G.R. No.

212920, September 16, 2015 which, in this case, were mostly Philippine Economic Zone
Authority registered enterprises - were non-residents "doing
COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. business outside the Philippines." Accordingly, it concluded
NIPPON EXPRESS (PHILS.) CORPORATION, Respondent. that Nippon's purported sales therefrom could not qualify as
zero-rated sales, hence, the reduction in the amount of tax
DECISION credit certificate claimed.18

Before its receipt of the August 10, 2011 Decision, or on

PERLAS-BERNABE, J.:
August 12, 2011, Nippon filed a motion to withdraw,19
considering that the BIR, acting on its administrative claim,
Assailed in this petition for review on certiorari1 are the
already issued a tax credit certificate in the amount of
Decision2 dated December 18, 2013 and the Resolution3
P21,675,128.91 on July 27, 2011 (July 27, 2011 Tax Credit
dated June 10, 2014 of the Court of Tax Appeals (CTA) En
Certificate).
Banc in CTA EB No. 924, which affirmed the Resolution4 dated
July 31, 2012 of the CTA Third Division (CTA Division) in CTA
Separately, the CIR moved for reconsideration 20 of the August
Case No. 6967, granting respondent Nippon Express (Phils.)
10, 2011 Decision and filed its comment/opposition 21 to
Corporation's (Nippon) motion to withdraw petition for
Nippon's motion to withdraw, claiming that: (a) the CTA
review5 (motion to withdraw).
Division had already resolved the factual issue pertaining to
Nippon's entitlement to a tax credit certificate, which, after
The Facts
trial, was proven to be only in the amount of P2,614,296.84;
(b) the issuance of the July 27, 2011 Tax Credit Certificate was
Nippon is a domestic corporation duly organized and existing
bereft of factual and legal bases, and prejudicial to the
under Philippine laws which is primarily engaged in the
interest of the government; and (c) Nippon's motion to
business of freight forwarding, namely, in the international
withdraw was "tantamount to [a] withdrawal and
and domestic air and sea freight and cargo forwarding,
abandonment of its [mjotion for [reconsideration also filed in
hauling, carrying, handling, distributing, loading, and
this case."22
unloading general cargoes and all classes of goods, wares,
and merchandise, and the operation of container depots,
Thereafter, Nippon, which maintained that it only had notice
warehousing, storage, hauling, and packing facilities. 6 It is a
of the August 10, 2011 Decision on August 16, 2011, 23
Value-Added Tax (VAT) registered entity with Tax
likewise sought for reconsideration,24 praying that the CTA
Identification No. VAT Registration No. 004-669-434-000.7 As
Division set aside its August 10, 2011 Decision and render
such, it filed its quarterly VAT returns for the year 2002 on
judgment ordering the CIR to issue a tax credit certificate in
April 25, 2002, July 25, 2002, October 25, 2002, and January
the full amount of P24,644,506.86, or in the alternative, grant
27, 2003, respectively.8 It maintained that during the said
its motion to withdraw.25cralawred
period it incurred input VAT attributable to its zero-rated
sales in the amount of P28,405,167.60, from which only
In a Resolution dated July 31, 2012, 26 the CTA Division
P3,760,660.74 was applied as tax credit, thus, reflecting
granted Nippon's motion to withdraw and, thus, considered
refundable excess input VAT in the amount of
the case closed and terminated.27 It found that pursuant to
P24,644,506.86.9
Revenue Memorandum Circular No. 49-03 (RMC No. 49-03)
dated August 15, 2003, Nippon correctly availed of the
On April 22, 2004, Nippon filed an administrative claim for
proper remedy notwithstanding the promulgation of the
refund10 of its unutilized input VAT in the amount of
August 10, 2011 Decision. It added that in approving the
P24,644,506.86 for the year 2002 before the Bureau of
withdrawal of Nippon's petition for review, it exercised its
Internal Revenue (BIR).11 A day later, or on April 23, 2004, it
discretionary authority under Section 3, Rule 50 of the Rules
filed a judicial claim for tax refund, by way of petition for
of Court after due consideration of the reasons proffered by
review,12 before the CTA, docketed as CTA Case No. 6967.13
Nippon, namely: (a) that the parties had already arrived at a
reasonable settlement of the issues; (b) further legal and
For its part, petitioner the Commissioner of Internal Revenue
related costs would be avoided; and (c) the court's time and
(CIR) asserted, inter alia, that the amounts being claimed by
resources would be saved.28
Nippon as unutilized input VAT were not properly
documented, hence, should be denied.14
Aggrieved, the CIR elevated29 its case to the CTA En Banc.
Proceedings Before the CTA Division
The CTA En Banc Ruling
15
In a Decision dated August 10, 2011, the CTA Division
In a Decision30 dated December 18, 2013, the CTA En Banc
partially granted Nippon's claim for tax refund, and thereby
affirmed the July 31, 2012 Resolution of the CTA Division
ordered the CIR to issue a tax credit certificate in the reduced
granting Nippon's motion to withdraw.31 It debunked the
amount of P2,614,296.84, representing its unutilized input
CIR's assertions that Nippon failed to comply with the
VAT which was attributable to its zero-rated sales.16 It found
requirements set forth in RMC No. 49-03 - i.e., that Nippon
that while Nippon timely filed its administrative and judicial
failed to notify the BIR that it agreed with its findings and to
claims within the two (2)-year prescriptive period,17 it,
file the necessary motion before the CTA Division prior to the
however, failed to show that the recipients of its services -
Page 1 of 3
promulgation of its Decision -noting that RMC No. 49-03 did case should have incited it to act otherwise.
not expressly require a taxpayer to inform the BIR of its
assent nor prescribe a definite period for filing a motion to First, it should be pointed out that the August 10, 2011
withdraw. It also observed that the CIR did not deny the Decision was rendered by the CTA Division after a full-blown
existence and issuance of the July 27, 2011 Tax Credit hearing in which the parties had already ventilated their
Certificate. In this regard, the same may be taken judicial claims. Thus, the findings contained therein were the results
notice of, and the need for its formal offer dispensed with. 32 of an exhaustive study of the pleadings and a judicious
evaluation of the evidence submitted by the parties, as well
The CIR moved for partial reconsideration33 which was, as the report of the commissioned certified public
however, denied by the CTA En Banc in a Resolution34 dated accountant. In Reyes v. Commission on Elections,38 the Court
June 10, 2014; hence, this petition. only noted, and did not grant, a motion to withdraw the
petition filed after it had already acted on said petition,
The Issue Before the Court ratiocinating in the following wise:
It may well be in order to remind petitioner that jurisdiction,
The core issue in this case is whether the CTA properly once acquired, is not lost upon the instance of the parties,
granted Nippon's motion to withdraw. but continues until the case is terminated. When petitioner
filed her Petition for Certiorari jurisdiction vested in the Court
The Court's Ruling and, in fact, the Court exercised such jurisdiction when it
acted on the petition. Such jurisdiction cannot be lost by the
The petition is meritorious. unilateral withdrawal of the petition by petitioner.39
The primary reason, however, that militates against the
A perusal of the Revised Rules of the Court of Tax Appeals35 granting of the motion to withdraw is the fact that the CTA
(RRCTA) reveals the lack of provisions governing the Division, in its August 10, 2011 Decision, had already
procedure for the withdrawal of pending appeals before the determined that Nippon was only entitled to refund the
CTA. Hence, pursuant to Section 3, Rule 1 of the RRCTA, the reduced amount of P2,614,296.84 since it failed to prove that
Rules of Court shall suppletorily apply: the recipients of its services were non-residents "doing
Sec. 3. Applicability of the Rules of Court. - The Rules of Court business outside the Philippines"; hence, Nippon's purported
in the Philippines shall apply suppletorily to these Rules. sales therefrom could not qualify as zero-rated sales,
Rule 50 of the Rules of Court - an adjunct rule to the appellate necessitating the reduction in the amount of refund claimed.
procedure in the CA under Rules 42, 43, 44, and 46 of the Markedly different from this is the BIR's determination that
Rules of Court which are equally adopted in the RRCTA 36 - Nippon should receive P21,675,128.91 as per the July 27,
states that when the case is deemed submitted for 2011 Tax Credit Certificate, which is, in all, P19,060,832.07
resolution, withdrawal of appeals made after the filing of the larger than the amount found due by the CTA Division.
appellee's brief may still be allowed in the discretion of the Therefore, as aptly pointed out by Associate Justice Teresita J.
court: Leonardo-De Castro during the deliberations on this case, the
RULE 50 massive discrepancy alone between the administrative and
DISMISSAL OF APPEAL judicial determinations of the amount to be refunded to
Nippon should have already raised a red flag to the CTA
xxxx Division. Clearly, the interest of the government, and, more
significantly, the public, will be greatly prejudiced by the
Section 3. Withdrawal of appeal. — An appeal may be erroneous grant of refund - at a substantial amount at that -
withdrawn as of right at any time before the filing of the in favor of Nippon. Hence, under these circumstances, the
appellee's brief. Thereafter, the withdrawal may be allowed CTA Division should not have granted the motion to
in the discretion of the court. (Emphasis supplied) withdraw.
Impelled by the BIR's supervening issuance of the July 27,
2011 Tax Credit Certificate, Nippon filed a motion to In this relation, it deserves mentioning that the CIR is not
withdraw the case, proffering that: estopped from assailing the validity of the July 27, 2011 Tax
Having arrived at a reasonable settlement of the issues with Credit Certificate which was issued by her subordinates in the
the [CIR]/BIR, and to avoid incurring further legal and related BIR. In matters of taxation, the government cannot be
costs, not to mention the time and resources of [the CTA], estopped by the mistakes, errors or omissions of its agents
[Nippon] most respectfully moves for the withdrawal of its for upon it depends the ability of the government to serve
Petition for Review.37 the people for whose benefit taxes are collected.40
Finding the aforementioned grounds to be justified, the CTA
Division allowed the withdrawal of Nippon's appeal thereby Finally, the Court has observed that based on the records,
ordering the case closed and terminated, notwithstanding the Nippon's administrative claim for the first taxable quarter of
fact that the said motion was filed after the promulgation of 2002 which closed on March 31, 2002 was already time-
its August 10, 2011 Decision. barred41 for being filed on April 22, 2004, or beyond the two
(2)-year prescriptive period pursuant to Section 112(A) 42 of
While it is true that the CTA Division has the prerogative to the National Internal Revenue Code of 1997. Although
grant a motion to withdraw under the authority of the prescription was not raised as an issue, it is well-settled that if
foregoing legal provisions, the attendant circumstances in this the pleadings or the evidence on record show that the claim

Page 2 of 3
is barred by prescription, the Court may motu proprio order
its dismissal on said ground.43 34 Id. at 83-99.

All told, the CTA committed a reversible error in granting 35

A.M. No. 05-11-07-CTA effective December 15, 2005.
Nippon's motion to withdraw. The August 10, 2011 Decision
36 Section 1, Rule 7 of the RRCTA states:
of the CTA Division should therefore be reinstated, without
prejudice, however, to the right of either party to appeal the
SECTION 1. Applicability of the Rules of the Court of Appeals, exception. - The
same in accordance with the RRCTA. procedure in the Court en bane or in Divisions in original and in appealed
cases shall be the same as those in petitions for review and appeals before
WHEREFORE, the petition is GRANTED. The Decision dated the Court of Appeals pursuant to the applicable provisions of Rules 42, 43, 44
December 18, 2013 and the Resolution dated June 10, 2014 and 46 of the Rules of Court, except as otherwise provided for in these Rules.
37Rollo, p. 221.
of the Court of Tax Appeals En Banc in CTA EB Case No. 924
are hereby SET ASIDE. The Decision dated August 10, 2011 of 38
G.R. No. 207264, October 22, 2013, 708 SCRA 197.
the Court of Tax Appeals Third Division in CTA Case No. 6967
39 Id. at 233.
is REINSTATED, without prejudice, however, to the right of
either party to appeal the same in accordance with the 40"It is a well-settled rule that the government cannot be estopped by the
Revised Rules of the Court of Tax Appeals. mistakes, errors or omissions of its agents. It has been specifically held that
estoppel does not apply to the government, especially on matters of
SO ORDERED.chanroblesvirtuallawlibrary taxation. Taxes are the nation's lifeblood through which government
agencies continue to operate and with which the State discharges its
functions for the welfare of its constituents. Thus, the government cannot be
Sereno, C.J., (Chairperson), Leonardo-De Castro, Bersamin, estopped from collecting taxes by the mistake, negligence, or omission of its
and Perez, JJ., concur. agents. Upon taxation depends the ability of the government to serve the
people for whose benefit taxes are collected. To safeguard such interest,
neglect or omission of government officials entrusted with the collection of
Endnotes:1Rollo, pp. 12-31. taxes should not be allowed to bring harm or detriment to the people."
(Visayas Geolhermai Power Company v. CIR, G.R. No. 197525, June 4, 2014,
2Id.at 39-62. Penned by Associate Justice Erlinda P. Uy with Associate 725 SCRA 130, 149.)
Justices Juanito C. Castaneda, Jr., Lovell R. Bautista, Caesar A. Casanova,
Esperanza R. Fabon-Victorino, Cielito N. Mindaro-Grulla, Amelia R. Cotangco- 41
"First, Section 112(A) clearly, plainly, and unequivocally provides that the
Manalastas, and Ma. Belen M. Ringpis-Liban concurring; and Presiding Justice taxpayer 'may, within two (2) years after the close of the taxable quarter
Roman G. Del Rosario concurring and dissenting. when the sales were made, apply for the issuance of a tax credit certificate or
refund of the creditable input tax due or paid to such sales.' In short, the law
3 Id. at 83-99. states that the taxpayer may apply with the Commissioner for a refund or
credit 'within two (2) years, which means at anytime within two years. Thus,
4Id. at 228-233. Signed by Associate Justices Lovell R. Bautista, Olga Palanca- the application for refund or credit may be filed by the taxpayer with the
Enriquez, and Amelia R. Cotangco-Manalastas. Commissioner on the last day of the two-year prescriptive period and it will
still strictly comply with the law. The two year prescriptive period is a grace
5 Id. at 220-222. period in favor of the taxpayer and he can avail of the full period before his
right to apply for a tax refund or credit is barred by prescription." (CIR v. San
6 Id. at 40 and 42 (pages arc inadvertently misarranged). Rogue Power Corporation, G.R. Nos. 187485, 196113, and 197156, February
12, 2013, 690 SCRA 336, 390-391.)
7 See Certificate of Registration issued by the Large Taxpayer District Office;
id at 109. 42
Section 112 (A) of the National Internal Revenue Code of 1997
reads:chanRoblesvirtualLawlibrary
8 Id. at 40.
Section 112. Refunds or Tax Credits of Input Tax. -
9
Id. at 104.
(A) Zero-rated or Effectively Zero-rated Sales. - any VAT-registered person,
10 Id. at 124-129. whose sales are zero-rated or effectively zero-rated may, within two (2)
years after the close of the taxable quarter when the sales were made,
11 See id. at 40 and 140. apply for the issuance of a tax credit certificate or refund of creditable input
tax due or paid attributable to such sales, except transitional input tax, to the
12 Id. at 100-106. extent that such input tax has not been applied against output tax: x x x.
13 Id. at 40. x x x x (Emphasis and underscoring supplied)
14 See Answer dated June 17,2004; id. at 130-131. 43 See China Banking Corporation v. CIR, G.R. No. 172509, February 4, 2015.
15Id. at 167-183. Penned by Associate Justice Lovell R. Bautista with
Associate Justice Amelia Cotangco-Manalastas concurring and Associate
Justice Olga Palanca Enriquez dissenting.

16
Id. at 181-182.

17 Id. at 173-174.

18 See id. at 174-181.

19 Id. at 220-222.

20 Id. at 193-204.

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