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Tax Case Digest: CIR v. Univation Motor Philippines, Inc. , G.R. No. 231581, April 10, 2019

Commissioner Of Internal Revenue  v. Univation Motor Philippines, Inc. (formerly Nissan Motor Philippines, Inc.).
G.R. No. 231581, April 10, 2019.

Second Division
REYES, J. JR., J.:

Lessons Applicable:  2-year prescription period, judicial claim, Factual Finding by the CTA
Laws Applicable: Sections 204 and 229 of NIRC, Section 7 of Republic Act No. 9282, Sec. 8 of RA 1125

  • March 12, 2012: Univation Motor Philippines, Inc. (UMP) filed its administrative claim with the Bureau of Internal Revenue (BIR) explaining that the overpayment of P26,103,898.52 consists of prior year's excess credits in the amount of P15,576,837.00 less Minimum Corporate Income Tax amounting to P2,341,683.48 and creditable withholding taxes accumulated during the four quarters of 2010 in the amount of P12,868,745.00.
  • April 12, 2013: Since the BIR has not acted upon the application for tax credit, UMP filed a petition for review with the CTA
  • CTA En Banc affirmed the CTA First Division decision partially granting the petition for Review and ordered the CIR to issue a tax credit certificate and denied CIR’s MR.
  • CIR filed a Petition for Review on Certiorari.
1. W/N CTA has prematurely assumed jurisdiction on judicial claim for tax refund or credit without waiting for the decision of BIR.
2. W/N CTA en Banc erred in granting the claim for refund despite its failure to substantiate its claim by sufficient documentary proof.

1.    NO. No violation of the doctrine of exhaustion of administrative remedies.  The law only requires that an administrative claim be priorly filed.  As long as the administrative claim and the judicial claim were filed within the two-year prescriptive period, then there was exhaustion of the administrative remedies.
  • 2-year prescriptive period to claim a refund actually commences to run, at the earliest, on the date of the filing of the adjusted final tax return because this is where the figures of the gross receipts and deductions have been audited and adjusted, reflective of the results of the operations of a business enterprise. 
  • 2-year period to file a claim for refund is reckoned from the date of filing its Final Adjustment Return – April 15, 2011 – both claims were filed on time:
    • Administrative claim – March 12, 2012
    • Judicial claim – April 12, 2013
  •  Under the circumstances, if respondent awaited for the commissioner to act on its administrative claim (before resort to the Court), chances are, the two-year prescriptive period will lapse effectively resulting to the loss of respondent's right to seek judicial recourse and worse, its right to recover the taxes it erroneously paid to the government.
2.    No.  CIR did not even render a Decision denying respondent's administrative claim on the ground that it had failed to submit all the required documents.  Considering that the administrative claim was never acted upon, there was no decision for the CTA to review on appeal per se. However, this does not preclude the CTA from considering evidence that was not presented in the administrative claim with the BIR.

  • Pilipinas Total Gas v. CIR (G.R. No. 207112, December 08, 2015): A distinction must be made between administrative cases (1) appealed due to inaction and those (2) dismissed at the administrative level due to the failure of the taxpayer to submit supporting documents. If an administrative claim was dismissed by the CIR due to the taxpayer's failure to submit complete documents despite notice/request, then the judicial claim before the CTA would be dismissible, not for lack of jurisdiction, but for the taxpayer's failure to substantiate the claim at the administrative level.  Failure to submit a document requested by the BIR at the administrative level cannot be cured by filing before the CTA.
  • Cases filed in the CTA are litigated de novo as such, respondent "should prove every minute aspect of its case by presenting, formally offering and submitting x x x to the Court of Tax Appeals all evidence x x x required for the successful prosecution of its administrative claim." Consequently, the CTA may give credence to all evidence presented by respondent, including those that may not have been submitted to the CIR as the case is being essentially decided in the first instance.
    • The issue of whether or not respondent was able to prove by preponderance of evidence its entitlement to the issuance of a Tax Credit certificate, the same is a factual matter. "It is doctrinal that the Court will not lightly set aside the conclusions reached by the CTA which, by the very nature of its function of being dedicated exclusively to the resolution of tax problems, has developed an expertise on the subject, unless there has been an abuse or improvident exercise of authority."
  • Jurisprudence laid down the basic requirements in order for a taxpayer to claim tax credit or refund of creditable withholding tax, thus: (1) The claim must be filed with the CIR within the two-year period from the date of payment of the tax, as prescribed under Section 229 of the NIRC of 1997; (2) The fact of withholding is established by a copy of a statement duly issued by the payor to the payee showing the amount paid and the amount of tax withheld; and (3) It must be shown on the return of the recipient that the income received was declared as part of the gross income.  The second and third requirements are found under Section 2.58.3(B) of Revenue Regulation No. 2-98, as amended.
    • CTA En Banc correctly appreciated that there were certain income payments which, although respondent expected to receive in 2006, 2008 and 2009, were only remitted to it in 2010.    The delay in collection of certain income payments caused the timing difference between the actual reporting of the income by respondent and the actual withholding of the corresponding creditable income tax by its customers.  What is important is that the creditable withholding taxes corresponding to the related income in the respondent's books for CY's 2006, 2008 and 2009 were not yet claimed as income tax credits in respondent's annual ITRs corresponding to the said years.  It presented Schedule/Summary of Creditable Taxes Withheld for the year 2010 and the related Certificates of Creditable Taxes Withheld at Source (BIR form No. 2307) duly issued to it by various withholding agents for the year 2010xxx.  Court was able to trace the income payments related to the substantiated CWT of P12,868,745.87 (save for the amount of P139,127.97 CWT) to UMP’s General Ledger (GL) for CY 2010, 2009, 2008 and 2006.