NIPPON EXPRESS (PHILIPPINES) CORP., v.

COMMISSIONER OF INTERNAL REVENUE

G.R. No. 185666

February 4, 2015

Petitioner Corporation applied for a tax credit/refund based on section 112 of the Tax Code in
the amount of P24,826,667.61 representing the value of input VAT paid by the corporation in relation to
sales which are attributable to zero-rated sales. Petitioner corporation filed the administrative claim
with the with the One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center of the Department
of Finance (OSSAC-DOF) on September 24, 2001. Having no resolution from the OSSAC-DOF, petitioner
corporation filed a petition for review with the CTA on April 24, 2002. The CTA denied the calim for tax
credit/refund for petitioner’s failure to comply with the receipt and invoicing requirements provided by
the Tax Code for refund based on zero-rated transactions.

Issues:

1. Did the CTA acquire jurisdiction over the controversy?

2. Is there a difference between ainvoicing requirements and receipt requirements in zero-rated

transactions?

Ruling:

1. No, the CTA did not acquire jurisdiction over the controversy. The Supreme Court stated that
strict compliance with the prescriptive periods in claiming for refund of creditable input tax due or paid
attributable to any zero-rated or effectively zero-rates sales (Commissioner of Internal Revenue v. San
Roque Power Corporation, Taganito Mining Corporation v. Commissioner of Internal Revenue, and
Philex Mining Corporation v. Commissioner of Internal Revenue). Petitioner Corporation has failed to
comply with the 120+30 day period, which is mandatory and jurisdictional, in filing its petition for
review. The 120 day period for the administrative office to act ended on September 22, 2001, thus
petitioner should have filed its petition for review thirty days thereafter or on or before April 24, 2002.

2. A VAT invoice is necessary for every sale, barter or exchange of goods or properties while a VAT
official receipt properly pertains to every lease of goods or properties, and every sale, barter or
exchange of services. In other words, the VAT invoice is the seller’s best proof of the sale of the goods
or services to the buyer while the VAT receipt is the buyer’s best evidence of the payment of goods or
services received from the seller.

CIR vs. Ironcon Builders and Development Corp.

G.R. No. 180042 , February 8, 2010

Facts: Respondent Ironcon Builders and Development Corporation (Ironcon) sought the refund by the
Bureau of Internal Revenue (BIR) of its income tax overpayment and excess creditable VAT. The
Commissioner continued not to act on its claims which made Ironcon to bring it up to CTA for review.
CTA 2nd Division held that taxpayers have the option to either carry over the excess credit or ask for a
refund, as regards with the overpayment. Apparently, the respondent filed two income tax returns for
the year 2000, an original and an amended one. Although Ironcon’s amended return indicated a
preference for “refund” of the overpaid tax, the CTA ruled that respondent’s original choice is regarded
as irrevocable, pursuant to Sec.76 of R.A. No. 8424, and moreover found out that Ironcon actually
carried over the credit from the overpayment and applied it to the tax due for 2001, and hence, denied
Ironcon’s claim for the refund.

As to the claim for VAT refund, CTA found that by the end of 2000, respondent had excess tax
credit carried over from 1999, an allowable input tax and a 6% creditable VAT, withheld and remitted by
its clients, which are deductible from Ironcon’s total output VAT liability of P20+M. The CTA ruled that
respondent had no more output VAT against which the excess creditable VAT withheld may be applied
or credited, the VAT withheld had been excessively paid. Because Ironcon did not present its VAT
returns for the succeeding quarters of 2001, 2nd Division denied the refund. Upon MfR of respondent,
now attaching the required VAT returns, CTA then granted the application having found that Ironcon
sufficiently proved that its excess creditable VAT withheld was not carried over or applied to any input
VAT for 2001. CIR filed its own MfR for the amended decision, which CTA denied, and CTA en banc
denied.

Petitioner CIR’s main contention is that, since these amounts were withheld in accordance with
what the law provides, they cannot be regarded as erroneously or illegally collected as contemplated in
Sections 204(C) and 229 of the NIRC.Petitioner CIR also points out that since the NIRC does not
specifically grant taxpayers the option to refund excess creditable VAT withheld, it follows that such
refund cannot be allowed. Excess creditable VAT withheld is much unlike excess income taxes withheld.

Issue:

Whether or not creditable VAT withheld from a taxpayer in excess of its output VAT liability may be the
subject of a tax refund in place of a tax credit.

Held: YES.

In the latter case, Sections 76 and 58(D) of the NIRC specifically make the option to seek a refund
available to the taxpayer. The CIR submits thus that the only option available to taxpayers in case of
excess creditable VAT withheld is to apply the excess credits to succeeding quarters. But the amounts
involved in this case are creditable withholding taxes, not final taxes subject to withholding. As the CTA
correctly points out, taxes withheld on certain payments under the creditable withholding tax system
are but intended to approximate the tax due from the payee. The withheld taxes remitted to the BIR are
treated as deposits or advances on the actual tax liability of the taxpayer, subject to adjustment at the
proper time when the actual tax liability can be fully and finally determined.

Even if the law does not expressly state that Ironcon’s excess creditable VAT withheld is refundable, it
may be the subject of a claim for refund as an erroneously collected tax under Sections 204(C) and 229.
Even if the law does not expressly state that Ironcon’s excess creditable VAT withheld is refundable, it
may be the subject of a claim for refund as an erroneously collected tax under Sections 204(C) and 229.
The rule is that before a refund may be granted, respondent Ironcon must show that it had not used the
creditable amount or carried it over to succeeding taxable quarters.

Substantial justice dictates that the government should not keep money that does not belong to it at the
expense of citizens. Since he ought to know the tax records of all taxpayers, petitioner CIR could have
easily disproved the claimant’s allegations.That he chose not to amounts to a waiver of that right. Also,
the CIR failed in this case to make a timely objection to or comment on respondent Ironcon’s offer of
the documents in question despite an opportunity to do so.11 Taking all these circumstances together, it
was sufficiently proved that Ironcon’s excess creditable VAT withheld was not carried over to succeeding
taxable quarters.