TOPIC: TAX REFUNDS

COMMISSIONER OF INTERNAL REVENUE  V. UMP- applied for tax credit (no action from BIR)
UNIVATION MOTOR PHILIPPINES, INC. (FORMERLY - Filed Petition for Review with CTA
NISSAN MOTOR PHILIPPINES) CTA 1st Division- partially granted PR & ordered CIR to
issue tax credit cert.
G.R. No. 231581, April 10, 2019. CTA EB- affirmed CTA 1st Division

 July 8, 2011: Univation Motor Philippines, Inc. (UMP) filed its amended Annual Income Tax Return (ITR) for
2010 showing a total gross income of P117,084,174.00 and an overpayment of income taxes amounting to
P26,103,898.52. Respondent opted to claim its overpayment of income tax through the issuance of a tax credit
certificate. 

 March 12, 2012: 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

 In its answer CIR raised the following special and affirmative defenses: (a) respondent’s claim for refund is
tainted with procedural infirmity due to petitioner’s failure to submit complete documents in support of its
administrative claim for refund; (b) petitioner miserably failed to exhaust administrative remedies before
elevating the case to this Court; and (c) claims for refund are construed strictly against the taxpayer and in
favor of the government.

 CTA First Division partially granted the Petition for Review and ordered the CIR to issue a tax credit certificate
and denied CIR’s MR, which was affirmed by CTA En Banc.

 CIR filed a Petition for Review on Certiorari.

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
WON CTA HAS claim and the judicial claim were filed within the two-year prescriptive period, then
PREMATURELY there was exhaustion of the administrative remedies.
ASSUMED
JURISDICTION ON  2-year prescriptive period to claim a refund actually commences to
JUDICIAL CLAIM FOR run, at the earliest, on the date of the filing of the adjusted final tax
TAX REFUND OR return because this is where the figures of the gross receipts and
CREDIT WITHOUT deductions have been audited and adjusted, reflective of the results
WAITING FOR THE of the operations of a business enterprise. 
DECISION OF BIR.
 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.

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
WON CTA EN BANC administrative claim was never acted upon, there was no decision for the CTA to
ERRED IN GRANTING review on appeal per se. However, this does not preclude the CTA from considering
THE CLAIM FOR evidence that was not presented in the administrative claim with the BIR.
REFUND DESPITE ITS
FAILURE TO Pilipinas Total Gas v. CIR (G.R. No. 207112, December 08, 2015): A distinction must
SUBSTANTIATE ITS be made between administrative cases (1) appealed due to inaction and those (2)
CLAIM BY SUFFICIENT dismissed at the administrative level due to the failure of the taxpayer to submit
DOCUMENTARY supporting documents. If an administrative claim was dismissed by the CIR due to the
 PROOF. 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.

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