CIR VS. NIPPON

G.R. No. 212920, September 15, 2015

FACTS
Nippon is a domestic corporation duly organized and existing under Philippine laws, which is primarily engaged in the business of freight forwarding, and a VAT registered entity. It filed its quarterly VAT returns for the year 2002 on April 25, 2002, July 25, 2002, October 25, 2002, and January 27, 2003, respectively. It maintained that during the said period it incurred input VAT attributable to its zero-rated sales in the amount of P28,405,167.60, from which only P3,760,660.74 was applied as tax credit, thus, reflecting refundable excess input VAT in the amount of P24,644,506.86. Nippon filed an administrative claim for refund of its unutilized input VAT in the amount of P24,644,506.86 for the year 2002 before the BIR. A day later, it filed a judicial claim for tax refund, by way of petition for review, before the CTA. For its part, petitioner CIR asserted that the amounts being claimed as unutilized input VAT were not properly documented, hence, should be denied.

ISSUE
Whether the CTA properly granted Nippon's motion to withdraw.

RULING

No. The primary reason that militates against the granting of the motion to withdraw is the fact that the CTA Division had already determined that Nippon was only entitled to refund the reduced amount of P2,614,296.84 since it failed to prove that the recipients of its services were non-residents "doing business outside the Philippines". Markedly different from this is the BIR's determination that Nippon should receive P21,675,128.91, which is larger than the amount found due by the CTA Division. Therefore, the massive discrepancy alone between the administrative and judicial determinations of the amount to be refunded to Nippon should have already raised a red flag to the CTA Division. Clearly, the interest of the government, and, more significantly, the public, will be greatly prejudiced by the erroneous grant of refund - at a substantial amount at that - in favor of Nippon. Hence, under these circumstances, the CTA Division should not have granted the motion to withdraw. In matters of taxation, the government cannot be estopped by the mistakes, errors or omissions of its agents for upon it depends the ability of the government to serve the people for whose benefit taxes are collected.

Comments