Philex Mining Corporation vs. Commissioner of Internal Revenue
G.R. No. 195120. April 19, 2017
Philex applied and was approved on April 12, 1998 for zero rating pursuant to Section 4.100-3 of Revenue Regulations No. 7-95. For the second quarter of 2005, Philex filed its original VAT return on July 26, 2005. The amended return filed on December 1, 2005 reported a total zero-rated sale of P1,335,044,466.98, domestic purchase of goods of P825,912.30 with corresponding input tax of P82,591.23 and importation of goods of P62,500,070.00 with corresponding input tax of P6,250,007.00. Philex fied a claim for tax refund/tax credit with the One-Stop Shop Center of the Department of Finance (DOF) on March 20, 2006 in the amount of P6,332,598.23. Respondent Commissioner of Internal Revenue (CIR) has not acted upon the tax refund of Philex impelling the latter to file a petition for review on certiorari before the CTA. The CTA First Division denied the petition on the ground of prescription.
Whether or not Philex’s claim for refund of unutilized input VAT has prescribed
It is a well-entrenched principle in taxation that a claim for refund is in the nature of a tax exemption and, as such, it is consequently construed strictly against a taxpayer. On the strength of paragraphs (A) and (C) of Section 112 of the 1997 NIRC, as amended, Philex filed its claim for refund of its excess unutilized input VAT for the second quarter of 2005. Entitlement to VAT refund necessitates the observance of the prescriptive periods within which to file the administrative and judicial claims. The reckoning point of the two-year period for the filing of an administrative claim for refund or credit of unutilized input VAT and the applicability of the two-year prescriptive period to both the administrative and judicial claim for refund or credit of unutilized input VAT are among the ancillary matters which remarkably are not novel but nonetheless brought before the Court germane to the disposition of the ultimate issue of whether Philex’s claim for refund of unutilized input VAT is time-barred.
Despite the timely filing of the administrative claim, the Court is compelled to reject Philex’s claim for tax refund/credit for having been filed in clear contravention of the provision of Section 112 of the 1997 NIRC. Indisputably, Philex’s case is one of late judicial filing. The Court agrees with the conclusion of the CTA denying Philex’s application for refund or credit of unutilized input VAT for having been judicially filed out of time. However, the tax court was mistaken as to its ruling that the two-year prescriptive period applies both to administrative and judicial claims for refund. The Court, in the case of CIR v. Aichi Forging Company of Asia, Inc. (646 Phil. 710), settled this matter with finality holding that it is only the administrative claim that must be filed within the two-year prescriptive period.
Records reveal that Philex filed an administrative claim for refund of unutilized input VAT on March 20, 2006 for the second quarter of 2005 which is well within the two-year prescriptive period or until June 30, 2007 as the close of the second quarter is on June 30, 2005. The CIR or in this case, the One-Stop Shop Center of the DOF has 120 days from March 20, 2006 or until July 18, 2006 within which to act on such claim. However, it failed to do so. Philex could treat the inaction as denial and interpose an appeal before the CTA Division within 30 days from July 18, 2006 or until August 17, 2006. Philex belatedly filed its judicial recourse on July 30, 2007 which is 330 days way beyond the prescribed 30-day period.