Sec. 76 NIRC Taxation Case Digest
Sec. 76 NIRC Taxation Case Digest
Sec. 76 NIRC Taxation Case Digest
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.
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.
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.
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)].
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.
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.