Deutsche Knowledge Services, et al. vs. Commissioner of Internal Revenue

DECISION

MINDARO -GRULLA, J..:

Submitted for decision is a Petition for Review for the Court En Bone under Section 18 of Republic Act (RA) No. 1125, as amended, as well as under Section 2(a)(¹), Rule 4, in relation to Section 4(b), Rule 8 of the 2005 Revised Rules of the Court of Tax Appeals, as amended,( Deutsche Knowled ge Services PTE LTD. vs. CIR CTA EB Case No. 667 (CTA Case No. 7979) of the Resolutio ns doted April 12, 2010 1 a nd July 20, 201 02, respectively, rendered by the First Division:l o f this Court. Petitio ner seeks a reversal o f the a foreme ntioned Resolutions, the dispositive p ortio ns o f whic h, respective ly, read as follow s: Resolution dated April 12, 2010:

"WH EREFO RE, the Motion to Dismiss doted Octo ber 15, 2009, file d by respondent Commissioner of Internal Revenue, is hereb y GRANTED. C onse quently, the instant Petition for Review is hereb y DISMISSED.

SO O RDER ED."

Resolution dated July 20, 2010:

"WHEREFO RE, pre mises considered , the

Motion

for Reconsideratio n (Re : Resolution doted April 12, 201 0) filed by petitioner on April 30, 2010, is hereby DENIED for lock of merit.

Pilipinas J'

On October 18, 2007, petitioner filed with the BIR its original Quarterly VAT Return for th e 3rd quarter of the taxable year 2007 .7 On November 1 7, 2007, petitioner filed on amended Quarterly VAT return for the 3rd quarter of th e taxable year 2007.8, 5Jd.

6 En Bone Docket, p. 9.

7 /d.

8 Jd.

Deu tsche Knowledge Services PTE LTD. vs. CIR CTA EB Case No . 667 (CTA Case No . 7979)

For the 3rcJ quarter o f the taxa ble year 2007, petitioner alleg edly accumulated excess input VAT in the total amount of Fourteen Million Two Hundred Seventeen Th ousand Two Hundred Twenty Two Pesos and Eighty Seven Centavos (PHP 14,² 17,222.87) attributable to zero-rated sales whic h, to date, has remained unutilized and/or unapplied against petitioner's output VAT liability.9 On September 18, 2009, petitioner filed with the BIR-Reve nue Distric t Office No. 47 an Applic ation for Tax Credits/Refunds (BIR Form No . 1914) of its excess and unutilized inp ut VAT for the 3rc:l quarter of the taxable year 2007 in the amount of PHP 14,2 17,222.87 .w O n September 30, 2009, petitioner filed a Petition for Review before this Co urt in order to to ll the running of the prescriptive pe riod under Section 229 o f the Notional Internal Re venue Cod e of 1997, as a m ended (the "Tax Cod e" ) 11 On O c to ber 19, 2009, instead of filing an Answer, respondent filed a Motion to Dismiss th e petition on the ground of lac k of c ause of a c tion due to failure to exhaust administrative re m edies.12 She p osits tha t the petitio n for review was prematurely filed before the Court oft 9 En Bone Docket, p. 10.

10 /d .

11 Division Doc ke t, p. 5.

12 Jd . at 50-53.

Deutsche Knowledge Services PTE LTD. vs. CIR CTA EB Case No. 667 (CTA Case No . 7979 )

Tax Appeals because the same was filed prior to the lapse of the 120- day pe riod provided under Sectio n 11 2(C ), Tax Cod e for her to d ecide or a c t o n the c laim for tax refund/c redit. He nce, she was not give n suffic ie nt tim e to a c t on th e administrative claim for tax refund/c redit. On December 14, 2009, petitioner filed its Co mment/Opposition (To Respondent' s Motion to Dismiss Dated October 15, 2009) (With

Motion

to

Declare

Responde nt in Default). 13

It

alleges that respondent's filin g o f the Motion to Dismiss was in d e fiance o f this Court 's ord er to fil e an Answer instead of a Motion to Dismiss; he nce, suc h failure to fil e an Answ er is suffic ie nt ba sis to declare respondent in default pursuant to Sec. 3, Rule 9, Revised Rules o f Co urt. 1 -1 Further, it asseverates that the filing of a petition for review before this Co urt prior to the lapse o f 120-day pe riod under Sec. 11 2(C ), Tax Cod e is not fatal to its claim for refund and neither is it a vio lation o f the d octrine o f exha ustio n o f administrative re medies. I S Petitio ne r a rg ues that the prevailing jurisprude nce is that th e 120- day pe riod under Sectio n 11 2(C ), Tax Cod e is neither mandatory nor com pulsory, and may be dispe nsed with a s long a s th e c laims for refund are filed within th e two-year period prescribed under Sectio n.t. 13 /d . at 60-85.

14 /d . o t 61 .

15 /d.

Deutsche Knowledge Services PTE LTD. vs. CIR CT A EB Case No. 667 (CTA Case No. 7979)

D E CISION

Page 6 o f 19 229, Tax Cod e . 16 Significantly, petitioner points out that respondent herself has mode contemporaneous pronouncements on the non- mandatory nature of the periods stated under Section 112(C) , Tax Code by way of issuance o f various revenue regulations.'; On April 12, 201 0, this Court's First Division rendered a Resolution 1s granting respondent' s Motio n to Dismiss and accordingly dismissed the Petition for Review based o n loc k o f jurisdic tion . Th e Court a quo held that the two-year prescriptive period under Section 11 2{A} , Tax Code defines the limit for filing on administrative claim for tax re fund or credit for input taxes with the Commissioner of Internal Revenue and not resort to Court action; 19 whereas, Sectio n 229, Tax Code cove rs refund of internal revenue taxes other than input value-added tax, erroneously or illegally assessed or collected, penalties imposed without authority and any sum alleged to hove been excessive or in any manner wrongfully collected. 2o Thu s, the Court a quo conc luded that it is only upon d e nial or the expiration of the allowable period of 120 days without any a c tion o n the pori of respondent that petitioner may, with the period of 30 days from notice, invoke the Court's compete nce to( 16 Division Docke l, p. 65.

17 /d. a1 77-82, c iting Revenue Regulations No. 7-95; Revenue Regulations 16-05; Revenue Memorandum Circular No . 49-03; Revenue Memorandum Circ ular No. 029- 09.

18 /d. at 90-96.

19 /d. at 94.

20 /d. a t 95.

Deu tsche Knowledge Services PTE LTD. vs. CIR C TA EB Case No. 667 (CTA Case No. 7979)

DECISION

Page 7 o f 19 hear its petition for review.21 Prior to that, the Court has no jurisdiction to entertain petitioner's appeal .77 Petitioner filed a motion for reconsideratio n of the abo ve-cited Resolution, whic h was subsequently denied in a Resolution23 dated July 20,2010.

Hence, petitioner filed the instant Petition for Review before the Court En Bane on Aug ust 26, 20 l 0. 7 ~ Respondent, o n th e o th er hand, failed to file her Comment to the Petition for Review .25 Petitioner raised th e following arguments before the Court En Bane, to wit:

21 /d.

22 fd.

l . The CTA-Division erred in not granting petitioner's Motion to Declare Responden t in Default and fa iling to consider tha t respondent had defied the CTA-Division 's order to file an Answer, instead of a motion to dismiss.

Therefore, such failure to file an answer should be sufficient basis to declare respondent in default;26 and

2. Petitioner's filing of its Petition for Review before the 120-day period under Section l l2(c ), Tax Code, has lapsed is not fatal to its claim for re fund and does not rend er the Petition for Review dismissible. 71' 23 fd. o l 164- 17l.

24 The Petition for Re view was filed within the exte nded p eriod g ron led by lhe Court En Bone in a Resolu tion do led Aug us! 12, 2010. 25 As p er Records Verifica tio n Form doled November 3, 20 10, En Bone Docke t, p. 84. 26En Bone Dockel , pp. 16-2 1.

21 /d. at 21 -46.

Deulsche Knowledge Services PTE LTD. vs. CIR CTA EB Case No . 667 (CTA Case No. 7979)

DECISION

Page 8 o f 19 The principal issue is whether or not the taxpayer's compliance with the 120 and 30-day period provided under Section 112(C), Tax Code, is mandatory and jurisdic tional.

Hence, the c rux of the controversy lies on th e correct interpretation of Sections 112(C) and 229, Tax Code insofar as the prescriptive period for the filing judic ial c laims for unutilized input VAT re fund/c redit is concerned. Petitioner strongly argues that the law confers a full two-year period within which to file both its administrative and judic ial claims for tax refund/credit as th e prevailing jurisprudence 2B on the matter provides that the 120-day period under Section 11 2(C), Tax Code is neither mandatory nor compulsory, and may be dispensed with as long as claims for refund are filed within the two-year period prescribed under Section 229 of the some Code .79 Further, petitioner submits that Section 11 2(C) , Tax Code, merely deals with VAT and the periods within which respondent shall grant a refund or issue a tax c redit, and does not deal with the period within which a taxpayer can go to court and seek judicial remedy; whereas, Section 229, Tax Code, specifically provides that no suit or proceeding sha ll be maintained in any court for,c 28 Citing CTA En Bane's Decision on CE Luzon Geo thermal Power Company, Inc. v. Commissioner of Infernal Revenue I Commissioner o f Internal Revenue v. CE Luzon Geothermal Power Company, Inc. , CT A EB Nos. 553 and 554, July 20, 20 l 0. 29 En Bane Docket, p. 22.

Deutsche Knowledge Services PTE LTD. vs. CIR CTA EB Case No. 667 (CTA Case No . 7979) the recovery of taxes erroneously or illegally collected. 30 Hence, petitioner concludes that Section 112 (C ), Tax Code should be harmonized with Section 229 of the same Code, which gives the taxpayer the bene fit o f th e full two-year period fro m the date o f payment o f the tax within whic h to file its judic ial c laim for refund be fore the Court o f Tax Appeals.:l l We find no merit in petitioner's argument.

It is worthy of emphasis that the pivotal issue o f when to file administrative and judic ial c laims for unutilized input VAT refund/c redit is no longer novel as the Supreme Court has already settled the said issue in th e recent c a se of Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc . (the "Aichi Case").J? As to the prescriptive period for filing an administrative c laim for unutilized input VAT refund/c redit, the Supreme Court in the Aichi Case reiterated its ruling in the case of Commissioner of Internal Revenue v. Mirant Pagbilao Corporation JJ that Sec tion 11 2(A), Tax Code is the applicable provision in determining the start of the two-year period for c laiming a refund/credit of unutilized input VAT and not Sections 204(C)l 3o /d. at 23-24.

31 /d. ol24.

32 G.R. No. 184823, October 6, 2010.

33 G.R. No . 172 129, September 12, 2008, 565 SCRA 154.

Deutsche Knowledge Services PTE LTD. vs. CIR CTA EB Case No. 667 (CTA Case No. 7979) and 229, Tax Code, which apply only to instances of erroneous payment or illegal collection of internal revenue taxes. Thus, the two-year period for claiming unutilized input VAT refund/credit before the Commissioner of Internal Revenue should be reckoned from the close of the taxable quarter when the sales were made. Thus, it ruled that:

"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. Miront Pogbiloo Corporation [G.R. No. 172129, September 12, 2008, 565 SCRA 154], where we ruled that Section 112(A) of the NIRC is the applicable provision in determining the start of the two-year period for claiming a refund/ credit of unutilized input VAT, and that Sections 204(C) and 229 of the NIRC are inapplicable as "both provisions apply only to instances of erroneous payment or illegal collection of internal revenue taxes. xxx" [Emphasis supplied.]

On another score, in determining the period on when to file a judic ial claim for unutilized input VAT re fund/credit before the Court of Tax Appeals, Section 112(C), Tax Code is applicable, which reads: "Sec. ll2(C) Period within which Refund or Tax Credit of Input Taxes shall be Mode. - 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." [Emphasis supplied.]' Deutsche Knowledge Services PTE LTD. vs. CIR CTA EB Case No . 667 (CTA Case No. 7979) In interpreting th e foregoing provision, th e Supreme Court in the Aichi Case c learly d elineated the procedure insofar a s judicial appeal before the Court of Tax Appeals is concerned , thus: "Section 11 2(0) of the NIRC clearly provides that the CIR has '120 days, from the dote of the submission 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 CIR, the taxpayer's recourse is to file an appeal before the CT A within 30 days from receipt of the decision of the Cl R. However, if after the 120-day period the CIR fails to act on the application for tax refund/ credit, the remedy of the taxpayer is to appeal the inaction of the CIR to CTA within 30 days." [Emphasis supplied.]

Moreover, in the some case, the Supreme Court c ategorically ruled that th e 120-day period under Section 11 2(0 ) (now, Section 11 2[Cl), Tax Code, for the Commissioner of Internal Revenue to act on administrative c laims for unutilized input VAT refund/credit is c rucial in filing an appeal to th e Co urt of Tax Appeals. The pertinent portion o f the said decision reads:

"Respondent's assertion that the non-observance of the 120- doy period is not fatal to the filing of a judicial claim as long as both the administrative and the judicial claims are filed w ithin the two-year prescriptive period has no legal basis.

There is nothing in Section 11 2 of the NIRC to support respondent's view. Subsection (A) of the said provision states that "any VAT-registered person, whose soles are zero-rated or effectively zero-rated may, within two years after the close of the taxable quarter when the soles were mode, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such soles." The phrase "within two (2) years x x x apply for the issuance of a tax credit certificate or refund" 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 (D) of the some provision, which states that the CIR has "120 days( Deu tsche Knowledge Services PTE LTD. vs. CIR CTA EB Case No. 667 (CTA Case No. 7979)

D E CISION

Page 12 o f 19 from the submission of complete documents in support of the application filed in accordance with Subsections (A) and (B)" within whic h to decide on the claim.

In fact, applying the two-year period to judicial c laims would render nugatory Section 11 2(0 ) of the NIRC. w hic h already provides for a specific period within w hic h a taxpayer should appeal the decision or inaction of the CIR. The second paragraph of Section 112(0) of the NIRC envisions two scenarios: (1) when a decision is issued by the CIR 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 within which to file an appeal with the CT A. As we see it then, the 120-day period is crucial in filing an appeal with the CTA.

With regard to Commissioner of Internal Revenue v. Victorias Milling, Co., Inc. [1 30 Phil. 12 ( 1968}] relied upon by respondent, we find the same inapplicable as the tax provision involved in that case is Section 306, now Section 229 of the NIRC. And as already discussed, Section 229 does not apply to refunds/credits of input VAT, such as the instant case.

In fine, the premature filing of respondent's claim for refund/ credit of input VAT before the CTA warrants a dismissal inasmuch as no jurisdiction was acquired by the CT A." [Emphasis supplied.]

Consequently, it is clear tha t compliance with the 120-day period provided under Section 11 2(C), Tax Cod e, is mandatory and jurisdic tional . Thus, th e inescapable conc lusion is that p e titioner c an only invoke the jurisdic tion of this Co urt within the p eriod of 30 days reckoned from the no tice of d enial or expiration of the 120-day period w itho ut a ny action on the part of respondent. Failure to heed the ma nd atory period o f 120 and 30-da ys is c ruc ial to its a p p eal and warra nts a dismissal on th e gro und of lack o f jurisdic tion to hear and decide petitioner's a p peal. c Deutsche Knowle dge Services PTE LTD . vs. CIR CTA EB Case No. 667 (C TA Case No. 7979 )

DECISION

Page 13 o f 19 In th e instant case, petitioner filed its administrative c laim for tax refund/credit of its excess and unutilized input VAT for the 3rd quarter of the taxable year 2007 with the BIR on September 18, 2009.34 Clearly the n, petitioner tim ely filed its administrative claim with the BIR, within two (2) years reckoned from the close o f the taxable quarter when the sales w ere made.

As to its judic ial claim, however, petitioner filed a Petition for Review before this Court in Division on September 30, 200935 or barely a month after petitioner filed its application for re fund with the BIR. Indisputably, petitioner failed to comply with th e mandatory period of 120 and 30 days under Section 11 2{C), Tax Code, which is c ruc ial in filing an appeal be fore th e Court o f Tax Appeals, as held in th e Aichi Case.

Hence, the filing o f pe titioner's c la im for unutilized input VAT refund/credit before the Court a quo was premature as there was no CIR decisio n for this Court to review nor was there inac tion on the part of the CIR after the lapse of the 120-day period provided under Section 112(C), Tax Code. Therefore, the petition for review filed before this Court warrants a dismissal o n the ground o f absence of jurisdiction to take cog nizance o f the case.( 34 Division Docket, p. 7.

35 /d. at 5.

Deutsche Knowledge Services PTE LTD. vs. CIR CTA EB Case No . 667 (CTA Case No. 7979)

DECISION

Page 14 o f 19 It is axiomatic that th e "Court o f Tax Appe als is a court o f special jurisdic tion and c an o nly take cog nizance of suc h matters as are c le arly within its jurisdiction.":l6 A c lose scru tiny o f Section 7 of Republic Act (R.A.) No. 9282, amending R.A No. 11 25, otherwise known as the Law Creating the Co urt of Tax Appeats31 and Section 3, Rule 4 and Section 3(a), Rule 8 of the Revised Rules of the Court of Tax Appeals38(, 36 Rizal Commerc ial Bonking Corp. vs. Commissioner o f Internal Revenue , G.R . No. 168498, April 24, 2007,522 SCRA 144.

37 Sec. 7. Jurisdic tion.- The CTA shall exerc ise: (a) Exclusive appella te jurisdic tion to review by appeal, as herein provided :

( 1) Decisions o f the Commissioner of Internal Revenue in cases involving disputed assessm ents, re funds o f infernal revenue taxes, fees or o ther c harges, penalties in relation there to, or other matters arising under the National Internal Revenue or o ther laws adminis tere d by the Bureau o f Internal Revenue;

(2) Inaction by the Commissioner o f Internal Revenue in cases involving disputed assessments, re funds o f internal revenue taxes, fees or o ther c harges, p enalties in re lation thereto, or o ther mat ters arising under the National Internal Revenue Cod e or o ther laws administered by the Bureau of Infernal Revenue, where the Na tional

Internal

l~eve nu e Code provides a sp ecific period of a c tion , in whic h c ase the inac tion shall be deemed a d e nial;

XXX

38 Rule 4, Sec tion 3. Cases Within the Jurisdic tion o f the Co urt in Divisio n.- The Court in Division sha ll exerc ise:

(a) Exclusive original or appella te jurisdic tion to review by appeal the following:

( 1) Decisions of the Commissioner o f Inte rnal Revenue in c ases involving disputed assessments, re funds o f infernal revenue taxes, fees or o ther c harges, p enalties in relation there to, or o the r matters arising under the National Infernal Revenue Code or o ther laws administered by the Bureau o f Internal Revenue; (2) Inac tion by the Commissioner o f Internal Revenue in cases involving disputed assessments, re funds of internal reve nue taxes, fees or o ther c harges, p enalties in re lation thereto, or o ther matters Deutsche Knowledge Services PTE LTD. vs. C IR CTA EB Case No. 667 (CTA Case No . 7979) revea ls that the jurisdictio n o f the Co urt of Tax Appea ls has been expa nded to includ e not o nly d ec isions or rulings but inactio n as w ell of the Commissio ner of Interna l Reve nue. Evidently, the decisions, rulings or inaction o f the Commissioner are necessary in order to vest the Court of Tax Appeals w ith jurisd ic tion to enterta in th e appeal, 39 spec ifically on claim for re fund, provided it is filed w ithin 30 d ays a fter the receip t o f suc h decision or rulin g, or within 30 d ays after the ( arising under the Nolionol lnlernol Revenue Cod e or o ther lows administered by lhe Bureau o f Internal Revenue, where the Notional Internal Revenue Cod e or o lher applic able low provides o specific perio d for a c tion: Provided , that in c ase o f dispu ted assessments, the inac tio n o f the Commissioner of Internal Revenue w ithin the one hundre d eighty day-p eriod under Sec lion 228 o f the Notional In ternal Revenue Cod e shall b e d eem ed o d e nial for purposes o f allowing the loxpoyer to appe al his case lo lhe Courl and d oes no t necessarily constitute o formal d ecision o f lhe Commissioner o f In terna l Revenue on the tax c ase; Provid ed , furlher, lhot should the taxpayer op t to owoit the final d ecision of the Commissioner o f Internal Revenue on the disputed assessme nts b eyond the one hundred eighty day-p eriod above me ntioned , the taxpayer may appeal suc h final d ecision to the Court under Sec tion 3(o) , Rule 8 o f lhese Rules; and Provided , still further, thol in lhe c ase o f c laims for re fund o f lo xes erro neously or illegally collec led , the lo xpoyer must file o pe lilion for review w ith the Courl p rior lo the expira lion o f lhe lwo-yeor p eriod under Sectio n 229 o f the Notional Internal Revenue Cod e;

X X X

Rule 8, Sec tion 3. Wh o m a y a p p eal; p eriod to fife pe tition. -

(o) A party adversely offec led by o d ecision, ruling or lhe inoc lion o f the Commissio ne r o f Internal Revenue on d isputed assessme n ts or c laims for re fund o f interna l revenue loxes, or by o d ecisio n or ruling o f the Commissio ne r o f Custom s, the Secre tory of Finance, the Secre tory o f Trade and Industry, the Secretory o f Agric ulture, or o Regional Trial Court in the exerc ise o f its original jurisdic tion may a ppe al lo the Court by p e tition for review filed w ilhin lhirly days o fl er receipt o f o copy o f suc h d ecision or ruling, or expiration o f lhe period fixed by low for the Commissioner o f lnlernol Revenue to o c l on lhe dispul ed assessments. In case o f inac tio n o f the Commissioner o f lnlernol Revenue on c laims for re fund o f internal revenue loxes erroneously or illegally collected , the taxpayer must file o p e li tion for review w ithin the two-year period prescribed by low from paym ent or collec lion o f lhe taxes. 39 Sup ra no te 36.

Deutsche Knowledge Services PTE LTD. vs. CIR CT A EB Case No . 667 (CTA Case No. 7979) expiration of the 120-day period fixed by law for the Commissioner to act o n claim for re fund.11o This 30-doy period after the receipt of suc h decision or ruling, or inac tion on the port of the CIR after the expiration of the 120-doy period, within which to file on appeal is jurisdic tional and failure to comply th erewith would bar the appeal and deprive the Court of Tax Appeals of its jurisdiction to entertain and determine the appeal or petition for review. Said period is not merely directory but mandatory and it is beyond the power of the courts to extend or shorte n the some.

Further, jurisprude nce is replete with c ases in holding that "the rig ht to appeal is not a natural right or a port of due process, it is merely a sta tutory privilege, and th e some may be exerc ised only in the manner and in accordance with the provisions of low. The party who seeks to avail of the some must comply with th e require m ents of the low. Foiling to do so, the right to appea l is l os t." ~ 1 Finally, anent petitioner's argument that th e Court a quo should hove granted its motion to declare respondent in default on th e e 4o See Commissioner o f Internal Revenue v. Aichi Forging Company of Asia. Inc .. supra note 32.

41 Producers Bonk of the Phil. vs. Court of Appeals. G.R . No. 126620. 38 1 SCRA 185. April 17, 2002 c iting Ortiz vs. Court of Appeals. 299 SCRA 708 ( 1998).

Deu lsche Knowledge Services PTE LTD. vs. CIR CTA EB Case No. 667 (CTA Case No. 7979 )

DECISION

Page 17 o f 19 ground that th e Iotter filed a Motion to Dismiss instead of on Answer, the some must necessarily foil.

Jurisdic tion is defined as the authority to try, hear and decide a c aseY Moreover, that jurisdiction of the court over the subject matter of the action is a matter of low and it may not be conferred by consent or agreement of the porties.~ 3 In fact, th e lock of jurisdiction of a court may be raised at any stage of the proceedings, even on oppeol .~ 4 Hence, where the court itself clearly has no jurisdiction over the subject matter, the a c tion shall be dismissed. ~~' Section I, Rule 9, Revised Rules of Court, aptly provides that wh en it appe ars from the pleadings or the evidence on record that the court has no jurisdiction over the subject matter of the case, the court shall dismiss th e c laim, regardless of whether or not the so me was pleaded either in a motion to dismiss or in the answer, thu s: "Section 1.

Defenses and objections not pleaded. - Defenses and objections not pleaded either in a motion to dismiss or in the answer ore deemed waived. However, when it appears from the pleadings or the evidence on record that the~ 42 Fort Bonifacio Development Corpora tion v. Hon. Edwin D. Sorongon, e t of., G.R. No. 176709, May 8, 2009 c iting Tolentino v. Leviste, G.R. No. 1561 18, 19 November 2004, 443 SCRA 274, 284; Toyota v. The Director o f the Bureau of Labor Relations, 363 Phil. 437 (1999); Zamora v. Co urt o f Appeals, G.R. No. 78206, 19 Marc h 1990, 183 SCRA 279. 43 Justice Jose Y. Feria and Mario Concepcion S. Noche, Civil Procedure Annotated, Vol. l, 200 1 Ed., p. 3 18.

44 fd .

45Lo Novo/ Drug Corporation vs. Court of Appeals, G.R. No. 103200,31 August 1994 c iting Section 2, Rule 9, Rules o f Court (now, Section 1, Rule 9, Revised Rules o f Court).

Deutsche Knowledge Services PTE LTD. vs. CIR CTA EB Case No. 667 (CTA Case No. 7979) court has no jurisdiction over the subject matter, that there is another action pending between the some parties for the some cause, or that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss the claim."

[Emphasis supplied.]

Evidently, th e court c on m otu proprio dismiss the claim on the ground of loc k of jurisdic tio n over the subject matter o f th e case. This belies petitioner's claim that the Court a quo should hove declared respondent in default on th e ground that the Iotter filed a Motion to Dismiss instead of on Answer.

WHEREFORE prem1ses considered, th e petition is DENIED. The Resolutions of th e First Division of this Court in CTA Case No. 7979 doted

April

12, 20 l 0 and July 20, 20 l 0 ore hereby AFFIRMED.

No

pronouncement as to costs.

Associate Justice

WE CONC UR:

L\9. c~ ERNESTO D. ACOSTA

Presiding Justice

Deutsche Knowledge Services PTE LTD. vs. CIR CTA EB Case No. 667 (CTA Case No . 7979)

DECISION

~~ac.Gr~~'*· frJANITO C. CASTANEDA,~. -

Associate Justice

Page 19 of 19

• ER~-y Asso~~~ice ~ fi?.e_e-~

OLGA PALANCA-ENRIQUEZ

Associate Justice

CAESAR A. CASANOVA

Associate Justice

~~A--/~-

AMEliA R. COTA£c'O-MANALASTAS

Associate Justice

CERTIFICATION

Pursuant to Artic le VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Decision w ere reac hed in consullation among the members o f the Court En Bane before the case was assigned to the writer o f the opinion o f the Court En Bane. \J:~t,. . t'~ ERNESTO D. ACOSTA

Presiding Justice

REPUBLIC OF THE PHILIPPINES

Court of Tax Appeals

QUEZON CITY

En Bane

DEUTSCHE KNOWLEDGE

SERVICES, PTE. LTD.,

Petitioner, -versus-

COMMISSIONER OF INTERNAL

REVENUE, Respondent.

Present:

Acosta, P.J.

Castaneda, Jr., Bautista, Uy, Casanova, Palanca-Enriquez, Fa bon-Victorino, Mindaro-Grulla, and Cotangco-Manalastas, Jl.

Promulgated:

U"r_~/~

SEP 1 6 2011

9:~ a -. ~ •.

X-------------------------------------------------------------------------------------------------------------X

Dissenting Opinion

BAUTISTA, [.:

While the Court En Bane denied the present Petition for Review, and accordingly, affirmed the assailed Resolutions of the First Division of the Court ("Court in Division") dated April 12, 2010 and July 20, 2010, which dismissed the Petition for Review before the Court in Division on the ground of lack of jurisdiction, I, on the other hand, opts to uphold the pronouncements made in the cases of Disse11ti11g Opi11io11 Cf A EB CASE NO. 667 (Cf A Case No. 7979)

Page 2 of 3

Commissioner of Internal Revenue v. Toledo Power, Inc.,1 and Commissioner of Internal Revenue v. San Roque Power Corporation.2 A plain reading of Section 112 of the 1997 National Internal Revenue Code ("NIRC"), as amended, will show that the provision use the word "may" instead of a more restrictive or mandatory term.³ Since it is well-settled that the word "may" when used in a statute, is merely permissive and operates to confer discretion, the same word incorporated in Section 112 of the 1997 NIRC, particularly paragraph (C) thereof, should be construed as permissive and not restrictive in nature.

And consistent with the provision's permissive nature, the preceding paragraph, specifically paragraph (A), likewise use the same word in stating that a "VAT -registered person whose sales are zero-rated or effectively-zero-rated may apply for the issuance of a tax credit certificate or refund xxx".

Therefore, the judicial recourse to this Court within thirty (30) days after the lapse of the one hundred twenty (120)-day period is merely directory and permissive, and not mandatory nor jurisdictional, however, subject only to the period provided under the same provision, i.e., within two (2) years after the close of the taxable quarter when the sales were made.

With this, if the two (2)-year prescriptive period is about to expire, there is no need to wait for the denial of the claim or the inaction by the Commissioner of