Tax Cases
Tax Cases
Tax Cases
211289
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RESPONDENT.
- Thus, withholding tax assessments such as EWT and WTC clearly contemplate deficiency
internal revenue taxes. Their aim is to collect unpaid income taxes and not merely to impose a
penalty on the withholding agent for its failure to comply with its statutory duty. Further, a holistic
reading of the Tax Code reveals that the CIR's interpretation of Section 203 is erroneous.
Provisions of the NIRC itself recognize that the tax assessment for withholding tax deficiency is
different and independent from possie penalties that may be imposed for the failure of withholding
-Under Section 75 of the National Internal Revenue Code, corporations, in general, are required to make
quarterly income tax payments. In the event that the the sum of the quarterly payments exceeds the
total income tax due for the entire year, Section 76 provides two alternative options to the corporation
concerned:
If the taxpayer elects the carry-over option, such election is permanent; the corporation is precluded
from subsequently changing its mind and replacing its choice with the option of refund or tax credit. It is
known as the irrevocability rule.
What if the corporation opts for refund or tax credit, does the irrevocability rule also apply?
Once the taxpayer opts to carry over such excess creditable tax, after electing refund or issuance of tax
credit certificate, the carry-over option becomes irrevocable. Accordingly, the previous choice of a claim
for refund, even if subsequently pursued, may no longer be granted
The irrevocability rule applies only to the option of carry over and not to the option of cash refund/tax
credit.
The law is very clear. The irrevocability rule is limited only to the option of carry-over such that a
taxpayer is still free to change its choice after electing a refund of its excess tax credit. The law does not
prevent a taxpayer who originally opted for a refund or tax credit certificate from shifting to the carry-
over of the excess creditable taxes to the taxable quarters of the succeeding taxable years.
The Irrevocability Rule Applies to the Subsequent Election of the Option to Carry Over
Once the taxpayer opts to carry over such excess creditable tax, after electing refund or issuance of tax
credit certificate, the carry-over option becomes irrevocable. Accordingly, the previous choice of a claim
for refund, even if subsequently pursued, may no longer be granted.
Despite its initial option to refund its 2006 excess creditable tax, UPSI-MI subsequently indicated in its
2007 short period FAR that it carried over the excess creditable tax and applied the same against its 2007
income tax due. By doing so, UPSI-MI constructively chose the option of carry-over, for which reason, the
irrevocability rule forbade it to revert to its initial choice. It does not matter that UPSI-MI had not
actually benefited from the carry over on the ground that it did not have a tax due in the 2007 short
period. Neither may it insist that the insertion of the carry-over in the 2007 FAR was by mere mistake or
inadvertence. The irrevocability rule admits of no qualifications or conditions.
Hence, UPSI-MI is barred from recovering the subject excess creditable tax through refund or TCC.
However, the petitioner remains entitled to the benefit of carry-over and thus may apply the 2006
overpaid income tax as tax credit in succeeding taxae years until fully exhausted. This is because, unlike
the remedy of refund or tax credit certificate, the option of carry-over under Section 76 is not subject to
any prescriptive period.
Under Section 70,23 Chapter 14, Book IV of the Administrative Code of 1987, it is provided that u
where the amount of the claim exceeds, one million pesos, the decision of the SOJ should be
appealed to the Office of the President (OP). Here, the value subject of the case is
P70,660,389.00. As such, the CIR should have first appealed the decision of the SOJ to the OP
rather than to file a Petition for Certiorari to the CA
Also, the petition for certiorari filed by the CIR before the CA is dismissie on the ground that the same is
not a plain, speedy, and adequate remedy granted to the CIR.
It is well settled that a petition for certiorari can be availed of when a tribunal, board or officer exercising
judicial or quasi-judicial functions has acted without or in excess its or his jurisdiction, or with grave
abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, or any plain,
speedy, and adequate remedy in the ordinary course of law.26 As such, the same "may be resorted to
only in the absence of appeal or any plain, speedy and adequate remedy in the ordinary course of
law."27
In the present case, there is a plain, speedy and adequate remedy in the ordinary course of law which is
availae to the CIR, which is an appeal to the OP. The CIR, however, failed to avail the same through its
own fault