CBK Power Company Limited vs. Commissioner of Internal Revenue

DECISION

COTANGCO-MANALASTAS, .1. :

THE CASE

This resolves the consolidated Petitions for Review both filed by CBK Power Company Limited on April 23, 2008 and July 24, 2008, pursuant to Section 11 oft-- 146

DECJSION

CTACaseNos. 777 1 & 78 14 CBK POWER COMPANY LiMITED vs. ClR

Page 2 of 28

Republic Act No. 1125 (R.A.l l 25), as amended by Section 9 of R.A. No. 9282, and Section 3(a), Rule 8 offhe 2005 Revised Rules ofthe Court ofTax Appeals (RRCTA), praying for the issuance of tax credit certificates (TCCs) allegedly representing its unutilized input Value Added Taxes (VAT). For CTA Case No. 7771 filed on April 23, 2008, the amount of SEVEN MILLION FIVE HUNDRED FIFTY NINE

THOUSAND

NINE

HUNDRED

FORTY

THREE

AND

44/100

PESOS

(P7,559,943.44) representing unutilized input VAT paid on its domestic purchases of goods and services, which are attributable to zero-rated sales for the period January 1, 2006 to March 31, 2006; 1 and for CTA Case No. 78 14 filed on July 24, 2008, the amount of THIRTY SIX MILLION TWO HUNDRED FORTY SIX THOUSAND SIX HUNDRED SIX AND 281100 PESOS (P36,246,606.28), representing unutilized input VAT paid on its domestic purchases of goods and services, which are attributable to zero-rated sales for the period April 1, 2006 to December 31, 2006.2

TilE PARTIES

Petitioner is a partnership duly organized and existing under and by virtue of the laws of the Philippines, with principal office at the NPC Compound, Kalayaan, Laguna.

Respondent, on the other hand, is the Commissioner of Internal Revenue, who is charged with the authority to act as such, including inter alia, the power to decide and grant refunds or tax credit or erroneously or illegally collected internal revenue taxes, as provided by law, with offi ce at the Bureau of Internal Revenue (BTR) ~ 1 Rollo, pp. 1- 111, Petition for Review for CT A Case No. 777 I 2 Rollo, pp. 4 18-429, Petition for Review for CTA Case No. 781 4 14 7

CT A Case Nos. 7771 & 78 14 CBK POWER COMPANY LJMJTED vs. C!R

National Office Building, Diliman, Quezon City, where he may be served with summons and other court processes. 3

TilE FACTS

The facts of the case, as culled from the records, are as follows: Petitioner is a special purpose entity, the sole purpose of which is to engage in all aspects of (a) design, fi nancing, construction, testing, commissioning, operation, maintenance, management and ownership

of Kalayaan

II

pumped-storage hydroelectric power plant, the new Caliraya Spillway, and other assets located in the

Province

of Laguna, and (b) rehabilitation, upgrade, expansion, testing, commi SSiomng, operation, maintenance and management of the Caliraya, Botocan and Kalayaan I hydroelectric power plants and their related fac ilities, located in the Province of Laguna.

It generates electricity through its Caliraya, Botocan, and Kalayaan I hydroelectric power plants, as well as from the Kalayaan II hydroelectric power plant.

4 Petitioner is registered as a VAT entity, with TIN/VAT No. 205-760-474-000, 111 accordance with the Tax Code, as amended. It was issued BTR Certificate of Registration OCN 1 RC0000050243 , dated April 10, 2000, by BTR Revenue District Office No. 55 (San Pablo City, Laguna), which was updated on May 11 , 2005. As a consequence thereof, petitioner was issued BTR Certificate of Registration OCN 1 RCOOOO 195405.5 Petitioner was also issued by the Energy Regulatory Commission the following Certificates of Compliance: (1) COC No. 04-02-GXT49A-0050, dated,.L--- 3 Rollo, p. 230, Pars. I and 2, Facts Admitted, Joint Stipulation of Facts and Issues (JSFI) 4 Pars. 5 and 9, Facts Admitted, JSFI, Rollo, pp. 23 1-232 ) Par. 6, Facts Admitted, JSFT, Rollo, p. 23 1 148

CTA Case Nos. 777 1 & 78 14 CBK POWER COMPAN Y LIMITED vs. CJR

April 11 , 2007; (2) COC No. 04-02-GXT49B-0051, dated February 4, 2004; (3) COC No. 04-02-GXT49C-0052, dated February 4, 2004; and (4) COC No. 05-10-GN12- 13354- 13373, dated April 11 , 2007.6 On March 17, 2006, BIR issued BIR Ruling No. DA- 146-2006, confirming petitioner's claim that as an entity engaged in hydropower generation, its billings/fees for the sale of electricity to NPC are subject to VAT at zero percent (0%) rate, under Section 108 (B)(7) ofthe Tax Code of 1997, as amended by Republic Act 933 7 (R.A. 9337)7 For the period January I, 2006 to December 31, 2006, petitioner fil ed with the BIR its Monthly VAT Declarations and Quarterly VAT Returns. Petitioner filed its Original Quarterl y VAT Returns for the fi rst, second, third, and fourth quarters of Calendar Year (CY) 2006 and Amended Quarterly VAT Returns for the four quarters of CY 2006 on the following dates:g -.,., ...... ,,., ~~~M~-;;~~ >a;m,·-aw''n·mwrw+·-lifm·" Mtil?w~wwwn m i""'""'''~"~~-~---·-·~~~·-•-··~"·~~·m•••••n••-~•·~~-·;•••--nnnnnn-" · ••--·-'"''"''"'"'""''""""""'"''"-'"'""""''"'""m"''' '' ·•-· ''"'' "' '''"""'''''''"'"·•••- •••••-•" """" nn- --- ------·-·-•-"•'"' 2006

Amended VAT Retum

J~~ble Q .. !!!!!!!!..L .. -*_ , - 1,12~JY.e.!!l,.. ... .., .... L..,__. , ~.Q~J!ledl. __ ·-- -- 1-st · ·· -·-· --· .. April 2s·:·2oo6 .....

··-----·---··o~~;~ be t :·2 8 :2·o o·7 ·· ....

2"d ...,rd .)

tl th July 25, 2006 October 20, 2006 January 2tl , 2007 6 Par. I 0, Facts Admitted, JSFI, Rollo, p. 232 7 Par. II , Facts Admitted, JSFI, Rollo, pp. 232-233 8 Pars. 7-8, Facts Admitted, JSFI, Rollo, pp. 23 1-232 149 March 31, 2008 April 18, 2008 May 7, 2008 July 21, 2008 -~

CIA Case Nos. 777 1 & 78 14 CBK POWER COMPAN Y LiMi TED vs. CJR

Petitioner's Amended Quarterly VAT Returns for the four quarters of CY 2006 reflected/reported the following input tax credits: 9 -¥------~------·-----~----·-·-·-c:::r::,-;;;;.::::::::::.::::;;;:.;:.;.:o:=·-=z;:::-.;;;.::.;;=::;..~ -:;,::::,..~--:.:..-..;..:;,::.::.:::.:::::::z~--'.;;;.-:-:;:_--:;:.===':'.':;;;;::,;..;:::-.:;;:::.------ .

--·----- - --- ·------------ JnpUt Tax Credits for the pel"iod Janua1·y 1 to December 31,2006

Taxable

Capital

Purchases !

of Goods

Purchase of I Rendered

Tax Credits

1

Quarte1·

Goods

of Goods I Other than

Services

I

by Non-

!

P 1Million

Capital l

Goods

I

exceeding Other than !

Capital l ! Residents

I

I

:

3 2,998;166. 11 I ,1\25,01 9.73 ! 810,906.00 I 0,92 1,51\ 1.86 I 302,627. 11\ 16,1\58,560.81\ -- -----.- ----·-- ---- +-.. -..

-··· -------· ----·- ·- -- +· .•. --'-----+---'----'·--- 1\'h !

I

344,377.46 1,620,670.63 I 654,763.oo 8,586,528.36 I 1,6o8,644.9o 12,814,984.35 -·-t----"--- .

'- -·- ··-· --- ---- -~- ----...

TOTAL

I

~ i j 6,559,893. 1 o -~~~p4. 8~...L J l.l ?4 , ?2.~ : oo 29 ,4 ~2z.0 ~4_.7Q_L4, 0 ?_9..;~62 . 08 __ ,~2t~!Zt~l~:2.2 . Also, based on the Amended Quarterly VAT returns for the Period January 1 to December 31, 2006, petitioner's reported zero-rated sales during the period are as follows 10:

"in -M-w Pii"':o~~__.~-.J!ii~fMir-·1Xf'P'!Wwm Z ero-Rated Sales for the period J anuary 1 to December 3l-, 2006 l !

1------········------------l-·· -· -----·-·--------·--------- ------ - -·"-----j

2006 Taxable Quarte1·

Zuo-Rated Sales/ Receipts

1 1 s.

--2_ r id -~ --- ..

------- 3ra 4th

TOTAL

~5 8 3_, 3~~!1Q7 .1\ 6- _1~4 8 , 748,033 ._5_2_ 1,599,882,354.64 I ,51\ 7,858,529.27 6,379,879,324.87 ' :: ~·. :::_: ~--::: :..-.· .. ~·:. :. ·: ': ~-~ ::: ·;: . :. ·.:~ · .. ·:.'' :.;·''' ·;:; _, .... ' ·;' ·;;;;;: .. ~-~-. -.~:~·::::~- ·_. ~ ... ·;, . ~-:.•:::: .' :;:;~-~-:.::::: ~ '.': :.~: :::~';:. ·.-:.. Out of the total input tax reported in the Amended Quarterly VAT returns for the period January 1 to December 31,2006, amounting to P49,347,433.70, petitioner is seeking issuance of TCCs for a total amount of P43,806,549. 72 (i.e. P7,559,943.44 f or CTA Case No. 7771, and P36,246,606.28f or CTA Case No. 7814) /--- 9 Exhibits " H- I" to " H- 10"

10 Supra Note 8

150

I(

CTA Case Nos. 7771 & 7814 CBK POWER COMPANY LIMITED vs. CJR

On March 31 , 2008, petitioner filed its administrative claim 11 with the BIR RDO No. 55 of Laguna for the issuance of a TCC in the total amount of P7,559,943.44, representing its unutilized input taxes for the period January 1, 2006 to March 31, 2006, pursuant to Section 112 (A) of the NIRC of 1997, as amended by R.A. 933712 Since respondent has not issued its final decision on the above administrative claim, petitioner filed on April 23, 2008 a Petition for Review 13 with this Court, docketed as CT A Case No. 7771, alleging inaction of respondent. 14 In his Answer 15 , respondent alleged by way of special and affirmative defenses that:

"5. Petitioner's alleged claim for the issuance of a tax credit certificate is subject to administrative investigation /examination by respondent's Bureau;

6. Petitioner failed to demonstrate that the tax subject of the case at bar was erroneously or illegally collected;

7. Taxes collected are presumed to be in accordance with laws and regulations;

8. Petitioner's judicial claim for the issuance of a TAX CREDIT CERTIFICATE was prematurely filed in view of Section 112 (C) of the 1997 National Internal Revenue Code (1997 NIRC ), as amended, which provides that:

' Section 11 2. Refunds or Tax Credits of Input Tax - (C) 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 fi'om the date (~f submission of complete documents in support of the application filed in accordance with Subsection (A) hereof. ~

11 Exhibit "A"

12 Par. 12, Facts Admitted, JSFI , Rollo, p. 235 13 Rollo, pp. 1-1 !J 14 Par. I!J , Facts Adl'nitted, JSFI , Rollo, p. 235 1 ' Rollo, pp. 156-162 151

DEClSJON

CTA Case Nos. 777 1 & 78 14 CBK POWER COMPANY LIMITED vs. CfR

Page 7 of28

In case of f ull 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, vvilhin 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.' (Italics supplied) Hence, when the petitioner filed its administrative claim for the issuance of a TAX CREDIT CERTIFICATE with the BIR Revenue District Office No. 55 of Laguna on 31 March 2008, respondent had 120 days within which to decide on petitioner's claim for the issuance of a TAX CREDiT CERTIFICATE. And in the case of full or partial denial of the claim or failure of respondent to act on the application within the 120 day period, petitioner has 30 days to appeal the decision or inaction with the Court of Tax Appeals. Thus, respondent had to render a decision within 120 days from 31 March 2008 or until 29 July 2008. In the event that respondent failed to act upon petitioner's claim for the issuance of a tax credit certificate, petitioner has 30 days from 29 July 2008 or until 28 August 2008 to appeal the unacted claim with the Court of Tax Appeals.

Petitioner filed the instant Petition for Review with the Court of Tax Appeals on 23 April 2008, more than fo ur ( 4) months before the lapse of the period allowed by law to file the judicial claim for the issuance of a tax credit certificate with the Court of Tax Appeals.

In the case at bar, petitioner seeks the issuance of a tax credit certificate representing its alleged unutilized input taxes. Thus, petitioner can appeal to this Honorable Court only after the expiration of the 120-day period granted by law or within 30 days from the decision of respondent denying its claim for tax credit. This being so, this Honorable Court has no jurisdiction to act on the instant Petition for Review.

9. Assuming in gratia argumenti that petitioner's judicial claim for the issuance of a tax credit certificate was not prematurely fi led, it is imperative for petitioner to prove compliance with the following, viz:

a. The registration requirements of a value-added taxpayer under the pertinent provision of the 1997 NIRC, as amended, and its implementing revenue regulations; .

b. The invoicing and accounting requirements for VAT registered persons, as well as the filing and payment of VAT pursuant to the provisions of Section 11 3 and 11 4 of the 1997 NIRC, as amended.

Failure to comply with the invoicing requirements on the documents supporting the sale of goods and services will result in the disallowance of the claim forAl-- 15 2

CTA Case Nos. 7771 & 7814 CBK POWER COMPANY LIMiTED vs. CJR input tax of the taxpayer claimant (Revenue Memorandum Circular No. 42-2003);

c. The submission of complete documents in support of the administrative claim for refund pursuant to Section 11 2 (C) of the 1997 NIRC, as amended, otherwise, there wo uld be no sufficient compliance with regard to the filing of administrative claim for tax credit/refund which is a condition sine qua non prior to the filing of judicial claim in accordance with Section 229 of the 1997 NIRC, as amended;

d. That the input taxes of P7,559,943.44 allegedly representing unutilized input VAT from its local purchases and/or importation of goods and services and payments for services rendered by non-residents, other than capital goods, and purchases of capital goods, were:

i. paid by the petitioner; ii. attributable to its zero-rated or effectively zero-rated sales; and iii. such input taxes paid should not have been applied against any output tax;

e. That petitioner's claim for tax credit or refund of the unutilized input tax (VAT) in the amount of P7,559,943.44 was filed within two (2) years after the close of the taxable quarter when the sales were made in accordance with Section 112 (A) ofthe 1997 NlRC, as amended;

f. That petitioner has complied with the governing rules and regulations with reference to recovery of tax erroneously or illegally colleted as explicitly provided in Sections 11 2 (A) and 229 of the 1997 NTRC, as amended.

I 0. Moreover, in an action for tax credit/refund, the burden of proof rests upon the taxpayer to establish by sufficient and competent evidence its entitlement to a claim for tax credit/refund;

11. Basic is the rule that tax refunds are in the nature of tax exemptions and are to be construed strictissimi juris against the entity claiming the same (Philippine Geothermal, Inc., vs. Commissioner of Internal Revenue, G.R. No. 154028, July 27, 2005). Moreover, statutes in derogation of sovereignty such as those containing exemption from taxation should be strictly construed in favor of the State.

In this regard, taxation is the rule and exemption is the exception. The law does not look with favor on tax exemptions and that he who would seek to be thus privileged must justify it by words too plain to be mistaken and too categorical to be misinterpreted (Sea- Land Services, Inc. vs. Court ojAppeals, 357SCRA -144)~ 153

DE CISlO

CTACaseNos. 777 1 & 781 4 CBK POWER COMPANY LiMITED vs. C!R

On July 23, 2008, petitioner fi led with the BIR RDO No. 55 of Laguna an administrative claim 16 fo r the issuance of a TCC for the total amount of P36,246,606.28, representing its unutilized input taxes for the period April 1, 2006 to December 31, 2006, pursuant to Section 1 12 (A) of the NIRC of 1997, as amended by R.A. 9337. 17 On July 24, 2008, petitioner filed a Petition for Review 18 with this Court, docketed as CT A Case No. 7814, in order to toll the running of the two (2) year . .

. d 19 prescnpt1ve pen o .

In his Answer filed on September 18, 2008, respondent alleged by way of special and affirmative defenses that:

"5. Petitioner's claim for tax refund is subject to administrative investigation/examination by respondent;

6. Taxes remitted to the BIR are presumed to have been made in the regular course of business and in accordance with the provision of law;

7. To supp011 its claim, it is imperative for petitioner to prove the following, viz:

16 Exhibit "B"

a. The registration requirements of a value-added taxpayer in compliance with the pertinent provision of the National Internal Revenue Code of 1997 ( 1997 NIRC), as amended, and its implementing revenue regulations;

b. The invoicing and accounting requirements for VAT- registered persons, as well as the filing and payment of VAT pursuant to the provisions of Section I 13 and 114 of the 1997 NIRC, as amended;

c. Proof of compliance with the submission of complete documents in support of the administrative claim for refund~ 17 Par. 13, Facts Admitted, JSFI, Rollo, p. 235 18 Rollo, pp. 11 18-1129 19 Par. 14, Facts Admitted, JSFI, Rollo, p. 235 154

CTA Case Nos. 777 1 & 78 14 CBK POWER COMPANY LIMITED I'S. CJR pursuant to Section 11 2 (C) of the 1997 NIRC, as amended, otherwise there \Vould be no sufficient compliance with the filing of administrative claim for refund which is a condition sine qua non prior to the filing of judicial claim in accordance with Section 229 of the 1997 NIRC, as amended.

d. That the input taxes of Php36,246,606.28 representing unutilized input tax (VAT) from its local purchases and /or importation of goods and services and payments for services rendered by non-residents, other than capital goods for the period April I, 2006 to December 31, 2006 were: d.i paid by the petitioner;

d.ii. attributable to its zero-rated or effectively zero- rated sales; and d.iii. such have not been applied against any output tax;

e. That petitioner's claim for tax credit or refund of the unutilized input tax (VAT) was filed within two (2) years after the close of the taxable qumier when the sales were made in accordance with Section 11 2 (A) of the 1997 NIRC, as amended;

f. That petitioner's domestic purchases and/or importation of goods and services, payment for services rendered by non- residents and capital goods were made in the course of its trade or business, properly supported by VAT invoices and/or official receipts and other documents, such as subsidim·y purchase journal, showing that it actually paid VAT in accordance with Sections 11 0 (A) (2) and 11 3 of the 1997 NIRC, as amended and in pursuance to Section 4.1 04-S(a) & (b) of Revenue Regulations No. 7-95 (Re: Substantiation of Claims for Input Tax Credit);

g. That petitioner has complied the requirements as enumerated under Section 4. 104-2 of the Revenue Regulations 7-95 (Re: persons who can avail of the Input Tax Credit).

8. In an action for refund, the burden of proof is on the taxpayer to establish its right to refund and failure to sustain the burden is fatal to the claim for tax refund/credit. This is so because exemptions from taxation are highly disfavored in law and he who claims exemptions must be able to justify his claim by the clearest grant of organic or statutory law.

An exemption from common burden cannot be permitted to ex ist upon vague implications;

9. The claims for refund are construed strictly against the claimant for the same partakes the nature of exemption from taxation and liberally in favor of the taxing authority.'Y" 155

DECISION

CTA Case Nos. 777 1 & 78 14 CBK POWER COMPANY LiMiTED vs. CJR Page ll of 28 On October 20, 2008, petitioner fi led a Motion for Consolidation of Cases2·0 praying for the consolidation ofCTA Case No. 781 4 with CTA Case No. 7771 , which the Court granted in a Resolution7 1 dated November 27, 2008. The parties filed their Joint Stipulation of Facts and Issues?.? on February 2, 2009, which was approved by this Court in a Resolution dated February 9, 2009, thus the Pre-Trial was terminated and the parties were ordered to proceed with the trial on the merits.

During the hearing held on April 1, 2009, Mr. Fernando J. Dela Paz, Chief Financial Officer of the petitioner, testified on direct examination by way of affidavit, he affirmed the veracity of the declarations made in his affidavit and identification of Exhibits "A" to "E-3", inclusive of all submarkings. Considering the absence of the respondent's counsel despite notice, and as moved by petitioner's counsel, the right of the respondent's counsel to cross-examine Mr. DeJa Paz was declared by this Court as deemed waived. In the same hearing, the petitioner's Motion to Commission Mr. Edwin F. Ra.n1os of Constantino Guadalquiver & Company, as the Independent Certified Public Accountant (CPA) who will conduct the audit and verification of the aforesaid official receipts, invoices and other pertinent documents, was granted.73 On July 24, 2009, Mr. Edwin F. Ramos, commissioned Independent CPA to conduct the independent special audit and examination of petitioner's voluminous documents, submitted his Sworn Statemene 4 .

The testimony of Mr. Ramos was taken during the hearing held on July 29, 2009, where he affinned the veracity of his,..L. 20 Rollo, pp. 185-188 2 1 Rollo, p. 19!1 22 Rollo, pp. 229-23 9 23 Minutes of the hearing held by the Second Division on April I, 2009; Rollo, p. 28 1 24 Rollo, pp. 302-3 ll 156

CTA Case Nos. 777 1 & 78 14 CBK POWER COMPANY LJMJTED vs. CIR declarations in his Sworn Statement and identification of Exhibits "G" to "W, "Y" and "AA", inclusive of all sub-markings.25 Petitioner filed its Formal Offer of Evidence26 on October 26, 2009, offering Exhibits "A" to "BB-1 ", inclusive of all submarkings. The exhibits were all admitted by the Court in a Resolution27 dated November 25, 2009. On April 21, 20 I 0, counsel fo r respondent manifested that he will no longer present any witness and that he is resting his case, thus, the parties were ordered to file their respective Memoranda, within thirty (30) days or until May 2 1, 201 0; afterwhich, the cases shall be deemed submitted for decision.28 Considering petitioner's Memorandum 29 fil ed on May 17, 2010, and the Report30 of the Judicial Records Division dated June 3, 20 l 0 that respondent failed to file his memorandum despite due notice, the cases were deemed submitted for decision on June 7, 2010.3 1

TilE ISSUES

Following are the issues, as stipulated upon by the parties, for this Court's resolution:

"1. Whether or not Petitioner's administrative and judicial claims for the issuance of tax credit certificates were filed on time;

2. Whether or not Petitioner is registered as a value-added taxpayer pursuant to the provisions of the 1997 NIRC, as amended;

3. Whether or not Petitioner has complied with the invoicing and accounting requirements for VAT-registered persons, as well as the -L 25 Minutes of the hearing held by the Second Division on July 29, 2009; Rollo, p. 3 12 26 Rollo, pp.323-335 27 Rollo, pp. 3119-350 28 Minutes of the hearing held by the Second Division on April 2 I, 20 I 0; Rollo, p. 357 29 Rollo, pp. 360-!1 13 30 Rollo, p. !I l 3 1 Rollo, p. 4 17, Resolution dated June 7, 20 l 0. 15 7 ,/

CIA Case Nos. 777 1 & 78 14 CBK POWER COMPANY LIMiTED vs. CJR filing and payment of VAT pursuant to the provisions of Sections 11 3 and 11 4 of the 1997 NlRC, as amended;

4. Whether or not Petitioner has submitted complete documents in support of its administrative claims for the issuance of tax credit certifi cates pursuant to Section 11 2(C) of the 1997 NIRC, as amended;

5. Whether or not the alleged input taxes in the amount of P43,806,549.72 representing unutilized input VAT from local purchases and/or importation of goods and services and payments for services rendered by non-residents and purchases of capital goods were:

i. paid or incurred by Petitioner; ii. attributable to its zero-rated sales or effectively zero-rated sales;

iii. such input taxes paid or incurred should not have been applied against any output tax;

6. Whether or nol the input taxes claimed were carried over to the succeeding quarter or quarters in Petitioner's VAT returns;

7. Whether or not Petitioner is entitled to the issuance of tax credit certificates in the amount of P43,806,549.72 allegedly representing unutilized input VAT from local purchases and/or importation of goods and services and payments for services rendered by non- residents and purchases of capital goods for the period January 1, 2006 to December 31, 2006.

The above issues revolve around the principal issue of whether petitioner is entitled to the issuance of TCCs in the total amount of P43,806,549.72, representing unuti lized input VAT on local purchases and/or importation of goods and services and payments for services rendered by non-residents and purchases of capital goods attributable to its zero-rated sales for the period January I, 2006 to December 31, 2006.

Arguments o(Petitioner CBK Power Companv Limitett 12 In this present Petitions for Review, petitioner CBK Power Company Limited maintains that its administrative and judicial claims for the issuance of TCCs for 32 Memorandum for the Petitioner, Rollo, pp. 360-4 13 tf--· 158

DEClSlON

CTA Case Nos. 777 1 & 7814 CBK POWER COMP...J.NY LIMiTED vs. C/R

Page 14 of28

unutilized input taxes for the period January 1, 2006 to December 31, 2006, were seasonably filed citing Section 229 of the NIRC of 1997, as amended, which provides for the two-year period for judicially claiming tax refund/credit, and argued that the case of Atlas Consolidated Mining and Development C01poration v. Commissioner of Internal Revenue 33 ("Atlas case") is the applicable jurisprudence in the pending petitions. Considering that the Atlas case was the prevailing jurisprudence at the time 'the subject administrative and judicial claims were filed, petitioner fo llowed in good faith the doctrine enunciated therein that the two-year prescriptive period for filing a claim for refund/credit of input VAT on zero-rated sales and input tax on capital goods should be counted from the date of filing of the VAT return and payment of the tax due.

The case of Commissioner of Internal Revenue v. Mirant Pagbilao Corporation (Formerly Southern Energy Quezon, Inc./_, ("Mirant case") should be given prospective application fo llowing the principle of prospectivity of statutes. With regard to the second issue, petitioner contends that it is a value-added taxpayer pursuant to the provisions of the Tax Code of 1997, as amended. In the Joint Stipulation of Facts and Issues (JSFI)35 filed by both parties on February 2, 2009, respondent had admitted that petitioner is registered as a VAT entity in accordance with the Tax Code of 1997.

As regards the remaining issues, which all boil down to the issue of whether or not petitioner is entitled to the issuance of TCCs, petitioner asserts that it had sufficiently proven and substantiated that it has complied with all the basic requirements in order to be entitled to the issuance of TCCs in the amount of P43,806,549.72 representing unutilized input VAT from local purchases and/o~ 33 G. R. Nos. 111 11 011 & 111 8763, June 8, 2007 ' 4 , G.R. No. 172 129, September 12, 2008 3) Rollo, pp. 229-238 159

CTA Case Nos. 777 1 & 7814 CBK POWER COMPANY LIMi TED vs. CiR importation of goods and services and payments fo r services rendered by non- residents and purchases of capital goods for the period January 1, 2006 to December 31, 2006.

Arguments o(Respondent Commissioner o{1nterna/ Revenue Respondent CIR strongly contends that petitioner's judicial claims for the issuance of TCCs were prematurely filed in view of Section 11 2(C) of the NIRC of 1997, as amended by R.A. 933 7, which essentially provides that the Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes within 120 days from the date of submission of complete documents in support of the application. Hence, the petitioner can elevate his claim before this Court only after the expiration of the 120-day period granted by law or within 30 days from the decision of the respondent denying its claim for tax credit.

TilE RULING OF TilE COURT

Section 11 2(A) of the NIRC of 1997, as amended, provides for the refund or tax credit of unutilized input VAT attributable to zero rated or effective!?' zero-rated sales, to wit:

SEC. 11 2. Refimds or Tax Credits of input Tax. - (A) Zero-Rated or Effectively Zero-Rated Sales. -

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 I 08 (B)( I) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance w ith 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 sa le of goods of prope11ies or services, and the~ 160

CTA Case Nos. 777 1 & 7814 CBK POWER COMPANY LJM!TEU \'S. CIR amount of credi table input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it sha ll be a llocated proportionately on the basis of the volume of sa les: Provided. finally, That for a person 111aking sales that are zero-rated under Section 108 (8)(6), the input taxes shall be a llocated ratably between his zero-rated all(luon-zero-rated sales.

Based on the afore-quoted proviSIOn and settled juris prudence, a taxpayer engaged in zero-rated or effectively zero-rated transactions may apply for tax refund or issuance of TCC for unutilized input VAT provided, the following requisites are satisfied:

( 1) the taxpayer is VAT registered;

(2) the taxpayer is engaged in zero-rated or effec tively zero-rated sales;

(3) the input taxes were incurred or paid;

(4) the input taxes have not been applied against output taxes during and in the succeeding quarters;

(5) the input taxes claimed are attributable to zero-rated or effectively zero- rated sales;

(6) the claim was applied/filed within the period prescribed in Section 11 2(A) and (C) of the N lRC of 1997. as amended.

Timeliness

of

Petitioner's

administrative and judicial claims for the issuance of tax credit certificates.

Before this Court proceeds to determine petitioner' s compliance with the 1st to 5th requisites for tax refund and issuance ofTCCs, the Court deems it appropriate and opts to first elwell on the 6 111 requisite, which is in fact the first (l 51 ) issue in this case, pertaining to the timeliness of petitioner' s administrative and judicial claims for the

ISSuance

of TCCs, seemg that tl1e resolution of this controversy#- 161

DEClSlON

CTACaseNos. 777 1 & 78 14 CBK POWER COMPANY LJMJTED vs. CJR

Page 17 of28

is the determining factor on whether this Court should proceed with the disquisition of the other issues in this case.

On the following dates, petitioner filed its Original and Amended Quarterly VAT Returns,36 and its administrative37 and judicial claims fo r the issuance ofTCCs: !!:~.! .. A?? __ '!(_,'!"¥_ "'?.?!!&' tLYLE~?.t:~.?.!J.!'}!~·!!':!'i!~?::.:::.f.!'~."'-':"l.!:'!'_~ ""~ ~ :&. ~:!: ______ ~~~---~m~- ··-- ... -- __ }10!'_. .. u ... 1 ' : •• ':!.'. !! w~?.: w __ '*!.?Y"'£1'!:¥_ -s-1 2006

Original VAT

Amended

Administrative

Petition for

Taxable

.

Return

. VAT Return

Claim

Review

1

Quarter

' (Date tiled) i (Date filed) -.~ ... ~wifii·wctrrrwer· c&w·m;t•wz· ,,. -~ M'e!Wf' tt''-'~.o:v~w-e- W*Z<'i?itm: ,~ ~\£:~~~ .. ~d)~:"'"'""'{12! te filedlJ March 31, 2008 April 23, 2008 · .

I st .,- April 2S, 2006 - December 28, 2007 2 nd March 3 1, 2008 July 25,2006 April 18,2008 July 23, 2008 July 2!J , 2008 3rd October 20, 2006 January 2tl, 2007 May 7, 2008 !J th July 2 1, 2008 Respondent, Commissioner of Internal Revenue, contends that petitioner's judicial claims for the issuance of TCCs were prematurely filed in view of Section 112(C) of the NIRC of 1997, as amended by R.A. 933 7, which provides that: SEC. 11 2. Refonds or Tax Credits of Input Tax. - (C) Period within which Refund or Tax Credit of input Taxes shall be Made. - In proper cases, the Commiss ioner shall grant a refund or issue the tax creclit ce11ificate for creditable input taxes w ithin one hundred twenty ( 120) days from the date of submiss ion of complete documents in support of the application fi led in accordance with Subsection (A) hereof.

In case of full or partial denial of the claim for tax refund or tax credit, or the fa ilure on the pa11 of the Commissioner to act on the application with in the period prescribed above, the taxpayer affected may, within thirty (3 0) 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 w ith the Court of Tax Appeals. r

CTACase Nos. 777 1 & 78 14 CBK POWER COMPANY LIMiTED \'S. CIR

Respondent posits that petitioner can appeal to this Honorable Court only after the expiration of the 120-day period granted by law or within 30 days from the decision of the respondent denying its claim for tax credit. This being so, according to the respondent, this Court has no jurisdiction to act on the Peti tions for Review. The issue concerning the timeliness of petitioner's administrative and judicial claims, for input tax refund or the issuance of TCCs, brought forth divergent views on the fo llowing:

First, reckoning of the 2-year period for fi ling/claiming refund or issuance of TCC provided under Section 11 2(A) of the NIRC of 1997, as amended by R.A. 933 7;

Second, whether the 2-year period mandated under Section 11 2(A) of the NIRC of 1997, os omended by R.A. 933 7, refers to the filing of both administrative and judicial claim.

Third, whether the non-observance of the 120-day period and 30-day period under Section ll 2(C) of the NIRC of 1997, as omended by R.A. 9337, prior to the filing of Petition fo r Review amounts to non-exhaustion of administrative remedy and thereby results to lack of jurisdiction of this Court. However, the Supreme Court finally put to rest the controversies as above- mentioned when it ruled in the case of Commissioner of Internal Revenue v. Aichi Forging Company ofAsia, Inc., G.R. No. 184823 ("Aichi case") on October 6, 2010, as fo llows:

First, the reckoning of the 2-year period fo r fi ling/claiming refund or issuance of TCC as expressly provided for under Section 11 2(A) of the N IRC of 1997, as amended by R.A. 933 7, is fi-om the close of the quarter when such?- 16 3

CTACaseNos. 777 1 & 7814 CBK POWER COMPANY LJA!lTED I'S. C!R sales were made.

In the Aichi case, the Supreme Court adhered to the principle enunciated in the lvfirant case notwithstanding the fact that the claim for refund was filed on September 30, 2004, approximately 4 years before the Mirant case was promulgated, effectively gtvmg the Mirant doctrine a retroactive application .

Second, the phrase "l·l'ithin two (2) years x x x appfy_/or the issuance of a tax credit cert!ficate or refimd' refers to applications for refund/credit filed with the CIR and not to appeals made to the CTA. This is apparent in the first paragraph of subsection (C) of the same provision, which states that the CIR has "120 days Fom the submission of complete documents in support of lhe application .filed in accordance 11'ith Subsections (A) and (B)" within which to decide on the claim.3!l Third, compliance with the "120-30 day period" under Section 11 2 (C) of the NIRC of 1997, os amended ofR.A. 933 7, is crucial in filing a judicial claim.

Hence, applying the aforementioned jurisprudential principle with the prevailing circumstances in this case, this Court is constrained to DENY petitioner's claim for issuance of TCCs. The Court in Division finds the Petitions to be devoid of merit and the arguments of the respondent to be in orde;,L- 38 Commissioner of Internal Revenue ,. Air..:hi Forging Company ol Asia, Inc., G.R. No. 1811823, October 6, 20 tO.

164

DEClSlON

CTA Case Nos. 777 1 & 78 14 CBK POWER COMPANY LiMITED vs. CJR

Page 20 of 28

in Division finds the Petitions to be devoid of merit and the arguments of the respondent to be in order.

Administrative claims 1-'Vere filed on time Apropos the administrative claim for refund or issuance of tax credit certificate for unutilized input tax, germane is the provision of Section 11 2(A) of the NIRC of 1997, as amended by R.A. 933 7, which prescribes the reckoning of the 2- year period within which to make a claim for refund or tax credit, i.e., from the close of the taxable quarter when the sales were made. By a plain reading of the foregoing provision, the 2-year prescriptive period for filing the application for refund/credit of input tax on zero-rated sales shall be determined from the close of the quarter when such sales were made.

The Supreme

Court, in the Aichi case, reinforced the doctrine laid down in the Mirant case, that the 2-year prescriptive period is reckoned from the close of the taxable quarter when the relevant sales or transactions were made, and significantly gave the said doctrine a retroactive application considering that the High Court applied the same to the Aichi case notwithstanding the fact that the claim for refund was fi led on September 30, 2004, approximately 4 years before the Miranl case was promulgated. In the Aichi case39, the Supreme Court explained as follows:

XXX

The pivotal question of when to reckon the running of the two- year prescriptive period, however, has already been resolved

in Commissioner

of

Internal

Revenue

v.

Miranl

Pagbilao

Corporation, where we ruled that Section 112(A) of the NIRC is the applicable provision in detem1ining the stm1 of the two-yem· period for claiming a refund/credit of Lmutilized input VAT, and that Sections 204(C) and 229 of the NIRC are inapplicable as "both provisions apply only t<V- 39 Supra note 38 165 CTA Case Nos. 7771 & 78 14 CBK POWER COMPANY LiMITED vs. CIR instances of enoneous payment or illegal collection of intemal revenue taxes." We explained that:

The above proviso [Section 11 2 (A) of the NlRC] clearly provides in no tmcertain tenns that unutilized input VAT payments not othenvise used for any internal revenue tax due the taxpayer must be claimed within two years reckoned from the close of the taxable quat·ter when the relevant sales were made pertaining to the input VAT regardless of whether said tax was paid or not. As the CA aptly puts it, albeit it enoneously applied the aforequoted Sec. 112 (A), "[P]rescriptive period commences fi:om the close of the taxable quarter when the sales were made and not fi:om the time the input VAT was paid nor from the time the official receipt was issued." Thus, when a zero-rated VAT taxpayer pays its input VAT a year after the pertinent transaction, said taxpayer only has a year to file a claim for refund or tax credit of the W1utilized creditable input VAT. The reckoning 11-ame would always be the end of the quatter when the pertinent sales or transaction was made, regardless when the input VAT was paid. Be that as it may, and given that the last creditable input VAT due for the petiod cove1ing the progress billing of September 6, 1996 is the third quru1er of 1996 ending on September 30, 1996, any claim for tmutilized creditable input VAT refund or tax credit for said quruter prescribed two years after September 30, 1996 or, to be precise, on September 30, 1998. Consequently, MPC's claim for refund or tax credit filed on December 1 0, 1999 had already prescribed.

Reckoning for prescriptive period under Sees. 204((} and 229 oftlte NIRCinapplicable To be sure, MPC cannot avail itself of the provisions of either Sec. 204(C) or 229 of the NIRC which, for the pmpose of refund, presc1ibes a different starting point for the two-year prescriptive limit for the filing of a claim therefor. Sees. 204(C) and 229 respectively provide:

Sec.

204. Authority of the

Commissioner to

Compromise,. Abate and Refund or Credit Taxes. - TI1e Commissioner may - xxxx

(c) Credit or refund taxes erroneously or illegally received or penalties imposed without authority, refund the value of intemal revenue stamps when they ru·e returned in good condition by the purchaser, and, in his discretion, redeem or chru1ge unused strunps that have been rendered tulfit for use and re:ft.md their value upon proof o~ 166

CTA Case Nos. 7771 & 7814 CBK POWER COMPANY LIMITED vs. CJR destmction. No credit or refund of taxes or penalties shall be allowed mlless the taxpayer files in writing with the Commissioner a claim for credit or refund within two (2) years after the payment of the tax or penalty: Provided, however, 1l1at a retum filed showing an overpayment shall be considered as a Wlitten claim for credit or re.fimd. xxxx Sec. 229. Recovery of Tax Erroneously or Illegally Collected. - No suit or proceeding shall be maintained in any court for the recovety of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authmity, of any sum alleged to have been excessively or in any manner wrongfully collected without authmity, or of any sum alleged to have been excessively or in any manner Wl·ongfully collected, Lmtil a claim for refimd or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid Lmder protest or dmess.

ln any case, no such suit or proceeding shall be filed after the expiration of two (2) years f1-om the date of payment of the tax or penalty regardless of any supervening cause that may mise after payment: Provided, however, That the Commissioner may, even without a w1itten claim therefor, refi.md or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid.

Notably, the above prOVISIOns also set a two-year prescriptive period, reckoned from date of payment of the tax or penalty, for the filing of a claim of refund or tax credit. Notably too, both provisions apply only to instances of erroneous payment or illegal collection of internal revenue taxes. MPC's creditable input VAT not erroneously paid For perspective, under Sec. 105 of the NIRC, creditable input VAT is an indirect tax which cm1 be shifted or passed on to the buyer, transferee, or lessee of the goods, propet1ies, or services of the taxpayer. The fact that the subsequent sale or trat1saction involves a wholly-tax exempt client, resulting in a zero-rated or effectively zero-rated t:rat1Saction, does not, standing alone, deprive the taxpayer of its 1ight to a refi.md for any unutilized creditable input VAT, albeit the enoneous, illegal, or Wl·ongful payment at1gle does not enter the equation.r 167

CTACaseNos. 777 1 & 7814 CBK POWER COMPANY LiMITED vs. CJR xxxx Considering the foregoing discussion, it is clear that Sec. 112 (A) of the NIRC, providing a two-year prescriptive period reckoned from the close of the taxable quarter when the relevant sales or transactions were made pertaining to the creditable input VAT, applies to the instant case, and not to the other actions which refer to erroneous payment of taxes. (Emphasis supplied.)

In view of the foregoing, we flnd that the CTA En Bane erroneously applied Sections 114(A) and 229 of the NlRC in computing the two-year presctiptive period for claiming refi.mcl/credit of unutilized input VAT. To be clear, Section 112 of the NIRC is the pertinent provision for the refund/credit of input VAT. Thus, the two-year period should be reckoned from the close of the taxable quarter when the sales were made.

XXX

Petitioner filed its administrative 40 claims for the issuance of TCCs on the following dates:

.-..·•;,A"'iJY.IncM =f·i...;';U= 'wo:w•v•dd 'H"'ili ~u;wf& *""'l'l•'i,V"Wi·'i:a•.-:r~.tW;-W'~'• i'P ib;u-±'*P'W"t':"~-mti>W- 2006

Taxable

Qua1·1u 1!!!~'P!""['"R~

1 Sl

2"d --.rd .)

!I th

Close or the

Quarter

.

i '~!£! _____ !~- __ 'it'~*!!:_ ·-----... --L"?:.:J .. ___ r&t March 31, 2006 June 30, 2006

Last Day to File

Date

Administn 1tive

Administrative

Claim

i

Claim Filed

~_!~Ai1~~(~- ·_·wsi&dM"P *-~---- ----=-- __ !.!"'*_"'![!'"flfrd March 31, 2008 March 31, 2008 June 3 0, 2008 July 23, 2008 - ·-·-- ·-- - - September 30, 2006 September 30, 2008 December 3 1, 2006 December 3 1, 2008 Clearly, applying the explicit provision of Section 11 2(A) of the NlRC of 1997, as amended by R.A. 933 7, as bolstered in the cases of Mirant and Aichi, the administrative claims were filed by the petitioner within the 2-year prescriptive period, except for the period covering the 2nd quarter of 2006. For the 2 11d quarter of ,a- 40 Pars. 12- 13, Facts Admitted, JSFI, Rollo, p. 23 5 168 ~

CTA Case Nos. 777 1 & 78 14

CBK POWER COMPANY LIMiTED vs_ CIR

2006, the mandated last day of tiling of an administrative claim was set by law on June 30, 2008, however, petitioner fi led its administrative claim on July 23, 2008, which is clearly beyond the 2-year prescripti ve period under Section 11 2(A) of the NIRC of 1997, as amended by R A 933 7.

The Oling o[the judicial claim 1vas premature Regarding the judicial claim for refund, Section 11 2(C) of the NIRC of 1997, as amended by R.A. 933 7, is the relevant provision, viz: "(C) Period within which Refund or Tax Credit q{ 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 fi led in accordance with Subsection (A) hereof."

"ln 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 Com1 of Tax Appeals."

Section 11 2(C) of the NlRC clearly provides that the CIR has "120 days from the date of the subrnission of the complete documents in support of the application [for tax refund/credit] ," within which to grant or deny the claim. In case of full or partial denial by the ClR, the taxpayer's recourse is to file an appeal before the Court of Tax Appeals (CTA) wi thin 30 days from receipt of the decision of the CIR. However, if after the 120-day period the CIR fails to act on the application fo~_ 169 DEClS.LON CT A Case Nos. 777 1 & 78 14 CBK POWER COk!PANV Ll/11/TED 1•s. C IR

Page 25 of 28

tax refund/credit, the remedy of the taxpayer is to appeal the inaction of the CIR to the CTA within 30 days.

111 In this case, records reveal that:

w;;.;~~-· _.f_tii"'d,..~:;!;~~.;~~.;;.;:

f!'~;:;·;!~~~;..~._:.~~.......i:.~~..::.~-y., 'i"i+ro:...:o ~ r- .. g_~ ~- «• g;w 6'' '1 'i'&..,._rl':J!

CTA Case

Administrative

End of 120 Days

Date Judicial

Claim 1<'iled fo•· the B1R

Claim Filed

Commissione•· to

Decide the Claim

~~~..:±-±~~~~.::. ·~~l~~:~.:.:;-;:J.'~-"..:::•'-~-'"-~~::!!'t~~-,~·~*:;:x~·'-'~--..:tL.¥'- !'f"illi CTA Case No.

777 1 CTA Case No.

781 4 March 3 I, 2008 July 23 , 2008 July 29, 2008 November 20, 2008 April 23, 2008 July 24, 2008 Verily, in both petitions, petitioner did not wait for the decision of the CIR or the lapse of the 120-day period before filin g its appeal to this Court. For this reason, this Court fi nds the filing of the judicial claims fo r issuance of TCCs for unutilized input VAT, premature.

Also, it is significant to note that, as clarified by the Supreme Court in the Aichi case'12, the aforementioned 2-year period refers to applications for refund/credit fil ed with the CIR and not to appeals made to this Court (CTA). The Supreme Court ratiocinated in this wise:

XXX

Respondent's asse1tion that the non-observance of the 120-day petiod is not fatal to the filing of a judicial claim as long as both the administrative and the judicial claims are filed within the two-year prescriptive period has no legal basis.

There is nothing in Section 112 ofthe NIRC to support respondent's view. Subsection (A) of the said provision states that "any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two years after the close of the taxable qumter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid atnibutable to such sales." The phrase "within two (2) years x x x apply for the issuance of a tax credit certificate or refund" reters to applications for re11md/credit tiled with the CIR and not to~ 41 Supra note 3 8 4.1 - Supra note 38 170 D.ECISJON CTACaseNos. 777 1 & 78 14 CBK POWER COMPANY LIMITED l'S. CIR

Page 26 of28

appeals made to the CT A This is apparent in the first parab'Taph of subsection (D) of the same provision, which states that the CIR has " 120 days fi·om the submission of complete documents in supp011 of the application filed in accordance with Subsections (A) and (B)" within which to decide on the claim.

ln fact, applying the two-year period to judicial claims would render nugatory Section 11 2(0) of the NIRC, which already provides for a specific period within which a ta..'<.payer should appeal the decision or inaction of the CIR. The second paragraph of Section 11 2(0 ) of the NIRC envisions two scenarios: (1) when a decision is issued by tl1e ClR before the lapse of the 120-day period; and (2) when no decision is made after the 120-day period. In both instances, the taxpayer has 30 days \Vithi.n which to file an appeal with the CT A. As we see it then, the 120-day period is crucial in filing an appeal witl1 the CT A.

With regard to Commissioner qf internal Revenue v. Victorias Milling, Co., Inc. relied upon by respondent, we find the same inapplicable as the tax provision involved in that case is Section 306, nmv Section 229 of the NIRC. And as already discussed, Section 229 does not apply to refunds/credits of input VAT, such as tl1e instant case. ln fine, the premature filing of respondent's clai.J.r1 for refund/credit of input VAT before the CT A warrants a dismissal inasmuch as no jmisdi.ction was acq uired by the CTA

XXX

This Court adheres to the ruling of the Supreme Court in the case of Commissioner oflnlemal RePenue v. Aichi Forging Company ofAsia, Inc., G.R. No. 184823, October 6, 20 I 0.

This is in keeping with the time-honored rule that the Supreme Court, by tradition and in our system of judicial administration, has the last word on what the law is. It is the final arbiter of any justiciable controversy.'13 All courts m_ust take their bearings fi·om the decisions of this Court. ' 1~ 43 Donie Nacuray, et. a!. vs. Notional Lohor Relations Commission; G.R. Nos. 11 119211 -27; 270 SCRA 9 44 Systra Philippines, Inc. vs. Commissioner of!nrerno/ Revenue, G.R. No. 176290, Reso lution dated September 2 1, 2007, 533 SCRA 776, 78 1.

171

CTA Case Nos. 7771 & 7814 CBK POWER COMPANY LIMiTED vs. CJR

To hold otherwise would not only offend the above-cited principles, but would altogether undermine the very foundations upon which the afore-cited principles were pronounced by the Supreme Court in the aforementioned decisions. Under the principle of stare decisis et non quieta movere, past judicial precedents should be followed in subsequent cases by all courts in the land.45 Hence, the cases of Mirant-16 and A ichi-17 constitute as stare decisis to the case at bar.

WHEREFORE, premises considered, the instant Petitions for Review are hereby DISMISSED for having been prematurely filed .

WE CONCUR:

se;ying Opinion) ~·JI.J R. BAUTISTA ~~-~~~/'~ AMELIA R. COT ANGCO- MANALASTAS

Associate Justice

b~~EZ

Associate Justice

45 Gregorio Castillo v. Sandiganhayan, G.R. No. 13823 1,377 SCRA 509 46 G.R. No. 172 129; 565 SCRA 1511, 17 1 4'/ Supra note 38 172

CTA Case Nos. 777 1 & 78 14 CBK POWER COMPANY LIMITED vs. CIR

ATTESTATION

1 attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. CEH.TIFICA TION Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court.

L

v.

o~ ERNESTO D. A COST A

Presiding Justice

173