51. Commissioner v. BPI G.R. No.

178490 July 7, 2009 FACTS: In its final adjusted Corporate Annual Income Tax Return (ITR) for the taxable year ending on December 31, 1998, respondent BPI computed an overpayment to the BIR of income taxes in the amount of P33,947,101.00. BPI opted to carry over this 1998 excess tax credit to the succeeding taxable year. During the years 1999 and 2000, however, BPI ended up with net losses.

On April 3, 2001, BPI filed with petitioner CIR an administrative claim for refund of its excess creditable income tax for 1998 in the abovementioned amount. The CIR failed to act on the claim. Hence, BPI filed a petition for review before the CTA. The CTA ruled that since BPI had opted to carry over its 1998 excess tax credit to 1999 and 2000, it was barred from filing a claim for the refund of the same. The CA reversed the decision of the CTA. The CIR now alleges that the CA erred in holding that the irrevocability rule under Section 76 of the Tax Code does not bar BPI from asking for a refund. ISSUE: Whether BPI is entitled to a refund RULING: No. There are two options offered by Section 76 to a taxable corporation whose total quarterly income tax payments in a given taxable year exceed its total income tax due. These are the filing for a tax refund or the availing of a tax credit. These two options are alternative in nature. The choice of one precludes the other. The controlling factor for the operation of the irrevocability rule is that the taxpayer chose an option; and once it had already done so, it could no longer make another one. Consequently, 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 is irrelevant.

The choice by BPI of the option to carry over its 1998 excess income tax credit to succeeding taxable years, which it explicitly indicated in its 1998 ITR, is irrevocable. Hence, BPI is not entitled to a refund.

52. Commissioner v. PL Management G.R. No. 160949 April 4, 2011

FACTS: In its 1997 income tax return (ITR), the respondent PL Management International Philippines, Inc. expressly signified that it had a creditable withholding tax of P1,200,000.00 to be claimed as tax credit in taxable year 1998. In its 1998 ITR, it declared a net loss. Due to this, it was unable to claim the tax credit.

On April 12, 2000, it filed with the petitioner CIR a written claim for the refund of the said tax credit. However, the CIR did not act on the claim. The respondent then filed a petition for review in the CTA. The CTA denied the respondent's claim on the ground of prescription. The records reveal that respondent filed its ITR for taxable year 1997 on April 13, 1998 and its judicial claim for refund only on April 14, 2000 which is beyond the two-year prescriptive period. The CA held that the prescriptive period, which was not jurisdictional, might be suspended for reasons of equity. The CIR now contends that the ruling of the CA had no legal basis.

ISSUE: Whether PL Management is entitled to a refund RULING: No. There are two options offered by Section 76 to a taxable corporation whose total quarterly income tax payments in a given taxable year exceed its total income tax due. These are the filing for a tax refund or the availing of a tax credit. These two options are alternative in nature. The choice of one precludes the other. The controlling factor for the operation of the irrevocability rule is that the taxpayer chose an option; and once it had already done so, it could no longer make another one.

Inasmuch as the respondent already opted to carry over its unutilized creditable withholding tax to taxable year 1998, the carry-over could no longer be converted into a claim for tax refund because of the irrevocability rule. Thereby, the respondent became barred from claiming the refund. However, the respondent remained entitled to utilize that amount as tax credit in succeeding taxable years until fully exhausted. In this regard, prescription did not bar it from applying the amount as tax credit considering that there was no prescriptive period for the carrying over of the amount as tax credit in subsequent taxable years.

53. BPI v. Commissioner C.A.-G.R. SP No. 38304 April 14, 2000

FACTS: By virtue of the Articles of Merger approved by the SEC on July 1, 1985, petitioner BPI became the successor-in-interest of the Family Bank and Trust Company (FBTC) whose corporate existence ended on June 30, 1985. On April 10, 1986, the FBTC filed its final income tax return with the BIR showing a net loss and a refundable amount of P174,065.77, representing the creditable income tax withheld at source from January 1 to June 30, 1985. BPI filed a letter claim dated October 10, 1986 with the CIR asking for refund. However, the CIR refused on the ground

that the claim for tax refund had already prescribed. BPI filed on December 29, 1987 a petition for review with the CTA. The latter dismissed the petition. ISSUE: Whether BPIs claim for refund had already prescribed RULING: Yes. Section 78 of the Tax Code and Section 244 of the Revenue Regulations No. 2 required FBTC as a dissolving corporation to file its income tax return within 30 days after the cessation of its business or 30 days after the approval of the merger on July 1, 1985 or up to July 31, 1985. Under Section 292 of the Tax Code, an action to claim for refund of an excessively collected tax starts to run from the day in which a corporate taxpayer is required by law to file its final income tax return. Accordingly, petitioner BPI should have filed the action for the refund of the excessively collected income tax return within two years from July 31, 1985 which was July 31, 1987. Unfortunately, petitioner filed said action only on December 29, 1987-which was late by 151 days. Said action was, therefore, clearly time-barred.