Title
Zuellig-Pharma Asia Pacific Ltd. Phils. ROHQ vs. Commissioner of Internal Revenue
Case
G.R. No. 244154
Decision Date
Jul 15, 2020
Zuellig-PH filed a VAT refund claim, BIR delayed processing; SC ruled judicial claim timely, 120-day period starts upon complete document submission, verbal requests valid.
foreign corporation
claim for refund
belated filing

Case Summary (G.R. No. 244154)

Statutory and Administrative Framework

The core statutory rule was Section 112(C) of the National Internal Revenue Code of 1997 (as amended), which grants the CIR one hundred twenty (120) days from the date of submission of complete documents to decide an administrative claim for refund or tax credit of creditable input taxes. If the CIR denies the claim or fails to act within that period, the taxpayer may, within thirty (30) days, appeal to the Court of Tax Appeals either from the receipt of the denial or after the expiration of the one hundred twenty day period. The Court also considered Revenue Memorandum Circular (RMC) No. 49-2003 on the processing of VAT refund/credit claims with incomplete documents, which provided that the taxpayer is given thirty (30) days to submit needed documentary requirements after a notice-request by the investigating or processing office, while emphasizing that for claims to be officially received, the submission must be of complete documents. The Court’s analysis further relied on its earlier ruling in Pilipinas Total Gas, Inc. v. CIR (Pilipinas Total Gas), which addressed when the 120-day period begins to run for purposes of deciding the administrative claim.

Factual Background: Administrative Claims and Document Submissions

For CY 2010, Zuellig-PH filed Quarterly VAT Returns (BIR Form No. 2550-Q) on April 22, 2010, July 21, 2010, October 20, 2010, and January 20, 2011. On February 15, 2011, it filed amended Quarterly VAT Returns for all four quarters of CY 2010. On February 17, 2011, Zuellig-PH filed an administrative claim for refund with the BIR Revenue District Office (RDO) No. 49, attaching an Application for Tax Credits/Refunds (BIR Form No. 1914), for excess and unutilized input VAT totaling P39,931,971.21.

The BIR issued a Letter of Authority (LOA) No. eLA201000037096 dated March 3, 2011, authorizing Revenue Officer (RO) Joaquin Tinio (RO Tinio) and Group Supervisor Socrates Regala to examine Zuellig-PH’s books of accounts and other accounting records for VAT for CY 2010. On June 29, 2011, the BIR requested Zuellig-PH to present its records and submit supporting documents related to the administrative refund claim. Zuellig-PH complied and submitted the requested documents on July 5, 2011.

Zuellig-PH then represented that the BIR made further verbal requests for documents from 2012 until 2014, which Zuellig-PH repeatedly complied with by submitting documents on May 8, 2012, July 25, 2012, December 6, 2012, and September 11, 2013, all received by RO Tinio. On February 4, 2014, Zuellig-PH’s claim was forwarded to the BIR Assessment Service and assigned to RO William P. Manzanares, Jr. (RO Manzanares).

Due to delay, Zuellig-PH wrote to the then Commissioner on March 5, 2014, requesting resolution of its VAT refund application. Deputy Commissioner Nelson M. Aspe (Deputy Commissioner Aspe) responded on March 12, 2014, stating that refund applications were processed on a first-in-first-out basis, but also assuring that the BIR would exert necessary efforts to process Zuellig-PH’s VAT refund within the 120-day period under Section 112(D) of the Tax Code, contingent upon complete document submission. RO Manzanares later required Zuellig-PH to resubmit certain documents; Zuellig-PH complied by a letter dated April 29, 2014, which the Assessment Service received on the same date. In that April 29, 2014 letter, Zuellig-PH stated that it had “already submitted the complete documents” supporting its refund application for the four quarters of TY 2010 in the amount of Php39,931,971.21, and urged that the BIR act within 120 days from submission pursuant to Section 112(C).

BIR Inaction and Filing of the Judicial Claim

When the BIR did not act within 120 days from receipt of Zuellig-PH’s last correspondence on April 29, 2014 (with the Court later using August 27, 2014 as the expiration date), Zuellig-PH filed a Petition for Review before the CTA-Second Division on September 25, 2014, docketed as CTA Case No. 8899.

The Parties’ Contentions Before the CTA

Zuellig-PH positioned its judicial claim as timely, premised on the BIR’s failure to act within the 120-day period counted from the submission point it asserted—specifically, its final submission letter dated April 29, 2014, where it declared that it had already submitted complete documents. The BIR, however, raised the threshold objection that the CTA lacked jurisdiction because the judicial claim was filed out of time. The BIR contended that if Zuellig-PH filed its administrative claim on February 17, 2011, the RDO had until June 11, 2011 (noted by the Court as an apparent oversight) to act. It argued that once the BIR failed to act, Zuellig-PH had thirty (30) days to file a judicial claim with the CTA, which allegedly expired in July 2011, but Zuellig-PH filed only on September 25, 2014, long after the lapse of the 30-day period. The BIR also argued, in the alternative, that Zuellig-PH failed to discharge its burden of proving entitlement to the refund.

CTA-Second Division and CTA En Banc Rulings

The CTA-Second Division denied Zuellig-PH’s petition on March 9, 2017, holding that the 120-day period should be reckoned from July 5, 2011, the date Zuellig-PH submitted documents in response to the BIR’s written request dated June 29, 2011. The CTA-Second Division disregarded the BIR’s subsequent verbal requests for additional documents, reasoning that, under Pilipinas Total Gas, notices for additional documents should be in writing. It therefore computed that Zuellig-PH should have filed its judicial claim within thirty (30) days from the expiration of the 120-day period, which it fixed at December 2, 2011. Because Zuellig-PH filed only on September 25, 2014, the petition was dismissed as filed out of time.

Zuellig-PH moved for reconsideration, arguing that the BIR should be estopped from questioning the CTA’s jurisdiction because Deputy Commissioner Aspe had represented that the BIR would continue processing its claim even beyond July 5, 2011. The CTA En Banc, in a January 21, 2019 Decision in CTA EB No. 1656, affirmed the denial. It applied the approach taken by the CTA-Second Division based on Pilipinas Total Gas and further held that the government could not be estopped by mistakes of its agents.

The Issue Before the Supreme Court

The Court narrowed the controversy to a single essential issue: whether Zuellig-PH’s judicial claim for refund was filed out of time.

Legal Reasoning: When the 120-Day Period Should Run

The Supreme Court began with Section 112(C), emphasizing the CIR’s obligation to decide within 120 days from the date of submission of complete documents, and the taxpayer’s resulting thirty (30) day window to resort to the CTA upon denial or inaction. It then invoked RMC No. 49-2003, which required submission of complete documents for official receipt and provided the taxpayer a thirty (30) day period to comply with documentary requirements after a notice-request for additional documents due to incomplete documentation.

The Court next analyzed Pilipinas Total Gas. It reiterated that the reckoning point of the 120-day period depends on the circumstances. If the taxing authority makes no notice requesting additional documents, or if the taxpayer manifests that it no longer wishes to submit additional documents, the 120-day period begins from the date of filing of the administrative claim, because the law assumes that complete documents had been submitted. Conversely, when the taxing authority requests additional documents, the 120-day period begins from the time the taxpayer submits complete documents sufficient to support the claim, with the taxpayer ultimately determining when complete documents have been submitted for purposes of starting and continuing the running of the 120-day period.

The Court clarified an important aspect of Pilipinas Total Gas. While Pilipinas Total Gas discussed a written notice in its narrative, the Supreme Court held that this did not foreclose the existence of properly made verbal requests where made by authorized BIR officials and where the request-and-compliance process was duly documented and traceable. The Court reasoned that neither the Tax Code nor RMC No. 49-2003 required that the request for additional documents be in a particular form. It also explained that the statements in Pilipinas Total Gas about “written” notice were not intended to create an absolute doctrinal requirement of written requests. The Court further noted that Pilipinas Total Gas was not directly controlling in a scenario involving later documented verbal requests and subsequent submissions in response thereto, because in that earlier case there was no request at all by the BIR, verbal or written, and the dispute focused on prematurity rather than the form of the request.

Application to Zuellig-PH’s Case

Applying these principles, the Court held that Pilipinas Total Gas was not the proper basis for the CTA’s categorical rejection of verbal requests. The record showed that Zuellig-PH complied with both written and verbal requests for additional documents. Its submissions were memorialized through letters dated July 5, 2011, May 8, 2012, July 25, 2012, December 6, 2012, September 11, 2013, and finally April 29, 2014. The Court stressed that these submissions and the corresponding requests were well-documented and confirmed by the BIR, which removed any practical risk of losing track of the start of the 120-day period.

The Court treated the April 29, 2014 letter—where Zuellig-PH declared that it had “already submitted the complete documents”—as the relevant submission of complete documents sufficient to support the claim. From that point, the BIR had 120 days, or until August 27, 2014, to act. Since the BIR failed to act within that period, Zuellig-PH had thirty (30) days, or until September 26, 2014, to file its judicial claim. Because Zuellig-PH filed on September 25, 2014, the petition was timely.

Government

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