Re: Lazi Bay Resources Development, Inc.

December 10, 2003 BIR RULING [DA-489-03] Department of Finance One Stop Shop Inter-Agency Tax Credit and Duty Drawback Center Roxas Boulevard corner Pablo Ocampo, Sr. St. Manila 1004 Attention: Ms. Laura M. Salita Head, Tax Revenue Group Gentlemen : RE: LAZI BAY RESOURCES DEVELOPMENT, INC. This refers to the claim for refund filed by SGV & Co., for and on behalf of its client LAZI BAY RESOURCES DEVELOPMENT, INC. (LBRDI for convenience), with the Department of Finance, One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center (DOF-OSS), which was forwarded to this Office by virtue of your Memorandum dated August 13, 2002, to rule on the propriety of the actions taken by herein taxpayer. Records show that LBRDI filed a claim for refund in the aggregate amount of P9,569,111.23 as alleged unutilized input VAT for the four (4) quarters of 1998 graphically shown as follows: Period Application No. Amount Claimed Total 1st Q 1998 Original 00-R-0436 P2,408,797.98 P2,408,797.98 2nd Q 1998 Original 00-R-0437 820,385.94 820,385.94 3rd Q 1998 Original 00-R-0438 1,125,162.16 3rd Q 1998 Additional 00-R-0969 3,051,623.48 4,176,785.64 4th Q 1998 Original 00-R-0439 955,359.45 4th Q 1998 Original 00-R-0970 1,207,782.22 2,163,141.67 Grand Total: P9,569,111.23 =========== On March 28, 2000, LBRDI, through counsel, filed a petition for review with the Court of Tax Appeals (CTA) and a supplemental petition for review on September 29, 2000. Accordingly, the evaluators of the DOF-OSS were not informed of the filing of the same with the CTA. After trial in due course, the CTA rendered a decision on June 27, 2002 by partly granting a tax credit or refund of P2,658,582.78. Despite the grant of the partial refund, herein taxpayer/claimant filed a motion for reconsideration with the said Court. With the actions taken by herein taxpayer, it is your contention that the "claimant is not yet on the right forum in violation of the provision of Section 112(D) of the NIRC' , to wit: "SEC. 112. Refunds Or Tax Credits Of Input Tax. (D) Period within which Refund or Tax Credit of Input Taxes shall be Made . 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) and (B) hereof. In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty day-period, appeal the decision or the unacted claim with the Court of Tax Appeals." In reply, please be informed that a taxpayer-claimant need not wait for the lapse of the 120-day period before it could seek judicial relief with the CTA by way of Petition for Review. Neither is it required that the Commissioner should first act on the claim of a particular taxpayer before the CTA may acquire jurisdiction, particularly if the claim is about to prescribe. The Tax Code fixed the period of two (2) years for filing a claim for refund with the Commissioner [Sec. 112(A) in relation to Sec. 204(c)] and for filing a case in court [Section 229]. Hence, a decision of the Commissioner is not a condition or requisite before the taxpayer can resort to the judicial remedy afforded by law. In the recent Court of Appeals (CA) case of Commissioner of Internal Revenue v. Hitachi Computer Products (Asia) Corporation, [CA-G.R. SP No. 63340, February 7, 2002], it was held: DaECST "It ought to be stressed at the outset that a claim for refund should be filed with the Commissioner of Internal Revenue as a pre-requisite before court action on tax refund cases can be commenced and that the same must be filed within two years from the date of payment of the tax. Nonetheless, it should be equally underscored that the law imposes a positive requirement that the said claim for refund should be filed with the Commissioner within two years from payment of the tax . In this regard, the Supreme Court had previously pronounced that when the two-year period is about to prescribe and the claim for refund with the Commissioner of Internal Revenue has not been acted upon by him, for the protection of the interest of the taxpayer, he should file a petition for review with the Court of Tax Appeals within the said two-year period , otherwise, if the decision of the Commissioner is adverse to the taxpayer and it was made after the two-year period he can no longer appeal the same to the Court of Tax Appeals ( Gibbs vs. Collector of Internal Revenue and Court of Tax Appeals , 107 Phil 232, Johnson Lumber Co. vs. CTA , 101 Phil 151) It appears, therefore, that it is not necessary for the Commissioner of Internal Revenue to first act unfavorably on the claim for refund before the Court of Tax Appeals could validly take cognizance of the case. This is so because of the positive mandate of Section 230 of the Tax Code and also by virtue of the doctrine that the delay of the Commissioner in rendering his decision does not extend the reglementary period prescribed by statute . Incidentally, the taxpayer could not be faulted for taking advantage of the full two-year period set by law for filing his claim for refund [with the Commissioner of Internal Revenue]. Indeed, no provision in the tax code requires that the claim for refund be filed at the earliest instance in order to give the Commissioner an opportunity to rule on it and the court to review the ruling of the Commissioner of Internal Revenue on appeal. The law fixed the same period -two years- for filing a claim for refund with the Commissioner (Sec. 204, par. 3), and for filing of suit in court (Sec. 230) , unlike in protests of assessment under Sec. 229 which fixed the period (thirty days from receipt of the decision) before an appeal could be made in court. Indeed, only the latter case presupposes the existence of a prior decision of the Commissioner which could be subjected to review by the court. In fact, the Court of Tax Appeals itself acknowledges that the claim for refund with the Commissioner could be pending simultaneously with a suit for refund filed before the former ( Commissioner of Internal Revenue vs. Bank of the Philippine Islands as Liquidator of Paramount Acceptance Corporation and the Court of Tax Appeals , CA-G.R. SP No. 34102, September 19, 1994)." (Emphasis & italics supplied) Based on the aforecited decision and considering that there is no legal prohibition, herein taxpayer acted only what is allowed under the Tax Code. Please be guided accordingly. Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group