CASE DIGEST: PROCTER & GAMBLE ASIA vs. CIR G.R. No. 205652. September 6, 2017

FACTS:

P&G is a foreign corporation duly organized and existing under the laws of Singapore and is maintaining a Regional Operating Headquarter in the Philippines. It is a VAT Registered taxpayer.

On March 22, 2007 and May 2, 2007, P&G filed applications and letters addressed to the BIR RDO No. 40, requesting the refund or issuance of tax credit certificates (TCC's) of its input VAT attributable to its zero-rated sales covering the taxable periods of January t0 June 2005.

Pending applications in BIR, on March 28, 2007, P&G filed a petition for review with the CTA seeking the refund or issuance of  TCC for VAT paid on goods or services attributable to its zero-rated sales for the first quarter of taxable year 2005 and another judicial claim for refund on June 8, 2007 for the second quarter of 2005.

While P&G's claim for refund or tax credit was pending before the CTA, the Court promulgated CIR vs. Aichi on October 6, 2010 wherein they held that compliance with 120 day period granted to the CIR, within which to act on an administrative claim for refund or credit of unutilized input VAT is mandatory and jurisdictional in filing an appeal with the CTA. Hence, the claims of P&G were denied by the CTA.

ISSUE:

Whether P&G's claims for refund or tax credit were timely filed.

RULING:

Yes. Sec. 112 of the NIRC provides for the rules on claiming refunds or the tax credits of unutilized input VAT. The CIR is given 120 days within which to grant or deny a claim for refund. Upon receipt of the CIR's decision or ruling denying the said claim, or upon the expiration of the 120-day period without action from the CIR, the taxpayer has 30 days within which to file a petition for review with CTA.

In Aichi, the court ruled that compliance with the 120+30 day periods is mandatory and jurisdictional and is fatal to the filing of a judicial claim with the CTA. However, in the case of San Roque, the Court recognized BIR Ruling No. DA-489-03 as an exception, which was issued on December 10, 2003, prior to the promulgation of Aichi. That BIR Ruling expressly allowed the filing of judicial claims with the CTA even before the lapse of the 120-day period. The court in that case held that such BIR Ruling furnishes a valid basis to hold the CIR in estoppel because the latter has misled taxpayers into filing judicial claims with the CTA even before the lapse of the 120-day period.

In the case of San Roque, the court cited two exceptions to the rule mandating compliance with the 120-day period. First is that, if the Commissioner, through a specific ruling, misleads a particular taxpayer to prematurely file a judicial claim with the CTA. Such ruling is applicable only to such particular taxpayer. Second is that, the Commissioner through a general interpretative rule issued under Section 4 of the Tax Code, misleads all taxpayers into filing prematurely judicial claims with the CTA.

In this case, P&G relied on BIR Ruling No. DA-489-03, which is a general interpretative rule. On the basis of the second exception mentioned above, the claims for refunds or credit by P&G were timely filed because it filed the claims after the issuance of the BIR Ruling and before the promulgation of Aichi case where the 120+30 day period becomes mandatory and jurisdictional.

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End Notes:

As a general Rule, the 120+30 day period for filing refunds or credits to CTA is mandatory and jurisdictional. This is the existing doctrine promulgated in the case of Aichi. Thus, it is required that the taxpayer should wait first for the resolution of the CIR regarding the claims or wait after the period lapse without having resolved by the CIR. It is only then that the taxpayer will have the 30 day period within which to file its petition for review with the CTA for its claims. If the claims were filed to CTA within that 120-day period without obtaining resolution from the CIR, the CTA cannot decide on that matter because the claims were prematurely filed and therefore the CTA did not actually acquired jurisdiction over the same.

However, this rule is not absolute, it admits of exceptions. It is when the  Commissioner misleads taxpayer from filing prematurely either through a specific ruling, which is applicable only for a particular taxpayer, or through a general interpretative rule, which applies to all taxpayers who will rely on it.