G.R. No. 258791 , December 7, 2022
TAIHEI ALLTECH CONSTRUCTION (PHIL.) INC., PETITIONER, VS. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

FACTS

Petitioner Taihei Alltech Construction (Phil.) Inc. (Taihei) filed administrative claims for tax credit of unutilized input VAT for the third and fourth quarters of 2011 on September 30, 2013 and December 23, 2013, respectively. The Commissioner of Internal Revenue denied these claims almost six years later, on June 10, 2019. Believing it had 30 days from receipt of this denial, Taihei filed a Petition for Review before the Court of Tax Appeals (CTA) on July 10, 2019. The CTA Second Division denied the petition for being filed beyond the mandatory 30-day period under Section 112(C) of the Tax Code, ruling that the period should be reckoned from the expiration of the 120-day period for the Commissioner to act on the administrative claim, which lapsed on January 28 and April 22, 2014. Thus, Taihei should have filed its judicial claims by February 27 and May 22, 2014. The CTA En Banc affirmed this dismissal. Taihei argued before the Supreme Court that the issuance of Revenue Regulations No. 1-2017 and Revenue Memorandum Circular No. 54-2014 raised a question of law that suspended the 120-day period under Revenue Memorandum Circular No. 29-2009 and Section 112(C) of the Tax Code, and that its claims were effectively revived by Revenue Regulations No. 1-2017.

ISSUE

Whether the Court of Tax Appeals has jurisdiction over Taihei’s claims for tax credit, which entails the application of the law providing the period for filing judicial claims for unutilized excess value-added tax credit.

RULING

The Supreme Court, through the Separate Concurring Opinion of Justice Leonen, affirmed the CTA’s lack of jurisdiction. A claim for refund is a form of tax exemption construed strictly against the taxpayer, who must comply with both prescriptive periods and substantive requirements. Under Section 112(C) of the 1997 Tax Code and Section 7(a)(2) of Republic Act No. 1125 , as amended, a taxpayer may appeal to the CTA within 30 days from receipt of a denial or from the expiration of the 120-day period for the Commissioner to act on the administrative claim, whichever comes sooner. The Commissioner’s inaction after 120 days is deemed a denial. Here, the Commissioner’s 120-day period to act on Taihei’s administrative claims filed in 2013 lapsed in 2014. The post facto denial in 2019 was irrelevant, as the deemed denial occurred in 2014. Taihei’s judicial filing in 2019 was thus belated and outside the CTA’s jurisdiction. Administrative regulations like Revenue Regulations No. 1-2017 cannot override, supplant, or modify the mandatory and jurisdictional periods set by the Tax Code.