G.R. No. 212920 , September 16, 2015
COMMISSIONER OF INTERNAL REVENUE, PETITIONER, VS. NIPPON EXPRESS (PHILS.) CORPORATION, RESPONDENT.

FACTS

Respondent Nippon Express (Phils.) Corporation (Nippon), a VAT-registered domestic corporation engaged in freight forwarding, filed its quarterly VAT returns for 2002. It claimed unutilized input VAT attributable to its zero-rated sales amounting to ₱24,644,506.86 and sought a refund. On April 22, 2004, Nippon filed an administrative claim for refund with the BIR. The following day, April 23, 2004, it filed a judicial claim via a petition for review before the CTA, docketed as CTA Case No. 6967. The CTA Third Division, after trial, rendered a Decision on August 10, 2011, partially granting the claim but reducing the refundable amount to only ₱2,614,296.84, finding that Nippon failed to prove its sales qualified as zero-rated. Before receiving this Decision, on August 12, 2011, Nippon filed a Motion to Withdraw its petition, informing the CTA that the BIR had already issued a Tax Credit Certificate in the amount of ₱21,675,128.91 on July 27, 2011. The CIR opposed the withdrawal, arguing the CTA had already judicially determined the correct refundable amount and that the BIR’s issuance was without factual and legal basis. The CTA Third Division granted Nippon’s motion to withdraw via a Resolution dated July 31, 2012, considering the case closed. The CTA En Banc affirmed this ruling. The CIR elevated the case to the Supreme Court.

ISSUE

Whether the CTA properly granted Nippon’s motion to withdraw its petition for review.

RULING

No. The Supreme Court ruled that the CTA committed a reversible error in granting the motion to withdraw. The petition is meritorious. While the CTA has discretionary authority to allow withdrawal of an appeal under suppletory application of the Rules of Court, the circumstances of this case militated against its exercise. First, the CTA Division had already rendered a Decision after full-blown proceedings, and jurisdiction, once acquired, is not lost by a party’s unilateral withdrawal. Second, and more critically, there was a massive discrepancy of ₱19,060,832.07 between the amount judicially determined by the CTA (₱2,614,296.84) and the amount administratively granted by the BIR (₱21,675,128.91). This discrepancy raised a red flag, and granting the withdrawal would prejudice the interest of the government and the public by allowing a potentially erroneous substantial refund. The government is not estopped by the mistakes of its agents in tax matters. Furthermore, the Supreme Court noted motu proprio that Nippon’s administrative claim for the first quarter of 2002 was filed on April 22, 2004, which was beyond the two-year prescriptive period from the close of the taxable quarter on March 31, 2002, and was thus time-barred. The CTA should not have granted the withdrawal and instead should have affirmed its August 10, 2011 Decision.