G.R. No. 179260, April 02, 2014
COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. TEAM [PHILIPPINES] OPERATIONS CORPORATION [FORMERLY MIRANT (PHILS) OPERATIONS CORPORATION], Respondent.
D E C I S I O N
Respondent marked the appropriate box manifesting its intent to have the above overpayment refunded.
Sales/Revenues P922,569,303.00 Less: Cost of Sales/Services 938,543,252.00 Gross Income from Operation (P15,973,949.00) Add: Non–Operating & Other Income 74,995,982.00 Total Gross Income P 59,022,033.00 Less: Deductions 59,022,033.00 Taxable Income – Tax Rate 32% Income Tax NIL Less: Tax Credits/Payments Creditable Tax Withheld for the First Three Quarters Creditable Tax Withheld for the P 27,784,217.00 Fourth Quarter 41,778,195.00 Total Tax Credits/Payments P 69,652,412.00 Tax Payable/(Overpayment) (P69,562,412.00)
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. (Emphasis supplied)
x x x x
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, 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)
Sec. 2.58.3.Claim for Tax Credit or Refund
x x x x
(B) Claims for tax credit or refund of any creditable income tax which was deducted and withheld on income payments shall be given due course only when it is shown that the income payment has been declared as part of the gross income and the fact of withholding is established by a copy of the withholding tax statement duly issued by the payor to the payee showing the amount paid and the amount of tax withheld therefrom. (Emphasis supplied)
SEC. 76. Final Adjustment Return. — Every corporation liable to tax under Section 27 shall file a final adjustment return covering the total taxable income for the preceding calendar or fiscal year. If the sum of the quarterly tax payments made during the said taxable year is not equal to the total tax due on the entire taxable income of that year, the corporation shall either:
(A) Pay the balance of tax still due; or
(B) Carry–over the excess credit; or
(C) Be credited or refunded with the excess amount paid, as the case may be.
In case the corporation is entitled to a tax credit or refund of the excess estimated quarterly income taxes paid, the excess amount shown on its final adjustment return may be carried over and credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable years. Once the option to carry–over and apply the excess quarterly income tax against income tax due for the taxable quarters of the succeeding taxable years has been made, such option shall be considered irrevocable for that taxable period and no application for cash refund or issuance of a tax credit certificate shall be allowed therefor. (Emphasis supplied)
On the first ground, [petitioner] argues that [respondent] failed to present the various withholding agents/payors to testify on the validity of the contents of the Certificates of Creditable Tax Withheld at Source (“certificates”). Thus, the certificates presented by [respondent] are not valid. And even assuming that the certificates are valid, this Court cannot entertain the claim for refund/tax credit certificates because the certificates were not submitted to [petitioner].
[Petitioner’s] arguments are untenable since the certificates presented (Exhibits “R”, “S”, “T”, “U”, “V”, “W”, and “X”) were duly signed and prepared under penalties of perjury, the figures appearing therein are presumed to be true and correct. Thus, the testimony of the various agents/payors need not be presented to validate the authenticity of the certificates.
In addition, that [respondent] did not submit the certificates to the [petitioner] is of no moment. The administrative and judicial claim for refund and/or tax credit certificates must be filed within the two–year prescriptive period starting from the date of payment of the tax (Section 229, NIRC). In the instant case, [respondent] filed its judicial claim (after filing its administrative claim) precisely to preserve its right to claim. Otherwise, [respondent’s] right to the claim would have been barred. Considering that this [c]ourt had jurisdiction over the claim, [respondent] rightfully presented the certificates before this [c]ourt. Besides, any records that [petitioner] may have on the administrative claim would eventually be transmitted to this [c]ourt under Section 5(b), Rule 6 of the Revised Rules of the Court of (Tax) Appeals.
As for the second ground, this [c]ourt finds [petitioner’s] contention unmeritorious. The requirements for claiming a tax refund/tax credit certificates had been laid down in Citibank N.A. vs. Court of Appeals, G.R. No. 107434, October 10, 1997. Nowhere in the case cited is proof of actual remittance of the withheld taxes to the [petitioner] required before the taxpayer may claim for a tax refund/tax credit certificates.26 (Emphasis supplied)
1 Rollo, pp. 46–57; Penned by Associate Justice Caesar A. Casanova with Presiding Justice Ernesto D. Acosta, Associate Justices Juanito C. Castañeda, Jr., Lovell R. Bautista, Erlinda P. Uy and Olga Palanca–Enriquez concurring.
2 Id. at 59–61.
3 CTA in Division rollo, pp. 456–465 and 486–488, respectively; Chaired by Presiding Justice Ernesto D. Acosta with Associate Justices Lovell R. Bautista and Caesar A. Casanova as members.
4Rollo, p. 48.
5 CTA in Division rollo, pp. 456–465.
6 Id. at 462.
7 Id. at 486–488.
8 RA No. 1125, otherwise known as “An Act Creating the Court of Tax Appeals,” as amended by RA No. 9282, also known as “An Act Expanding the Jurisdiction of the Court of Tax Appeals (CTA), Elevating its Rank to the Level of a Collegiate Court with Special Jurisdiction and Enlarging its Membership, Amending for the Purpose Certain Sections of Republic Act No. 1125, As Amended, Otherwise Known As the Law Creating the Court of Tax Appeals, and for Other Purposes,” which took effect on 23 April 2004.
9Rollo, pp. 9–20.
10 Id. at 22–24.
11 Id. at 189–190. On 23 March 2009, this Court has resolved to note and grant respondent’s motion to change caption of this case to reflect the new corporate name of respondent to “Commissioner of Internal Revenue vs. Team (Philippines) Operations Corporation”. (Underscoring supplied)
12 Id. at 33.
13 548 Phil. 32, 36–37 (2007). See also Commissioner of Internal Revenue v. Far East Bank & Trust Company (now Bank of the Philippine Islands), G.R. No. 173854, 15 March 2010, 615 SCRA 417, 424.
14 Jose C. Vitug and Ernesto D. Acosta, Tax Law and Jurisprudence, 329 (2006) citing Gibb v. Collector, 107 Phil. 230 (1960).
15Calamba Steel Center, Inc. v. Commissioner on Internal Revenue, 497 Phil. 23, 32 (2005).
16 SUBJECT: Implementing Republic Act No. 8424, “An Act Amending The National Internal Revenue Code, as Amended” Relative to the Withholding on Income Subject to the Expanded Withholding Tax and Final Withholding Tax, Withholding on Income Tax on Compensation, Withholding of Creditable Value–Added Tax and Other Percentage Taxes.
17 Section 76 gives two options to a taxable corporation who is entitled to a tax credit or refund of the excess income taxes paid in a given taxable year, namely: (1) to carry–over the excess credit to the quarters of the succeeding taxable years; or (2) to apply for the issuance of a tax credit certificate or to claim a cash refund. However, once the option to carry over has been made, such shall be irrevocable for that taxable period and no application for cash refund or issuance of tax credit certificate shall be allowed. This is known as the irrevocability rule. (See Philam Asset Management, Inc. v. Commissioner of Internal Revenue, 514 Phil. 147, 162 2005).
It bears emphasis that the operation of the irrevocability rule not only removes from the taxpayer the option for cash refund or tax credit, after the taxpayer opts to carry–over its excess tax credit to the following taxable period, the question of whether or not it actually gets to apply said tax credit does not matter. Section 76 of the NIRC of 1997 is explicit in stating that once the option to carry over has been made, “no application for tax refund or issuance of a tax credit certificate shall be allowed therefor.” In other words, once the carry–over option is taken, actually or constructively, it becomes irrevocable. The aforesaid section mentioned no exception or qualification to the irrevocability rule. (See Commissioner of Internal Revenue v. Bank of the Philippine Islands, G.R. No. 178490, 7 July 2009, 592 SCRA 219, 231).
Furthermore, the last sentence of Section 76, which mentioned of the phrase “for that taxable period”, merely identifies the excess income tax, subject of the option, by referring to the taxable period when it was acquired by the taxpayer. Hence, the evident intent of the legislature, in adding the last sentence to Section 76 of the NIRC of 1997, as amended, is to keep the taxpayer from flip–flopping on its options, and avoid confusion and complication as regards said taxpayer’s excess tax credit. (See Commissioner of Internal Revenue v. Bank of the Philippine Islands, G.R. No. 178490, 7 July 2009, 592 SCRA 219, 231–232 and Commissioner of Internal Revenue v. PL Management International Philippines, Inc., G.R. No. 160949, 4 April 2011, 647 SCRA 72, 81).
Clearly, the corporation must signify in its Annual Corporate Adjustment Return (by marking the option box provided in the BIR form) its intention, whether to request a refund or claim an automatic tax credit for the succeeding taxable year. To reiterate, these remedies are in the alternative, and the choice of one precludes the other (See PBCom. v. Commissioner of Internal Revenue, 361 Phil. 916, 932 ).
18 See ACCRA Investments Corporation v. Court of Appeals, G.R. No. 96322, 20 December 1991, 204 SCRA 957, 963–964, where the Court ruled that the two–year prescriptive period commences to run on the date when the final adjustment return is filed, as that is the date when ACCRA could ascertain whether it made a profit or incurred losses in its business operation. The Court therein stated that, “there is the need to file a return first before a claim for refund can prosper inasmuch as the respondent Commissioner by his own rules and regulations mandates that the corporate taxpayer opting to ask for a refund must show in its final adjustment return the income it received from all sources and the amount of withholding taxes remitted by its withholding agents to the Bureau of Internal Revenue.”
19 The reckoning of the two–year prescriptive period for the filing of the claim for refund/tax credit certificates of excess creditable withholding tax/quarterly income tax payment starts from the date of filing of the annual income tax return [See ACCRA Investments Corporation v. Court of Appeals, et al., G.R. No. 96322, 20 December 1991, 204 SCRA 957; Commissioner of Internal Revenue v.TMX Sales, Inc., G.R No. 83736, 15 January 1992, 205 SCRA 184, 192] because it is only from this time that the refund is ascertained [See Com. of Internal Revenue v. Philamlife, 314 Phil. 349, 366 (1995)].
20 Taxable year 2004 being a leap year.
21 CTA in Division rollo, p. 463.
22 Id. at 463–464.
23 Id. at 461–462.
24 Toshiba Information Equipment (Phils.), Inc. v. Commissioner of Internal Revenue, G.R. No. 157594, 9 March 2010, 614 SCRA 526, 561 citing Commissioner of Internal Revenue v. Cebu Toyo Corporation, 491 Phil. 625, 640 (2005).
25Barcelon, Roxas Securities, Inc. (now known as UBP Securities, Inc.) v. Commissioner of Internal Revenue, 529 Phil. 785, 795 (2006) citing Sea–Land Service Inc. v. Court of Appeals, G.R. No. 122605, 30 April 2001, 357 SCRA 441, 445–446 and Commissioner of Internal Revenue v. Mitsubishi Metal Corp., G.R. No. 54908, 22 January 1990, 181 SCRA 214, 220.
26 CTA in Division rollo, pp. 487–488