation of Section 112 of the NIRC on the 120+30 day mandatory and jurisdictional periods for VAT refund claims, and established the BIR Ruling No. DA-489-03 exception. The Court applied its framework to determine jurisdiction over petitioner's claims for taxable years 2002 and 2003.

• Mindanao II Geothermal Partnership vs. Commissioner of Internal Revenue, G.R. Nos. 193301 and 194637, 11 March 2013, 693 SCRA 49 — Followed. The Second Division applied the San Roque ruling and provided a summary of rules on prescriptive periods for VAT refund claims, which the Court adopted as the framework for analyzing petitioner's claims.

• Panasonic Communications Imaging Corporation of the Philippines vs. Commissioner of Internal Revenue, G.R. No. 178090, 8 February 2010, 612 SCRA 28 — Followed. Established that the absence of the word "zero-rated" on invoices covering zero-rated sales is fatal to a claim for tax refund, as the requirement is specifically enumerated in Section 4.108-1 of RR No. 7-95.

• Hitachi Global Storage Technologies Philippines Corp. vs. Commissioner of Internal Revenue, G.R. No. 174212, 20 October 2010, 634 SCRA 205 — Cited in support of the Panasonic ruling on the invoicing requirement for zero-rated sales.

• Section 112(A) and (D), NIRC of 1997, as amended — Governs refunds or tax credits of input tax for zero-rated or effectively zero-rated sales. Subsection (A) allows a VAT-registered person to apply for a TCC or refund within two years after the close of the taxable quarter when the sales were made. Subsection (D) (later renumbered as Section 112(C) upon the effectivity of RA No. 9337) requires the CIR to decide within 120 days from submission of complete documents, and allows the taxpayer to appeal to the CTA within thirty days from receipt of the denial or from expiration of the 120-day period. Applied to determine the timeliness and jurisdictional validity of petitioner's judicial claims.

• Section 113, NIRC of 1997, as amended — Prescribes invoicing requirements for VAT-registered persons, requiring that invoices state that the seller is a VAT-registered person followed by his TIN, and indicate the total amount paid with an indication that it includes VAT. Applied to hold that petitioner's invoices were deficient for failing to indicate VAT-registered status.

• Section 237, NIRC of 1997, as amended — Sets forth general invoicing requirements referenced in Section 113. Cited together with Section 113 as the statutory basis for mandatory invoicing requirements.

• Section 4.108-1, Revenue Regulations No. 7-95 — The Consolidated VAT Regulations, issued 9 December 1995, effective 1 January 1996. Requires, among other things, that the word "zero-rated" be imprinted on invoices covering zero-rated sales. Applied as the controlling rule rendering petitioner's invoices non-compliant and its refund claim for taxable year 2003 fatally deficient.

• Sections 7 and 11, RA No. 1125, as amended by RA No. 9282 — Define the appellate jurisdiction of the CTA and the period within which appeals may be taken (thirty days from receipt of the decision or from expiration of the period fixed by law for action). Cited to establish the jurisdictional framework for judicial claims before the CTA.

Antonio T. Carpio (Chairperson), Arturo D. Brion, Mariano C. Del Castillo, and Estela M. Perlas-Bernabe concurred with the decision of Justice Jose Portugal Perez.