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REPUBLIC OF THE PHILIPPINES
SUPREME COURT
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Manila
SECOND DIVISION
NOTICE
Sirs/Mesdames:
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Please take notice that the Court, Second Division, issued a Resolution
dated 18 March 2015 which reads as follows:
11
G.R. No. 206230 - Associated Swedish Steels Philippines, Inc. v.
Commissioner ofInternal Revenue and Court of Tax Appeals.
Before this Court is a petition for certiorari 1 under Rule 65 of the
Rules of Court assailing the August 23, 2012 Decision2 and the January 21,
2013 Resolution3 of the Court of Tax Appeals En Banc (CTA-En Banc) in
CTA EB Case No. 854 which, in tum, affirmed in toto the September 16,
2011 Decision4 and the December 15, 2011 Resolution 5 of the First Division
of the Court of Tax Appeals (CTA Division) in CTA Case No. 7850.
The undisputed facts may be restated in the following manner:
Petitioner Associated Swedish Steels, Inc. (petitioner) was a domestic
corporation and a registered Value-Added Tax (VAT) entity engaged in the
business of importing and selling tool steels and metallurgical products. 6 On
November 15, 2007, petitioner'~ board of directors resolved to dissolve the
corporation effective December 31, 2007. 7
On July 1, 2008, seven months later, after it had ceased operations,
petitioner filed its Application for Registration Information Update 8 with
respondent Bureau of Internal Revenue (BIR), seeking the cancellation of its
registration as a VAT-registered entity. Through the same application,
petitioner also sought the cancellation of its Taxpayer Identification Number
(TIN) due to "Cessation of VAT Registration."
1
Rollo, pp. 3-55.
2
Penned by Associate Justice Juanito C. Castaneda, Jr., with Presiding Justice Ernesto D. Acosta, and
Associate Ju8tices Lovell R. Bautista, Erlinda P. Uy, Caesar A. Cassanova, Olga Palanca-Enriquez,
Esperanza R. Fabon-Victorino, Cielito N. Mindaro-Grulla and Amelia R. Cotangco-Manalastas, concurring;
rollo, pp. 35-49.
3
Id. at 51-54.
4
Penned by Associate Justice Erlinda P. Uy, with Presiding Justice Ernesto D. Acosta, and Associate Justice
Esperanza R. Fabon-Victorino concurring; id. at 20-28.
5
Id. at 29-33.
6
See CTA rollo, p. 5, 22.
7
Id. at 17.
8
~
Id. at 18.
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2
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· · · . A' few~: days thereafter, on July 7, 2008, petitioner filed an
·administrativeI'
claim with the BIR for the issuance of a tax credit certificate
/;, (TCC)~ iB th.e· .amount of F23,303,769.83, representing its accumulated
' ... : · e~c~ss/~nn~ilized input tax credits from its importation of goods and from
domesti~·purchase of goods as of December 31, 2007.
Due to the inaction of the BIR, petitioner filed a petition for review 9
with the CTA Division.
On September 16, 2011, the CTA-Division found petitioner's
application for the issuance of TCC premature and disposed of the petitio!l
in the following manner:
WHEREFORE, premises considered, the instant Petition for
Review is hereby DENIED for lack of merit.
SO ORDERED. 10
Petitioner sought reconsideration but its motion was rebuffed.
On August 23, 2012, the CTA-En Banc affirmed the ruling of the
CTA-Division, disposing:
WHEREFORE, premises considered, the Petition for Review
is DISMISSED for lack of merit. Accordingly, both the assailed
Decision dated September 16, 2011 and [the] Resolution dated
December 15, 2011 of the CTA First Division are hereby
AFFIRMED.
SO ORDERED. 11
Petitioner moved for reconsideration, but to no avail.
Hence, this petition.
ISSUE
Whether or not the [CTA-En Banc] gravely abused its
discretion when it denied [P]etitioner's claim for refund amounting to
Pesos: TWenty Three Million Three Hundred Three Thousand Seven
Hundred Sixty Nine and 83/100 (P23, 303,769.83) solely on the ground
that the administrative claim for issuance of a TCC was prematurely
made, thus, failing to comply with the last requisite of Section 112 (B)
of the Tax Code. 12
9
Id. at 4-24.
10
ld. at 28.
11
Id. at 48.
12
Id. at 9.
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In seeking the issuance of the corrective writ of certiorari, petitioner
claims that the CTA-En Banc committed grave abuse of discretion when
respondent Commissioner of Internal Revenue (respondent) denied the
administrative claim solely on the ground that the administrative claim was
prematurely filed. According to petitioner, the denial of claim on a mere
technicality should not be allowed, as it would not only unduly enrich the
government at the expense of the petitioner, but also deprive it of its right to
property without due process of law. 13
As for the merits of its claim, petitioner asserts that the act of filing its
Application for Registration Information Update for the cancellation of its
VAT registration due to the cessation of its operations was the sole operative
act that would trigger the cancellation of its tax registration. 14 Accordingly,
petitioner is of the considered view that because it filed its Application for
Registration Information Update on July 1, 2008, 15 its claim for refund or
issuance of a TCC filed on July 7. 2008 was on time.
Petitioner argues that even if its administrative claim was prematurely
filed, the defense of prematurity should have been deemed waived by
respondent when it continued to process the claim notwithstanding its
prematurity, and when it agreed to the Joint Stipulation of Facts and Issues 16
filed before the CTA-Division, where it was :;idmitted that petitioner's
administrative claim was filed "clearly within the two-year period ... " 17
For petitioner, both respondent f,llld the tax courts should have acted
liberally in applying the rules of procedure so as not to defeat petitioner's
substantive right to claim a refund. 18
The Court's Ruling
The petition must fail.
Petitioner availed of
the wrong remedy
Immediately apparent is that the subject petition was the wrong
remedy to question the issuances of the CTA-En Banc. Section 19 of
13
Id. at 9- JO.
14
Id. at 11.
15
Id. at 10-12.
16
CTA Division rol/o, pp. 56-59.
17
Rollo, p. 13.
18
Id. at 15-17.
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Republic Act (R.A.) No. 1125, as amended by Republic Act No. 9282, 19 and
Section 1, Rule 16 of the Revised Rules of the Court of Tax Appeals 20
expressly provide that a party desiring to appeal from a judgment or final
order or resolution of the CTA-En Banc should file a verified petition for
review on certiorari under Rule 45 of the Rules of Court. Considering
that, in this case, appeal by certiorari was available to petitioner, its right to
resort to a special civil action for certiorari under Rule 65, a limited form of
review and a remedy of last recourse, was foreclosed. Well-settled is the rule
that certiorari lies only where there is no appeal or plain, speedy and
adequate remedy in the ordinary course of law. 21
A petition for review on certiorari under Rule 45 and a petit10n
for certiorari under Rule 65 of the Rules of Court are mutually exclusive
remedies. Certiorari cannot co-exist with an appeal or any other adequate
remedy. 22 The nature of the questions of law intended to be raised on appeal
is of no consequence.
While in certain cases this Court has considered petitions erroneously
filed under Rule 65 as filed under Rule 45, the Court finds that it cannot be
done in this case because the petition was filed beyond the 15-
day reglementary period. Records show that petitioner filed its petition sixty
(60) days after receipt of the January 21, 2013 Resolution of the CTA-En
Banc23 denying its motion for reconsideration. Verily, a Rule 65 petition
cannot substitute for the lost appeal, even if the ground is grave abuse of
discretion. 24
The claim, that the subject recourse is justified on the ground that the
dismissal of petitioner's right to recover excess input tax would result in the
deprivation of property without due process of law, deserves scant
consideration. After all, it has been said that the input tax is not a property or
a property right within the constitutional purview of the due process
clause. 25 Moreover, it cannot be said that the government is guilty of unjust
enrichment should it not allow a recovery of the excess/unutilized input tax
19
Section. 19. Review by Certiorari. - A party adversely affected by a decision or ruling of the CTA-En
bane may file with the Supreme Court a verified petition for review on certiorari pursuant to Rule 45 of the
1997 Rules of Civil Procedure."
20
Section 1. Appeal to Supreme Court by petition for review on certiorari. - A party adversely affected by a
decision or ruling of the Court en bane may appeal therefrom by filing with the Supreme Court a verified
petition for review on certiorari within fifteen days from receipt of a copy of the decision or resolution, as
provided in Rule 45 of the Rules of Court. If such party has filed a motion for reconsideration or for new
trial, the period herein fixed shall run from the party's receipt of a copy of the resolution denying the
motion for reconsideration or for new trial. (n)
21
Beluso v. Commission on Elections, 635 Phil. 436, 442-443 (20 I 0).
22
Macawiag v. Balindong, 533 Phil. 735, 747 (2006).
23
See Nippon Paint Employees Union-Olalia v. Court ofAppeals, 485 Phil. 675, 681-682 (2004).
24
Malayang Manggagawa ng Stayfast Phils., Inc. v. National labor Relations Commission, G.R. No.
155306, August 28, 2013, 704 SCRA 24.
25
Abakada Guro Party List, Inc. v. Hon. Exec. Sec. Ermita, 506 Phil. 1 (2005).
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credits. On this score, the following reasoning of the Court in Commissioner
of Internal Revenue v. San Roque Power Corporation 26 (San Roque) can be
said to be applicable by analogy:
The input VAT is not "excessively" collected as understood
under Section 229 because at the time the input VAT is collected the
amount paid is correct and proper. The input VAT is a tax liability of,
and legally paid by, a. VAT-registered seller of goods, properties or
services used as input by another VAT-registered person in the sale
of his own goods, properties, or services. This tax liability is true
even if the seller passes on the input VAT to the buyer as part of the
purchase price. The second VAT-registered person, who is not
legally liable for the input VAT, is the one who applies the input
VAT as credit for his own output VAT~ If the input VAT is in fact
"excessively" collected as understood under Section 229, then it is
the first VAT-registered person - the taxpayer who is legally liable
and who is deemed to have legally paid for the input VAT - who can
ask for a tax refund or credit under Section 229 as an ordinary
refund or credit outside of the VAT System. In such event, the
second VAT-registered taxpayer will have no input VAT to offset .
against his own output VAT. (Emphases included. Underscoring
supplied)
On these premises alone, the petition must be dismissed. For it is well
to point out that with petitioner's erroneous filing of the subject petition, the
challenged issuances of the CTA-En Banc had already attained finality and
could no longer be reviewed by this Court. When a decision becomes final
and ·executory, the court loses jurisdiction over the case and not even an
appellate court has the power to review the said judgment. Otherwise, there
will be no end to litigation and this will set to naught the main role of courts
of justice to assist in the enforcement of the rule of law and the maintenance
of peace and order by settling justiciable controversies with finality. 27 As
held in the case of Zamboanga Forest Managers Corp. v. Pacific Timber and
Supply Co.: 28 1
Although appeal is an essential part of our judicial process, it
has been held, time and again, that the right thereto is not a natural
right or a part of due process but is merely a statutory privilege.
Thus, the perfection of an appeal in the· manner and within the
period prescribed by law is not only mandatory but also
jurisdictional and failure of a party to conform to the rules regarding
appeal will render the judgment final and executory. Once a decision
attains finality, it becomes the law of the case irrespective of
whether the decision is erroneous or not and no court - not even
the Supreme Court - has the power to revise, review, change or
alter the same. The basic rule of finality of judgment is grounded on
the fundamental principle of public policy and sound practice that,
26
G.R. Nos. 187485, 196113 and 197156, February 12, 2013, 690 SCRA 336, 392-393.
27
Macawiag v. Balindong, 533 Phil. 735, 747 (2006).
28
647 Phil. 403, 415(2010) ..
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at the risk of occasional error, the judgment of courts and the award
of quasi-judicial agencies must become final at some definite date
fixed by law. (Emphasis supplied)
The CTA-Division and the
CTA-En Banc did not commit
Grave Abuse ofDiscretion
At any rate, granting that a petition under Rule 65 was the proper
remedy, the Court finds that the petition must still fail, as a review of the
records of the case reveal that the tax tribunals below did not commit grave
abuse of discretion amounting to lack or in excess of jurisdiction when they
ruled to dismiss petitioner's administrative claim.
At the core of the subject petition is petitioner's insistence in its theory
that the act of filing its Application for Registration Information Update for
the cancellation of its VAT registration was the sole operative act that would
trigger the cancellation of its tax registration. 29 Essentially, petitioner posits
that since it filed its application for the cancellation of its VAT registration
on July 1, 2008, there was nothing to stop it from filing its administrative
claim for refund/issuance of a TCC on July 7, 2008, with respondent.
Petitioner's theory is misplaced.
As amended by R.A. No. 9337, 30 Article 236 of the National Internal
Revenue Code (NJRC) reads:
xx xx
(F) Cancellation of Registration. -
"(1) General Rule. -The registration of any person who ceases
to be liable to a tax type shall be cancelled upon filing with the
Revenue District Office where he is registered, an application for
registration information update in a form prescribed therefor;
"(2) Cancellation of Value-Added Tax Registration. - A VAT-
registered person may cancel his registration for VAT if:
"(a) He makes written application and can demonstrate to
the Commissioner's satisfaction that his gross sales or receipts for
the following twelve (12) months, other than those that are exempt
under Section 109 (A) TO (U), will not exceed One million five
hundred thousand pesos (P1,500,ooo); or
29
Rollo, p. 11.
30
Otherwise known as the Revised Value-Added Tax Law (R-VAT Law).
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"(b) He has ceased to carry on his trade or business, and does
not expect to recommence- any trade or business within the next
twelve (12) months.
"The cancellation of registration will be effective from the first
day of the following month. (Emphases and underscoring supplied)
From the above, it is readily apparent that the registration of any
person who ceases to be liable to a tax type shall be cancelled upon filing of
an application for registration information update with the tax authorities.
As stated therein, this is only the general rule. Insofar as the registration of
one subject to VAT is concerned, the law mandates that the canc~llation of
the registration of such person will be effective from the first day of the
following month after the submission of a written application for
cancellation of registration. By employing the word "will," the law
commands that the effectivity of the cancellation of a taxpayer's VAT
registration would occur at definite date, that is, the first day of the following
month from his application for cancellation. Neither the taxpayer nor the tax
authorities enjoy the discretion when such cancellation shall take effect.
Accordingly, when petitioner filed for the cancellation of its VAT registration
on July 1, 2008, the cancellation thereof only took effect the first day of the
following month.
·Effect offiling an administrative
claim prior to cancellation
of VAT Registration:
1. Administrative Claim
is Dismissible for being
Premature
In its petition for review before the CTA-Division, petitioner cited
Section l l 2(B) of the Tax Code as basis of its application for the issuance of
a TCC in its favor. The cited provision states:
SEC. 112. Refunds or Tax Credits of Input Tax. -
xx xx
(B) Cancellation of VAT Registration. - A person whose
registration has been cancelled due to retirement from or cessation
of business, or due to changes in or cessation of status under
Section 106(C) of this Code may, within two (2) years from the date
of cancellation, apply for the issuance of a tax credit certificate for
any unused input tax which may be used in payment of his other
interi;ial revenue taxes.
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From the above, it is clear that the taxpayer may, if he wishes, apply
for the issuance of a tax credit certificate for any unused input tax which
may be used in payment of his other internal revenue taxes. The word "may"
simply means that the taxpayer may or may not apply for the issuance of a
TCC. It also means that the application may be filed "within two (2) years,"
which means at any time within two years. 31
Whether due to retirement from or cessation of business or due to
changes in or cessation of status under Section 106(C), the application for
the issuance of a TCC under this provision is premised on the fact that a
taxpayer's registration under the VAT system has been cancelled. Moreover,
the two-year prescriptive period within which a taxpayer may apply for the
issuance of a TCC is reckoned from the date of the cancellation of his
registration. With these in mind, it goes without saying that the cancellation
of a taxpayer's registration is both a mandatory and jurisdictional
requirement before filing an administrative claim for the issuance of such tax
credit certificate. On this, there can be no doubt.
Consequently, considering that petitioner's administrative claim was
filed on July 7, 2008 prior to the cancellation of its VAT registration, the
only conclusion is that the same was premature. Verily, with the law being
clear, plain, and unequivocal, it should be applied exactly as worded,
pursuant to the well-settled verba legis doctrine.
2. Petitioners application for a TCC
and Petition for Review are Void
To repeat, the prior cancellation of taxpayer's VAT registration is not
only a mandatory requirement but a jurisdictional one as well. This is
because, as explained above, an application for the issuance of a TCC is
preconditioned on the prior cancellation of one's VAT registration. A
taxpayer's application for refund/issuance of a TCC absent the prior
cancellation of his VAT registration is one that cannot be recognized as filed
under the law. Failure to comply with this jurisdictional requirement is as if
petitioner never filed at all; it cannot be made a basis for a grant or a denial
or an inaction "deemed a denial" which could have been the subject of the
appellate tax court's jurisdiction.
For petitioner's failure to comply with the mandatory and
jurisdictional requirement of prior cancellation of registration of its VAT
registration, its application is null and void. The same can be said with
respect to the subsequent petition for review filed with the appellate tax
31
See Commissioner of Internal Revenue v. San Roque, supra note 26, at 390-391, regarding a similar
ruling in interpreting Section 112 (A) of the Tax Code.
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court. It is null and void, as there could not have been any decision or
inaction on the part of respondent that could have been the subject of the tax
court's appellate jurisdiction.
The alleged admission by the respondent that petitioner's application
was valid because it was filed "clearly within the two-year period" has no
significant bearing. The pertinent portion of the Joint Stipulation of Facts
and Issues reads:
xx xx
6. Within two years from cancellation of Petitioner's VAT
registration (which took effect on July 1, 2008), Petitioner may
apply for the issuance of a Tax Credit Certificate (TCC) representing
unused/ excess input VAT credits.
7. Petitioner filed with BIR Regional District Office No. 43
("BIR") an Application for Tax Credits/Refunds (BIR Form No.
1914) to claim a refund of excess or unutilized input VAT credits on
July 7, 2008.
8. An administrative claim for issuance of a TCC was also
filed on July 7, 2008, clearly within the two-year period provided
therefrom.
xx xx
From the above, what respondent could have only admitted was the
fact that petitioner filed its administrative claim on July 7, 2008.
Respondent could not have stipulated as to whether petitioner's claim for
refund/issuance of a TCC was filed within the prescriptive period as this was
not a factual matter, but rather, a conclusion of law.
At any rate, as correctly noted by the CTA-En Banc, while respondent
may have been barred from raising the issue of prematurity, the parties'
stipulation as to petitioner's compliance with the mandate of the law cannot,
in no uncertain terms, bind the courts.
In all, petitioner's failure to comply with the mandatory and
jurisdictional requirement of prior cancellation of VAT registration rendered
its application for issuance of a TCC a mere scrap of paper which cannot be
the source of any right. As Article 5 of the Civil Code provides:
Acts executed against provisions of mandatory or prohibitory
laws shall be void, except when the law itself authorizes their
validity.
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The Court cannot set a precedent that non-compliance with mandatory
and jurisdictional conditions can be excused if the claim is otherwise
meritorious, particularly in claims for tax refunds or credit. 32 Well-settled is
the rule that tax refunds or credits, just like tax exemptions, are strictly
construed against the taxpayer. The burden is on the taxpayer to show that he
has strictly complied with the conditions for the grant of tax refund or
credit. 33
As for petitioner's plea for the liberal application of the rules, suffice
it to say that liberality in the application of the rules is afforded by the Court
to only the deserving.
WHEREFORE, the petition is DENIED. (Brion, J., on leave;
Velasco, Jr., J., designated Acting Member, per Special Order No. 1951,
dated March 18, 2015)
SO ORDERED. If
Very truly yours,
MA.~~~CTO
/;~;!~/•
Division Clerk
32
33
Commissioner ofInternal Revenue v. San Roque, supra note 26, at 384.
Mindanao Geothermal Partnership v. Commissioner on Internal Revenue, G.R. No. 193301 & 194637,
March 11, 2013, 693 SCRA 49,76-78, citing Commissioner of Internal Revenue v. San Roque Power
Corporation, Taganito Mining Corporation i. Commissioner of Internal Revenue, and Phi/ex Mining
Corporation v. Commissioner of Internal Revenue, G.R. Nos. 187485, 196113, and 197156, February 12,
2013, 690 SCRA 336.
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COURT OFTAX APPEALS (reg)
National Government Center
Agham Road, 1104 Diliman
Quezon City
(CTA EB No. 854 and CTA Case No, 7850)
CABRERA LAV ADIA AND ASSOCIATES (reg)
(ATTY. JOCELYNT. TSANG)
Counsel for Petitioner
29/F, Philamlife Tower, 8767 Paseo de Roxas
1226 Makati City
OFFICE OF THE SOLICITOR GENERAL (reg)
134 Amqrsolo Street
1229 Legaspi Village
Makati City
BUREAU OF INTERNAL REVENUE (reg)
(ATTY. AMADO REY B. PAGARIGAN)
Legal Division, BIR Region No. 7
BIR Regional Office Building
Quezon Avenue corner Set. Santiago Streets
1100 Quezon City
JUDGMENT DIVISION (x)
Supreme Court, Manila
OFFICE OF THE CHIEF ATTORNEY (x)
OFFICE OF THE REPORTER (x)
Supreme Court, Manila
PUBLIC INFORMATION OFFICE (x)
LIBRARY SERVICES (x)
Supreme Court, Manila
[for uploading pursuant to A.M. No. 12-7-1-SC]
Please notify the Court of any change in your address.
GR206230. 03/18/15 (121[b])URES