CIR v.

Dash Engg PH Inc (DEPI)

GR No. 184145, 11 Dec 2013, Mendoza, J.
Tax Law Review

Although RESP filed its admin claim w/ BIR on Aug 9’04 before the expiration of the 2-yr period
in Sec 112(A), it failed to comply with the 120+30 day period in Sec 112(C) w/c requires that
upon the inaction of the CIR for 120 days after the submission of the documents in support of the
claim, taxpayer has to file judicial claim w/in 30 days after the lapse of said period

FACTS
 RESP is a VAT-registered entity engaged in the export sales of computer-aided engg and
design
o It filed its monthly and quarterly VAT returns for the period from Jan 1’03 to June
30’03.
 On Aug 9’04, it filed a claim for tax credit or refund in the amount of P2.1M representing
unutilized input VAT attributable to its zero-rated sales.
o Because PET failed to act upon it, RESP filed petition for review with CTA on
May 5’05
 CTA 2 Division partially granted RESP’s claim for refund or issuance of tax credit cert
nd

in the reduced amount of P1.1M

o It found that RESP’s claims for refund for the 1st and 2nd quarters of 2003 were
filed w/in the 2-yr prescriptive period w/c is counted from the date of filing of the
return and payment of tax due
 Because DEPI filed its amended quarterly VAT returns on July 24,’04, it
had until July 24,’06 to file its judicial claim. As such, its filing of petition
for review with CTA on April 26’05 was w/in the prescriptive period
o PET moved for recon  denied
 PET went to CTA En banc where it argued that the petition for review was filed out of
time
 CTA En Banc upheld CTA 2nd Division
o Judicial claim was filed on time because “may” in Sec 112(C), NIRC indicates
that judicial recourse w/in 30 days after lapse of the 120-day period is only
directory and permissive, not mandatory and jurisdictional, as long as the petition
was filed w/in 2-yr prescriptive period
o That the 2-yr prescriptive period applies to both admin and judicial claims
o PET’s MR was denied
 Hence this petition
o PET argues that the judicial claim was filed of time because RESP failed to
comply with the 30-day period referred to in Sec 112(c) NIRC, citing Aichi,
where Court held that compliance w/ prescribed periods in Sec 112 is mandatory
and jurisdictional
 RESP filed its admin claim on Aug 9’04. The 120-day period w/in w/c CIR
should act expired on Dec 7’04. Thus RESP only had 30 days from lapse of
said period, or until Jan 6’05, to file petition for review w/ CTA
  But petition was filed only on May 5’05
o RESP asserts that its petition was seasonably filed before CTA, per the 2-yr
prescriptive period under Secs 204(c)1 and 2292.
 It interprets Sec 1123 in relation to Sec 229 to mean that the 120-day
period is the time given to CIR to decide the case
 Taxpayer, on the other hand, has the option of either
 Appealing to the CTA the CIR’s denial of the claim for refund w/in
30 days from receipt of such denial and w/in the 2-yr prescriptive
period, or
 Appealing an unacted claim to CTA anytime after the expiration of the 120-
day period given to CIR to resolve admin claim for as long as the judicial
claim is made w/in the 2-yr prescriptive period
 So, its filing of the judicial claim on April 26’05 was filed on time because it
was made after the lapse of the 120-day period and w/in the 2-yr period
under Sec 229

ISSUES & HOLDING

 WON RESP’s judicial claim for refund was filed w/in prescriptive period? –NO. RESP
filed judicial claim beyond the 30 days, which is counted from the inaction of the
CIR for 120 days

RATIO
Sec 229 inapplicable; 2-yr period in Sec 112 refers only
to admin claims.
 Secs 204 and 229 pertain to refund of erroneously or illegally collected taxes
 Sec 229 is inapplicable to claims for excess of input VAT.
 CIR v San Roque Power: input VAT is not excessively collected as understood under Sec
229 because at the time the input VAT is collected the amount paid is correct and proper.
Sec 112 is the more specific and appropriate provision for claims for excess input VAT

1 xxx No credit or refund of taxes or penalties shall be allowed unless 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 xxx
2
No suit or proceeding shall be maintained in any court for the recovery 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 authority, of any sum alleged to have been
excessively or in any manner wrongfully collected without authority, or of any sum alleged to have been excessively or in any manner wrongfully
collected, until a claim for refund 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 under protest or duress.
In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of the tax or penalty xxx

3 (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 compete documents in
support of the application filed in accordance with Subsections (A) and (B) hereof.
In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application
within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim or after
the expiration of the one hundred twenty day-period, appeal the decision or the unacted claim with the Court of Tax Appeals.
 o Sec 112(A)4 also provides for a 2-yr period for filing a claim for refund. But as
explained in San Roque, that 2-yr prescriptive period applies only to the filing of
admin claims w/ CIR, not to the filing of judicial claims w/ CTA. For as long as
admin claim is filed w/ CIR w/in the 2-yr prescriptive period, the 30-day period
given to taxpayer to file judicial claim w/ CTA need not fall in the same 2-yr
period
 At any rate, RESP’s noncompliance w/ 2-yr prescriptive period under Sec 112(A) is not
an issue. What is being questioned is its failure to observe the requisite 120+30 day
period under Sec 112(C)
120+30 day period under Sec 112 is mandatory and
jurisdictional; RESP’s judicial claim for refund must be
denied for having been filed late
 See footnote 3 (Sec 112(D), par 2)
 Although RESP filed its admin claim w/ BIR on Aug 9’04 before the expiration of the 2-
yr period in Sec 112(A), it failed to comply with the 120+30 day period in Sec 112(C)
w/c requires that upon the inaction of the CIR for 120 days after the submission of the
documents in support of the claim, taxpayer has to file judicial claim w/in 30 days after
the lapse of said period
 120 days granted to CIR to decide ended on Dec 7’04, thus RESP had 30 days therefrom,
or until Jan 6’05 to file petition for review w/ CTA. But RESP only sought judicial relief
on May 5’05, almost 4 mos after the period allowed. As a consequence, CTA did not
properly acquire jurisdiction over the claim
 Taxes are the lifeblood of the govt, consequently tax laws must be faithfully and strictly
implemented; they are not intended to be liberally construed

DISPOSITIVE
Petition granted. RESP’s judicial
claim for refund or tax credit is
denied.

4 Sec. 112. Refunds or Tax Credits of Input Tax. – (A) Zero-rated or Effectively Zero-rated Sales. – Any VATregistered person, whose sales are
zero-rated or effectively zerorated 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