Case: 106. Pilipinas Total Gas, Inc. vs CIR. GR No.

207112, 8 December 2015

Topic: 120 + 30 day period to appeal to the CTA has been modified by amendments introduced
by RA 10963 (this case must be read in light of the changes)

DOCTRINE:

BEFORE Amendment: CIR has 120 days from date of submission of complete documents to
decide a claim for tax credit or refund of creditable input taxes. The taxpayer may, within 30
days from receipt of denial of claim or after the expiration of 120-day period considered a “denial
due to inaction” appeal the decision [this is the doctrine in this case]

AFTER Amendment: Sec. 112 (C), NIRC – Period within which refund or tax credit of input taxes shall be made –
The Commissioner shall grant a refund for creditable input taxes within 90 days from the date of submission of the
official receipts or invoices and other documents in support of the application: Provided, that should the
Commissioner find the grant or refund is not proper, he must state so in writing the legal and factual basis thereof.

In case of full or partial denial of the claim of tax refund, the taxpayer may, within 30 days from the receipt of the
decision denying the claim, appeal the decision with the CTA: Provided, that failure on the part of the official, agent or
employee of BI to act on the application within 90 days shall be punishable under Sec. 269 of this Code.

ACTION SEQUENCE: Total filed Amended Quarterly VAT Returns for first 2 qtrs of 2007 –
Total filed an admin claim for refund of input VAT said period – Total elevated the matter to CTA
Division – CTA Div denied claim for refund – CTA en banc denied the petition for review.

FACTS

 On May 20, 2008, Pilipinas Total Gas filed its Amended Quarterly VAT Returns for the
first two quarters of 2007 reflecting its sales subject to VAT, zero-rated sales and
domestic purchases of noncapital goods and services.
o It claimed that for the First & Second quarters of 2007, it incurred unutilized input
VAT credits from domestic purchases of noncapital goods and services for a total
of P8.1 Million. Of this total accumulated input VAT, Total claimed it had P7.8
Million excess unutilized input VAT
 On May 15, 2008, Total filed an administrative claim for refund of unutilized input VAT
for the first two quarters of 2007. On August 28, 2008, Total submitted additional
supporting documents. On January 23, 2009, Total elevated the matter to the CTA in
view of the inaction of CIR.
 Ruling of CTA Division – Dismissed the petition for being prematurely filed for failure to
complete the necessary documents for a refund claim under RMO 53-98. Because of
this, CTA also held that the 120-day period allowed for CIR to decide had not even
started to run.
 Ruling of CTA en banc – Denied the Petition for Review. CTA En banc held that:
o CTA Division had no jurisdiction over the case because Total failed to file its
petition on time. The 120-day period could not commence on the day Total filed
its last supporting document because to allow such would give the taxpayer
unlimited discretion to indefinitely extend the 120-day period by filing the
documents piecemeal.
  Here, Total filed its admin claim on May 15, 2008; CIR had 120 days to
act on the claim (until Sept. 12, 2008); Total had 30 days from Sept. 12 to
question the inaction.
o Total failed to submit the complete supporting documents to warrant a refund.
 Total filed this petition. It argues that the 120-day period should be counted from the
date of its submission of the complete documents (August 28, 2008).

ISSUE/S: Whether the claim for refund was belatedly filed

RULING: No. The claim for refund was timely filed.

RMC No. 49-2003 states that upon filing of tax credit/refund claim, the taxpayer has 30 days
within which to complete the documents, unless given further extension by the head of the
processing unit. If, in the course of investigation of the claim, additional documents are required,
the taxpayer shall submit them within 30 days from the request of the investigating office.
Therefore, notice, by way of a request from the tax collection authority to produce the
complete documents, became essential. It is only upon the submission of these documents
that the 120-day period begins to run.

Therefore, for the purposes of determining when the supporting documents have been
completed, it is the taxpayer who ultimately determines when complete documents have been
submitted for commencing and continuing the running of the 120-day period. It’s the taxpayer
who has the right and burden of providing any and all documents since he has the burden to
prove his cause of action since the 120-day period is intended to benefit the taxpayer ((after all,
the sooner the taxpayer successfully processes his refund, the sooner can he reap the benefits
of his claim). To allow CIR to determine the completeness of docs and dictate the 120-day
period would leave the taxpayer in limbo and at the mercy of CIR without adequate remedy to
hasten the processing of the administrative claim.

Thereafter, whether these documents are actually complete as required by law is for the CIR
and Courts to determine, (again, RMC No. 49-2003 states that notice by way of a request of tax
collection authority to produce complete documents is essential).

Several amendments through RMOs were made in determining the period within which CIR
should act upon an admin claim. The latest of amendment of the Code (applicable to this case)
is RA No. 9337 passed in 2005. Sec. 112 (C) of the amendment categorically states that CIR
has 120 days from date of submission of complete documents to decide a claim for tax
credit or refund of creditable input taxes. The taxpayer may, within 30 days from receipt of
denial of claim or after the expiration of 120-day period, which is considered a “denial due to
inaction,” appeal the decision. Likewise, RA 9337 implies that that RMC No. 49-2003 should still
be observed.

In this case, CIR made no effort to question the inadequacy of the documents submitted by
Total as it neither gave notice nor ruled to deny its claim for failure to substantiate the same.
Thus, the Supreme Court ruled that the 120-day period should be reckoned from August 28,
2008, the date when Total made its “submission of complete documents.” Consequently, BIR
has 120 days from August 28 to decide the claim. However, without absolutely no action or
notice on the part of BIR for 120 days, Total had 30 days or until January 25, 2009 to file its
judicial claim. Therefore, Total timely filed its judicial claim on January 23, 2009.

For the same reasons above, the appeal (judicial claim) made by Total to CTA is not premature.
When Total filed its appeal to CTA, it relied on BIR Ruling No. DA-489-03 which at that time was
not yet struck down by the Aichi Doctrine (which states that the 120+30 period are mandatory
and jurisdictional).

The Court cannot rule on whether Total is entitled to the P7.8 Million refund as the Supreme
Court is not a trier of facts, thus, this case shall be remanded to the CTA Divison.

DISPOSITIVE PORTION: Petition is PARTIALLY GRANTED. The CTA en banc’s decision is

REVERSED and SET ASIDE. The case is REMANDED to the CTA Third Division for trial de
novo.

NOTES

 The rules above should only be applied to claims filed prior to June 11, 2014. Because,
under the current rule, the taxpayer is required to complete his supporting documents at the
time he filed his claim and attest that he will no longer submit any other documents. In fact,
under the current rule, he is barred from submitting additional documents. Note that the
current rule cannot be applied retroactively.
 Reliance by the CTA on RMO No. 53-98 as list of required documents is misplaced. There is
nothing in Sec. 112 or RMO 53-98 which requires the submission of the complete
documents enumerated in RMO 53-98 for a grant of a refund or credit of input VAT,
because what was contained therein is a checklist of documents upon Audit of tax liabilities.
Here, Total was applying for a refund or credit and there’s no allegation of an audit. We
reiterate that the revenue officer failed to give notice thereof.
 Taxpayer’s failure to comply with the requirements under RMO No. 53-98 is not fatal to its
claim for tax refund or credit especially if the claim has arrived at the judicial level. When the
case has been elevated to the Court, the Rules of Court governs as such the question of
whether the evidence submitted is sufficient lies on the sound discretion of the Court.
 A distinction must be made:
o Admin claim dismissed by CIR for failure to submit complete documents despite
notice, the judicial claim before CTA would be dismissible for taxpayer’s failure to
substantiate the claim at admin level.
o When the judicial claim is an appeal of an unsuccessful admin claim, the taxpayer
has to convince CTA that he is entitled under substantive law to his claim and that he
satisfied all the documentary requirements for an admin claim. Consequently, a
taxpayer cannot cure its failure to submit a document requested by BIR at admin
level by filing said document before the CTA.

Digest by [Cadiz]

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