CIR v.

BPI
G.R. No. 178490 July 7, 2009;
Chico-Nazario, J.
Doctrine:
1. 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.
2.

When circumstances show that a choice has been made by the

taxpayer to carry over the excess income tax as credit, it should be
respected; but when indubitable circumstances clearly show that
another choice, a tax refund, is in order, it should be granted. As to
which option the taxpayer chose is generally a matter of evidence.

the irrevocability of the option of BIR to carry over its 1998 excess tax credit
to only the 1999 taxable period; such that, when the 1999 taxable period
expired, the irrevocability of the option of BPI to carry over its excess tax
credit from 1998 also expired.
Issue:
1. What is the period captured by the irrevocability rule?
2. Whether or not the taxpayers failure to mark the option chosen is
fatal to whatever claim
Held:
1.

Technicalities and legalisms, however exalted, should not be

misused by the government to keep money not belonging to it and
thereby enrich itself at the expense of its law-abiding citizens.
Facts:
In filing its Corporate Income Tax Return for the Calendar Year 2000, BPI
carried over the excess tax credits from the previous years of 1997, 1998
and 1999. However, BPI failed to indicate in its ITR its choice of whether to
carry over its excess tax credits or to claim the refund of or issuance of a tax
credit certificate.
BPI filed with the Commissioner of Internal Revenue (CIR) an administrative
claim for refund. The CIR failed to act on the claim for tax refund of BPI.
Hence, BPI filed a Petition for Review before the CTA, whom denied the claim.
The CTA relied on the irrevocability rule laid down in Section 76 of the
National Internal Revenue Code (NIRC) of 1997, which states that once the
taxpayer opts to carry over and apply its excess income tax to succeeding
taxable years, its option shall be irrevocable for that taxable period and no
application for tax refund or issuance of a tax credit shall be allowed for the
same.
The Court of Appeals reversed the CTA decision stating that there was no
actual carrying over of the excess tax credit, given that BPI suffered a net
loss in 1999, and was not liable for any income tax for said taxable period,
against which the 1998 excess tax credit could have been applied.
The Court of Appeals further stated that even if Section 76 was to be
construed strictly and literally, the irrevocability rule would still not bar BPI
from seeking a tax refund of its 1998 excess tax credit despite previously
opting to carry over the same. The phrase for that taxable period qualified

The last sentence of Section 76 of the NIRC of 1997 reads: 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 tax refund
or issuance of a tax credit certificate shall be allowed therefor. 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.
In the present case, the excess income tax credit, which BPI opted to
carry over, was acquired by the said bank during the taxable year
1998. The option of BPI to carry over its 1998 excess income tax
credit is irrevocable; it cannot later on opt to apply for a refund of
the very same 1998 excess income tax credit.

2.

No. Failure to signify ones intention in the FAR does not mean
outright barring of a valid request for a refund, should one still
choose this option later on. The reason for requiring that a choice be
made in the FAR upon its filing is to ease tax administration (Philam
Asset Management, Inc. v. CIR G.R. No. 156637 and No. 162004, 14
December 2005). When circumstances show that a choice has been
made by the taxpayer to carry over the excess income tax as credit,
it should be respected; but when indubitable circumstances clearly
show that another choice a tax refund is in order, it should be
granted. Therefore, as to which option the taxpayer chose is
generally a matter of evidence.
Technicalities and legalisms, however exalted, should not be
misused by the government to keep money not belonging to it and
thereby enrich itself at the expense of its law-abiding citizens.

PHILIPPINE BANK OF COMMUNICATIONS v. CIR

G.R. No. 112024 January 28, 1999
Quisumbing, J.
Doctrine:
1. Any excess of the total quarterly payments over the actual
income tax computed in the adjustment or final corporate
income tax return, shall either (a) be refunded to the
corporation, or (b) may be credited against the estimated
quarterly income tax liabilities for the quarters of the
succeeding taxable year.
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 for a refund or
claim for an automatic tax credit for the succeeding taxable
year. To ease the administration of tax collection, these
remedies are in the alternative, and the choice of one
precludes the other.
2. Basic is the principle that taxes are the lifeblood of the
nation. Due process of law under the Constitution does not
require judicial proceedings in tax cases. This must
necessarily be so because it is upon taxation that the
government chiefly relies to obtain the means to carry on its
operations and it is of utmost importance that the modes
adopted to enforce the collection of taxes levied should be
summary and interfered with as little as possible.
3. A memorandum-circular of a bureau head could not operate
to vest a taxpayer with shield against judicial action for there
are no vested rights to speak of respecting a wrong
construction of the law.
Facts:
Petitioner reported a net loss in 1986 and thus declared no tax
payable. On 1987, petitioner requested the respondent, among
others, for a tax credit representing the overpayment of taxes in the
first and second quarters of 1985.

Thereafter, petitioner filed a claim for refund of creditable taxes

withheld by their lessees from property rentals in 1985 and in 1986.
Pending investigation, petitioner instituted a Petition for Review
before the Court of Tax Appeals (CTA).
CTA denied the request of petitioner for a tax refund or credit for
1985 on the ground that it was filed beyond the two-year
reglementary period provided for by law. The petitioners claim for
refund in 1986 was likewise denied on the assumption that it was
automatically credited by PBCom against its tax payment in the
succeeding year. MR was denied.
CA affirmed the decision in toto hence this petition.
Petitioner argues that the government is barred from asserting a
position contrary to its declared circular if it would result to injustice
to taxpayers. Citing ABS CBN Broadcasting Corporation vs. Court of
Tax Appeals (1981), petitioner claims that rulings or circulars
promulgated by the Commissioner of Internal Revenue have no
retroactive effect if it would be prejudicial to taxpayers.
Respondent argues that the two-year prescriptive period for filing tax
cases in court concerning income tax payments of Corporations is
reckoned from the date of filing the Final Adjusted Income Tax
Return, which is generally done on April 15 following the close of the
calendar year. Further, respondent Commissioner stresses that when
the petitioner filed the case before the CTA on November 18, 1988,
the same was filed beyond the time fixed by law, and such failure is
fatal to petitioners cause of action.
Issue:
Whether or not the Court of Appeals erred in denying the plea for tax
refund or tax credits on the ground of prescription
Held:
No. The rule states that the taxpayer may file a claim for refund or
credit with the Commissioner of Internal Revenue, within two (2)
years after payment of tax, before any suit in CTA is commenced.
The two-year prescriptive period provided, should be computed from
the time of filing the Adjustment Return and final payment of the tax
for the year.

Basic is the principle that taxes are the lifeblood of the nation. Due
process of law under the Constitution does not require judicial
proceedings in tax cases. This must necessarily be so because it is
upon taxation that the government chiefly relies to obtain the means
to carry on its operations and it is of utmost importance that the
modes adopted to enforce the collection of taxes levied should be
summary and interfered with as little as possible.
From the same perspective, claims for refund or tax credit should be
exercised within the time fixed by law because the BIR being an
administrative body enforced to collect taxes, its functions should
not be unduly delayed or hampered by incidental matters.
Any excess of the total quarterly payments over the actual income
tax computed in the adjustment or final corporate income tax return,
shall either (a) be refunded to the corporation, or (b) may be credited
against the estimated quarterly income tax liabilities for the quarters
of the succeeding taxable year.
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 for a refund or claim for an automatic
tax credit for the succeeding taxable year. To ease the administration
of tax collection, these remedies are in the alternative, and the
choice of one precludes the other.
A memorandum-circular of a bureau head could not operate to vest a
taxpayer with shield against judicial action. For there are no vested
rights to speak of respecting a wrong construction of the law by the
administrative officials and such wrong interpretation could not place
the Government in estoppel to correct or overrule the same [Tan
Guan vs. Court of Tax Appeals, 19 SCRA 903 (1967)].

Philam Asset Mgt vs CIR (477 SCRA 761)

Doctrine: Under Section 76 of the National Internal Revenue Code,
a taxable corporation with excess quarterly income tax payments
may apply for either a tax refund or a tax credit, but not both. The
choice of one precludes the other. Failure to indicate a choice,
however, will not bar a valid request for a refund, should this option
be chosen by the taxpayer later on.
FACTS: In April 1998, petitioner filed its 1997 annual ITR with the
BIR reflecting a net loss of P2.6 million. Consequently, it was unable
to use its CWTs amounting to P522,092 which arose out of
professional fees. It filed a claim for refund but the same was left
unacted by the BIR. Thus, it filed a petition for review before the CTA
which denied the same.
In April 1999, petitioner filed its 1998 annual ITR and declared a net
loss of P1.5 million. Its unused CWT for that year amounted to
P459,756. In the 2000, petitioner declared in its 1999 annual ITR tax
due amounting to P80,042 and unused CWT amounting to P915,995
plus the P459,756 1998 CWTs.
In November 2000, petitioner filed a claim for tax refund with respect
to the 1998 CWTs amounting to P459,756. No action was done by the
BIR, thus a Petition for Review was filed before the CTA. Such petition
was denied by the CA.
ISSUE:
1. WON the failure of the petitioner to indicate in its annual ITR the
option to refund its creditable withholding tax is fatal to its claim
for refund?
2. WON petitioner is entitled to a refund of its creditable taxes
withheld for taxable years 1997 and 1998?
RULING: (Section 76 offers two options to a taxable corporation,
whose total quarterly income tax payments in a given taxable year,
exceeds its total income tax due. These options are (1) filing for a
tax refund or (2) availing of a tax credit. The first option means that
any tax on income that is paid in excess of the amount due the
government may be refunded, provided that a taxpayer properly

applies for the refund. The second option works by applying the
refundable amount, as shown on the FAR of a given taxable year,
against the estimated quarterly income tax liabilities of the
succeeding taxable year.
These two options under Section 76 are alternative in nature. The
choice of one precludes the other. Indeed, in Philippine Bank of
Communications v. Commissioner of Internal Revenue, the Court
ruled that a corporation must signify its intention -- whether to
request a tax refund or claim a tax credit -- by marking the
corresponding option box provided in the FAR. While a taxpayer is
required to mark its choice in the form provided by the BIR, this
requirement is only for the purpose of facilitating tax collection. One
cannot get a tax refund and a tax credit at the same time for the
same excess income taxes paid.
1. No, it is not. Failure to signify ones intention in the FAR
does not mean outright barring of a valid request for a
refund, should one still choose this option later on. A tax
credit should be construed merely as an alternative remedy to a tax
refund under Section 76, subject to prior verification and approval by
respondent.
The reason for requiring that a choice be made in the FAR upon its
filing is to ease tax administration, particularly the self-assessment
and collection aspects. A taxpayer that makes a choice expresses
certainty or preference and thus demonstrates clear diligence.
Conversely, a taxpayer that makes no choice expresses uncertainty
or lack of preference and hence shows simple negligence or plain
oversight.
In the present case, although petitioner did not mark the refund box
in its 1997 FAR, neither did it perform any act indicating that it chose
a tax credit. On the contrary, it filed on September 11, 1998, an
administrative claim for the refund of its excess taxes withheld in
1997. In none of its quarterly returns for 1998 did it apply the excess
creditable taxes. Under these circumstances, petitioner is entitled to
a tax refund of its 1997 excess tax credits in the amount of
P522,092.

2. Petitioner is entitled to tax refund for the 1997 CWTs but

not for the 1998. For the 1997, refer to No.1 above.
The carry-over option under Section 76 is permissive. A corporation
that is entitled to a tax refund or a tax credit for excess payment of
quarterly income taxes may carry over and credit the excess income
taxes paid in a given taxable year against the estimated income tax
liabilities of the succeeding quarters. Once chosen, the carry-over
option shall be considered irrevocable for that taxable period, and no
application for a tax refund or issuance of a tax credit certificate shall
then be allowed.
According to petitioner, it neither chose nor marked the carry-over
option box in its 1998 FAR. As this option was not chosen, it seems
that there is nothing that can be considered irrevocable. In other
words, petitioner argues that it is still entitled to a refund of its 1998
excess income tax payments. The court disagreed and considered
the subsequent acts of petitioner, which revealed that it has
effectively chosen the carry-over option.
Section 76 remains clear and unequivocal. Once the carry-over
option is taken, actually or constructively, it becomes irrevocable.
Petitioner has chosen that option for its 1998 creditable withholding
taxes. Thus, it is no longer entitled to a tax refund of P459,756,
which corresponds to its 1998 excess tax credit. Nonetheless, the
amount will not be forfeited in the governments favor, because it
may be claimed by petitioner as tax credits in the succeeding
taxable years.

Commissioner Of Internal Revenue vs. Team [Philippines]

Operations Corporation [Formerly Mirant (Phils) Operations
Corporation]
G.R. No. 179260
April 2, 2014
J. Perez
DOCTRINES
Requirements to be entitled to a refund or tax credit:
(1) the claim is filed with the Commissioner of Internal Revenue
within the two-year period from the date of payment of the tax;
(2) it is shown on the return of the recipient that the income payment
received was declared as part of the gross income; and
(3) the fact of withholding is established by a copy of a statement
duly issued by the payor to the payee showing the amount paid and
the amount of the tax withheld therefrom.
Irrevocability Rule
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.
Hornbook Doctrine
The findings and conclusions of the CTA are accorded the highest
respect and will not be lightly set aside.
FACTS:
This is a Petition for Review on Certiorari by petitioner Commissioner
of Internal Revenue (CIR) seeking to reverse and set aside the
Decision and Resolution of the Court of Tax Appeals (CTA) En Banc in
which affirmed in toto the Decision and Resolution of the First
Division of the CTA (CTA in Division) granting Team (Philippines)
Operations Corporations (Team) claim for refund in the amount
of P69,562,412.00 representing unutilized tax credits for taxable
period ending 31 December 2001.

Respondent Team on 15April2012 filed its 2001 income tax return

with the Bureau of Internal Revenue (BIR), reporting an overpayment
in the amount of Php69,562,412.00 arising from unutilized credit
taxes withheld. Team marked the appropriate boxes manifesting its
intent to have the said overpayment refunded. Team also filed on
27March2003 with BIR a letter requesting for the refund or issuance
of a tax credit certificate in connection herewith.
CIR on its petition relies solely on the ground that CTA gravely erred
on a question of law in affirming the CTA in Divisions ruling despite
not being supported by the evidence on record.
ISSUE/s:
1. Is the respondent entitled to a refund?
2. Is the CTA correct in affirming the ruling of CTA in Division?
RULING:
1. YES, the respondent is entitled to a refund.
There are three essential conditions for the grant of a claim for
refund of creditable withholding income tax, to wit: (1) the claim is
filed with the Commissioner of Internal Revenue within the two-year
period from the date of payment of the tax; (2) it is shown on the
return of the recipient that the income payment received was
declared as part of the gross income; and (3) the fact of withholding
is established by a copy of a statement duly issued by the payor to
the payee showing the amount paid and the amount of the tax
withheld therefrom. The first requisite is provided under Sections
204(C) and 229 of the National Internal Revenue Code (NIRC) of
1997. The second and third requisites are anchored on Section
2.58.3(B) of Revenue Regulation No. 2-98.
In addition, strict observance to the irrevocability rule under
Section 76 of NIRC of 1997 is required. The rule provides: 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.
In this case, it is found undisputed that Team complied with the
above requisites. Counting from 15April2002, Team had until
14April2004 to file for a refund and the 27March2003 claim falls
within said prescriptive period. Team also was able to present various
certificated of creditable tax withheld at source for year 2001. Lastly,
Team opted for a refund as evinced by the marked boxes in its
return.
2. YES, the CTA was correct.
The Hornbook Doctrine provides that the findings and conclusions
of the CTA are accorded the highest respect and will not be lightly set
aside. Consequently, its conclusions will not be overturned unless
there has been an abuse or improvident exercise of authority. Its
findings can only be disturbed on appeal when their findings are not
supported by substantial evidence or the showing of gross error or
abuse.
In the instant case, there was no abusive or improvident exercise
of authority on the part of the CTA in Division. There was also no
showing of gross error or abuse and the findings are supported by
substantial evidence. Hence, there was no cogent reason to disturb
the same.

ACCRA Investments Corporation v. Court of Appeals

Facts: ACCRA INVESTMENTS (ACCRAIN) is a domestic corporation
engaged in the business of real estate investment and management
consultancy.
ACCRAIN filed with the Bureau of Internal Revenue its
annual corporate income tax return for the calendar year reporting a
net loss of P2,957,142.00 on April 15, 1982.
ACCRAIN declared as creditable all taxes withheld at source by
various withholding agents which withholding agents aforestated
paid and remitted the above amounts representing taxes on rental,
commission and consultancy income of the petitioner corporation to
the Bureau of Internal Revenue.
ACCRAIN filed a claim for refund. Pending action of the respondent
Commissioner on its claim for refund, the petitioner corporation, on
April 13, 1984, filed a petition for review with the respondent Court of
Tax Appeals.
The CTA dismissed the case for being filed out of time and the MR
was likewise denied.
A petition for review was submitted to the SC and the SC referred the
case to the CA.
The CA affirmed decision of the CTA.
Issue: Whether or not the claim for refund was filed on time
Held: YES. Crucial in the resolution of the instant case is the
interpretation of the phraseology "from the date of payment of the
tax" in the context of Section 230 on Recovery of tax erroneously or
illegally collected.
A correct application of the Gibbs case according to the court is that
a taxpayer whose income is withheld at source will be deemed to
have paid his tax liability at the end of the tax year. It is from when
the same falls due at the his latter date then, or when the two-year
prescriptive period under Section 306 of the Revenue Code starts to

run with respect to payments effected through the withholding tax

system..
The aforequoted ruling presents two alternative reckoning dates, (1)
the end of the tax year; and (2) when the tax liability falls due. In the
instant case, it is undisputed that the petitioner corporation's
withholding agents had paid the corresponding taxes withheld at
source to the Bureau of Internal Revenue from February to December
1981. ACCRAIN is not claiming a refund of overpaid withholding
taxes, per se. It is asking for the recovery the refundable or
creditable amount determined upon the petitioner corporation's filing
of the its final adjustment tax return on or before 15 April 1982 when
its tax liability for the year 1981 fell due. The petitioner corporation's
taxable year is on a calendar year basis, hence, with respect to the
1981 taxable year, ACCRAIN had until 15 April 1982 within which to
file its final adjustment return. The petitioner corporation duly
complied with this requirement
Anent claims for refund, section 8 of Revenue Regulation No. 13-78
issued by the Bureau of Internal Revenue requires that:
Section 8. Claims for tax credit or refund Claims for tax credit or
refund of income tax deducted and withheld on income payments
shall be given due course only when it is shown on the return that
the income payment received was declared as part of the gross
income and the fact of withholding is established by a copy of the
statement, duly issued by the payor to the payee (BIR Form No.
1743-A) showing the amount paid and the amount of tax withheld
therefrom.
The term "return" in the case of domestic corporations like ACCRAIN
refers to the final adjustment return. It bears emphasis at this point
that the rationale in computing the two-year prescriptive period with
respect to the petitioner corporation's claim for refund from the time
it filed its final adjustment return is the fact that it was only then that
ACCRAIN could ascertain whether it made profits or incurred losses in
its business operations. The "date of payment", therefore, in
ACCRAIN's case was when its tax liability, if any, fell due upon its
filing of its final adjustment return on April 15, 1982.