Lepanto Consolidated Mining Company vs. Commissioner of Internal Revenue

DECISION

CTA EB No. 2329 (CTA Case No. JOI53)

Page 2 of IO

Honorable Court is GRANTED. The Petition for Review docketed as CTA Case No.

10153, entitled Lepanto Consolidated Mining Company v. Commissioner of Internal Revenue is DISMISSED for lack of jurisdiction.

Motion for Reconsideration (of the Honorable Court's

Resolution dated 13 December 2019) is DENIED for lack of merit.

THE FACTS

Petitioner is a duly organized and existing domestic corporation with principal address at 21/F Lepanto Building, 8747 Paseo de Roxas, Makati City.4 It is engaged in mining of gold and other precious metals at its mine site in Mankayan, Benguet. 5 It is a VAT -registered and Board of Investments ("BOI")-registered entity as a new export producer of gold bullion, copper concentrate, gold, and silver.6 Respondent is the incumbent Commissioner of the BIR who has the authority to grant tax credit/refund under the law. 7 On May 22, 2009, petitioner filed with the DOF-OSS its application for tax credit/refund of input VAT for first (1st), second (2nd), third (3'd), and fourth {41h) quarters of 2008 in the total amount of Forty Million Eight Hundred Ninety Six Thousand Six Hundred Forty Eight and 52/100 pesos (PhP 40,896,648.52).8 On July 22, 2019, petitioner received a copy of the letter dated March 29,2019 of the BIR denying petitioner's application for VAT refund/credit, purportedly because petitioner failed to prove the validity of its claim. 9 ')e:-- 4 Rollo, p. I 9.

5 !d., p. 20.

6 !d.

7 /d, p. I9.

'/d., p. 22.

9 /d.

CTA EB No. 2329 (CTA Case No. 10153)

On August 20, 2019, petitioner filed it Petition for Review before the CTA Division. 10 On September 24, 2019, respondent filed an Answer. 11 On October 16, 2019, respondent filed a "Motion for Early Resolution on the Issue of Jurisdiction of the Honorable Court." 12 On November 7, 2019, petitioner filed its "Comment/Opposition (to the Respondent's Motion for Early Resolution dated 16 October 2019)." 13 On November 13, 2019, the Court Division submitted for resolution respondent's "Motion for Early Resolution on the Issue of Jurisdiction of the Honorable Court," and cancelled until further notice the Pre-Trial Conference previously scheduled on December 4, 2019. 14 On December 13, 2019, the Court Division granted respondent's "Motion for Early Resolution on the Issue of Jurisdiction of the Honorable Court" and dismissed the petition, for lack of jurisdiction. 15 On January 20, 2020, petitioner timely filed its "Motion for Reconsideration (of the Honorable Court's Resolution dated 13 December 2019)." 16 On January 27, 2020, the Court Division ordered respondent to file a comment on petitioner's motionP On February 5, 2020, respondent filed an "Opposition (Re: Motion for Reconsideration of the Resolution dated 13 December 2019)." 18 On June 16, 2020, the Court Division denied, for lack of merit, petitioner's "Motion for Reconsideration (of the Honorable Court's Resolution dated 13 December 2019)." 19 On September 11, 2020, the CTA En Bane granted petitioner's "Motion for Extension of Time to File Petition for Review."20 Je- 10 Division Docket, pp. 1 0-20; With attached Annexes, Division Docket, pp. 21-84. 11 Division Docket, pp. 92-99.

12 !d., pp. 109-117.

13 /d.,pp.131-137.

14 !d., p.139.

IS Jd., pp. 157-162.

CTA EB No. 2329 (CTA Case No. !0153)

Within the period of extension granted, petitioner filed its Petition for Review on September 25, 2020 before this CourtY On October 13, 2020, the CTA En Bane ordered respondent to file his Comment.22 Respondent filed a "Comment (Re: Petition for Review)" by registered mail on October 26, 2021.23 On January 6, 2021, this case was submitted for decision.24 Hence, this Decision.

ISSUE

In its petition, petitioner raised the following Grounds and

Arguments:25

I.

PETITIONER RESPECTFULLY SUBMITS THAT

THE HONORABLE COURT IN DIVISION ERRED

WHEN IT DISMISSED THE PETITION FOR REVIEW

FOR LACK OF JURISDICTION PURPORTEDLY

DUE TO IT BEING FILED OUT OF TIME.

THE DEADLINE FOR THE FILING OF THE

PETITION MUST BE RECKONED FROM THE

RECEIPT OF THE DENIAL LETTER FROM THE BIR

AS

REVENUE

REGULATIONS

NO.

1-2017

PROVIDES THAT THE RESULT OF TAX CREDIT

CLAIMS

COVERED

BY

THE

REVENUE

REGULATION SHALL BE COMMUNICATED IN

WRITING

BY

THE

CONCERNED

REVENUE

OFFICIAL.

II.

THE HONORABLE COURT IN DIVISION ERRED IN

RULING THAT THE VAT REFUND CLAIM OF THE

PETITIONER HAS BEEN DEEMED DENIED. ON THE CONTRARY, THERE WAS ACTUAL DENIAL 21 Rollo, pp. 18-37.

22 /d., pp. 135-136.

23 /d., pp. 137-140.

24 /d., pp. 144-145.

"!d., pp.23-25.

OF THE PETITIONER'S CLAIM THROUGH THE 29

MARCH 2019 LETTER OF DENIAL ISSUED BY THE

BIR WHICH

CLEARLY

STATES

THAT

THE

PETITIONER'S CLAIM WAS PROCESSED AND,._

CTA EB No. 2329 (CTA Case No. 10153)

THAT IT IS DUE TO EXCESS DEDUCTIONS OVER

THE

AMOUNT

APPLIED

FOR

AS

TAX

REFUND/CREDIT

THAT

THE

CLAIM

WAS

DENIED.

III.

THE HONORABLE COURT IN DIVISION ERRED IN

FAILING

TO

APPLY

THE

PRINCIPLE

OF

EQUITABLE

ESTOPPEL

AGAINST

THE

RESPONDENT CIR, WHOSE DISAVOWAL OF SECTION 3, REVENUE REGULATIONS NO. 1-2017,

THE 29 MARCH 2019 LETTER (WHICH THE BIR

ITSELF

ISSUED),

AND

THEIR

LEGAL

IMPLICATIONS

RUNS

COUNTER

TO

THE

PRINCIPLES OF EQUITY AND FAIRPLAY.

IV.

PETITIONER IS ENTITLED TO TAX CREDIT OF ITS

FIRST (1 sr), SECOND (2ND), THIRD (3RD), AND

FOURTH (4TH) QUARTERS OF 2008 INPUT VAT

ARISING FROM IMPORTATIONS OF CAPITAL

AND CONSUMABLE GOODS AMOUNTING TO

FORTY MILLION EIGHT HUNDRED NINETY SIX

THOUSAND SIX HUNDRED FORTY EIGHT AND

52/100 PESOS (PHP 40,896,648.52).

V.

THE HONORABLE COURT IN DIVISION ERRED IN

DISMISSING THE PETITION OUTRIGHT, WHICH IS

TANTAMOUNT TO A DENIAL OF THE RIGHT TO

APPEAL AND A VIOLATION OF PETITIONER'S

CONSTITUTIONAL RIGHT TO DUE PROCESS.

Based on the foregoing, the issue in this case is WHETHER THE

COURT DIVISION ERRED IN DISMISSING THE PETITION FOR

REVIEW FOR LACK OF JURISDICTION.

Petitioner reiterates that the Petition for Review filed before the CT A Division had been timely filed under Section 112 (C) of the National Internal Revenue Code (NIRC), as amended, by Republic Act No. 10963.26 It insists that the thirty (30)-day period for filing the petition for review should be reckoned from the receipt, i.e., July 22, 2019, of the March 29, 2019letter that the application was denied. 27 3:--

CTA EB No. 2329 (CTA Case No. IOI53)

Petitioner states that there was no deemed denial in this case.28 It insists that there was actual denial of its VAT refund claim for 2008 from reading of the said March 29, 2019 letter. 29 On the other hand, respondent argues that the Petition for Review was filed beyond the mandatory and jurisdictional thirty (30) day period from the expiration of the one hundred twenty (120) day period, thus, petitioner's contention are bereft ofmerit.30

THIS COURT'S RULING

The petition is denied.

In this case, petitioner filed its application for tax credit/refund of input VAT for the four (4) quarters of 2008 on May 22, 2009. On July 22, 2019, it received the March 29, 2019 letter that the application was denied. On August 20, 2019, it filed its Petition for Review before the CTA Division.

It is worthy to emphasize that petitioner itself admitted on its pleadings the relevant dates necessary in the determination of the timeliness of the filing of the petition for review.

In the consolidated cases of Commissioner of Internal Revenue v. San Roque Power Corporation, Taganito Mining Corporation v. Commissioner of Internal Revenue and Phi/ex Mining Corporation v. Commissioner of Internal Revenue, 31 ("San Roque case''), the Supreme Court En Bane categorically recognized that if the CIR fails to decide within "a specific period", required by law, such "inaction shall be deemed a denial" of the application for tax refund or credit. Pertinent portion of the said Decision provides;

"The charter of the CT A also expressly provides that if the Commissioner fails to decide within 'a specific period' required by law, such 'inaction shall be deemed a denial>n of~ 28 Rollo, pp. 29-31.

29 !d.

' 0 Rollo, pp. I37-138.

"G.R. Nos. I87485, 196113 & 197156, February 12,2013. 32 Section 7. Jurisdiction.- The CTA shall exercise:

(a) Exclusive appellate jurisdiction to review by appeal, as herein provided: (I) ...

(2) Inaction by the Commissioner oflnternal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau oflnternal Revenue, where the National Internal Revenue Code provides a specific period of action, in which case the inaction shall be deemed a denial;

CTA EB No. 2329 (CTA Case No. 10153) the application for tax refund or credit. It is the Commissioner's decision, or inaction 'deemed a denial,' that the taxpayer can take to the CTA for review."

Pertinent to this case is Section 112(C) of the NIRC of 1997, as amended, provides:

"(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 from the date of submission of complete documents in support 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 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." (Emphases Supplied) In the case of Site! Philippines Corporation (Formerly Clientlogic Phils., Inc.) v. Commissioner of Internal Revenue, 33 (Site! case) the Supreme Court categorically stated that, "Based on the plain language of the foregoing provision [Section 112 (C) of the NIRC, as amended], the CIR is given 120 days within which to grant or deny a claim for refund. Upon receipt of CIR's decision or ruling denying the said claim, or upon the expiration of the 120-day period without action from the CIR, the taxpayer has thirty (30) days within which to file a petition for review with the CTA." (Emphases Supplied) In this case, there is deemed denial of petitioner's application for tax credit/refund of input VAT for failure of the CIR to decide the application within 120 days from filing of the administrative claim for tax credit/ refund. The CIR had until September 19, 2009, within which to decide the administrative claim. Counting 30 days from the expiration of the 120-day period, petitioner had until October 19, 2009 within which to appeal the inaction of the CIR to the CTA. However, it was only on August 20, 2019 that petitioner filed the Petition for Review to the CT A Division. The petition is, therefore, filed out of time. Petitioner's judicial claim cannot~

XXX

XXX

XXX (Emphasis supplied) JJ G.R. No. 201326, February 8, 2017.

DECISION

CTA EB No. 2329 (CTA Case No. IOI53)

Page 8 of IO

prosper for its failure to comply with the 30-day mandatory and jurisdictional period set forth by law.

This Court agrees with the findings of the CT A Division in the First Assailed Resolution that, "the Petition for Review was clearly filed out of time. As correctly pointed out by the respondent, the petitioner should have appealed its VAT refund/credit claim within thirty (30) days from the lapse of the one hundred twenty (120) day period or until 19 October 2009. However, petitioner only filed its judicial claim on 20 August 2019 or several years after the lapse of the said period."34 that:

In the San Roque case, supra, the Supreme Court En Bane discussed "xxx The application of the 120+30 day periods was first raised in Aichi,35 which adopted the verba legis rule in holding that the 120+30 day periods are mandatory and jurisdictional. The language of Section 112(C) is plain, clear, and unambiguous. When Section 112(C) states that "the Commissioner shall grant a refund or issue the tax credit within one hundred twenty (120) days from the date of submission of complete documents," the law clearly gives the Commissioner 120 days within which to decide the taxpayer's claim. xxx"

(Emphases Supplied)

With respect to petitioner's reliance on RR No.1- 2017 and in Section 112 (C) of the Tax Code, as amended by Republic Act No. 10963, this Court also reiterates with approval the discussion of the CTA Division in the First Assailed Resolution, as follows:

"Finally, reliance of petitioner in RR No. 1-2017 is of no moment. RR No. 1-2017 did not extend the period for a taxpayer to file its judicial claim in this Court. Neither can petitioner rely on Section 112 (C) of the Tax Code, as amended by Republic Act No. 10963, considering that the VAT refund/credit claim became deemed denied long before the effectivity of Republic Act No. 10963 on 1 January 2018." Based on the foregoing, there is no reason to set aside the findings and conclusions of the CTA Third Division in the assailed Resolutions. For petitioner's failure to comply with the 120+30 day mandatory period, this ~ 34 Rollo, p. 43.

35 Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc., G.R. No. 184823, October 6, 2010.

DECISION

CTA EB No. 2329 (CTA Case No. !0153) Page 9 of lO Court finds that the CT A Division did not err in dismissing the case for lack of jurisdiction.

WHEREFORE, premises considered, the Petition for Review is DENIED. Accordingly, the assailed Resolutions promulgated on December 13, 2019 and on June 16, 2020, respectively, by the CT A Third Division are AFFIRMED.

WE CONCUR:

ERL~.UY

Associate Justice

O...a-.-c~ c.a..r-.,......,~~ a. .

.RJANITO C. CASTANED/f( JR.

Associate Justice

Presiding Justice

~-~ ...-~c MA. BELEN M. RINGPIS-LIBAN

Associate Justice

/1'~· 7·/h-d--- CAfHERINE T. MANAHAN

Associate Justice

.,...

JEAN lnftn.J..l)( J.LL.I1.1 'lA

CTA EB No. 2329 (CTA Case No. I0153)

~~F¥~F~

MARIAN IVY F. REYES-FAJARDO

Associate Justice

~~tt LANEE S. CUI-DAVID

Associate Justice

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, 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.

Presiding Justice