Metropolitan Bank & Trust Company v.
CIR Final Adjustment Return or the Annual Income Tax Return was filed,
G.R. No. 182582
April 17, 2017
FACTS:
Luzon Hydro Corporation (LHC) borrowed $123,780,000 from
Solidbank Corporation. Pursuant to their contract, LHC is bound to
shoulder all the corresponding internal revenue taxes required by law
to be deducted or withheld on the said loan as well as the filing of tax
returns and remittance of the taxes withheld to the BIR.
Later on, Metrobank acquired Solidbank and thus, assumed the
latter’s rights and obligations under the said contract. LHC paid
Metrobank total amounts of $1.5M and $1.3M. LHC withheld and paid
to the BIR 10% final tax on the interest portions of the aforesaid
payments. LHC remitted a total of $106K or Php5.2M. Metrobank
mistakenly remitted the aforesaid amounts to the BIR as well when they
were inadvertently included in its own Monthly Remittance Returns of
Final Income Taxes Withheld for the months of March 2001 and
October 2001. Thus, on December 27, 2002, it filed a letter to the BIR
requesting for the refund thereof. CIR denied the request. CTA En Banc
ruled that the refund has already prescribed, as it was already beyond
the 2-year prescriptive period.
ISSUE:
Whether or not Metrobank is entitled to a refund?
HELD:
No. Metrobank's final withholding tax liability in March 2001 was
remitted to the BIR on April 25, 2001. As such, it only had until April
25, 2003 to file its administrative and judicial claims for refund.
However, while Metrobank's administrative claim was filed on
December 27, 2002, its corresponding judicial claim was only filed on
September 10, 2003. Therefore, Metrobank's claim for refund had
clearly prescribed.
As gleaned from the above, a claimant for refund must:
1. File an administrative claim for refund before the CIR
2. File an judicial claim from the CTA
Both must be filed within 2 years. The claimant is allowed to file the
latter even without waiting for the resolution of the former in order to
prevent the forfeiture of its claim through prescription. In this regard,
case law states that "the primary purpose of filing an administrative
claim [is] to serve as a notice of warning to the CIR that court action
would follow unless the tax or penalty alleged to have been collected
erroneously or illegally is refunded. This is reckoned from the time the
since it is only at that time that it would be possible to determine whether
the corporate taxpayer had paid an amount exceeding its annual
income tax liability.
CASE DOCTRINE:
Q: What are the available remedies of a claimant for refund?
A: Sections 204 and 229 provides that a claimant can:
1. File an administrative claim for refund before the CIR
2. File an judicial claim from the CTA
Both must be filed within 2 years.
(Metropolitan Bank & Trust Company v. CIR, G.R. No. 182582,
April 17, 2017)
Belle Corporation v. CIR
G.R. No. 181298
January 10, 2011
FACTS:
Petitioner Belle, a domestic corporation engaged in the real
estate and property business, filed with the BIR its income tax return
(ITR) for the first quarter of 1997. Subsequently, it filed with the BIR its
second quarter ITR, declaring an overpayment of taxes. In view of the
overpayment, no taxes were paid for the second and third quarters of
1997. Instead of claiming the amount as a tax refund, petitioner decided
to apply it as a tax credit to the succeeding taxable year by marking the
tax credit option box in its 1997 ITR. On April 12, 200, petitioner filed
with the BIR an administrative claim for refund its unutilized excess
income tax payments for the taxable year 1997. Notwithstanding the
filing of the administrative claim for refund, petitioner carried over the
excess amount to the taxable year 1999. Due to the inaction of the
respondent CIR and in order to toll the running of the two-year
prescriptive period, petitioner appealed its claim for refund of unutilized
excess income tax payments for the taxable year 1997 via petition for
review. The CTA denied the petition.
ISSUE:
Whether petitioner is entitled to a refund of its excess income
tax payments for the taxable year 1997
RULING:
No. In case the corporation is entitled to a refund of the excess
estimated quarterly income taxes paid, the refundable amount shown
on its final adjustment return may be credited against the quarterly
income tax liabilities for the taxable quarters of the succeeding taxable
years. 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 tax credit certificate shall be allowed therefor.
Under Section 76 of the NIRC, in case of overpayment of income taxes,
the remedies are still the same; and the availment of one remedy still
precludes the other. The carry-over of excess income tax payments is
no longer limited to the succeeding taxable year. Unutilized excess
income tax payments may now be accrued over to the succeeding
taxable years until fully realized.
In this case, since the petitioner carried over its 1997 excess
income tax payments to the succeeding taxable year 1998, it may no
longer file a claim for refund of unutilized tax credits for taxable year
1997. Once the option to carry over excess income tax payments to the
succeeding years has been made, it becomes irrevocable. Thus,
applications for refund of the unutilized excess income tax payments
may no longer be allowed.
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.
“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 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:
Whether or not BPI is entitled for tax refund.
Ruling:
No. BPI was unable to discharge the burden of proof necessary
for the grant of a refund. BPI expressly indicated in its ITR for 1998 that
it was carrying over, instead of refunding, the excess income tax it paid
during the said taxable year. BPI consistently reported the said amount
in its ITRs for 1999 and 2000 as credit to be applied to any tax liability
the bank may incur; only, no such opportunity arose because it suffered
a net loss in 1999 and incurred zero tax liability in 2000.
 Also, 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.
Winebrenner & Iñigo Insurance Brokers, Inc. v. CIR
(G.R. No. 206526, January 28, 2015)
RE: Proving that no carry-over has been made does not absolutely
require the presentation of the quarterly ITRs
FACTS:
April 7, 2006, petitioner applied for the administrative tax
credit/refund claiming entitlement to the refund of its excess or
unutilized CWT for CY 2003.
When CTA initially granted partially the claim for refund, CIR
moved for reconsideration, praying for the denial of the entire amount
of refund because petitioner failed to present the quarterly Income Tax
Returns (ITRs) for CY 2004. To the CIR, the presentation of the 2004
quarterly ITRs was indispensable in proving petitioner's entitlement to
the claimed amount because it would prove that no carry-over of
unutilized and excess CWT for the four (4) quarters of CY 2003 to the
succeeding four (4) quarters of CY 2004 was made. In the absence of
said ITRs, no refund could be granted in accordance with the
irrevocability rule under Section 76 of the NIRC.
CTA then denied the entire claim of petitioner. It reasoned out that
petitioner should have presented as evidence its first, second and third
quarterly ITRs for the year 2004 to prove that the unutilized CWT being
claimed had not been carried over to the succeeding quarters. It stated
that before a cash refund or an issuance of tax credit certificate for
unutilized excess tax credits could be granted, it was essential for
petitioner to establish and prove, by presenting the quarterly ITRs of
the succeeding years, that the excess CWT was not carried over to the
succeeding taxable quarters considering that the option to carry over in
the succeeding taxable quarters could not be modified in the final
adjustment returns (FAR). Because petitioner did not present the first,
second and third quarterly ITRs for CY 2004, despite having offered
and submitted the Annual ITR/FAR for the same year, the CTA-En
Banc stated that the petitioner failed to discharge its burden, hence, no
refund could be granted
ISSUE:
Whether the submission and presentation of the quarterly ITRs of the
succeeding quarters of a taxable year is indispensable in a claim for
refund
RULING:
The logic in not requiring quarterly ITRs of the succeeding taxable years
to be presented remains true to this day. What Section 76 requires, just
like in all civil cases, is to prove the prima facie entitlement to a claim,
including the fact of not having carried over the excess credits to the
subsequent quarters or taxable year. It does not say that to prove such
a fact, succeeding quarterly ITRs are absolutely needed.
This simply underscores the rule that any document, other than
quarterly ITRs may be used to establish that indeed the non-carry over
clause has been complied with, provided that such is competent,
relevant and part of the records.
It goes without saying that the annual ITR (including any other proof
that may be sufficient to the Court)can sufficiently reveal whether carry
over has been made in subsequent quarters even if the petitioner has
chosen the option of tax credit or refund in the immediately 2003 annual
ITR.
It must be remembered that taxes computed in the quarterly returns are
mere estimates. It is the annual ITR which shows the aggregate
amounts of income, deductions, and credits for all quarters of the
taxable year. It is the final adjustment return which shows whether a
corporation incurred a loss or gained a profit during the taxable quarter.
Thus, the presentation of the annual ITR would suffice in proving that
prior year's excess credits were not utilized for the taxable year in order
to make a final determination of the total tax due.
The absence of any amount written in the Prior Year excess Credit —
Tax Withheld portion of petitioner's 2004 annual ITR clearly shows that
no prior excess credits were carried over in the first four quarters of
2004 . And since petitioner was able to sufficiently prove that excess
tax credits in 2003 were not carried over to taxable year 2004 by leaving
the item "Prior Year's Excess Credits" as blank in its 2004 annual ITR,
then petitioner is entitled to a refund.
It must be emphasized that once the requirements laid down by the
NIRC have been met, a claimant should be considered successful in
discharging its burden of proving its right to refund. Thereafter, the
burden of going forward with the evidence, as distinct from the general
burden of proof, shifts to the opposing party that is, the CIR. It is then
the turn of the CIR to disprove the claim by presenting contrary
evidence which could include the pertinent ITRs easily obtainable from
its own files.