RECALL that in the past, it is the Commissioner’s decision, or inaction “deemed a denial,” that the taxpayer can take to the Court of Tax Appeals (CTA) for review.
As to the manner of appeal, the Supreme Court (SC) in the case of Mindanao II Geothermal Partnership v. Commissioner of Internal Revenue (CIR) laid down the rules of which the taxpayer can file an appeal in one of two ways: (1) file the judicial claim within thirty days after the Commissioner denies the claim within the 120-day period, or (2) file the judicial claim within thirty days from the expiration of the 120-day period if the Commissioner does not act within the 120-day period.
Failure to file a judicial claim with the CTA within 30 days from the expiration of the 120- day period rendered such Commissioner’s inaction that is “deemed a denial,” final and unappealable as provided in Revenue Memorandum Circular No. (RAMO) 54-2014.
However, notwithstanding the above rules, some taxpayers prefer to elevate the Bureau of Internal Revenue’s (BIR) final decision rather than the Commissioner’s inaction that is “deemed a denial.” As such, despite of the expiration of the 120-day period, they still waits further for the BIR to issue the final decision in the belief that the Commissioner can still process their claims even beyond the expiration of the 120 day period.
In a recent case of Rohm Apollo Semiconductor Philippines Inc. (Rohm) v. CIR, G.R. 168950, the SC clarified this issue.
In this case, instead of filing a judicial claim within the 30 days from the lapse of the 120-day period on April 10 or until May 10, 2001, Rohm filed a Petition for Review with the CTA on September 11, 2002. The SC denied the Petition saying that Rohm’s judicial claim for a refund was filed beyond the prescriptive period.
In clarifying the waiting issue, the SC reminded the taxpayers that when the 120-day period lapses and there is inaction on the part of the CIR, they must no longer wait for the BIR to come up with a decision thereafter. The CIR’s inaction is the decision itself. It is already a denial of the refund claim. Thus, the taxpayer must file an appeal within 30 days from the lapse of the 120-day waiting period.
Now, as can be gleaned from the foregoing, a new development for value added tax (VAT) refund is that the CIR’s inaction is now the decision itself and not merely an “inaction that is deemed a denial.” And the implication of this is that no more decision is expected from the BIR after the lapse of the 120-day waiting period.
Indubitably, the SC is sending a message that since the Commissioner’s inaction is itself a decision, then the BIR may now be barred from proceeding further to process the claim. This pronouncement clears all doubts for taxpayer who prefers to wait for the BIR’s final decision rather than to elevate the Commissioner’s inaction that is “deemed a denial” because as presently worded the CIR’s inaction is itself a decision.
Another development is that it cemented the rules upon expiration of the 120-day period. As it stands, if the taxpayer does not agree with the CIR’s inaction which in itself a decision, the remedy of the taxpayer is to file an appeal within 30 days from the lapse of the 120-day waiting period. In the language of SC, the taxpayer “must” no longer wait for the BIR to come up with a decision thereafter and “must” file an appeal within 30 days from the lapse of the 120-day waiting period.
As a final note, with these new developments on VAT refund claims, taxpayers who are planning to claim VAT refunds as well as those with pending administrative claims must be vigilant and must pay attention of their rights as enunciated in the above SC ruling. Otherwise, their claims fall through the cracks or they may be left with no remedy of refund at all.
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The author is a senior associate of Du-Baladad and Associates Law Offices, a member firm of World Tax Services Alliance. The article is for general information only and is not intended, nor should be construed, as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported therefore by a professional study or advice. If you have any comments or questions concerning the article, you may email the author at ronald.cubero@bdblaw.com.ph or call 403-2001 local 350.