CIR v. Univation Motor Philippines, Inc. (formerly NISSAN MOTOR PHILIPPINES, INC.) Recovery of Tax Erroneously or Illegally Collected, Administrative and Judicial Remedies


On July 8, 2011, Univation Motor Philippines, Inc. (respondent) filed its amended Annual Income Tax Return (ITR) for 2010 showing a total gross income of ₱117,084,174.00 and an overpayment of income taxes amounting to ₱26,103,898.52. Respondent opted to claim its overpayment of income tax through the issuance of a tax credit certificate. 

On March 12, 2012, respondent filed its administrative claim with the BIR explaining that the overpayment consists of prior year’s excess credits, less Minimum Corporate Income Tax and creditable withholding taxes accumulated during the four quarters of 2010. Respondent filed its Application for Tax Credit in the amount of ₱12,868,745.00. 

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.

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.

Respondent presented and formally offered its testimonial and documentary evidence which were all admitted. 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 Decision 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 Motion for Reconsideration which was denied.

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 affirming the Decision of the CTA First Division. Petitioner CIR moved to reconsider but just the same, its motion was denied.

Hence, this petition.


Whether or not the respondent prematurely filed its judicial claim with the CTA depriving it of the opportunity to act on the administrative claim for refund/tax credit in violation of the doctrine of exhaustion of administrative remedies.


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, 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 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.”

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.

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