Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&amp;view=article&amp;id=50186:gr-176290-2007&amp;catid=1496&amp;Itemid=566
Timestamp: 2019-04-24 22:53:27+00:00

Document:
SYSTRA PHILIPPINES, INC., Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.
This resolves petitioner Systra Philippines, Inc.'s (1) motion for leave to file a second motion for reconsideration and (2) second motion for reconsideration of the Court's March 28, 2007 resolution.
(c) failure to give an explanation why service was not done personally as required by Section 11, Rule 13 in relation to Section 3, Rule 45 and Section 5(d), Rule 56 of the Rules of Court.
On July 5, 2007, petitioner's motion for reconsideration was denied with finality as there was no compelling reason to warrant a modification of the March 28, 2007 resolution. Thus, the present motions.
Petitioner claims that this Court has granted second and even third motions for reconsideration for "extraordinarily persuasive reasons." It avers that this Court should look into the importance of the issues involved in deciding whether leave to file a second motion for reconsideration should be granted or not. It prays that its petition should not be denied on the basis of procedural lapses alone and points out that the substantial amount involved in the petition justifies relaxation of technical rules. It asserts that there is an important legal issue involved in this case: whether the exercise of the option to carry over excess income tax credits under Section 76 of the National Internal Revenue Code of 1997, as amended (Tax Code) bars a taxpayer from claiming the excess tax credits for refund even if the amount remains unutilized in the succeeding taxable year. Finally, it contends that the assailed CTA decision was contradictory to the decisions of the Court of Appeals (CA)4 in Bank of the Philippine Islands v. Commissioner of Internal Revenue5 and Raytheon Ebasco Overseas Ltd. Philippine Branch v. Commissioner of Internal Revenue6 which involved the same issue as that in this case. According to petitioner, in view of those CA decisions, it is unjust to deprive it of the right to claim a refund.
On April 16, 2001, petitioner filed with the [Bureau of Internal Revenue (BIR)] its Annual Income Tax Return ("ITR") for the taxable year ended December 31, 2000 declaring revenues in the amount of [P18,252,719] the bulk of which consists of income from management consultancy services rendered to the Philippine Branch of Group Systra SA, France. Subjecting said income from consultancy services of petitioner to 5% creditable withholding tax, a total amount of [P4,703,019] was declared by petitioner as creditable taxes withheld for the taxable year 2000.
Petitioner opted to carry over the said excess tax credit to the succeeding taxable year 2001.
Petitioner indicated in the 2001 ITR the option "To be issued a Tax Credit Certificate" relative to its tax overpayments.
On August 9, 2002, petitioner instituted a claim for refund or issuance of a tax credit certificate with the BIR of its unutilized creditable withholding taxes in the amount of P5,342,246.00 as of December 31, 2001."
Petitioner moved for reconsideration but it was denied. Petitioner elevated the case to the CTA en banc which rendered the assailed decision. Thus, this petition.
As already stated, petitioner formulated the issue in this petition as follows: whether the exercise of the option to carry-over excess income tax credits under Section 76 of the Tax Code bars a taxpayer from claiming the excess tax credits for refund even if the amount remains unutilized in the succeeding taxable year. Petitioner contends that it does not.
A corporation entitled to a tax credit or refund of the excess estimated quarterly income taxes paid has two options: (1) to carry over the excess credit or (2) to apply for the issuance of a tax credit certificate or to claim a cash refund. If the option to carry over the excess credit is exercised, the same shall be irrevocable for that taxable period.
This is known as the irrevocability rule and is embodied in the last sentence of Section 76 of the Tax Code. The phrase "such option shall be considered irrevocable for that taxable period" means that the option to carry over the excess tax credits of a particular taxable year can no longer be revoked.
In this case, it was in the year 2000 that petitioner derived excess tax credits and exercised the irrevocable option to carry them over as tax credits for the next taxable year. Under Section 76 of the Tax Code, a claim for refund of such excess credits can no longer be made. The excess credits will only be applied "against income tax due for the taxable quarters of the succeeding taxable years."
In case the corporation is entitled to a tax credit or refund of the excess estimated quarterly income taxes paid, the refundable amount shown on its final adjustment return may be credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable year.
Under Section 69 of the 1977 Tax Code, there was no irrevocability rule. Instead of claiming a refund, the excess tax credits could be "credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable year," that is, the immediately following year only. In contrast, Section 76 of the present Tax Code formulates an irrevocability rule which stresses and fortifies the nature of the remedies or options as alternative, not cumulative. It also provides that the excess tax credits "may be carried over and credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable years" until fully utilized.
WHEREFORE, petitioner's motion for leave to file a second motion for reconsideration and the second motion for reconsideration are hereby DENIED.
No further pleadings shall be entertained. Let entry of judgment be made in due course.
2 Integrated Bar of the Philippines.
4 Under RA 9282 which took effect on April 23, 2004, decisions of the CTA are no longer appealable to the CA but directly to this Court. See also note 17.
5 CA-G.R. SP No. 77655, 29 April 2005.
6 CA-G.R. SP No. 80296, 11 April 2005.
9 Section 2, Rule 52 in relation to Section 4, Rule 56 of the Rules of Court.
10 324 Phil. 483 (1996).
12 Santos v. Court of Appeals, G.R. No. 92862, 04 July 1991, 198 SCRA 806.
13 Spouses Galang v. Court of Appeals, G.R. No. 76221, 29 July 1991, 199 SCRA 683.
16 The fact that the amount involved is claimed to be substantial is neither a compelling nor an extraordinarily persuasive reason. It is a subjective standard. What may be a pittance for one may be a fortune for another. And all properties, substantial or not, deserve protection under the laws.
17 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.
18 Republic of the Philippines v. Maj. Gen. Garcia, G.R. No. 167741, 17 July 2007.
19 Supra note 1, pp. 41-43.
20 Philippine Bank of Communications v. Commissioner of Internal Revenue, 361 Phil. 916 (1999).
21 De Leon, Hector, The National Internal Revenue Code, Seventh Edition, 2000, p. 430.
22 G.R. NOS. 156637/162004, 14 December 2005, 477 SCRA 761.
23 Where, however, the corporation permanently ceases its operations before full utilization of the tax credits it opted to carry over, it may then be allowed to claim the refund of the remaining tax credits. In such a case, the remaining tax credits can no longer be carried over and the irrevocability rule ceases to apply. Cessante ratione legis, cessat ipse lex.

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