Commissioner of Internal Revenue vs. Univation Motor Philippines, Inc

5/15/24, 7:16 PM SUPREME COURT REPORTS ANNOTATED VOLUME 901
G.R. No. 231581. April 10, 2019.*
COMMISSIONER OF INTERNAL REVENUE, petitioner,

vs. UNIVATION MOTOR PHILIPPINES, INC. (formerly
NISSAN MOTOR PHILIPPINES, INC.), respondent.
Taxation; Tax Refund; Sections 204 and 229 of the National

Internal Revenue Code (NIRC) provide for the refund of
erroneously or illegally collected taxes. Section 204 applies to
administrative claims for refund, while Section 229 to judicial
claims for refund.—Sections 204 and 229 of the National Internal
Revenue Code (NIRC) provide for the refund of erroneously or
illegally collected taxes. Section 204 applies to administrative
claims for refund, while Section 229 to judicial claims for refund.
Thus: SEC. 204. Authority of the Commissioner to
Compromise, Abate and Refund or Credit Taxes.—The
Commissioner may — x x x x (c) Credit or refund taxes
erroneously or illegally received or penalties imposed without
authority, refund the value of internal revenue stamps when they
are returned in good condition by the purchaser, and, in his
discretion, redeem or change unused stamps that have been
rendered unfit for use and refund their value upon proof of
destruction. No credit or refund of taxes or penalties shall
be allowed unless the taxpayer files in writing with the
Commissioner a claim for credit or refund within two (2)
years after the payment of the tax or penalty: Provided,
however, That a return filed showing an overpayment shall be
considered as a written claim for credit or refund. Section 229 of
the 1997 NIRC provides: Sec. 229. Recovery of Tax
Erroneously or Illegally Collected.—No suit or proceeding
shall be maintained in any court for the recovery of any national
internal revenue tax hereafter alleged to have been erroneously or
illegally assessed or collected, or of any penalty claimed to have
been collected without authority, of any sum alleged to have been
excessively or in any manner wrongfully collected without
authority, or of any sum alleged to have been excessively or in any
manner wrongfully collected, until a claim for refund or credit has
been duly filed with the Commissioner; but such suit or
proceeding may be maintained, whether or not such tax, penalty,
https://escra.mycentralapp.com/sfsreader/session/0000018f7bf7c943a4b20449000d00d40059004a/t/?o=False 1/19
or sum has been paid under protest or duress. In any case, no

such suit or proceed-
_______________
* SECOND DIVISION.
513
ing shall be filed after the expiration of two (2) years

from the date of payment of the tax or penalty regardless
of any supervening cause that may arise after payment.
Provided, however, That the Commissioner may, even without a
written claim therefor, refund or credit any tax, where on the face
of the return upon which payment was made, such payment
appears clearly to have been erroneously paid.
Same; Same; While the law provides that the two (2)-year
period is counted from the date of payment of the tax,
jurisprudence, however, clarified that the two-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.—The two-year period in filing
a claim for tax refund is crucial. While the law provides that the
two-year period is counted from the date of payment of the tax,
jurisprudence, however, clarified that the two-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. “Thus, it is only
when the Adjustment Return covering the whole year is filed that
the taxpayer would know whether a tax is still due or a refund
can be claimed based on the adjusted and audited figures.”
Same; Same; Exhaustion of Administrative Remedies; For as
long as the administrative claim and the judicial claim were filed
within the two (2)-year prescriptive period, then there was
exhaustion of the administrative remedies.—Contrary to petitioner
CIR’s assertion, there was no violation of the doctrine of
exhaustion of administrative remedies. The Court ruled: x x x the
Court agrees with the ratiocination of the CTA En Banc in
debunking the alleged failure to exhaust administrative remedies.
Had CBK Power awaited the action of the Commissioner on its
claim for refund prior to taking court action knowing fully well
that the prescriptive period was about to end, it would have lost
not only its right to seek judicial recourse but its right to recover
the final withholding taxes it erroneously paid to the government
thereby suffering irreparable damage. x x x The law only requires
that an administrative claim be priorly filed. That is, to give the
BIR at the administrative level an
514
opportunity to act on said claim. In other words, for 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.
Court of Tax Appeals; Jurisdiction; Section 7 of Republic Act
(RA) No. 9282, amending RA No. 1125, provides that the Court of
Tax Appeals (CTA) has exclusive appellate jurisdiction over tax
refund claims in case the Commissioner fails to act on them.—At
any rate, Section 7 of Republic Act No. 9282, amending Republic
Act No. 1125, provides that the CTA has exclusive appellate
jurisdiction over tax refund claims in case the Commissioner fails
to act on them: Sec. 7. Jurisdiction.—The CTA shall exercise: (a)
Exclusive appellate jurisdiction to review by appeal, as herein
provided: (1) Decisions of the Commissioner of Internal Revenue
in cases involving disputed assessments, refunds of internal
revenue taxes, fees or other charges, penalties in relation thereto,
or other matters arising under the National Internal Revenue or
other laws administered by the Bureau of Internal Revenue; (2)
Inaction by the Commissioner of Internal Revenue in cases
involving disputed assessments, refunds of internal revenue
taxes, fees or other charges, penalties in relation thereto, or other
matters arising under the National Internal Revenue Code or
other laws administered by the Bureau of Internal Revenue,
where the National Internal Revenue Code provides a specific
period of action, in which case the inaction shall be deemed a
denial; (3) Decisions, orders or resolutions of the Regional Trial
Courts in local tax cases originally decided or resolved by them in
the exercise of their original or appellate jurisdiction. x x x This
means that while the Commissioner has the right to hear a
refund claim first, if he or she fails to act on it, it will be treated
as a denial of the refund, and the CTA is the only entity that may
review this ruling. Respondent need not wait for the
Commissioner to act on its administrative claim for refund.
Same; The Court of Tax Appeals (CTA) is not limited by the
evidence presented in the administrative claim in the Bureau of
Internal Revenue (BIR). The claimant may present new and
additional evidence to the CTA to support its case for tax refund.—
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. Thus, RA No. 1125 states:
515
Section 8. Court of record; seal; proceedings.—The Court of

Tax Appeals shall be a court of record and shall have a seal which
shall be judicially noticed. It shall prescribe the form of its writs
and other processes. It shall have the power to promulgate rules
and regulations for the conduct of the business of the Court, and
as may be needful for the uniformity of decisions within its
jurisdiction as conferred by law, but such proceedings shall not be
governed strictly by technical rules of evidence. The law creating
the CTA specifically provides that proceedings before it shall not
be governed strictly by the technical rules of evidence. The
paramount consideration remains the ascertainment of truth.
Thus, the CTA is not limited by the evidence presented in the
administrative claim in the Bureau of Internal Revenue. The
claimant may present new and additional evidence to the CTA to
support its case for tax refund. 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.
Same; It is doctrinal that the Supreme Court (SC) will not
lightly set aside the conclusions reached by the Court of Tax
Appeals (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.—“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
require-
516
ments are found under Section 2.58.3(B) of Revenue

Regulation No. 2-98, as amended.
PETITION for review on certiorari of the decision and

resolution of the Court of Tax Appeals En Banc.
The facts are stated in the opinion of the Court.
Office of the Solicitor General for petitioner.
Salvador, Llanillo & Bernardo for respondent.
J. REYES, JR., J.:
This resolves the Petition for Review on Certiorari1

seeking to nullify the December 22, 2016 Decision2 and the
April 27, 2017 Resolution3 of the Court of Tax Appeals
(CTA) En Banc, which respectively dismissed petitioner
Commissioner for Internal Revenue’s (petitioner CIR’s)
Petition for Review thereby partially granting respondent’s
judicial claim for refund and/or issuance of Tax Credit
Certificate for its excess creditable income tax, and denied
petitioner CIR’s Motion for Reconsideration, in C.T.A.-E.B.
No. 1333.
On July 8, 2011, Univation Motor Philippines, Inc.
(respondent) filed its amended Annual Income Tax Return
(ITR) for 20104 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. On March 12,
_______________
1 Rollo, pp. 30-62.

2 Penned by Associate Justice Caesar A. Casanova, with Associate
Justices Roman G. Del Rosario (Presiding Justice), Juanito C. Castaneda,
Jr., Lovell R. Bautista, Erlinda P. Uy, Esperanza R. Fabon-Victorino,

Cielito N. Mindaro-Grulla, Ma. Belen M. Ringpis-Liban (on leave) and
Catherine T. Manahan (on leave), concurring; Id., at pp. 10-20.
3 Id., at pp. 22-24.
4 Id., at pp. 184-189.
517
2012, respondent filed its administrative claim5 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. Respondent filed its Application
for Tax Credit6 in the amount of P12,868,745.00. Since the
BIR has not yet acted upon respondent’s administrative
claim, petitioner filed a Petition for Review with the CTA
on April 12, 2013.7
In its Answer, petitioner 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.
During trial, respondent presented and formally offered
its testimonial and documentary evidence which were all
admitted in the Resolutions dated May 22, 2014 and
August 11, 2014. Petitioner CIR’s counsel manifested
during hearing that he will no longer present any evidence.
On March 10, 2015, the CTA First Division rendered a
Decision8 which partially granted respondent’s Petition for
Review and ordered petitioner CIR to issue a tax credit
certificate in the amount of P12,729,617.90 representing
respondent’s unutilized or excess creditable withholding
taxes for taxable year ending December 21, 2010.
Petitioner CIR filed a
_______________
5 Id., at pp. 191-192.

6 Id., at p. 193.
7 Id., at p. 12.
8 Id., at pp. 284-297.
518
Motion for Reconsideration but the CTA First Division

denied the said Motion in a Resolution9 dated June 30,
2015.
Petitioner CIR elevated the case to the CTA En Banc.
Finding respondent’s documentary evidence as sufficient,
the CTA En Banc issued the now appealed Decision dated
December 22, 2016 affirming the Decision of the CTA First
Division. Petitioner CIR moved to reconsider but just the
same, its motion was denied in a Resolution dated April 27,
2017.
Dissatisfied with the Decision of the CTA En Banc,
petitioner CIR filed the instant petition with this Court
raising the following issues, to wit:
I.
WHETHER THE CTA HAS PREMATURELY
ASSUMED JURISDICTION ON RESPONDENT’S
JUDICIAL CLAIM FOR TAX REFUND OR CREDIT
WITHOUT WAITING FOR THE DECISION OF
PETITIONER.
II.
WHETHER THE CTA EN BANC ERRED IN
GRANTING RESPONDENT’S CLAIM FOR REFUND
DESPITE ITS FAILURE TO SUBSTANTIATE ITS CLAIM
BY SUFFICIENT DOCUMENTARY PROOF.
Petitioner CIR argued that respondent prematurely filed

its judicial claim with the CTA depriving it with the
opportunity to act on the administrative claim for
refund/tax credit in violation of the doctrine of exhaustion
of administrative remedies. Petitioner CIR also argued that
respondent’s administrative claim should be considered pro
forma for failure to submit the complete supporting
documents as required by Revenue Memorandum Order
(RMO) No. 53-98 and Revenue Regulations No. 2-2006.
_______________
9 Id., at pp. 298-300.
519
Respondent, however, explained that if it waited for the

CIR’s decision on its claim for refund, it would have
suffered irreparable damage as it would have been barred
from seeking judicial recourse.
The issue is not novel.
Sections 204 and 229 of the National Internal Revenue
Code (NIRC) provide for the refund of erroneously or
illegally collected taxes. Section 204 applies to
administrative claims for refund, while Section 229 to
judicial claims for refund.10 Thus:
SEC. 204. Authority of the Commissioner to

Compromise, Abate and Refund or Credit Taxes.—The
Commissioner may —
xxxx
(c) Credit or refund taxes erroneously or illegally
received or penalties imposed without authority, refund the
value of internal revenue stamps when they are returned in
good condition by the purchaser, and, in his discretion,
redeem or change unused stamps that have been rendered
unfit for use and refund their value upon proof of
destruction. No credit or refund of taxes or penalties
shall be allowed unless the taxpayer files in writing
with the Commissioner a claim for credit or refund
within two (2) years after the payment of the tax or
penalty: Provided, however, That a return filed showing an
overpayment shall be considered as a written claim for
credit or refund.11
Section 229 of the 1997 NIRC provides:
Sec. 229. Recovery of Tax Erroneously or Illegally

Collected.—No suit or proceeding shall be main-
_______________
10 CBK Power Company Limited v. Commissioner of Internal Revenue,

750 Phil. 748; 746 SCRA 93 (2015).
11 Id., at p. 763; p. 108.
520
tained in any court for the recovery of any national internal

revenue tax hereafter alleged to have been erroneously or
illegally assessed or collected, or of any penalty claimed to
have been collected without authority, of any sum alleged to
have been excessively or in any manner wrongfully collected
without authority, or of any sum alleged to have been
excessively or in any manner wrongfully collected, until a
claim for refund or credit has been duly filed with the
Commissioner; but such suit or proceeding may be
maintained, whether or not such tax, penalty, or sum has
been paid under protest or duress.
In any case, no such suit or proceeding shall be
filed after the expiration of two (2) years from the
date of payment of the tax or penalty regardless of
any supervening cause that may arise after payment.
Provided, however, That the Commissioner may, even
without a written claim therefor, refund or credit any tax,
where on the face of the return upon which payment was
made, such payment appears clearly to have been
erroneously paid. (Emphasis supplied)
Indeed, the two-year period in filing a claim for tax

refund is crucial. While the law provides that the two-year
period is counted from the date of payment of the tax,
jurisprudence, however, clarified that the two-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 return12 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.13 “Thus, it is only when the
Adjustment Return covering the whole year is filed that the
taxpayer would know whether a tax is still due or a re-
_______________
12 ACCRA Investments Corporation v. Court of Appeals, 281 Phil. 1060,

1068-1069; 204 SCRA 957, 963 (1991).
13 Commissioner of Internal Revenue v. TMX Sales, Inc., 282 Phil. 199,
207; 205 SCRA 184, 192 (1992).
521
fund can be claimed based on the adjusted and audited

figures.”14
In the instant case, the two-year period to file a claim for

refund is reckoned from April 15, 2011, the date
respondent filed its Final Adjustment Return. Since
respondent filed its administrative claim on March 12,
2012 and its judicial claim on April 12, 2013, therefore,
both of respondent’s administrative and judicial claim for
refund were filed on time or within the two-year
prescriptive period provided by law. 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. Hence,
respondent’s immediate resort to the Court is justified.
Contrary to petitioner CIR’s assertion, there was no
violation of the doctrine of exhaustion of administrative
remedies. The Court ruled:
x x x the Court agrees with the ratiocination of the CTA

En Banc in debunking the alleged failure to exhaust
administrative remedies. Had CBK Power awaited the
action of the Commissioner on its claim for refund prior to
taking court action knowing fully well that the prescriptive
period was about to end, it would have lost not only its right
to seek judicial recourse but its right to recover the final
withholding taxes it erroneously paid to the government
thereby suffering irreparable damage.15 (Citation omitted)
The law only requires that an administrative claim be

priorly filed.16 That is, to give the BIR at the
administrative level
_______________
14 Id.
15 Supra note 10 at p. 764; p. 110.
16 Id., at p. 765; p. 110.
522
an opportunity to act on said claim.17 In other words, for 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.
At any rate, Section 7 of Republic Act No. 9282,

amending Republic Act No. 1125, provides that the CTA
has exclusive appellate jurisdiction over tax refund claims
in case the Commissioner fails to act on them:
Sec. 7. Jurisdiction.—The CTA shall exercise:

(a) Exclusive appellate jurisdiction to review by appeal,
as herein provided:
(1) Decisions of the Commissioner of Internal

Revenue in cases involving disputed assessments,
refunds of internal revenue taxes, fees or other
charges, penalties in relation thereto, or other
matters arising under the National Internal Revenue
or other laws administered by the Bureau of Internal
Revenue;
(2) Inaction by the Commissioner of Internal
Revenue in cases involving disputed assessments,
refunds of internal revenue taxes, fees or other
charges, penalties in relation thereto, or other
matters arising under the National Internal Revenue
Code or other laws administered by the Bureau of
Internal Revenue, where the National Internal
Revenue Code provides a specific period of action, in
which case the inaction shall be deemed a denial;
(3) Decisions, orders or resolutions of the
Regional Trial Courts in local tax cases originally
decided or resolved by them in the exercise of their
original or appellate jurisdiction. (Emphasis supplied)
_______________
17 Id., at p. 764; p. 110.
523
This means that while the Commissioner has the right

to hear a refund claim first, if he or she fails to act on it, it
will be treated as a denial of the refund, and the CTA is the
only entity that may review this ruling.18 Respondent need
not wait for the Commissioner to act on its administrative
claim for refund. Thus, in the old case of P.J. Kiener Co.,
Ltd. v. David,19 the Court held:
x x x Nowhere and in no wise does the law imply that the

Collector of Internal Revenue must act upon the claim, or
that the taxpayer shall not go to court before he is notified
of the Collector’s action. Having filed his claim and the

Collector of Internal Revenue having had ample time to
study it, the claimant may, indeed should, within the
statutory period of two years proceed with his suit without
waiting for the Collector’s decision. We understand the
filing of the claim with the Collector of Internal Revenue to
be intended primarily as a notice or warning that unless the
tax or penalty alleged to have been collected erroneously or
illegally is refunded, court action will follow. x x x20
Petitioner CIR argued that failure of the respondent to

submit the required complete documents as required by
Revenue Memorandum Order No. 53-98 and Revenue
Regulations No. 2-2006 rendered the petition with the CTA
dismissible on the ground of lack of jurisdiction. It
reasoned out that when a taxpayer prematurely filed a
judicial claim with the CTA, the latter has no jurisdiction
over the appeal.
In the instant case, respondent’s failure to submit the
complete documents at the administrative level did not
render its petition for review with the CTA dismissible for
lack of juris-
_______________
18 Philippine Airlines, Inc. (PAL) v. Commissioner of Internal Revenue,

G.R. Nos. 206079-80 & 206309, January 17, 2018, 851 SCRA 518.
19 92 Phil. 945 (1953).
20 Id., at p. 947.
524
diction. At this point, it is necessary to determine the

grounds relied upon by a taxpayer in filing its judicial
claim with the CTA. The case of Pilipinas Total Gas, Inc. v.
Commissioner of Internal Revenue21 is instructive, thus:
A distinction must, thus, be made between

administrative cases appealed due to inaction and those
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. When a judicial claim for refund or tax
credit in the CTA is an appeal of an unsuccessful
administrative claim, the taxpayer has to convince the CTA
that the CIR had no reason to deny its claim. It, thus,
becomes imperative for the taxpayer to show the CTA that
not only is he entitled under substantive law to his claim for
refund or tax credit, but also that he satisfied all the
documentary and evidentiary requirements for an
administrative claim. It is, thus, crucial for a taxpayer in a
judicial claim for refund or tax credit to show that its
administrative claim should have been granted in the first
place. Consequently, a taxpayer cannot cure its failure to
submit a document requested by the BIR at the
administrative level by filing the said document before the
CTA.22
In this case, it was the inaction of petitioner CIR which

prompted respondent to seek judicial recourse with the
CTA. Petitioner CIR did not send any written notice to
respondent informing it that the documents it submitted
were incomplete or at least require respondent to submit
additional documents. As a matter of fact, petitioner CIR
did not even render a Deci-
_______________
21 774 Phil. 473; 776 SCRA 395 (2015).

22 Id., at p. 504; p. 429.
525
sion 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.23 Thus, RA No. 1125
states:
Section 8. Court of record; seal; proceedings.—The

Court of Tax Appeals shall be a court of record and shall
have a seal which shall be judicially noticed. It shall
prescribe the form of its writs and other processes. It shall

have the power to promulgate rules and regulations for the
conduct of the business of the Court, and as may be needful
for the uniformity of decisions within its jurisdiction as
conferred by law, but such proceedings shall not be
governed strictly by technical rules of evidence.
The law creating the CTA specifically provides that

proceedings before it shall not be governed strictly by the
technical rules of evidence.24 The paramount consideration
remains the ascertainment of truth.25 Thus, the CTA is not
limited by the evidence presented in the administrative
claim in the Bureau of Internal Revenue.26 The claimant
may present new and additional evidence to the CTA to
support its case for tax refund.27
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
suc-
_______________
23 Commissioner of Internal Revenue v. Philippine National Bank, 744

Phil. 299, 312; 736 SCRA 609, 621-622 (2014).
24 Filinvest Development Corporation v. Commissioner of Internal
Revenue, 556 Phil. 439, 447-448; 529 SCRA 605, 614 (2007).
25 Id., at p. 450; p. 614.
26 Supra note 18.
27 Id.
526
cessful prosecution of its administrative claim.”28

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.29
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.”30
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.31
The second and third requirements are found under
Section 2.58.3(B) of Revenue Regulation No. 2-98,32 as
amended, which reads:
_______________
28 Commissioner of Internal Revenue, v. Philippine National Bank,

supra.
29 Pilipinas Total Gas, Inc. v. Commissioner of Internal Revenue, supra
note 21 at p. 505; p. 430.
30 Commissioner of Internal Revenue v. Bank of the Philippine Islands,
G.R. No. 224327, June 11, 2018, 866 SCRA 104.
31 Commissioner of Internal Revenue v. TeaM (Philippines) Operations
Corporation, 719 Phil. 513, 520-521; 707 SCRA 467, 474 (2013).
32 Implementing Republic Act No. 8424, “An Act Amending the
National Internal Revenue Code, as Amended, and for Other Purposes.”

Relative to the Withholding on Income Subject to the
527
Section 2.58.3. Claim for tax credit or refund.—(B)

Claims for tax credit or refund of any creditable income tax
which was deducted and withheld on income payment shall
be given due course only when it is shown that the income
payments has been declared as part of the gross income and
the fact of withholding is established by a copy of the
withholding tax statement duly issued by the payor to the
payee showing the amount paid and the amount of tax
withheld therefrom.
Petitioner CIR insisted on the absence of the second and

third requirements. It argued that respondent failed to
prove the fact of withholding, showing the amount paid and
the amount of tax withheld and that the income it received

was declared as part of the gross income. Specifically,
petitioner CIR questioned respondent when it included the
creditable withholding taxes pertaining to income
payments for the years 2006, 2008 and 2009 to form part of
its claim for refund for the year 2010.
In this case, respondent was able to establish through
the documentary evidence it submitted compliance with the
second and third requisites. As correctly evaluated by the
CTA 1st division:
To prove its compliance with the second requisite,

petitioner [now respondent] presented Schedule/Sum-mary
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 2010, reflecting creditable withholding
taxes in the total amount of P12,868,745.87.
Anent the third requisite, the 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
petitioner’s General Ledger (GL) for CY 2010, 2009,
_______________
Expanded Withholding Tax and Final Withholding Tax, Withholding on

Income Tax On Compensation, Withholding of Creditable Value-Added
Tax and Other Percentage Taxes.
528
2008 and 2006 and noted that the same were reported in
petitioner’s Annual ITRs for the years 2010, 2009, 2008 and
2006.33
It must be noted that while the income payments from

which the CWTs which were declared in its return covered
the years 2006, 2008, 2009 and 2010, there was nothing
wrong with it as what is important is that the respondent
complied with the third requisite, that is, the income which
the taxes were withheld was included in the returns of the
respondent.
The CTA En Banc correctly appreciated the explanation
of the independent CPA (ICPA) why the income payments
from which the CWT amounting to P12,729,617.90 were
withheld, were declared in its returns covering the years
2006, 2008, 2009 and 2010. In gist, the ICPA suggests that
there were delays in collection of certain income payments
to respondent. For one, certain sales made by respondent to
its dealers in 2008 and 2009 were only paid in 2010. In
other words, there were certain income payments which,
although respondent expected to receive in 2006, 2008 and
2009, were only remitted to it in 2010. As concluded by the
CTA En Banc, the delay in collection of certain income
payments of respondent caused the timing difference
between the actual reporting of the income by respondent
and the actual withholding of the corresponding creditable
income tax by respondent’s customers.34 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. Hence, it is just proper that these income payments
should form part of respondent’s tax credit for 2010.
Again, we reiterate the well-established doctrine that as
a matter of practice and principle, we will not set aside the
_______________
33 Rollo, p. 293.
34 Id., at p. 18.
529
conclusion reached by an agency, like the CTA x x x. By the

very nature of its function, it has dedicated itself to the
study and consideration of tax problems and has
necessarily developed an expertise on the subject, unless
there has been an abuse or improvident exercise of
authority on its part x x x.35 On this score, we give highest
respect to the factual findings of the CTA, which can only
be disturbed on appeal if they are not supported by
substantial evidence or there is a showing of gross error or
abuse on the part of the CTA.36 No such exception obtains
in this case and thus, we presume that the CTA rendered a
decision which is valid in every respect.
WHEREFORE, the instant Petition is DENIED. The
December 22, 2016 Decision and the April 27, 2017
Resolution of the Court of Tax Appeals En Banc,
respectively sustaining the findings of the CTA 1st Division
and denying petitioner CIR’s Motion for Reconsideration, in
C.T.A.-E.B. No. 1333, are AFFIRMED. Accordingly, the
Commissioner of the Bureau of Internal Revenue is

DIRECTED to issue a Tax Credit Certificate in favor of
Univation Motor Philippines, Inc. in the amount of
P12,729,617.90 representing its unutilized or excess
creditable withholding tax for the taxable year 2010.
SO ORDERED.
Carpio** (Chairperson), Caguioa and Lazaro-Javier,

JJ., concur.
Perlas-Bernabe, J., On Leave.
_______________
35 Commissioner of Internal Revenue v. Philippine Bank of

Communications, G.R. Nos. 198522 and 199057, Second Division
Resolution dated March 14, 2018, citing Commissioner of Internal Revenue
v. United Salvage and Towage (Phils.), Inc., 738 Phil. 335, 342-343; 729
SCRA 113, 120 (2014).
36 Supra note 18 at p. 540.
** Designated Senior Associate Justice per Section 12, R.A. No. 296,
The Judiciary Act of 1948, as amended.
530
Petition denied, judgment and resolution affirmed.

Commissioner of Internal Revenue directed to issue Tax
Credit Certificate in favor of Univation Motor Philippines,
Inc.
A claim for tax refund or credit is similar to a tax

exemption and should be strictly construed against the
taxpayer. (Coral Bay Nickel Corporation vs. Commissioner
of Internal Revenue, 793 SCRA 190 [2016])
——o0o——
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5/15/24, 7:16 PM SUPREME COURT REPORTS ANNOTATED VOLUME 901

G.R. No. 231581. April 10, 2019.*

COMMISSIONER OF INTERNAL REVENUE, petitioner,

Taxation; Tax Refund; Sections 204 and 229 of the National

or sum has been paid under protest or duress. In any case, no

ing shall be filed after the expiration of two (2) years

opportunity to act on said claim. In other words, for as long as

Section 8. Court of record; seal; proceedings.—The Court of

ments are found under Section 2.58.3(B) of Revenue

PETITION for review on certiorari of the decision and

J. REYES, JR., J.:

This resolves the Petition for Review on Certiorari1

1 Rollo, pp. 30-62.

Jr., Lovell R. Bautista, Erlinda P. Uy, Esperanza R. Fabon-Victorino,

2012, respondent filed its administrative claim5 with the

5 Id., at pp. 191-192.

Motion for Reconsideration but the CTA First Division

Petitioner CIR argued that respondent prematurely filed

9 Id., at pp. 298-300.

Respondent, however, explained that if it waited for the

SEC. 204. Authority of the Commissioner to

Section 229 of the 1997 NIRC provides:

Sec. 229. Recovery of Tax Erroneously or Illegally

10 CBK Power Company Limited v. Commissioner of Internal Revenue,

tained in any court for the recovery of any national internal

Indeed, the two-year period in filing a claim for tax

12 ACCRA Investments Corporation v. Court of Appeals, 281 Phil. 1060,

fund can be claimed based on the adjusted and audited

In the instant case, the two-year period to file a claim for

x x x the Court agrees with the ratiocination of the CTA

The law only requires that an administrative claim be

an opportunity to act on said claim.17 In other words, for as

At any rate, Section 7 of Republic Act No. 9282,

Sec. 7. Jurisdiction.—The CTA shall exercise:

(1) Decisions of the Commissioner of Internal

17 Id., at p. 764; p. 110.

This means that while the Commissioner has the right

x x x Nowhere and in no wise does the law imply that the

of the Collector’s action. Having filed his claim and the

Petitioner CIR argued that failure of the respondent to

18 Philippine Airlines, Inc. (PAL) v. Commissioner of Internal Revenue,

diction. At this point, it is necessary to determine the

A distinction must, thus, be made between

taxpayer’s failure to substantiate the claim at the

In this case, it was the inaction of petitioner CIR which

21 774 Phil. 473; 776 SCRA 395 (2015).

sion denying respondent’s administrative claim on the

Section 8. Court of record; seal; proceedings.—The

prescribe the form of its writs and other processes. It shall

The law creating the CTA specifically provides that

23 Commissioner of Internal Revenue v. Philippine National Bank, 744

cessful prosecution of its administrative claim.”28

on the subject, unless there has been an abuse or

28 Commissioner of Internal Revenue, v. Philippine National Bank,

National Internal Revenue Code, as Amended, and for Other Purposes.”

Section 2.58.3. Claim for tax credit or refund.—(B)

Petitioner CIR insisted on the absence of the second and

the amount of tax withheld and that the income it received

To prove its compliance with the second requisite,

Expanded Withholding Tax and Final Withholding Tax, Withholding on