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    4 - Zuellig Pharma V CIR

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    Orland Marc Luminarias

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    of 12
    Republic of the Philippines Supreme Court Manila SECOND DIVISION ZUELLIG-PHARMA _ ASIA GAR. No. 244154 PACIFIC) LTD. PHILS. ROHQ, Present Petitioner, PERLAS-BERNABE, S.A./, Chaieperson, = versus - HERNANDO, INTING, DELOS SANTOS, and COMMISSIONER oF GAERLAN,' JU. INTERNAL REVENUE (cir), Promulgated Respondent DECISION PERLAS-BERNABE, —— ro Janay 21,2019 of he CSUR GpIS BI STUEN BAN, CTA BB No. 1656, whieh 1d. Phils. ROHQ (Zuelig-PH)'s cer Besomiod Adie Member er Spec x No. 27 ded May 1,200 Wat set Pn by Asal sce Ma Sen M, Ragin with Pring hse Ronan Dl Reais Acie ste unt CC tds Uy ape ao toot Decision 2 GR. No, 244154 Zuellig-PH is a ign corporation duly organized and existing under the laws of Hong Kong.” For CY 2010, Zucllig-PH filed its Quarterly VAT Retums (BIR Form No, 2550-Q) on April 22, 2010," July 21, 2010 October 20, 2010. and January 20, 2011,” respectively. On February 1S, 2011, Zuellig-PH filed its amended Quarterly VAT Returns On ‘with fo, 1914) of its amounting 10 a total of 'P39,931,971.21 with the Bureau of Intemal Revenue (BIR) Revenue Distict Office (RDO) No. 49." attached Ne. 1420100037096" dated March 3, 2011 fom the BIR. In the stid LOA, the [BIR authorized Revenue Officer (RO) Joaquin Tinio (RO Tinio) and Group Supervisor Socrates Regala to examine Zuellig-PH’s book of accounts and ‘other accounting records for VAT for CY 2010." —— in relation to is Uishhetatve chin brad heer ee ereto, Zuelig-PH sulmitted the requested documents to the BIR on July $, 2011." feto which the former acceded. Consequently, Zuellig-PH made submissions on May 8 2012,” July 25, 2012," December 6, 2012,” and September 11, 2013,” all of ‘whieh were received by RO Tini On February 4,2014, Zucllig-PH's claim 1 eT, 188, ad 101-192, agp te one tte rere ity VAT eta Quang Soe Wm) Seer p. EA Didone p90, ‘Se et uy, 201 of ai PCTA Den ra, p57 ‘Se eter (uth tact) a ty 7, 20 ul PS a 2H ‘Slo ed aS iF 98, ‘Se lt (neh crt) ed Doe 6.3012 Zul Pe 846, ‘SS le (neh aac ied Samba, 30 of Zul PM 398 08, Decision 2 GR.No. 244154 \was forwarded tothe BIR Assessment Service and assigned to RO William P. Manzanares, Jr. (RO Manzanares)?" Due to the GHGRIRRGEEMEIP in the processing of its refund claim, Zuellig-PH sent a letter on March 5, 2014 to then Commissioner Kim § Jacinto-Hlenares, requesting that its application for refund be resolved atthe soonest possible time. Deputy Commissioner Nelson M. Aspe (Depuly Commissioner Aspe) replied to Zuelig-PH in a leter® dated March 12,2014, stressing that applications for refund were processed by the Assessment Service on a “frstin-firstout” basis. Nevertheless, Deputy Commissioner Aspe assured Zucllig-PH that efforts to r amended, ‘Thereafter, RO Manzanares requested Zuclig-PH to resubmit certain documents, to which the later complied as evidenced hy a letter” dated April 29, 2014. The aforesaid leer was stamped received by the Assessment Service on the same date* In the same letter, ZuellisPH Imanifested that it had “wleeady submited the complete documents in support its| application for refund of excess and unutilized input VAT for. four (4) quurters-of TY 2010 in the amount of Phps9,I31, 97121" Consequently, it averred that the BIR should act on its application for VAT refund *within 120 days from the date of submission x x nin suvvrdance with Section {112 (C)], National Intemal Revenue Code of 1997." When the BIR failed to act onthe administrative claim for refund within 120 days from receipt of Zuellig-PH's last correspondence on April 29, 2014 (the 126" day being August 27, 2014), Zuellig-PH filed a Petition for Review before the CTA-Second Division on September 25, 2014, docketed as CTA Case No. 8899. For its par, the BIR argued that the CTA. did not acquire jur ‘over the esse, considering that Zuellig-PH’s judicial claim for rel belatedly filed. In particular, the BIR pointed out that since Zuellig-PH its administrative claim for refund on February 17, 2011, the RDO hed| une 11, 2011" to aet on the claim. When the RDO failed to do 30, Zu PH shuld ve filed jul lam with the CTA within shir (30) dg: $e ae Mr 2.20 Day Cons Opetins Op eon MA sorghasi ppl Di epee S204, Wa 1425, hs syestobean veh ses. fm Fey 1,201 ae 1 11,201 Decision 4 GR, No, 244156 therefrom, or until July 11, 20112 Since Zuellig-PH filed its judicial claim ‘only on September 25, 2014, which was clearly long after the lapse ofthe 30- ‘ay period, the claim was already belatedly filed. In any event, it argued thet Zuellg-PH was not able to discharge its burden of proving its entitlement to its claim for refund. ‘The CTA-Second Division Ruling Ina Decision” dated March 9, 2017, the CTA-Second Division denied Zuellig-PH's Petition for Review for being filed out of time thet thatthe 120-day period within which the BIR should act on the {administrative claim for refiand must be reckoned from the date when Zulli PH submitted the requested documents on July $, 2011, which was in Fesponse to the BIR’s written request for such dated June 29,2011. In this regard, the CTA-Second Division disregarded the subsequent verbal requests for written documents made by the BIR to Zuelig-PIl, considering that, as per the case of Pilipinas Total Gas, Ine. 9. CIR (Pilipinas Tora! Gas).” the notice for additional documents should be in ‘writing; hence, the 120-day period for the BIR co act on the refund elaim was, reckoned from June 29, 2011, and upon the lapse thereof, Zuellig-PH had thirty G30) days to file its judicial claim for refund, or on December 2, 2011 However, since Zuelig-PH filed the Petition for Review only on September 5, 2014, the same was Tiled out of time Agartieved, Zuelig-PH moved for revonsideration.” It argued thatthe BBIR was estopped from questioning the jurisdiction of the CTA given the subsequent representations of Deputy Commissioner Aspe (albeit verbal) ‘regarding the continued processing ofits VAT refund claim which took place {even beyond July 5, 2011 (ce, the date which the CTA-Division construed as ‘the reckoning point of the 120-day petiod for the BIR to act on Zuellig-PH's administrative claim for refund). In a Resolution” dated May 9, 2017, Zuelig-PH's motion for reconsideration was denied. Unperturbed, it then elevated! the matter to the CTA En Bane. Boon oo 31d abe ly 17,2011 Sec pores ihe suet etn fr Reve ie Sep 23,214 diel Novena 3, ig 22-169, Pome by iat ats ai ‘ete ni cs ae Cor tamraseogy ‘5 mu Tr rosea Re: Deco ho Mach 9, 207) od Meh 27,2017 8 75 Decision 5 GR. No. 244158 ‘The CTA En Bane Ruling In a Decision dated January 21, 2019, the CTA En Bane affirmed the CTA-Second Division, It agreed with the latter's application of the ruling in Pilipinas Total Gas to Zuellig-PHs case, and further held that the government ‘cannot be estopped by the mistakes ofits agents.” Hence, the instant petition. ‘The Issue Before the Court ‘The essential issue forthe Court's resolution is RRP O NEAT PH’s judicial claim for refund was filed out of time, ‘The Court's Ruling ‘The petition is (ASHOHOUD Section 112 (C) of the National Internal Revenue Code of 1997 (Tax. Code)" provides for the period within which to file a claim for refund of creditable input tax ‘SHC, 112, Refunds or Tax Cris of Input Tax.— (©) Period within whic Refund or Tax Crit of Input Taxes shal! be Made. ~In proper cscs, the Commissioner shall grant refund oF Ise the tax credit certificate for creditable input taxes within one red twenty (120) GguMIEHE in support of the application filed in-aceordance with Subsection (A) hereot. In case of fl or paral denial of the elim for tx refund or tax ‘edit, or the fallue on the par af the Commissioner t0 act on the sgpliaton within the period presclted above, te taxpayer afore ma, simi hy (0) dy to the ea the deinen the slaim or after the expiration ofthe one bundred twenty day pio Soe underscoring supped) ‘As may be gleaned from the above provision, the CIR has a petiod of 120 days from the date of submission of complete documents within vhich ‘weevaluaie an administrative claim for tax credit or refund of creditable input {axes (120-day period), If the CIR denies the administrative claim, or it it remains unacted upon the expiration ofthe said period - which is essentially ‘considered a “denial due to inaction,” the taxpayer may, within thirty (30) Slap. Sak "© ep, RA) S24 mend po RA337 Oy. 2085) ry Decision ‘ GR. No, 244154 ‘days from such denial or expiration, aval ofthe further remedy of filing 1 judicial elaim before the CTA." Inthis relation, the BIR issued RMICNGISIIOOSW ich provides for the procedure in instances where there are pending administrative claims for refund but with incomplete documents. The circular states that the taxing authority shall requite the further submission of the needed. supporting «documents through a notice-request, which should then be complied with by ‘the taxpayer within thirty (30) days from receipt thereof: 18 For Geen REORDER. what is he reriad iia eh fo mit he sopping documents quired by the investigatingprocesing fice? When should the investigating’ processing offic ually receive claims for fax eredivrefund nd what Hod required to sch lain? AcIB: For pending cams whieh have not Been acted pon by the investigating processing office duc to incomplete Jocumenation, ‘he tmpayerctaimant ae given thity (0) ays within Which to submit the documentary requirements unless given further extension by dhe ead ofthe processing unit, bt sch exason should nt sce hy 30) ys For claims to be filed by claimants with the respective investigating processing ofc of the administrative agency. the sume shal be offically received only upon submission of complete For current an future claims for tx reiting, the same shall bbe processed within one hundred twenty (120) days fm rept ofthe complete daeament In the course o he inesigion and procesing ofthe elim, addtional documents are equted for ‘he proper deteminaton of the legitimate amount of clin the ‘axpayerlaiant shal sabi och dures within tity (30) days from request ofthe investigating/procesing office. ich shall be costued as within the one honed twenty [(120)y] period Emphases and underscoring supplied) ‘The foregoing rules were further refined by the differently: Under present las, when should the submission of documents be deemed ‘completed’ for purposes of determining the running of the 120-dy eriod?™ Seip ol ar pa 35, 0 48 © ted “anancng avsoan To GUSTO NUMA 1 OF RVERLE MEMOHANDLA CRELLAR NO. 42900 a a ADTUNAL Gib MSOF EUESREL ANE rH acts ne for Vallerannta Ta (VAT) Chsaturnn, IeMe Tose Fess watt he ae event Gro, owssror Stor IibeAaeNeY Tax CHIT MO DUTY Dusen Coes, Deratraexor Fret (OSS Oe) Bec Erte bel ow gu 15 © Stpmime35 aa88 uaraiorga, Decision 7 GR, No, 244154 ‘Contonted with this question, the Court then ruled that the sins @ inate muhorey doesnot make any notice requesting) for additional documents orf the taxpayer manifests that he no longer wishes to submit any additional documents, t sit would be assumed that at that point, the taxpayer had already submitted complete documents in support of ts claims!” oF (amuarhsealmy In is sear, the expayer who ultimately determines when complete documents have been submitted for the purpose of commencing and continuing the running of the 120-day period." Notably, there is WolRequirementiWthe Tax Code or in RMC No. 49-2003 m tated differently, iaw does it require that the request for additional documents must always and absolutely be made in written form. While written requests would be preferred because it would be easier for the BIR to ke documents submitted by the tx ‘To be sure, while the Court in Pilipinas Total Gas did state that “such notice by way of a written request is required by the CIR to be sent to [the taxpayer,” the said statement was not intended to foist any judicial doctrine fnent the request’s required form. The seeming requirement thatthe request for additional documents must be “written” only appears in a singular sentence of the Couns entire Decision. In fac, the word “Written” only appears twie in Pilipinas Total Gas, the pertinent portion of which is hereby reproduced as fallow: ‘Sovond, the CIR seat no writen notice informing Total Gas that the documents were incomplete or required it to sunt ational Scuments, As stated above, such notice by way ofa writen request eared by the CIR to be seat to Total Gas, Nether was the say ‘ecision mae denying he adminsratve claim of Total Gas on the srw "hat had filet subi al the required documents It was pecsey the inaction ofthe BIR which prompled Tol Gas to ile the Julia ain, Thus, by Tiling inform Total Gas of the need to submit any addon Seis nas Decision 8 GR, No, 240154 document, the BIR cannot now argue thatthe judicial elim should be ismised because i Tied to subi eomplete documenta 4n contrast, it must be pointed out thatthe intial portions ofthe Court's ruling in Pilipinas Total Gas did not even qualify thatthe request must bein ‘written form, As held in the same ease, ae Lest it be misunderstood, the tone gven to the tapayer 1 termine when it should complete its submission of documents te ot unbridled. Under RMC No. 49.2003, in the curse of te investigation and processing of the claim, addtinal documents are requited forthe ‘rope determination ofthe eptmacy of the claim, the taxpayerclainants tall submit such documents within tiny 20) days fron request of the investiatingprocessingoic. Aguin, notice, by way of a request rom theta ulhority to produce ete documents in these ‘cases, seni ‘Thus, the statement that “such notice by requited by the CIR to be sent to [the taxpayer statement of the Court whi his is confirmed by the fact that in Pilipinas Total Gas, there was even no request ~ whether verbal or written ~ given by the BIR, to the taxpayer ten request is Inany event, Pilipinas Total Gas is not squarely applicable tothe case atbar. Tobe sure, the core ofthe controversy in Plipinas Total Gas only lies in the supposed prematurity of the taxpayer's judicial claim for reftnd, considering that te later allegedly failed to submit complete documents in support thereof at the time the claim was filed; hence, the 120-day period for the BIR to decide the claim had not yet begun to run. The Court held that ‘the 120-day period should be reckoned from the ime the taxpayer had deemed itself to have submitted the complete documents in support of its administrative claim, without prejudice to the BIR’s request for additional documents which did not obtain inthis ease; thus, with the 120 days having lapsed therefrom, the taxpayer may then, within thirty (30) days, accordingly, fle its judicial claim for refund, as was done by the taxpayer in Pilipinas Total Gas. To this end, the Court had summarized its disposition a5 follows: “To summarize, for he jus daposition ofthe subject ontoves) the ‘ule eta rom the dite an ainsi claim fr extess wnutlized VAT is fled, toxpayer has thy (G0) days within which to submit he documentary requirements sulficen «support his claim, unless ven faher extension by the CIR. Then, upon filing by the taxpayer of hi ‘complete documents t suppor his appiestion, or expiration of te pod ‘ven the CIR has 120 day within thc to dele te claim forts rei ‘orrelind. Should the txpsyer, onthe dat Ri ling, mais tht Be «505; emp si I atecempbans insane pp 5 Sella smo Decision ° GR No. 264154 longex wishes to submit any ther sion documents 19 complet hi ‘ministrative clam, the 120-ay period allowed tothe CIR begins tt from the dt offing Unlike in this case, the Court in Pl ‘with the i ‘dayyperiodain fact, as earlier mentioned, in Pilipinas Total Gas, there was 40 request ~ whether verbal or written — given by the BIR to the taxpayer. Thus, in view of the foregoing, Pilipinas Total Gas isnot the proper basis to construe ‘that all subsequent verbal communications made by the BIR to ZuelligsPH (ot ny taxpayer for that matte) are insufficient forthe purpose of determining, ‘the reckoning point of the 120-day period, In this ease, records show that Zuellig-PH duly complied with the BIR ‘officials’ writen and verbal requests for additional documents through its lewers dated July 5, 2011, May 8, 20123 July 25, 2012," December 6, 2012," September 11, 2013," and April 29, 2014, with the last ler indicating that it had “alseady submitted the complete documents in support ts] application for refund of excess and unutilized input VA'T for the (41 quariers of TY 2010 jp the amount of Php39.931,971,21." Notably, of these verbal requests for additional documents and Zucllig-P corresponding submissions in response thereto were well-documented therein applied, the 120-day period should therefore be (G@HBieckoned from the Aprit 29, 2014 leter of Zucllig-PH wherein it stated GUNN that it had already submitted the complete documents in support of its refund claim. In turn, the BIR had 120 days from such time (or until August 27, 2014) to act on Zuellig-PH’s administrative claim for refund. Since it was established that the BIR failed to act within such period, Zuellig- iid hy 30) dave, nl Sepa 26 2014 tole ical im Atthis juncture, itis well to point out that it was the BIR’s own officials who led Zuellig-PH to believe that the numerous verbal requests. for documents they made were all regular and above-board, and that the ‘taxpayer's compliance therewith would result in the timely processing ofits administrative claim. Were it not for the BIR's own representations, then Decision 0 GRNo. 244154 ‘Zuellig-PH could bave filed its judicial claim for refund sooner. Thus, Zuellig- PH cannot be faulted for merely acting in accord with the representations of the BIR itself. Indeed, while the Cour recognizes the well-entrenched principle that estoppel doesnot apply to the government, especially on matters ‘f taxation (as taxes are the nation’s lifeblood through which government agencies continue to operate and with which the State discharges its Functions forthe welfare ofits constituents), this principle does not apply if it would ‘work injustice against an innocent pary.*' such as Zuellig-PH in this cas, Hence all things considered, the Cour holds that the CTA erred in dismissing, Zuellig-PH's judicial claim for refund. Since the CTA-Second Division had ‘already conditcted a trial on the merits but instead chose to dismiss Zuellig- PH’s claim on the aforementioned ground, the Court finds it proper torematid ‘the ease ta it fora resolution on the merits with utmost dispatch ‘Asa final note, the Court clarifies thatthe above disquisition only finds ‘pplication to those claims for refund made prior o tune 11, 2014 (ce. the date that RMC_No, $4-2014 a ‘0 reiterate, the prevailing rule 1 all complete RET. cavntted pene linge uxpayers ne

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