PROCTER & GAMBLE vs. CIR (Tax 2)

G.R. No. 202071               February 19, 2014

PROCTER & GAMBLE ASIA PTE LTD., Petitioner,

vs.

COMMISSIONER OF INTERNAL REVENUE, Respondent.

FACTS:

On 26 September and 13 December 2006, petitioner filed administrative claims with the Bureau of Internal Revenue (BIR) for the refund or credit of the input VAT attributable to the former’s zero-rated sales covering the periods 1 July-30 September 2004 and 1 October-31 December 2004, respectively.

On 2 October and 29 December 2006, petitioner filed judicial claims for the aforementioned refund or credit of its input VAT. Respondent filed separate Answers to the two cases, which were later consolidated, basically arguing that petitioner failed to substantiate its claims for refund or credit.

Trial on the merits ensued. On 17 January 2011, the CTA First Division rendered a Decision dismissing the judicial claims for having been prematurely filed. It ruled that petitioner had failed to observe the mandatory 120-day waiting period to allow the Commissioner of Internal Revenue (CIR) to decide on the administrative claim. Petitioner’s Motion for Reconsideration was denied on 15 March 2011.

Petitioner thereafter filed a Petition for Review before the CTA En Banc. The latter, however, issued the assailed Decision affirming the ruling of the CTA First Division. Petitioner’s Motion for Reconsideration was denied in the assailed Resolution.

Hence, petitioner filed the present petition.

Petitioner argue that 120-day waiting period is not jurisdictional. Respondent to submit its Comment, counters that the 120-day period to file judicial claims for a refund or tax credit is mandatory and jurisdictional. Failure to comply with the waiting period violates the doctrine of exhaustion of administrative remedies, rendering the judicial claim premature. Thus, the CTA does not acquire jurisdiction over the judicial claim.

ISSUE:

Whether respondent is correct.

RULING:

Respondent is correct on this score. However, it fails to mention that San Roque also recognized the validity of BIR Ruling No. DA-489-03. The ruling expressly states that the "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."

The Court, in San Roque, ruled that equitable estoppel had set in when respondent issued BIR Ruling No. DA-489-03. This was a general interpretative rule, which effectively misled all taxpayers into filing premature judicial claims with the CTA. Thus, taxpayers could rely on the ruling from its issuance on 10 December 2003 up to its reversal on 6 October 2010, when CIR v. Aichi Forging Company of Asia, lnc. was promulgated.

The judicial claims in the instant petition were filed on 2 October and 29 December 2006, well within the ruling's period of validity. Petitioner is in a position to "claim the benefit of BIR Ruling No. DA-489-03, which shields the filing of its judicial claim from the vice of prematurity."