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I. Facts:
The administrative claim for VAT refund or TCC must be filed within two
years from the close of the taxable quarter when the zero-rated sales and/or
effectively zero-rated sales were made.
II. Issue:
Whether the Bureau of Internal Revenue (BIR) may accept an
administrative claim for tax refund of Creditable Input Value-Added Tax
even if the taxpayer has not submitted the complete documents as
required under Annex A specifically the Certified True Copy of Audited
Financial Statements of Revenue Memorandum Circular No. 54-2014?
III. Arguments
1. Pursuant to the due process guaranteed under the 1987 Constitution 2,
the taxpayer-applicant should be allowed reasonable freedom as to
when and how to present his claim within the allowable period
provided by law.
2. There is nothing in Section 112 of the NIRC or RMC No. 54-2014 that
requires that the submission of complete documents enumerated in
Annex A of RMC No. 54-2014 must be made upon the application of
tax refund.
IV. Discussion
1. In a claim for tax credit or refund, it is the taxpayer who has the
burden to prove his cause of action. As such, he enjoys relative
2. Under Section 112 (C) of the NIRC, it provides that In proper cases,
the Commissioner shall grant a refund or issue the tax credit certificate
for creditable input taxes within one hundred twenty (120) days
from the date of submission of complete documents in support
of the application filed in accordance with Subsections (A) hereof. 4
The law is clear and unequivocal that the 120-day period granted to
the CIR to decide the administrative claim is primarily intended to
benefit the taxpayer, to ensure that his claim is decided judiciously and
expeditiously.
Here, the RMC 54-2014 allows the CIR to determine the completeness
of the documents submitted which is upon the application of a tax
refund and thus dictates the running period of the 120-day period.
Moreover, what the law only requires is that the taxpayer has two (2)
years, after the close of the taxable quarter when the sales were
made, to apply for the issuance of a tax credit certificate or refund of
creditable input tax due or paid attributable to such sales. Hence,
before the administrative claim is barred by the 2 year period, the
taxpayer should be allowed to submit his complete documents in
support of the application filed.
Moreover, under the Tax Code specifically Section 112 of the NIRC,
there was no express requirement that the submission of the complete
documents enumerated under Annex A of RMC 54-2014 is necessary
for a grant of a refund.5
Here, RMC 54-2014 runs contrary to the law and jurisprudence when it
provides that the application for VAT refund/tax credit must be
accompanied by complete supporting documents and in addition the
taxpayer shall attach a statement under oath attesting to the
completeness of the submitted documents. Furthermore, the affidavit
shall further state that the said documents are the only documents
which the taxpayer will present to support the claim.
The RMC 54-2014 provides stricter conditions which are not found
under the NIRC or applicable jurisprudence. In so doing, the BIR did not
simply interpret the law; rather it legislated guidelines contrary to the
statute passed by Congress.