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30-day and 120-day periods for VAT refund cases

In the Philippines, getting a tax refund is a very difficult process. Often times, this is
given least priority by revenue officers, thus it takes time before a taxpayer can actually
receive a cash refund or even a tax credit.

In filing a case for tax refund, the application must first be filed on an administrative level,
meaning, the Bureau of Internal Revenue (BIR). If, the application is denied by the BIR
either on the merits of the case or through the inaction of the revenue officers assigned,
the taxpayer has the option of whether to appeal the same to the Court of Tax Appeals
(CTA) or not. If the taxpayer decides to appeal to the CTA, for input VAT refund cases,
the appeal must be filed within 30 days after the receipt of the decision or ruling denying
the application for refund or in case of a denial due to the inaction of the BIR, the 30 day
period shall be counted from the end of the 120 day period from the submission of all the
documents in support of the claim for refund.

The importance of the 30 day period and the 120 day period for input VAT refund cases,
was reiterated by the CTA in a recent ruling which was promulgated last July 7 (Third
Millenium Oil Mill, Inc. vs. Commissioner of Internal Revenue, CTA Case No. 7583) In
the said case, the taxpayer filed an administrative claim for VAT refund on June 26,
2006, with the taxpayer submitting the documentary requirements in support of the
claim.

No decision was received by the taxpayer relative to the application which was filed,
thus, on March 28, 2007, the taxpayer filed a petition for review with the CTA.

The CTA ruled in favor of the taxpayer, and ordered the BIR to issue a tax credit
certificate in favor of the taxpayer. This decision, however, was appealed by the BIR
stating that the Court has no jurisdiction to hear and resolve the petition filed since the
period within which the taxpayer may file the petition with the CTA has expired in
accordance with Section 112(A) and (D) of the 1997 Tax Code.

The CTA in resolving the motion for reconsideration ruled in favor of the BIR stating that,
for the Court to have appellate jurisdiction over the case, the taxpayer, who timely filed
the administrative claim, must await the decision or ruling of denial of such claim, or the
expiration of the 120-day period from the submission of complete documents in support
of such claim, and then file before the Court a Petition for Review within 30 days from
receipt of the decision or ruling, or from the expiration of the 120-day period, as the case
may be. For the latter case, the expiration of such period is necessary since it is only at
that time that the inaction shall (already) be deemed a denial.

It is clear that the petitioner timely filed on June 26, 2006, its administrative claim for the
issuance of tax credit certificate for its unutilized input taxes since it was made within the
two year period prescribed under Section 112(A) of the 1997 Tax Code. However, the
Petition for Review filed last March 28, 2007 was filed beyond the 30 days after the
expiration of the 120-day period prescribed under Section 112(D) of the Tax Code since
the CTA concluded that the day of the filing by the taxpayer of the administrative claim
on June 26, 2006 was the reckoning date of the 120-day period as the taxpayer already
filed all the supporting documents necessary to process the application for refund. Thus,
when the taxpayer filed its appeal by way of a Petition for Review on March 28, 2007,
the Court has no more appellate jurisdiction to entertain the same as the 30-day period
to appeal the presumed denial of the taxpayers application for refund has lapsed. For a
clear picture of the dates involved, a summary of the events as it took place is detailed
as follows:

Last day of 120-day Last day of 30- Date of Filing

Taxable Filing date of period from the filing day period to file by taxpayer of
year 2005 administrative of administrative Petition for Petition for
claim claim Review Review
1st Quarter
2nd
Quarter 26-Jun-06 24-Oct-06 23-Nov-06 28-Mar-07
3rd Quarter
4th Quarter

As held by the Supreme Court in the case of Yao vs. Court of Appeals (GR No. 132428,
October 24, 2000), the right to appeal is not a constitutional, natural or inherent right. It
is a statutory privilege of statutory origin and, therefore, available only if granted or
provided by statute. Since the right to appeal is not a natural right or a part of due
process, it may be exercised only in the manner and in accordance with the provision of
law. Corollarily, its requirements must be strictly complied with.

Notwithstanding the above decision of the CTA, the taxpayer still has to file its Petition
for Review with the court within two years from the date of the payment of the tax as
provided for under Section 229 of the Tax Code.
The author is a senior associate of Du-Baladad and Associates Law Offices (BDB Law).
If you have any comments or questions concerning the article, you can e-mail the author
at kristine.casa-siervo@bdblaw.com.ph or call 403-2001 local 340.