Pilipinas Kyohritsu, Inc. v. Commissioner of Internal Revenue

EN BANC [C.T.A. EB CASE NO. 1131. March 23, 2015.] (C.T.A. Case No. 8622) PILIPINAS KYOHRITSU, INC. , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . DECISION COTANGCO-MANALASTAS , J p : Before the Court En Banc is the Petition for Review 1 filed on March 20, 2014, assailing the Resolutions, 2 dated November 12, 2013 and February 13, 2014, of the CTA Third Division in CTA Case No. 8622, which dismissed petitioner's judicial claim for refund of unutilized input Value-Added Tax (VAT) for having been barred by prescription. AcCTaD The Facts Petitioner Pilipinas Kyohritsu, Inc. is a corporation duly organized and existing under and by virtue of the laws of the Philippines. It is engaged in the business of manufacturing parts and accessories for motor vehicles. It is a registered VAT taxpayer with Bureau of Internal Revenue (BIR) Certificate of Registration number 2006-059-0014 and located at Km. 75 Laurel Hi-way, Brgy. Inosluban, Lipa City, Batangas. 3 Petitioner is registered with the Board of Investments (BOI) as an export producer of automotive wiring harness and weld cap for automotive application with BOI registration numbers EP 2005-177 and 2007-060. 4 Respondent is the Commissioner of Internal Revenue (CIR), who is duly appointed and is empowered to perform the duties of her office, including, among others, the power to deny or grant tax refunds pursuant to Section 112(C) of the National Internal Revenue Code (NIRC), as amended. 5 In the course of its business of manufacturing parts and accessories for motor vehicles, the petitioner purchased services and goods which are mostly spare parts and components used for completion of its products. Due to these business activities, the petitioner was charged with input taxes. 6 Petitioner filed its Quarterly VAT returns for taxable year 2011 on the following dates: 7 Quarter Close of the Quarter Quarterly Return Filed First Quarter March 31, 2011 April 14, 2011 Second Quarter June 30, 2011 July 19, 2011 Third Quarter September 30, 2011 October 22, 2011 Fourth Quarter December 31, 2011 January 23, 2012 Petitioner filed its applications for refund, in the total amount of P69,971,457.30, with the BIR on the following dates: 8 Quarterly Return Filed Administrative Claim Filed April 14, 2011 December 15, 2011 July 19, 2011 October 22, 2011 April 25, 2012 January 23, 2012 On March 25, 2013, petitioner filed its Petition for Review with the CTA Third Division, alleging BIR inaction on their administrative claim for refund. 9 Respondent, Commissioner of Internal Revenue (CIR), filed its Answer, via registered mail, and received by the CTA Third Division on May 22, 2013. 10 DAEaTS The CTA Third Division set the case for pre-trial conference to be held on July 4, 2013. 11 After a resetting requested by the respondent, pre-trial ensued on August 15, 2013, during which petitioner brought to the attention of the CTA Third Division the fact of the pendency of the administrative examination and investigation of the claim for refund. 12 In line with this, and as ordered by the CTA Third Division, petitioner filed its Manifestation and Motion to Suspend Proceedings on October 3, 2013. 13 Respondent failed to comment despite notice. On November 12, 2013, the CTA Third Division promulgated the assailed Resolution. The CTA Third Division, in finding that the judicial claim was filed beyond the 30-day period, explained: "In its Petition for Review, petitioner admitted that it filed its administrative claims for refund of the unutilized input VAT attributable to its zero-rated sales for taxable year 2001 on December 15, 2011, covering the first quarter of 2011, and on April 25, 2012, covering the three (3) remaining quarters of 2011. As alleged by petitioner, the administrative claims were filed well within the two-year prescriptive period provided under Section 112(A) of the NIRC of 1997, as amended. The same is however not true with regard to the filing of the instant Petition for Review. From December 15, 2011 and April 25, 2012 or the dates when petitioner filed its administrative claims for refund with the BIR and presumably the dates of its submission of complete documents supporting its applications for refund/TCC, respondent had 120 days or until April 13, 2012, for the first claim, and August 23, 2012, for the second claim, within which to act on the claim. After the lapse of the said 120-day period without any action on the part of the respondent, petitioner had thirty (30) days or until May 13, 2012, for the first claim, and September 22, 2012, for the second claim, within which to seek judicial recourse. But as admitted by petitioner, it filed the instant Petition for Review only on March 25, 2013, or way beyond the 30-day period to appeal effectively depriving the Court of jurisdiction to entertain its judicial claim. xxx xxx xxx By opting to file its judicial claim only on March 25, 2013, or way beyond the 30-day period to appeal, petitioner's judicial recourse is already barred by prescription." 14 Petitioner's Motion for Reconsideration 15 was likewise denied in the CTA Third Division's Resolution, 16 dated February 13, 2014, and received by petitioner on February 18, 2014. 17 After an extension was granted, petitioner timely filed the instant Petition for Review before the Court En Banc , on March 20, 2014. The Court En Banc , through a Resolution dated April 29, 2014, ordered respondent to file its comment. 18 After an extension was granted, respondent timely filed its Comment/Opposition 19 through registered mail on June 9, 2014, and received by the Court En Banc on June 16, 2014. On June 26, 2014, the Court En Banc ordered the parties to submit their respective memoranda. 20 aCcHEI The instant Petition for Review was submitted for decision on September 24, 2014, considering petitioner's Memorandum, 21 filed on August 11, 2014, and respondent's Manifestation and Motion, 22 filed on August 20, 2014, wherein she adopts all her arguments and affirmative defenses in her Comment/Opposition, as well as the factual findings and conclusions of the CTA Third Division in CTA Case No. 8622. 23 Issues Petitioner submits the following issues for resolution: 1. Whether or not the Third Division of the Honorable Court erred in dismissing the Petition based on mere presumption and speculation that petitioner has submitted its complete documents simultaneous to the filing of its VAT refund applications. 2. Whether or not the petitioner has the right/option to wait for the decision of the Commissioner of Internal Revenue. 3. Whether or not the second paragraph of Section 112 (C) of the National Internal Revenue Code is unconstitutional. Ruling of the Court The main issue in the instant case is whether the CTA Third Division erred in dismissing petitioner's petition for review on the ground of said appeal having been filed out of time. Petitioner argues that the CTA Third Division erred in treating the dates of filing of the refund applications as the dates of submission of complete documents which would trigger the 120-day period. 24 We disagree. Section 112(C) of the 1997 NIRC, as amended, provides: "Sec. 112. Refunds or Tax Credits of Input Tax. xxx xxx xxx (C) 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 Subsection (A) hereof. . . . " ( Underscoring ours) AaECSH It is thus necessary to determine when the "date of submission of complete documents" occurs. And in order to determine the foregoing, the term "complete documents" must be defined. In Commissioner of Internal Revenue vs. First Express Pawnshop Company, Inc., 25 the Supreme Court ruled: "The term 'relevant supporting documents' should be understood as those documents necessary to support the legal basis in disputing a tax assessment as determined by the taxpayer . The BIR can only inform the taxpayer to submit additional documents. The BIR cannot demand what type of supporting documents should be submitted. Otherwise, a taxpayer will be at the mercy of the BIR, which may require the production of documents that a taxpayer cannot submit ." (Underscoring ours) Admittedly, the foregoing ruling refers to the interpretation of the term "relevant supporting documents" under Section 228 of the NIRC of 1997 referring to tax assessments. 26 However, there is no reason not to apply the same doctrine in the interpretation of "complete documents" under Section 112 (C) of the same Code. Accordingly, the term "complete documents" under Section 112 (C) of the NIRC of 1997, as amended, should be understood as those documents necessary to support the application for refund or tax credit as determined by the taxpayer. 27 Thus, should the taxpayer decide to submit only certain documents, or should the taxpayer fail, or opt not to submit any document at all, in support of its application for refund or tax credit certificate under Section 112 of the NIRC of 1997, as amended, then the reckoning date of the 120-day period should be from the filing of the said application. In the instant case, petitioner filed two (2) administrative claims for refund, dated December 15, 2011 and April 25, 2012. Petitioner alleges that it submitted additional documents on later dates. The Court will now determine when complete documents were submitted and whether the judicial claim has been timely filed. December 15, 2011 administrative claim Petitioner's December 15, 2011 administrative claim covers the first quarter of taxable year 2011. Counting from December 15, 2011, the 120-day period ended on April 13, 2012, and the 30-day period therefrom ends on May 13, 2012. Petitioner alleges that it submitted additional documents through electronic mail on February 15, 24, and 25, 2012. 28 If the Court considers February 25, 2012, as the date of submission of complete documents, the 120-day period ends on June 24, 2012, and the last day to file the judicial claim is on July 24, 2012. Clearly, petitioner's judicial claim filed only on March 25, 2013 is still filed way beyond the 30-day period and is therefore prescribed. IAETSC April 25, 2012 administrative claim The April 25, 2012 administrative claim covers the 2nd, 3rd, and 4th quarters of taxable year 2011. On May 23, 2012, petitioner received the Letter of Authority (LOA) No. 122-2012-00000010 covering the period from April 1, 2011 to December 31, 2011 only. 29 There is no indication or allegation that petitioner submitted additional documents pursuant to this LOA. 30 The Letter 31 dated March 8, 2013, purportedly received by petitioner, does not demand additional documents, but is merely a notice to petitioner that there has been a change in the revenue officer assigned to the examination of petitioner's claim. Again, there is no indication or allegation that petitioner submitted additional documents after receipt of the March 8, 2013 letter. 32 These facts bolster the fact that, as determined by petitioner, it has already submitted its complete documents when it filed the claim on April 25, 2012. Thus, the 120-day period expired on August 23, 2012, and the last day to file its petition for review was on September 22, 2012. Again, considering that the judicial claim was filed only on March 25, 2013, the same is clearly prescribed. Petitioner also harps on the fact that even after the petition for review before this Court has been filed, the BIR sent them communications as late as February 2014 and that they submitted additional documents on February 27, 2014. 33 Based on this, petitioner argues that clearly complete documents have not been submitted yet. Assuming arguendo , that complete documents were only submitted on February 27, 2014, then petitioner's judicial claim, filed on March 25, 2013, is dismissible for being premature applying the Supreme Court's rulings in Commissioner of Internal Revenue vs. Aichi Forging Company of Asia, Inc. 34 and the consolidated cases of Commissioner of Internal Revenue vs. San Roque Power Corporation, Taganito Mining Corporation vs. Commissioner of Internal Revenue , and Philex Mining Corporation vs. Commissioner of Internal Revenue . 35 Clearly, the CTA Third Division committed no error when it dismissed the petition for review on the ground of prescription. WHEREFORE , premises considered, the instant Petition for Review is hereby DISMISSED for lack of merit. The Resolutions, dated November 12, 2013 and February 13, 2014, of the Third Division in CTA Case No. 8622, are hereby AFFIRMED. SO ORDERED. IaEHSD (SGD.) AMELIA R. COTANGCO-MANALASTAS Associate Justice Roman G. del Rosario, P.J., Juanito C. Castaeda, Jr., Lovell R. Bautista, Erlinda P. Uy, Caesar A. Casanova, Esperanza R. Fabon-Victorino, Cielito N. Mindaro-Grulla and Ma. Belen M. Ringpis-Liban, JJ., concur. Footnotes 1. Rollo , CTA EB Case No. 1131, pp. 25-52. 2. Rollo , pp. 56-67 and 69-72. 3. Rollo , p. 28. 4. Id. 5. Id. 6. Rollo , p. 29. 7. Id. 8. Rollo , p. 30. 9. Docket, C.T.A. Case No. 8622, pp. 7-20. 10. Docket, pp. 108-110. 11. Docket, p. 112. 12. Rollo , p. 33. 13. Id. 14. Rollo , pp. 65-66. 15. Rollo , pp. 73-82. 16. Rollo , pp. 69-72. 17. Rollo , p. 27. 18. Rollo , pp. 311-312. 19. Rollo , pp. 317-326. 20. Rollo , pp. 329-330. 21. Rollo , pp. 331-351. 22. Rollo , pp. 356-357. 23. Rollo , pp. 359-361. 24. Rollo , p. 37. 25. G.R. Nos. 172045-46, July 16, 2009. 26. Total (Philippines) Corporation vs. Commissioner of Internal Revenue , CTA Case No. 8253, October 24, 2013. 27. Id. 28. Rollo , p. 39, and p. 340. 29. Rollo, p. 101. 30. Rollo , pp. 339-341. 31. Rollo , p. 104. 32. Rollo , pp. 339-341. 33. Rollo , p. 341. 34. G.R. No. 184823, October 6, 2010. 35. G.R. Nos. 187485, 196113, and 197156, February 12, 2013.