VAT Ruling No. 091-90

April 20, 1990 VAT RULING NO. 091-90 Mr. Leodevice G. Jorvina Asst. Revenue District Officer Revenue District No. 45 Naga City S i r : This refers to your letter dated January 31, 1989 requesting clarification whether the 4% contractors tax or 10% value-added tax erroneously withheld and remitted by the withholding agents to the Bureau of Internal Revenue for the year 1988 be credited as an input tax against the value-added tax due for the same year and any succeeding year, considering that the same cannot be refunded even if requested, without prior investigation and recommendation from the office which has jurisdiction. In reply please be informed as follows: 1. On the assumption that the 4% contractor's tax was withheld presumably by government agencies in accordance with the provisions of R.A. No. 1051; or even the 10% value-added tax, and the taxes so withheld were remitted to the Bureau of Internal Revenue, said taxes erroneously withheld but remitted may be credited against the value-added tax liability of the contractor during the quarter in which the withholding was made. Thus, the Supreme Court in the case of Sinforosa Alca vs. Commissioner of Internal Revenue, G.R. No. L-24624, November 27, 1968, said: "Petitioner has regularly and faithfully paid the percentage tax on manufactured products involved here, pursuant to the regulations and requirements of the revenue offices then enforced; and that it was only after the promulgation of our 1960 decision in Central Azucarera Don Pedro case (L-14015) that the revenue authorities realized that they had been collecting the wrong tax and Alca was required to pay the specific tax on the same goods for which the percentage tax had already been imposed and paid. Under the circumstances and allowing for the fact that errors of the revenue officials will not estop the Government from collecting the correct tax due it, still elementary principles of equity dictate that in the computation of the corresponding specific taxes that may still be due and owing from the petitioner taxpayer, she could be credited with the amounts she has paid previously to the government by way of percentage tax." (Emphasis supplied) 2. If the 4% contractor's tax or the 10% value-added tax withheld were not credited against the output tax liability of the taxpayer-contractor, the only remedy available to him is to file a claim for refund/tax credit, treating the tax withheld as erroneously tax paid in accordance with the provision of Section 204 of the Tax Code, as amended. dctai Very truly yours, JOSE U. ONG Commissioner of Internal Revenue