Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&view=article&id=82937:56823&catid=1582&Itemid=566
Timestamp: 2019-04-25 01:52:01+00:00

Document:
G.R. No. 179260, April 02, 2014 - COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. TEAM [PHILIPPINES] OPERATIONS CORPORATION [FORMERLY MIRANT (PHILS) OPERATIONS CORPORATION], Respondent.
COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. TEAM [PHILIPPINES] OPERATIONS CORPORATION [FORMERLY MIRANT (PHILS) OPERATIONS CORPORATION], Respondent.
Before the Court is a Petition for Review on Certiorari seeking to reverse and set aside the 19 June 2007 Decision1 and the 13 August 2007 Resolution2 of the Court of Tax Appeals (CTA) En Banc in C.T.A. EB No. 224 which affirmed in toto the Decision and Resolution dated 4 August 2006 and 8 November 2006, respectively, of the First Division of the CTA (CTA in Division)3 in C.T.A. Case No. 6623, granting Team (Philippines) Operations Corporation’s (respondent) claim for refund in the amount of P69,562,412.00 representing unutilized tax credits for taxable period ending 31 December 2001.
Petitioner is the duly appointed Commissioner of Internal Revenue, charged with the duty of enforcing the provisions of the National Internal Revenue Code (NIRC), including the power to decide and approve administrative claims for refund.
Respondent, on the other hand, is a corporation duly organized and existing under and virtue of the laws of the Republic of the Philippines, with its principal office at Bo. Ibabang Pulo, Pagbilao Grande Island, Pagbilao, Quezon Province. It is primarily engaged in the business of designing, constructing, erecting, assembling, commissioning, operating, maintaining, rehabilitating and managing gas turbine and other power generating plants and related facilities for the conversion into electricity of coal, distillate and other fuels provided by and under contract with the Government of the Republic of the Philippines, or any subdivision, instrumentality or agency thereof, or any government owned or controlled corporations or other entity engaged in the development, supply or distribution of energy.
On 30 April 2001, respondent secured from the Securities and Exchange Commission (SEC) its Certificate of Filing of Amended Articles of Incorporation, reflecting its change of name from Southern Energy Asia–Pacific Operations (Phils.), Inc. to Mirant (Philippines) Operations Corporation. Prior to its use of the name Southern Energy Asia–Pacific Operations (Phils.), Inc., respondent operated under the corporate names CEPA Operations (Philippines) Corporation, CEPA Tileman Project Management Corporation and Hopewell Tileman Project Management Corporation. The changes in respondent’s corporate name from CEPA Operations (Philippines) Corp. to Southern Energy Asia–Pacific Operations (Phils.) Inc., from CEPA Tileman Project Management Corporation to CEPA Operations (Philippines) Corp. and from Hopewell Tileman Project Management Corporation to CEPA Tileman Project Management Corp., were approved by the SEC on 24 November 2000, 21 November 1997 and 29 July 1994, respectively.
Under its original corporate name, Hopewell Tileman Project Management Corp., respondent was registered with the Bureau of Internal Revenue (BIR) with Tax Identification No. 003–057–796 as shown by its original BIR Certificate of Registration issued on 29 March 1994.
In line with its primary purpose, respondent entered into Operating and Management Agreements with Mirant Pagbilao Corporation (MPC) [formerly Southern Energy Quezon, Inc.] and Mirant Sual Corporation (MSC) [formerly Southern Energy Pangasinan, Inc.] to provide MPC and MSC with operation and maintenance services in connection with the operation, construction and commissioning of the coal–fired thermal power stations situated in Pagbilao, Quezon and Sual, Pangasinan, respectively. Payments received by respondent from MPC and MSC relative to the said agreements were allegedly subjected to creditable withholding taxes.
Respondent marked the appropriate box manifesting its intent to have the above overpayment refunded.
On 19 March 2003, pursuant to Section 76 in relation to Section 204 of the NIRC of 1997, as amended, respondent filed with the BIR, a letter requesting for the refund or issuance of a tax credit certificate corresponding to its reported unutilized creditable withholding taxes for taxable year 2001 in the amount of P69,562,412.00.
Thereafter, on 27 March 2003, respondent filed a Petition for Review before the CTA, in order to toll the running of the two–year prescriptive period provided under Section 229 of the NIRC of 1997, as amended, which was docketed as C.T.A. Case No. 6623.
In a Decision dated 4 August 2006,5 the CTA in Division granted respondent’s Petition and ordered petitioner to refund or issue a tax credit certificate in favor of the former the entire amount of P69,562,412.00, representing its unutilized tax credits for the taxable year ended 31 December 2001.
Aggrieved, petitioner appealed to the CTA En Banc by filing a Petition for Review pursuant to Section 18 of Republic Act (RA) No. 1125, as amended by RA No. 92828 on 6 December 2006, docketed as CTA EB No. 224.
The CTA En Banc affirmed in toto both the aforesaid Decision and Resolution rendered by the CTA in Division in CTA Case No. 6623, pronouncing that there was no cogent reason to disturb the findings and conclusion spelled out therein. It revealed that what the petition seeks to accomplish was for the CTA En Banc to view and appreciate the evidence in another perspective, which unfortunately had already been considered and passed upon correctly by the CTA in Division.
The core issue for the Court’s resolution is whether or not respondent has established its entitlement for the refund or issuance of a tax credit certificate in its favor the entire amount of P69,562,412.00 representing its unutilized tax credits for taxable year ended 31 December 2001, pursuant to the applicable provisions of the NIRC of 1997, as amended.
In order to be entitled to a refund claim or issuance of a tax credit certificate representing any excess or unutilized creditable withholding tax, it must be shown that the claimant has complied with the essential basic conditions set forth under pertinent provisions of law and existing jurisprudential declarations.
In Banco Filipino Savings and Mortgage Bank v. Court of Appeals,13 this Court had previously articulated that 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;14 (2) it is shown on the return of the recipient that the income payment received was declared as part of the gross income;15 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.
(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.
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.
(C) Be credited or refunded with the excess amount paid, as the case may be.
Applying the foregoing discussion to the present case, we find that respondent had indeed complied with the abovementioned requirements.
Here, it is undisputed that the claim for refund was filed within the two–year prescriptive period prescribed under Section 22918 of the NIRC of 1997, as amended. Respondent filed19 its income tax return for taxable year 2001 on 15 April 2002. Counting from said date, it indeed had until 14 April 200420 within which to file its claim for refund or issuance of tax credit certificate in its favor both administratively and judicially. Thus, petitioner’s administrative claim and petition for review filed on 19 March 2003 and 27 March 2003, respectively, fell within the abovementioned prescriptive period.
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.
In the same vein, this Court finds no abusive or improvident exercise of authority on the part of the CTA in Division. Since there is no showing of gross error or abuse on the part of the CTA in Division, and its findings are supported by substantial evidence which were thoroughly considered during the trial, there is no cogent reason to disturb its findings and conclusions.
All told, respondent complied with all the legal requirements and it is entitled, as it opted, to a refund of its excess creditable withholding tax for the taxable year 2001 in the amount of P69,562,412.00.
WHEREFORE, the petition is hereby DENIED for lack of merit. Accordingly, the Decision dated 19 June 2007 and Resolution dated 13 August 2007 of the CTA En Banc are hereby AFFIRMED. No costs.
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.
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.
5 CTA in Division rollo, pp. 456–465.
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.
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 ).
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.
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.

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