Republic of The Philippines

COURT OF TAX APPEALS

Quezon City

EN BANG

HYDER CONSULTING MIDDLE CTA EB No. 727

EAST LTD. MANILA ROHQ, (CTA Case No. 8120)
Petitioner,
For: Refund

Present:
ACOSTA, PJ,
CASTANEDA, JR.
-versus- BAUTISTA
UY
CASANOVA
PALANCA-ENRIQUEZ
FASON-VICTORINO
MINDARO-GRULLA
COMMISSIONER OF INTERNAL
REVENUE, COTANGCO-MANALASTAS, JJ.
Respondent.
Promulgated:
tfw:J,.&_ ..~~
OCT 08 2012 . , .,. . .__,
/,"/~ e ,
x-------------------------------------------------------------------------------------------------------------x

DECISION
MINDARO-GRULLA, J.:

Submitted for decision is a Petition for Review for the Court En Bane

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 (RRCTA),1 as amended, of the (

1 Rule 4, SEC. 2. Cases within the jurisdiction of the Court en bane. - The Court en bane shall

exercise exclusive appellate jurisdiction to review by appeal the following:

(a) Decisions or resolutions on motions for reconsideration or new trial of the Court in
Divisions in the exercise of its exclusive appellate jurisdiction over:
Hyder Consulting Middle East Ltd . Manila ROHQ, vs. CIR
Page 2 of 22
CTA EB Case No. 727 (CTA Case No. 8120)
DECISION

Resolution dated November 10, 2010 2 and the Resolution dated February 07,

2011 3 rendered by the First Division of this Court, the dispositive portions of

which, respectively, read as follows:

Resolution dated November 10, 2010:

"WHEREFORE, the Motion to Dismiss dated July 22, 2010, filed

by respondent, is hereby GRANTED. Consequently, the Petition for
Review dated June 23, 2010, filed by petitioner Hyder Consulting
Middle East Ltd. Manila ROHQ, is hereby DISMISSED for lack of
cause of action, without prejudice.

SO ORDERED."

Resolution dated February 07, 2011:

"WHEREFORE, premises considered, the Motion for

Reconsideration dated November 22, 2010 filed by petitioner is hereby
DENIED, for lack of merit.

SO ORDERED."

The antecedent facts are as follows :C.

(1) Cases arising from administrative agencies - Bureau of Internal

Revenue, Bureau of Customs, Department of Finance,
Department of Trade and Industry, Department of Agriculture ;

XXX XXX XXX

Rule 8, SEC. 4. Where to appeal,· mode of appeal. - x x x

{b) An ::mnP.<'ll from <'! rlP.c:i!=:ion or rP.!=:oh•tion of thP. r.o11rt in Divi!':ion on <'! motion for
rP.c:on!=:irlP.r<'ltion or nP.w tri<'ll !=:h<'lll hP. t<'lkP.n to thP. r.o11rt hv nP.tition for rP.viP.w <'!!':
nrovirlP.d in Rule 43 of the Rules of Court. The Court en bane shall act on the
appeal.

XXX XXX XXX

2 Penned by Associate Justice Esperanza R. Fabon-Victorino, concurred in by Presiding Justice

Ernesto D. Acosta and Associate Justice Erlinda P. Uy, En Bane Docket, pp. 30-36.
3 Penned by Associate Justice Esperanza R. Fabon-Victorino, concurred in by Presiding Justice
Ernesto D. Acosta and Associate Justice Erlinda P. Uy, En Bane Docket, pp. 15-21 .
Hyder Consulting Middle East Ltd . Manila ROHQ, vs. CIR
Page 3 of 22
CTA EB Case No. 727 (CTA Case No. 8120)
DECISION

Petitioner Hyder Consulting Middle East Ltd. Manila ROHQ ("Hyder") is

a duly registered Regional Operating Headquarters organized and existing

under and by virtue of Philippine Laws holding office at the gth Floor, Tower II,

The Enterprise Paseo de Roxas Street, Makati City. It is registered with the

Bureau of Internal Revenue as a Value-Added Tax ("VAT") taxpayer.

Respondent, on the other hand , is the duly appointed Commissioner of

Internal Revenue ("CIR") vested with the authority to act as such, including the

powers to decide, approve and grant claims for issuance of tax credit

certificate or refunds of overpaid internal revenue taxes as provided by law.

She holds office at the Bureau of Internal Revenue , ("BIR") National Office

Building, Agham Road, Diliman, Quezon City.

For the period of April 1, 2008 to June 30, 2008, Hyder filed before the

BIR its quarterly VAT return for the 1st Quarter, where it declared as input VAT

for the said period the amount of One Million Fifty Nine Thousand Eight

Hundred Forty Pesos and Twenty One Centavos W1 ,059,840.21 ).

On June 23, 2010, one week before the expiration of the 2-year

prescriptive period ,4 Hyder filed an administrative claim for refund of its,

4 SEC. 112. Refunds or Tax Credits of Input Tax. -(A) Zero-Rated or Effectively Zero-Rated Sales. -
any VAT-registered person , whose sales are zero-rated or effectively zero-rated 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 x x x
Hyder Consulting Middle East Ltd. Manila ROHQ, vs. CIR
Page 4 of 22
CTA EB Case No. 727 (CTA Case No. 8120)
DECISION

unutilized input VAT in the total amount of One Million Fifty Nine Thousand

Eight Hundred Forty Pesos and Twenty One Centavos (~ 1,059,840.21) for

the said quarter with the BIR.

On June 29, 2010, or barely six (6) days after Hyder filed its

administrative claim for refund, a Petition for Review dated June 23, 2010 was

filed before this Court. It argued that since CIR has not yet rendered a

decision on its application for refund from the time it filed an administrative

claim on June 23, 2010, and within the period to file a judicial claim expiring

on June 30, 2010 by citing Section 229 5 of the National Internal Revenue

Code of 1997 ("1997 Tax Code"), the Petition for Review before this Court is

proper.

On July 28, 2010, CIR filed a Motion to Dismiss6 on the grounds that the

Petition for Review was prematurely filed and there was neither denial nor

inaction on her part that could be assailed before this Court. She invoked

Section 112 (C)? of the 1997 Tax Code, and Steag State Power, Inc. , vs. (

5 SEC. 229. Recovery of Tax Erroneously or Illegally Collected . -

XXX
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 regardless of any supervening
cause that may arise after payment: xxx
6 Division Docket pp. 138-145.
7
SEC. 112. Refunds or Tax Credits of Input Tax. - xxx

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
Hyder Consulting Middle East Ltd. Manila ROHQ, vs. CIR
Page 5 of 22
CTA EB Case No. 727 (CTA Case No. 8120)
DECISION

Commissioner of Internal Revenue 8 (the "Steag State Case'), and contended

that since Hyder filed its judicial claim before the lapse of the 120 day period

for her to act upon its application, the filing of the judicial claim therefore is

premature. Moreover, CIR argued that a judicial claim for refund may only be

filed once there is a denial or inaction on her part. She stressed that Section

2299 of the 1997 Tax Code is not applicable in this case because the 2-year

period stated therein pertains only to applications for refund of taxes

erroneously or illegally collected, and not for refund of unutilized input VAT, as

in the case of Hyder.

On November 10, 2010, the First Division of this Court rendered a

Resolution 10 granting the Motion to Dismiss, consequently denying Hyder's

Petition for Review. The Court a quo ratiocinated that Hyder violated the rule

on exhaustion of administrative remedies when it immediately filed a judicial

claim before this Court when there was yet neither a denial of its claim nor (

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.

s CTA Case Nos. 7458 and 7554, August 27 , 2009 .

9 Supra note 5.
10 Supra note 2.
Hyder Consulting Middle East Ltd. Manila ROHQ, vs. CIR
Page 6 of 22
CTA EB Case No. 727 (CTA Case No. 8120)
DECISION

inaction on the part of CIR within the 120-day period accorded to her under

Section 112 of the 1997 Tax Code.

The First Division held, as follows :

"Under the circumstances, respondent had 120 days from June 23,
2010 or until October 21, 2010, within which to rule on petitioner's claim
for refund. Failing any action on the part of respondent, petitioner has 30
days from the expiration of the 120-day period or until November 20, 2010
to seek recourse from the Court.

In this case however, petitioner instituted this appeal on June 29,

2010 or barely six (6) days after the administrative claim for refund was
filed on June 23, 2010, effectively depriving respondent of the opportunity
to act on the administrative claim for refund within the time frame
accorded to her in Section 112 of the NIRC , as amended. During the
relevant period, neither was there a denial of the claim nor inaction on the
part of respondent that could be a subject of an appeal before this Court."
11

The First Division also clarified that the application of Section 112 of the

1997 Tax Code, as invoked by CIR is correct, since it specifically governs

applications for refund of excess and unutilized value added tax while Section

229 of the same Code, as cited by Hyder upon filing its judicial claim , covers

claims for refund of erroneously or illegally assessed or collected taxes,

hence, the inapplicability of the latter section in its case. In addition, the First

Division emphasized that the 2-year period under Section 112 (A) applies only

to administrative claim and not to judicial claim .(

11 Supra note 2.
Hyder Consulting Middle East Ltd. Manila ROHQ, vs. CIR
Page 7 of 22
CTA EB Case No. 727 (CTA Case No. 8120)
DECISION

As an ending note, the First Division cited the Supreme Court Ruling in

the case of Commissioner of Internal Revenue vs. Aichi Forging Company of

Asia, lnc., 12 (the "Aichi Case') which states 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. Mirant Pagbdao Corporation, 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 XXX XXX

Section 112(0) of the NIRC clearly provides that the CIR has "120
days, from the date 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 CIR. 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.

In this case, the administrative and the judicial claims were

simultaneously filed on September 30, 2004. Obviously, respondent did
not wait for the decision of the CIR or the lapse of the·120-day period. For
this reason, we find the filing of the judicial claim with the CTA premature.

Respondent's assertion that the non-observance of the 120-day

period is not fatal to the filing of a judicial claim as long as both the
administrative and the judicial claims are filed within the two-year
prescriptive period has no legal basis.

There is nothing in Section 112 of the NIRC to support

respondent's view. Subsection (A) of the said provision states that "any
VAT registered person, whose sales are zero-rated or effectively zero-
rated may, within two 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." 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 CT A. This is apparent in the first paragraph of
subsection (D) of the same provision, which states that the CIR has "120
days from the submission of complete documents in support of the
application filed in accordance with Subsections (A) and (B)" within which
to decide on the claim.?-

12G.R. No. 184823, October 06, 2010. The Aichi Case became final as per Supreme Court's
Resolution dated December 6, 2010.
Hyder Consulting Middle East Ltd. Manila ROHQ, vs. CIR
Page 8 of 22
CTA EB Case No. 727 {CTA Case No. 8120)
DECISION

In fact, applying the two-year period to judicial claims would render

nugatory Section 112(0) of the NIRC , which already provides for a specific
period within which 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 CTA. 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. 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 CTA."

Aggrieved , Hyder filed its Motion for Reconsideration 13 on November

26, 2010 . It argued that the Court erred in dismissing its Petition by applying

the Aichi Case. It reasoned out that the Aichi Case was only promulgated on

October 06, 2010, while its Petition for Review was filed on June 29, 2010,

prior to the promulgation of the said Supreme Court Decision , hence, it should

not be given retroactive effect. Moreover, the assailed Decision 14 of the First

Division was promulgated only on November 10, 2010, which states that it

only had until November 20, 2010 within which to file a Petition for Review.

However, Hyder received the Decision only on November 19, 2010 , or one (1)

day before the last day given by the First Division to file a new Petition for(

13 En Bane docket pp. 22-29.

14 Supra note 2.
Hyder Consulting Middle East Ltd. Manila ROHQ , vs. CIR
Page 9 of 22
CTA EB Case No. 727 (CTA Case No. 8120)
DECISION

Review. Hence, on ground of equity, Hyder also prays to admit the Motion for

Reconsideration as its new Petition for Review.

In denying Hyder's motion, the First Division applied the rule laid down

in Eagle Realty vs. Republic of the Philippines,15 and held that, "Judicial

interpretation of a statute constitutes part of the law as of the date it was

originally passed, since the Court's construction merely establishes the

contemporaneous legislative intent that the interpreted law carried into effect."

Since the Aichi Case merely interprets the provision of Section 112 of the

1997 Tax Code, which is already in effect as early as January 1, 1998, the

ruling in the said Case must be applied as of the date the 1997 Tax Code was

originally passed. The taxable year involved in Hyder's claim is 2008, which is

obviously governed by the 1997 Tax Code, hence the applicability of Aichi.

On Hyder's prayer to allow the continuation of its Petition , the First

Division ruled that since Hyder was not able to file its Petition on or before

November 20, 2010, it failed to file its Petition for Review within the

reglementary period. Consequently, the Resolution 16 of the First Division

already became final and conclusive. When the Resolution became final , the

First Division was no longer in the position to exercise jurisdiction to review it.,

1s G.R. No. 151424, July 31 , 2009 .

16 Supra note 2.
Hyder Consulting Middle East Ltd. Manila ROHQ , vs . CIR
Page 10 of 22
CTA EB Case No. 727 (CTA Case No. 8120)
DECISION

The same Division also reminded Hyder that observance of the prescriptive

period to file the Petition is not only mandatory but also jurisdictional.

Hence, this Petition for Review 17 was filed before the Court En Bane on

February 24, 2011.

The issues raised are the following:

1. Whether the Aichi Ruling as to the mandatory compliance with the

120-day period should be applied prospectively, hence, should
not be applied in this case at bar; and
2. Whether this Court should allow the continuation of this Petition
and admit Hyder's Motion for Reconsideration as its new Petition
for Review.

Hyder solely relies on the ruling of the First Division in the case of Team

Energy vs. Commissioner of Internal Revenue,18 (the "Team Energy Case')

and states that it would not have any problem with the retroactive application

of the Aichi Case as basis for denying its Petition for Review for being

premature if not for the particular ruling made by the said Division in the Team

Energy Case.

The First Division in the Team Energy case cited by Hyder held

that-

"although there is a recent case entitled Commissioner of Internal

Revenue vs. Mirant Pagbilao Corporation (Formerly SOUTHERN £

17 En Bane Docket, pp. 1-14

18 CTA Case Nos. 7229 and 7298, October 5, 2009.
Hyder Consulting Middle East Ltd. Manila ROHQ, vs. CIR
Page 11 of 22
CTA EB Case No. 727 (CTA Case No. 8120)
DECISION

ENERGY QUEZON, INC.), wherein the Supreme Court held that the
reckoning of the two-year prescriptive period for the filing of a claim for
input VAT refund starts from the close of the taxable quarter when the
relevant sales were made, this Court finds it proper to apply said ruling to
cases filed after the promulgation date of the Mirant Case. To apply said
ruling in the present case will in effect be giving the new doctrine
retroactive application thereby impairing vested rights."

Hyder points out that the First Division cannot simply deny its Petition

by applying the Aichi Ruling retroactively, when in fact, the very same Division

held in the Team Energy Case that a retroactive application of a new doctrine

will impair vested rights.

On its theory of prospective application of the Aichi Ruling, Hyder

argues that the case of San Roque Power Corporation vs. Commissioner of

Internal Revenue,19 (the "San Roque Case!') which was promulgated on

November 11 , 2009, should apply, and not the Aichi Case, which was

promulgated after the filing of its Petition for Review. It quoted the San Roque

Case, to wit:

"On 19 June 2002, 25 October 2002, 27 February 2003, and 29

May 2003, petitioner filed with the BIR four separate administrative claims
for refund of Unutilized Input VAT paid for the period January to March
2002, April to June 2002 , July to September 2002, and October to
December 2002, respectively. x x x

XXX XXX XXX

On 30 May 2003 and 31 July 2003, petitioner filed two letters with
the BIR to amend its claims for tax refund or credit for the first and fourth
quarter of 2002 , respectively. x x x

Respondent failed to act on the request for tax refund or credit of

xc
petitioner, which prompted the latter to file on 5 April 2004, x x

19 G.R. No. 180345, November 11 , 2009.

Hyder Consulting Middle East Ltd . Manila ROHQ, vs. CIR
Page 12 of 22
CTA EB Case No. 727 {CTA Case No. 8120)
DECISION

We are not persuaded.

It is observed that the Team Energy Case cited by Hyder had not yet

been passed upon by this Court En Bane when the Petition for Review was

filed before the First Division, hence, it cannot be relied upon by petitioner. As

a matter of fact, a Court En Bane Decision 2 o was subsequently promulgated

and applied instead the Aiehi Case, consequently modifying the Division's

Decision. The Court En Bane held:

"With the above cited ruling [Aich1], the argument that the Mirant
decision should only be applied prospectively and should not be made to
apply to judicial claims for refund of excess input VAT pending with the
courts at the time of issuance of the Mirant decision has been put to rest.
It bears stressing that the Mirant ruling was affirmed and applied outright
in Aichi case notwithstanding the fact that the claim for refund involved the
third quarter of the taxable year 2002 (July 1, 2002 to September 30,
2002) and both its administrative and judicial claims were still pending
prior to the promulgation of Mirant. Hence, We see no reason why We
should depart from the Aichi ruling considering the periods involved in the
said case were earlier than the periods in the present case, yet, the
Supreme Court applied the Mirantruling without any qualifications."

Evidently, between the Team Energy Case decided by the First

Division, and the Team Energy Case decided by the Court En Bane, the latter

shall prevail. The Court En Bane has the power to review and modify

Decisions and Resolutions of this Court in Division. 21 The fact that the Cou~

2°Commissioner of Internal Revenue vs. Team Energy Corporation, CTA EB No. 603, April 08, 2011 .
21SEC. 2. Cases within the jurisdiction of the Court en bane. - The Court en bane shall exercise
exclusive appellate jurisdiction to review by appeal the following :

(a) Decisions or resolutions on motions for reconsideration or new trial of the Court in
Divisions in the exercise of its exclusive appellate jurisdiction xxx
Hyder Consulting Middle East Ltd . Manila ROHQ , vs. CIR
Page 13 of 22
CTA EB Case No. 727 (CTA Case No. 8120)
DECISION

En Bane Decision was promulgated after the filing of Hyder's Petition is of no

moment since it is a basic rule that one cannot rely on a Decision which has

not yet attained finality. As pointed out, the Team Energy Case cited by Hyder

is not conclusive as it was brought to the En Bane for Its review, and it was

eventually amended.

Hyder, states that the Steag State Case does not apply since it has not

yet been passed upon by the Supreme Court when its Petition was filed

before this Court. If this is true, then the Team Energy Case decided by the

First Division should also hold no water in its situation because it cannot be

considered as the concluding statement of this Court as to the said case. As

pointed out earlier, the Division's Team Energy Decision cannot be relied

upon by any party litigant as such has not attained finality until it is reviewed

by this Court En Bane.

Hyder asserts the alleged misplaced application of the Aiehi Ruling in

this case. It insists that "the reckoning period laid down in the Aiehi Case

should be prospective and should affect only petitions to be filed after said

decision."22 Nonetheless, a careful perusal would show that the judicial claim

in the Aiehi Case was filed on September 30, 2004 . This was even prior to the(

22Petition for Review filed by Hyder before the Court En Bane on February 24, 2011 , par. 11 , p. 4; En
Bane Docket, p.4.
Hyder Consulting Middle East Ltd . Manila ROHQ, vs. CIR
Page 14 of 22
CTA EB Case No. 727 (CTA Case No. 8120)
DECISION

claims of herein petitioner. Yet, the Supreme Court, applied outright the 120-

30 day ruling in Aichi and dismissed the Petition of Aichi Forging Company of

Asia upon the promulgation of the Decision of the Supreme Court based on

prematurity.23

Significantly, on the application of the Aichi ruling as it should be in this

case, the First Division aptly said that, "Judicial interpretation becomes part of

the law as of the date that law was originally passed" 24 Considering that the

claim for refund in this case involved the taxable year 2008, the applicable law

is Section 112 of 1997 Tax Code, which took effect on January 1, 1998, the

same law applied in the Aichi Case.

Furthermore, the Aichi Case has been decided by no less than the

Supreme Court from whose decisions all other courts should take their

bearings. 25 As it is, the final arbiter of all justifiable controversies, its decisions

deserve utmost respect and adherence. Hence, this Court has no other

recourse but to uphold the ruling of the Supreme Court in the Aichi Case as it

is applicable to the case at bench .26 Such judicial doctrine does not amount to<

23Commissioner of Internal Revenue vs. Mindanao II Geothermal Partnership, CT A EB Case Nos.

690 and 718 , April 04, 2012.
24 Cemco Holdings, Inc., vs. National Life Insurance Company, G.R. No. 171815, August 7, 2007,
citing Serrano vs. National Labor Relations Commission, 387 Phil. 345, 357 (2000).
25 Kepco Philippines Corporation vs. Commissioner of Internal Revenue, CTA EB Case No. 736,

January 10, 2012, citing Commissioner of Internal Revenue vs. Michel J. Lhuillier Pawnshop, Inc.,
G.R. No. 150947, July 15, 2003 .
26 Ibid
Hyder Consulting Middle East Ltd . Manila ROHQ, vs. CIR
Page 15 of 22
CTA EB Case No. 727 (CTA Case No. 8120)
DECISION

the passage of a new law but consists merely of a construction or

interpretation of a pre-existing one, as is the situation in this case .27

The San Roque Case cited by Hyder cannot even be said to be the

correct jurisprudence because the interpretation of the mandatory 120-day

period for CIR to act upon the administrative claims was not even presented

as an issue in the said case. The mandatory provision of Section 112 of the

1997 Tax Code was not raised as a question in that case for the Supreme

Court to clarify on the matter unlike what was held in the Aichi Case.

In the San Roque Case, CIR was accorded the 120-day mandatory

period to act upon the request for the tax refund. It is noted that San Roque

filed its administrative claim on June 19, 2002 , and the judicial claim was filed

on April 05, 2004 . Thus, San Roque gave CIR 120 days to resolve its

administrative claim for a tax refund before it filed its judicial claim before this

Court. In this case , CIR was not provided such mandatory period to act upon

Hyder's claim for a refund, hence, the San Roque Case cannot be considered

as on all fours with this case.

Accordingly, this case should finally be dismissed on the ground of lack

of jurisdiction . As correctly held by the First Division in its second Resolution , 2 ~

27 Roos Industrial Construction Inc. and Oscar Tocmo vs. NLRC and Jose Martillos, G.R. No. 172409,
Feb. 4, 2008 citing Columbia Pictures, Inc. vs. Court of Appeals, 329 Phil. 875, 907-908.
28 Supra note 3.
Hyder Consulting Middle East Ltd. Manila ROHQ , vs. CIR
Page 16 of 22
CTA EB Case No. 727 (CTA Case No. 8120)
DECISION

when Hyder failed to file a Petition for Review on November 20, 2010, the

questioned first Resolution29 became final and executory, and which deprives

this Court of jurisdiction to alter the judgment, much less to entertain this very

Petition for Review. 3o The primordial issue in any claim for a refund of

unutilized input VAT is the timeliness of the filing of such claim, both in the

administrative and judiciallevels.31

Apparently, Hyder filed its judicial claim without waiting for the lapse of

the 120-day period provided for under Section 112 of the 1997 Tax Code. It

should have filed its Petition for Review between October 22, 201032 and

November 20, 2010. Unfortunately, such was not the case . As a result,

petitioner's failure to file the Petition for Review within the 30-day period after

the mandatory 120-day period negates this Court with jurisdiction over this

case. As its Petition was filed out of time, there is no case over which this

Court may acquire jurisdiction. This 30-day period within which to file the

Petition for Review is jurisdictional and failure to comply therewith would bar

the appeal and it would deprive this Court of its jurisdiction to entertain this

very Petition. Such period is not merely directory but mandatory and it is (

29 Supra note 2.
30 En Bane Docket, p. 20, citing Sehwani, Incorporated vs. In-N-Out Burger, G.R. No. 171053,
October 15, 2007.
31 Commissioner of Internal Revenue vs. Keihin-Everett Forwarding Co. Inc., CTA EB Case No. 692,

February 07, 2012.

32 Supra note 11 .
Hyder Consulting Middle East Ltd. Manila ROHQ , vs. CIR
Page 17 of 22
CTA EB Case No. 727 (CTA Case No. 8120)
DECISION

beyond the power of the courts to extend the same.33 Well-settled is the rule

that the perfection of an appeal in the manner and within the reglementary

period allowed by law is not only mandatory but also jurisdictional. 34 A Motion

for Reconsideration is not the mode of appeal35 in filing a judicial claim for

refund before this Court. A Motion for Reconsideration is not a Petition for

Review. Thus, "a taxpayer must prove not only his entitlement to a refund but

also his compliance with the procedural due process as non-observance of

the prescriptive periods within which to file the administrative and the judicial

claims would result in the denial of his claim." 36

Significantly, in the case of Videogram Regulatory Board vs. Court of

Appeals,37 the Supreme Court held that-

"x x x There are certain procedural rules that must remain inviolable, like
those setting the periods for perfecting an appeal or filing a petition for
review, for it is doctrinally entrenched that the right to appeal is a statutory
right and one who seeks to avail of that right must comply with the statute
or rules. The rules, particularly the requirements for perfecting an appeal
within the reglementary period specified in the law, must be strictly(

33 Rizal Commercial Banking Corporation vs. Commissioner of Internal Revenue, G.R. No. 168498,
Resolution dated April 24, 2007, 522 SCRA 144, citing Chan Kian vs. Court of Tax Appeals, 105 Phil.
904, 906 (1959) .
34 Tiger Construction and Development Corporation vs. Abay, et. a/. , G.R. No. 164141 , February 26,

2010, citing Estoesta, Sr. v. Court of Appeals, G.R. No. 74817, November 8, 1989, 179 SCRA 203,
211-212.

35 Supra note 1, Rule 8, SEC . 4. x x x

(a) An aooeal from a decision or resolution of the Court in Division on a motion for
reconsideration or new trial shall be taken to the Court bv oetition for review as
orovided in Rule 43 of the Rules of Court. The Court en bane shall act on the
appeal.

36 Supra note 12.

37 G.R. No. 106564, November 28, 1996.
Hyder Consulting Middle East Ltd . Manila ROHQ , vs . CIR
Page 18 of 22
CTA EB Case No. 727 (CTA Case No. 8120)
DECISION

followed as they are considered indispensable interdictions against

needless delays and for orderly discharge of judicial business.
Furthermore, the perfection of an appeal in the manner and within the
period permitted by law is not only mandatory but also jurisdictional and
the failure to perfect the appeal renders the judgment of the court final and
executory. Just as a losing party has the right to file an appeal within the
prescribed period , the winning party also has the correlative right to enjoy
the finality of the resolution of his/her case. xxx After all, a denial of a
petition for being time-barred is a decision on the merits." [Emphasis
supplied.]

As early as in the case of Caltex vs. Commissioner of Internal

Revenue,38 the Supreme Court has already ruled that, "In the absence of any

decision or ruling which may be the subject of an appeal or petition for review

to the Court of Tax Appeals, said court has no case to take cognizance of. "39

Hyder seeks to persuade this Court to apply the technical rules liberally

by allowing the Petition to continue through its Motion for Reconsideration ,

citing the case of Commissioner of Internal Revenue vs. lroncon Builders and

Development Corporation (the ''lroncon Case').4 0

We must rule that the reliance of Hyder in the lroncon Case is very well

misplaced. The issue raised in lroncon was the propriety of the admission of

exhibits offered only after trial. Thus, the Supreme Court relaxed the rules on

technicality as to the admission of the exhibits. However, the jurisdiction of this

Court in the lroncon Case was not submitted as an issue at all. Hence, a

liberal approach as to want of jurisdiction is not acceptable becausec

38 G.R. No. L-20462, June 30 , 1965.

39 Citing CNS Estate, Inc. vs. Commissioner of Customs, G.R. No. L-18773, January 31, 1964.
40 G.R. No. 180042, February 08, 2010.
Hyder Consulting Middle East Ltd . Manila ROHQ , vs . CIR
Page 19 of 22
CTA EB Case No. 727 (CTA Case No. 8120)
DECISION

jurisprudence is replete with cases stating that failure to perfect an appeal as

required by the rules has the effect of defeating the right to appeal of a party

and precluding the appellate court from acquiring jurisdiction over the case. 41

Failure of petitioner to file its Petition for Review within the period prescribed

by law renders the decision final, with the result that no court can exercise

jurisdiction to review said final decision .42 Consequently, whatever liberality to

be applied by this Court is considered to be useless as no case so to speak is

pending before It in the first place.

Moreover, the lroncon Case cannot be said to apply on all fours with

this case since the taxpayer in !roncon complied with the mandatory 120-day

period. A reading of the facts in the !roncon Case shows that the

administrative claim was filed on May 10, 2001 , while the judicial claim was

filed after more than a year, which was on June 01 , 2002 . In this case,

however, Hyder failed to heed the required 120-day period, hence , the

irrelevance of the lroncon Case to it.

While existing jurisprudence adopts liberality on procedural matters, the

fact remains that the First Division did not acquire jurisdiction to hear the case

because Hyder failed to file the Petition on time , and thus, the First Division,,

41 Commissioner of Internal Revenue vs. Fort Bonifacio Development Corporation, G.R. No. 167606,
August 11 , 201 o n2Rsr.RA ~n
42 Supra note 34, citing Uy vs. Court of Appeals, 286 SCRA 343, 351 (1998).
 Hyder Consulting Middle East Ltd . Manila ROHQ , vs. CIR
Page 20 of 22
CTA EB Case No. 727 (CTA Case No. 8120)
DECISION

as well as the Court En Bane, has no jurisdiction to act on the judicial claim

filed by Hyder.

Suffice it to say that the resort to a wrong remedy will not toll the

running of the prescriptive period to file the judicial claim for a refund before

this Court. 43 The Supreme Court, in numerous cases, has repeatedly called

the attention of party litigants that the rule on liberal construction does not

mean that procedural rules are to be ignored or disdained at will to suit the

convenience of a party. Procedural law has its own rationale in the orderly

administration of justice, namely, to ensure the effective enforcement of

substantive rights by providing for a system that obviates arbitrariness,

caprice, despotism or whimsicality in the settlement of disputes. 44 The rule on

liberal construction was never intended to forge a bastion for a violation of due

process. 45 The relaxation of procedural rules was never intended to be a

license for erring litigants to violate the rules with impunity.46

Procedural rules are not to be belittled or dismissed simply because

their non-observance may have resulted in prejudice to the parties(

43 Fish wealth Canning Corporation vs. Commissioner oflnternal Revenue, G. R. No. 179343, January
21 , 2010 .
44 Abrenica vs. Abrenica, G.R. No. 169420, September 22, 2006; Reyes vs. Fit-Estate Properties, Inc.,
G.R. No. 148967, February 09, 2007; Garcia Jr. vs. Court of Appeals, 546 SCRA 595, February 26,
2008 .
45 Rizal Security & Protective Services, Inc. , vs. Maraan, 546 SCRA 23, February 18, 2008.
46 Marohomsalic vs. Cole, 547 SCRA 98, February 27, 2008.
Hyder Consulting Middle East Ltd. Manila ROHQ, vs. CIR
Page 21 of 22
CTA EB Case No. 727 (CTA Case No. 8120)
DECISION

substantive rights. Like all rules, they are required to be followed except only

for the most persuasive of reasons as when "transcendental matters" of life,

liberty or state security are involved. 47 What constitutes good and sufficient

cause that would merit suspension of the rules is discretionary upon the

courts.48

Given the fact that this Court has no jurisdiction to give due course to

this instant Petition due to failure of Hyder to file its judicial claim by way of a

Petition for Review within the prescribed period, it is but proper for this Court

to dismiss this case. The discussion of the other issues, if any, is deemed

unnecessary considering this Court's finding that the judicial claim for refund

was filed beyond the prescriptive period .

WHEREFORE, premises considered , the Petition for Review dated

February 24, 2011 filed by Petitioner is DENIED for lack of merit. The two (2)

Resolutions dated November 10, 2010 and February 7, 2011 , both rendered

by the First Division of this Court, are hereby AFFIRMED.

SO ORDERED.

~ ~. \,-1~ ,. 6~
CIELITO N. MINDARO-GRULLA
Associate Justice

47 Mindanao Savings Loan Association vs. Vicenta Vda. De Flores, G.R. No. 142022, September 7,
2005.
48 Commissioner of Internal Revenue vs. Mirant Pagbilao Corporation, G.R. No. 159593, October 12,

2006.
Hyder Consulting Middle East Ltd. Manila ROHQ, vs. CIR
Page 22 of 22
CTA EB Case No. 727 (CTA Case No. 8120)
DECISION

WE CONCUR:

Q~~--~
ERNESTO D. ACOSTA
Presiding Justice

~~L!~~
JOANITO c. CASTANEDA,
1
~~ ­
Associate Justice

E~.UY
As~~~stice
CAESAR A. CASANOVA
Associate Justice

~~~
OLGA PALANCA-ENRIQUEZ
Associate Justice

(On Leave)
AMELIA R. COTANGCO-MANALASTAS
Associate Justice

CERTIFICATION

Pursuant to Article VIII , Section 13 of the Constitution , it is hereby certified

that the conclusions in the above Decision were reached in consultation among the
members of the Court En Bane before the case was assigned to the writer for the
opinion of the Court En Bane.
~[9- Q~
ERNESTO D. ACOSTA
Presiding Justice
 REPUBLIC OF THE PHILIPPINES
Court ofTax Appeals
QUEZON CITY

En Bane

HYDER CONSULTING MIDDLE EAST CTA EB CASE NO. 727

LTD., MANILA RQHQ, (CTA Case No. 8120)
Petitioner,

Present:
Acosta, P. J.
Castaneda, Jr.,
Bautista,
-versus- Uy,
Casanova,
Palanca-Enriquez,
Fa bon-Victorino,
Mindaro-Grulla, and
Cotangco-Manalastas, JJ.

COMMISSIONER OF INTERNAL Promulgated:

REVENUE, @4//p_~~-
Respondent. OCT 0 8 2012 ;,.-rtt? 1", :JII'-,

)(----------------------------------------------------------------------------------------------------)(
DISSENTING OPINION
BAUTISTA,[.:

While the Court En Bane denied the Petition for Review for lack of merit, and

accordingly, affirmed the assailed Resolutions, dismissing the claim for

refund/ credit due to lack of cause of action; this ponencia is of view that the factual

circumstances present in the case at bench supports the application of the then

prevailing jurisprudence at the time the claim was made.

Based on the records of the case, one week before the lapse of the two (2)-year

prescriptive period pursuant to Section 112 of the 1997 National Internal Rev7
DISSENTING OPINION
Cf A EB Case No. 727 (Cf A Case No. 8120)
Page 2 of 5

Code, as amended,l petitioner filed its administrative claim for refund of its

unutilized input tax in the total amount of P1,509,840.21 covering the period from

April 1, 2008 to June 30, 2008, on June 23, 2010; and barely six days after it filed its

administrative claim, petitioner filed a Petition for Review before this Court on June

29, 2010. All during the aforementioned dates, the then controlling doctrine is the

case of Commissioner of Internal Revenue v. Mirant Pagbilao Corporation [Formerly

Southern Energy Quezon, Inc.].2

I submit that the ruling in the case of Commissioner of Internal Revenue v. Aichi

Forging Company of Asia, Inc.,3 is more in accordance with the letter and spirit of

Section 112 of the 1997 National Internal Revenue Code, as amended, nonetheless, it

would be the height of injustice to impose a new ruling, on the basis of the so-called

"adherence to precedence," for the same is clearly promulgated after the taxpayer-

claimant had faithfully relied and complied with the Court's former ruling. Further,

the same would run counter with the use of the word "may" in Section 112(C) of the

same Code, which indicates that the judicial recourse within thirty (30) days after the

lapse of the one hundred twenty (120)-day period is directory and permissive, and

not mandatory nor jurisdictional as long as the claim is made within the two (2)-year

1 SEC. 112. Refunds or Tax Credits of Input Tax. -

(A) Zero-rated or Effectively Zero-rated Sales. - Any VAT -registered person, whose sales are zero-rated or
effectively zero-rated 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:
Provided, however, That in the case of zero-rated sales under Section 106(A)(2)(a)(1),(2) and (B) and Section 108
(B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in
accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where
the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods or
properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely

z G.R. No. 172129, September 12, 2008, 565 SCRA 154.

' G.R. No. 184823, Cktobe< 6, 2010.
JT
attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales.
DISSENTING OPINION
erA EB Case No. 727 (erA Case No. 8120)
Page 3 of 5

prescriptive period under Sections 1124 and 2295 of the 1997 National Internal

Revenue Code, as amended.6

Therefore, it must be borne in mind that no claim can be had, whether in the

administrative or judicial fora, beyond the two (2)-year period provided under

Section 112 of the 1997 National Internal Revenue Code, as amended.

Stated differently, if the two (2)-year prescriptive period is about to expire,

there is no need to wait for the denial of the claim by the Commissioner of Internal

Revenue or its inaction after the expiration of the one hundred twenty (120)-day

period before the taxpayer can lodge its appeal to this Court?

In the landmark case of Albino S. Co, v. Court of Appeals, et al.,B the Supreme

Court aptly penned the following disquisitions, to wit:

4 SEC. 112. Refunds or Tax Credits of Input Tax. -

(A) Zero-rated or Effectively Zero-rated Sales. - Any VAT-registered person, whose sales are zero-rated or
effectively zero-rated 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:
Provided, however, That in the case of zero-rated sales under Section 106(A)(2)(a)(1),(2) and (B) and Section 108
(B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in
accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where
the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods or
properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely
attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales.
s SEC. 229. Recoven; of Tax Erroneously or Illegally Collected. - 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, 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 regardless of any supervening cause that may arise after payment: Provided,
however, That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on
the face of the return upon which payment was made, such payment appears clearly to have been erroneously
paid.
6 Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc., CTA EB Case No. 416, February 4,
2009.
7 Commissioner of Internal Revenue v. CE Cebu Geothermal Power Company, Inc., erA EB Case No. 426, May

29,2009.
s G.R. No. 100776, October 28, 1993, 277 SCRA 444.

I
DISSENTING OPINION
CIA EB Case No. 727 (CIA Case No. 8120)
Page 4 of 5

The principle of prospectivity of statutes, original or amendatory,

has been applied in many cases. These include: Buyco v. PNB, 961 2
SCRA 682 (June 30, 1961), holding that Republic Act No. 1576 which
divested the Philippine National Bank of authority to accept back pay
certificates in payment of loans, does not apply to an offer of payment
made before effectivity of the act; Largado v. Masaganda, et al., 5 SCRA 522
(June 30, 1962), ruling that RA 2613, as amended by RA 3090 on June,
1961, granting to inferior courts jurisdiction over guardianship cases,
could not be given retroactive effect, in the absence of a saving clause;
Larga v. Ranada, Jr., 64 SCRA 18, to the effect that Sections 9 and 10 of
Executive Order No. 90, amending Section 4 of PD 1752, could have no
retroactive application; People v. Que Po Lay, 94 Phil. 640, holding that a
person cannot be convicted of violating Circular No. 20 of the Central,
when the alleged violation occurred before publication of the Circular in
the Official Gazette; Baltazar v. C.A., 104 SCRA 619, denying retroactive
application to P.D. No. 27 decreeing the emancipation of tenants from the
bondage of the soil, and P.D. No. 316 prohibiting ejectment of tenants
from rice and corn farmholdings, pending the promulgation of rules and
regulations implementing P.D. No. 27; Nilo v. Court of Appeals, 128 SCRA
519, adjudging that RA 6389 which removed "personal cultivation" as a
ground for the ejectment of a tenant cannot be given retroactive effect in
the absence of a statutory statement for retroactivity; Tac-An v. CA, 129
SCRA 319, ruling that the repeal of the old Administrative Code by RA
4252 could not be accorded retroactive effect; Ballardo v. Borromeo, 161
SCRA 500, holding that RA 6389 should have only prospective
application; (see also Bonifacio v. Dizon, 177 SCRA 294 and Balatbat v. CA,
205 SCRA 419).

The prospectivity principle has also been made to apply to

administrative rulings and circulars, to wit: ABS-CBN Broadcasting
Corporation v. CTA, Oct. 12, 1981, 108 SCRA 142, holding that a circular or
ruling of the Commissioner of Internal Revenue may not be given
retroactive effect adversely to a taxpayer; Sanchez v. COMELEC, 193 SCRA
317, ruling that Resolution No. 90-0590 of the Commission on Elections,
which directed the holding of recall proceedings, had no retroactive
application; Romualdez v. CSC, 197 SCRA 168, where it was ruled that CSC
Memorandum Circular No. 29, s. 1989 cannot be given retrospective effect
so as to entitle to permanent appointment an employee whose temporary
appointment had expired before the Circular was issued.

r
The principle of prospectivity has also been applied to judicial
decisions which, "although in themselves not laws, are nevertheless
evidence of what the laws mean, ... (this being) the reason why under
Article 8 of the New Civil Code, 'Judicial decisions applying
DISSENTING OPINION
CfA EB Case No. 727 (CfA Case No. 8120)
Page 5 of 5

interpreting the laws or the Constitution shall form a part of the legal
system ...'" (Boldfacing supplied.)

Applying the above disquisitions, I find the administrative and judicial claims

filed within the prescribed period.

Accordingly, I vote that the Petition for Review be GRANTED. The Petition

for Review, docketed as CTA Case No. 8120 should be REINSTATED and be

GIVEN DUE COURSE.

LO