TAGANITO MINING CORPORATION VS CIR (2013)

G.R. No. 196113 is a petition for review assailing the Decision promulgated on 8 December 2010 as well
as the Resolution promulgated on 14 March 2011 by the CTA En Banc. In its Decision, the CTA En Banc
reversed the 8 January 2010 Decision as well as the 7 April 2010 Resolution of the CTA Second Division
and granted the CIRs petition for review in CTA Case No. 7574. The CTA En Banc dismissed, for having
been prematurely filed, Taganito Mining Corporations (Taganito) judicial claim for P8,365,664.38 tax
refund or credit.
Facts:
Petitioner, Taganito Mining Corporation, is a corporation duly organized and existing under Philippine
laws, organized for the purpose of mining, etc. It is a VAT-registered entity and likewise, is registered with
the Board of Investments (BOI) as an exporter of beneficiated nickel silicate and chromite ores.
In the year 2005, Taganito reported zero-rated sales amounting to P1,446,854,034.68; input VAT on its
domestic purchases and importations of goods (other than capital goods) and services amounting to
P2,314,730.43; and input VAT on its domestic purchases and importations of capital goods amounting to
P6,050,933.95.
In 2006, filed with the CIR a letter claiming a tax credit/refund of its suppose input VAT amounting to 8
million for the period covering Jan 2004-Dec 2005. On the same date, [Taganito] likewise filed an
Application for Tax Credits/Refunds for the period covering January 1, 2005 to December 31, 2005 for the
same amount.
On November 29, 2006, [Taganito] sent again another letter dated November 29, 2004 to [the CIR], to
correct the period of the above claim for tax credit/refund in the said amount of 8,365,664.38 as actually
referring to the period covering January 1, 2005 to December 31, 2005.
As the statutory period within which to file a claim for refund for said input VAT is about to lapse without
action on the part of the [CIR], [Taganito] filed the instant Petition for Review on February 17, 2007.
The CIR interposes the following defenses, among others:
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7. Proof of compliance with the prescribed checklist of requirements to be submitted involving claim for
VAT refund pursuant to Revenue Memorandum Order No. 53-98, otherwise there would be no
sufficient compliance with the filing of administrative claim for refund, the administrative claim
thereof being mere proforma, which is a condition sine qua non prior to the filing of judicial
claim in accordance with the provision of Section 229 of the 1997 Tax Code.
Further, Section 112 (D) of the Tax Code, as amended, requires the submission of complete
documents in support of the application filed with the BIR before the 120-day audit period shall apply,
and before the taxpayer could avail of judicial remedies as provided for in the law. Hence,
[Taganitos] failure to submit proof of compliance with the above-stated requirements warrants immediate
dismissal of the petition for review.
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9. In an action for refund/credit, the burden of proof is on the taxpayer to establish its right to refund, and
failure to sustain the burden is fatal to the claim for refund/credit.

10. Claims for refund are construed strictly against the claimant for the same partake the nature of
exemption from taxation and as such, they are looked upon with disfavor.
Section 112. Refunds or Tax Credits of Input Tax.
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(D) 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 (120) days from the date of submission of complete documents in support of the
application filed in accordance with Subsections (A) and (B) hereof.
In cases of full or partial denial 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 dayperiod, appeal the decision or the unacted claim with the Court of Tax
Appeals. (Emphasis supplied.)
CTA Division partially granted Taganitos claim.
Upon appeal to the CTA En Banc, the CTA EB granted the CIRs petition for review and reversed and set
aside the challenged decision and resolution.
The CTA EB found that Taganito filed its administrative claim on 14 November 2006, which was well
within the period prescribed under Section 112(A) and (B) of the 1997 Tax Code. However, the CTA EB
found that Taganitos judicial claim was prematurely filed. Taganito filed its Petition for Review before the
CTA Second Division on 14 February 2007. The judicial claim was filed after the lapse of only 92 days
from the filing of its administrative claim before the CIR, in violation of the 120-day period prescribed in
Section 112(D) of the 1997 Tax Code.
HELD:
National Internal Revenue Code; value added tax; 120-day period given by law to the Commissioner of
Internal Revenue to grant or deny application for tax refund or credit mandatory and jurisdictional. Failure
to comply with the 120-day waiting period violates a mandatory provision of law. It violates the doctrine of
exhaustion of administrative remedies and renders the petition premature and thus without a cause of
action, with the effect that the Court of Tax Appeals (CTA) does not acquire jurisdiction over the taxpayers
petition. The charter of the CTA expressly provides that its jurisdiction is to review on appeal decisions of
the Commissioner of Internal Revenue (CIR) in cases involving xxx refunds of internal revenue taxes.
When a taxpayer prematurely files a judicial claim for tax refund or credit with the CTA without waiting for
the decision of the CIR, there is no decision of the CIR to review and thus the CTA as a court of special
jurisdiction has no jurisdiction over the appeal. The charter of the CTA also expressly provides that if the
CIR fails to decide within a specific period required by law, such inaction shall be deemed a denial of
the application for a tax refund or credit. It is the CIRs decision or inaction deemed a denial, that the
taxpayer can take to the CTA for review. Without a decision or an inaction xxx deemed a denial of the
CIR, the CTA has no jurisdiction over a petition for review.