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National Internal Revenue Code; value-added tax (“VAT”); refund of input VAT.Prior to the issuance of Bureau of Internal Revenue (BIR) Ruling No. DA-489-03, the BIR’s actual administrative practice was to contest simultaneous filing of claims at the administrative and judicial levels, until the Court of Appeals declared in the case of Commissioner v. Hitachi Computer Products (Asia) Corporation (the “Hitachi case”) that the BIR’s position was wrong. The Hitachi case is the basis of BIR Ruling No. DA-489-03 dated December 10, 2003 allowing simultaneous filing. From then on, taxpayers could rely in good faith on BIR Ruling No. DA-489-03 until the Court held in the case of Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc. (the “Aichi case”), promulgated on October 6, 2010, that the 120+30 day period is compulsory. Strict observance of the 120+30 day period is the presently controlling doctrine. Judicial and administrative claims simultaneously filed during the period from the promulgation of BIR Ruling No. DA-489-03 until the promulgation of the Aichi case, are treated as valid claims. Commissioner of Internal Revenue v. San Roque Power Corporation, G.R. No. 187485/G.R. No. 196113/G.R. No. 197156. October 8, 2013.
National Internal Revenue Code; claim for refund of input VAT; limited applicability of operative fact doctrine. The Court applied the doctrine of operative fact when it recognized the simultaneous filing during the period between December 10, 2003, when BIR Ruling No. DA-489-03 was issued, and October 6, 2010, when the Court promulgated its decision in the Aichi case declaring the 120 + 30 day periods mandatory and jurisdictional thus reversing BIR Ruling No. DA-489-03. The doctrine of operative fact is incorporated in section 246 (non-retroactivity of rulings) of the National Internal Revenue Code (the “Tax Code”). Under section 246, taxpayers may rely upon a rule or ruling issued by the Commissioner of Internal Revenue from the time the rule or ruling is issued up to its reversal by the Commissioner or the Court. The reversal is not given retroactive effect. This, in essence, is the doctrine of operative fact. There must, however, be a rule or ruling issued by the Commissioner that is relied upon by the taxpayer in good faith. A mere administrative practice, not formalized into a rule or rulings, will not suffice because such a mere administrative practice may not be uniformly and consistently applied. An administrative practice, if not formalized as a rule or ruling, will not be known to the general public and can be availed of only by those with informal contacts with the government agency. Since the law has already prescribed in section 246 of the Tax Code how the doctrine of operative fact should be applied, there can be no invocation of the doctrine of operative fact other than what the law has specifically provided in section 246.. Commissioner of Internal Revenue v. San Roque Power Corporation,G.R. No. 187485/G.R. No. 196113/G.R. No. 197156. October 8, 2013.
National Internal Revenue Code; value-added tax (VAT); refund of input VAT; period to file judicial claim. A taxpayer is required to file an administrative claim for input VAT refund within 2 years from the close of the taxable quarter when the sales were made. The taxpayer will always have 30 days to file the judicial claim for refund even if the Commissioner acts only on the 120th day, or does not act at all during the 120 day period. With the 30 –day period always available to the taxpayer, the taxpayer can no longer file a judicial claim for refund or tax credit of unutilized excess input VAT without waiting for the Commissioner to decide until the expiration of the 120-day period. Failure to comply with the 120-day waiting period violates the doctrine of exhaustion of administrative remedies and renders the petition premature and thus without a cause of action, with the effect that the CTA does not acquire jurisdiction over the taxpayer’s petition. The 120+30 day rule, therefore, is mandatory and jurisdictional. However, BIR Ruling No. DA-489-03 dated December 10, 2003 provided a valid claim for equitable estoppel under section 246 of the National Internal Revenue Code. The aforementioned ruling was classified as a general interpretative rule that was made in response to a query by the very government agency that was tasked to implement the processing of tax refunds and credits. All taxpayers could therefore rely on the aforementioned ruling from the time of its issuance, December 10, 2003, until its reversal in the Case of Aichi which was promulgated on October 6, 2010. Republic of the Philippines represented by the Commissioner of Internal Revenue v. GST Philippines, Inc., G.R. No. 190872. October 17, 2013.
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