COMMISSIONER OF
INTERNAL REVENUE,
Petitioner,
- versus -
BANK OF THE
PHILIPPINEISLANDS,
Respondent.
G.R. No. 178490
Present:
YNARES-SANTIAGO, J.,
Chairperson,
CHICO-NAZARIO,
VEASCO, !R.,
NACH"RA, and
PERATA, JJ.
Pro#$%&ated:
!$%' (, )**+
,- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -,
- E C I S I O N
CHICO-NAZARIO, J.:
This is a Petition .or Re/ie0 assai%in& the -e1ision
234
dated )+ Apri% )**5
and the Reso%$tion dated )* Apri% )**( o. the Co$rt o. Appea%s in CA-G.R. SP
No. ((655, 0hi1h ann$%%ed and set aside the -e1ision dated 3) 7ar1h )**8 o. the
Co$rt o. Ta, Appea%s 9CTA: in CTA Case No. 6)(6, 0herein the CTA he%d that
respondent ;an< o. the Phi%ippine Is%ands 9;PI: a%read' e,er1ised the irre/o1a=%e
option to 1arr' o/er its e,1ess ta, 1redits .or the 'ear 3++> to the s$11eedin& 'ears
3+++ and )*** and 0as, there.ore, no %on&er entit%ed to 1%ai# the re.$nd or
iss$an1e o. a ta, 1redit 1erti.i1ate .or the a#o$nt thereo..
On 35 Apri% 3+++, ;PI .i%ed 0ith the ;$rea$ o. Interna% Re/en$e 9;IR: its
.ina% ad?$sted Corporate Ann$a% In1o#e Ta, Ret$rn 9ITR: .or the ta,a=%e 'ear
endin& on 31 D!"#$ 1998, sho0in& a ta,a=%e in1o#e o. P3,((8,)86,(@5.**
and a tota% ta, d$e o. P%0&,900,493.00.
Aor the sa#e ta,a=%e 'ear 3++>, ;PI a%read' #ade in1o#e ta, pa'#ents .or
the .irst three B$arters, 0hi1h a#o$nted to P'%3,'47,470.4%.
2)4
The =an< a%so
re1ei/ed in1o#e in 3++> .ro# /ario$s third persons, 0hi1h, 0ere a%read' s$=?e1ted
to e,panded 0ithho%din& ta,es a#o$ntin& to P7,%8',887.90. ;PI additiona%%'
a1B$ired .orei&n ta, 1redit 0hen it paid the "nited States &o/ern#ent ta,es in the
a#o$nt o. C353,@6(.**, or the eB$i/a%ent o. P%,190,014.4%, on the operations o.
.or#erDs Ne0 Yor< ;ran1h. Aina%%', respondent ;PI had 1arried o/er e,1ess ta,
1redit .ro# the prior 'ear, 3++(, a#o$ntin& to P'9,4&4,&&&.00.
Creditin& the a.ore#entioned a#o$nts a&ainst the tota% ta, d$e .ro# it at the
end o. 3++>, ;PI 1o#p$ted an o/erpa'#ent to the ;IR o. in1o#e ta,es in the
a#o$nt o.P33,947,101.00. The 1o#p$tation o. ;PI is reprod$1ed =e%o0:
Tota% In1o#e Ta,es -$e P6*),+**,@+8.**
ess: Ta, Credits:
Prior 'earDs ta, 1redits P5+,@)@,))).**
E$arter%' pa'#ents 568,5@(,@(*.@6
Credita=%e ta,es 0ithhe%d (,6>5,>>(.+*
Aorei&n ta, 1redit 6,3+*,*3@.** 686,>@(,5+@.**
------------------- -------------------
Net Ta, Pa'a=%eF9Re.$nda=%e: P988,+@(,3*3.**:
;PI opted to 1arr' o/er its 3++> e,1ess ta, 1redit, in the a#o$nt
o. P88,+@(,3*3.**, to the s$11eedin& ta,a=%e 'ear endin& 31 D!"#$ 1999.
284
Aor 3+++, ho0e/er, respondent ;PI ended $p 0ith 93: a net %oss in the a#o$nt
o. P%1',74&,10&.00G 9): its sti%% $napp%ied e,1ess ta, 1redit 1arried o/er .ro# 3++>,
in the a#o$nt o. P33,947,101.00(and 98: #ore e,1ess ta, 1redit, a1B$ired in 3+++,
in the s$# o. P1&,97',7'0.00. So in 3+++, the tota% e,1ess ta, 1redits o. ;PI
in1reased to P4%,9&&,8'1.00, 0hi1h it on1e #ore opted to 1arr' o/er to the
.o%%o0in& ta,a=%e 'ear.
Aor the ta,a=%e 'ear endin& 31 D!"#$ &000, respondent ;PI de1%ared in
its Corporate Ann$a% ITR: 93: )$o ta,a=%e in1o#eG 9): e,1ess ta, 1redit 1arried
o/er .ro# 3++> and 3+++, a#o$ntin& to P4%,9&&,8'1.00G and 98: e/en #ore e,1ess
ta, 1redit, &ained in )***, in the a#o$nt o. P&',&07,939.00. This ti#e, ;PI .ai%ed
to indi1ate in its ITR its 1hoi1e o. 0hether to 1arr' o/er its e,1ess ta, 1redits or to
1%ai# the re.$nd o. or iss$an1e o. a ta, 1redit 1erti.i1ate .or the a#o$nts thereo..
On 8 Apri% )**3, ;PI .i%ed 0ith petitioner Co##issioner o. Interna%
Re/en$e 9CIR: an ad#inistrati/e 1%ai# .or re.$nd in the a#o$nt
o. P33,947,101.00, representin& its e,1ess 1redita=%e in1o#e ta, .or 3++>.
The CIR .ai%ed to a1t on the 1%ai# .or ta, re.$nd o. ;PI. Hen1e, ;PI .i%ed a
Petition .or Re/ie0 =e.ore the CTA, do1<eted as CTA Case No. 6)(6.
The CTA pro#$%&ated its -e1ision in CTA Case No. 6)(6 on 3) 7ar1h
)**8, r$%in& therein that sin1e ;PI had opted to 1arr' o/er its 3++> e,1ess ta,
1redit to 3+++ and )***, it 0as =arred .ro# .i%in& a 1%ai# .or the re.$nd o. the
sa#e.
The CTA re%ied on the irrevocability rule %aid do0n in Se1tion (6 o. the
Nationa% Interna% Re/en$e Code 9NIRC: o. 3++(, 0hi1h states that on1e the
ta,pa'er opts to 1arr' o/er and app%' its e,1ess in1o#e ta, to s$11eedin& ta,a=%e
'ears, its option sha%% =e irre/o1a=%e .or that ta,a=%e period and no app%i1ation .or
ta, re.$nd or iss$an1e o. a ta, 1redit sha%% =e a%%o0ed .or the sa#e.
The CTA -e1ision ad?$d&ed:
A 1%ose s1r$tin' o. the 3++> in1o#e ta, ret$rn o. 2;PI4 re/ea%s that it
opted to 1arr' o/er its e,1ess ta, 1redits, the a#o$nt s$=?e1t o. this 1%ai#, to the
s$11eedin& ta,a=%e 'ear =' p%a1in& an H,I #ar< on the 1orrespondin& =o, o. said
ret$rn 9E,hi=its A-) J 8-a:. Aor the 'ear 3+++, 2;PI4 a&ain #ani.ested its
intention to 1arr' o/er to the s$11eedin& ta,a=%e period the s$=?e1t 1%ai# toðer
0ith the 1$rrent e,1ess ta, 1redits 9E,hi=it !:. Sti%% $na=%e to app%' its prior 'earDs
e,1ess 1redits in 3+++ as it ended $p in a net %oss position, petitioner a&ain 1arried
o/er the said e,1ess 1redits in the 'ear )*** 9E,hi=it K:.
The 1o$rt a%read' 1ate&ori1a%%' r$%ed in a n$#=er o. 1ases that on1e the
option to 1arr'-o/er and app%' the e,1ess B$arter%' in1o#e ta, a&ainst the in1o#e
ta, d$e .or the ta,a=%e B$arters o. the s$11eedin& ta,a=%e 'ears has =een #ade,
s$1h option sha%% =e 1onsidered irre/o1a=%e and no app%i1ation .or 1ash re.$nd or
iss$an1e o. a ta, 1redit 1erti.i1ate sha%% =e a%%o0ed there.ore 9Pi%ipinas Transport
Ind$stries /s. Co##issioner o. Interna% Re/en$e, CTA Case No. 6*(8, dated
7ar1h 3, )**)G Pi%ipinas Hino, In1. /s. Co##issioner o. Interna% Re/en$e, CTA
Case No. 6*(@, dated Apri% 3+, )**)G Phi%a# Asset 7ana&e#ent, In1. /s.
Co##issioner o. Interna% Re/en$e, CTA Case No. 6)3*, dated 7a' ), )**)G The
Phi%ippine ;an<in& Corporation 9no0 <no0n as G%o=a% ;$siness ;an<, In1.: /s.
Co##issioner o. Interna% Re/en$e, CTA Reso%$tion, CTA Case No. 6)>*,
A$&$st 36, )**3. Sin1e 2;PI4 a%read' e,er1ised the irre/o1a=%e option to 1arr'
o/er its e,1ess ta, 1redits .or the 'ear 3++> to the s$11eedin& 'ears 3+++ and
)***, it is, there.ore, no %on&er entit%ed to 1%ai# .or a re.$nd or iss$an1e o. a ta,
1redit 1erti.i1ate.
2@4
In the end, the CTA de1reed:
IN VIEL OA A THE AOREGOING, the instant petition .or re/ie0 is
here=' -ENIE- .or %a1< o. #erit.
254
;PI .i%ed a 7otion .or Re1onsideration o. the .ore&oin& -e1ision, =$t the
CTA denied the sa#e in a Reso%$tion dated 8 !$ne )**8.
;PI .i%ed an appea% 0ith the Co$rt o. Appea%s, do1<eted as CA-G.R. SP No.
((655. On )+ Apri% )**5, the Co$rt o. Appea%s rendered its -e1ision, re/ersin&
that o. the CTA and ho%din& that ;PI 0as entit%ed to a re.$nd o. the e,1ess in1o#e
ta, it paid .or 3++>.
The Co$rt o. Appea%s 1on1eded that ;PI indeed opted to 1arr' o/er its
e,1ess ta, 1redit in 3++> to 3+++ =' p%a1in& an H,I #ar< on the 1orrespondin& =o,
o. its 3++> ITR. Nonethe%ess, there 0as no a1t$a% 1arr'in& o/er o. the e,1ess ta,
1redit, &i/en that ;PI s$..ered a net %oss in 3+++, and 0as not %ia=%e .or an' in1o#e
ta, .or said ta,a=%e period, a&ainst 0hi1h the 3++> e,1ess ta, 1redit 1o$%d ha/e
=een app%ied.
The Co$rt o. Appea%s added that e/en i. Se1tion (6 0as to =e 1onstr$ed
stri1t%' and %itera%%', the irrevocability rule 0o$%d sti%% not =ar ;PI .ro# see<in& a
ta, re.$nd o. its 3++> e,1ess ta, 1redit despite pre/io$s%' optin& to 1arr' o/er the
sa#e. The phrase H.or that ta,a=%e periodI B$a%i.ied the irre/o1a=i%it' o. the
option o. ;IR to 1arr' o/er its 3++> e,1ess ta, 1redit to on%' the 3+++ ta,a=%e
periodG s$1h that, 0hen the 3+++ ta,a=%e period e,pired, the irre/o1a=i%it' o. the
option o. ;PI to 1arr' o/er its e,1ess ta, 1redit .ro# 3++> a%so e,pired.
The Co$rt o. Appea%s .$rther reasoned that the &o/ern#ent 0o$%d =e
$n?$st%' enri1hed sho$%d the appe%%ate 1o$rt ho%d that the irrevocability rule =arred
the 1%ai# .or re.$nd o. a ta,pa'er, 0ho pre/io$s%' opted to 1arr'-o/er its e,1ess
ta, 1redit, =$t 0as not a=%e to $se the sa#e =e1a$se it s$..ered a net %oss in the
s$11eedin& 'ear.
Aina%%', the appe%%ate 1o$rt 1ited BPI-Family Savings Bank, Inc. v. Court of
Appeals
264
0herein this Co$rt he%d that i. a ta,pa'er s$..ered a net %oss in a 'ear,
th$s, in1$rrin& no ta, %ia=i%it' to 0hi1h the ta, 1redit .ro# the pre/io$s 'ear 1o$%d
=e app%ied, there 0as no reason .or the ;IR to 0ithho%d the ta, re.$nd 0hi1h
ri&ht.$%%' =e%on&ed to the ta,pa'er.
2(4
In a Reso%$tion dated )* Apri% )**(, the Co$rt o. Appea%s denied the 7otion
.or Re1onsideration o. the CIR.
2>4
Hen1e, the CIR .i%ed the instant Petition .or Re/ie0, a%%e&in& that:
I
THE CO"RT OA APPEAS CO77ITTE- A REVERSI;E ERROR IN
HO-ING THAT THE HIRREVOCA;IITY R"EI "N-ER SECTION (6 OA
THE TAM CO-E -OES NOT OPERATE TO ;AR PETITIONER ARO7
ASKING AOR A TAM REA"N-.
II
THE CO"RT OA APPEAS CO77ITTE- GRAVE ERROR LHEN IT
REVERSE- AN- SET ASI-E THE -ECISION OA THE CO"RT OA TAM
APPEAS AN- HE- THAT RESPON-ENT IS ENTITE- TO THE
CAI7E- TAM REA"N-.
The Co$rt .inds #erit in the instant Petition.
The Co$rt o. Appea%s erred in re%'in& on BPI-Family, #issin& si&ni.i1ant
detai%s that rendered said 1ase inapp%i1a=%e to the one at =ar.
In BPI-Family, therein petitioner ;PI-Aa#i%' de1%ared in its Corporate
Ann$a% ITR .or 3+>+ e,1ess ta, 1redits o. P3>5,**3.** .ro# 3+>>
and P33),@+3.** .ro# 3+>+, tota%in& P)+(,@+).**. ;PI-Aa#i%' 1%ear%' indi1ated
in the sa#e ITR that it 0as 1arr'in& o/er said e,1ess ta, 1redits to the .o%%o0in&
'ear. ;$t on 33 O1to=er 3++*, ;PI-Aa#i%' .i%ed a 1%ai# .or re.$nd o.
its P33),@+3.** ta, 1redit .ro# 3+>+. Lhen no a1tion .ro# the ;IR 0as
.orth1o#in&, ;PI-Aa#i%' .i%ed its 1%ai# 0ith the CTA. The CTA denied the 1%ai#
.or re.$nd o. ;PI-Aa#i%' on the &ro$nd that, sin1e the =an< de1%ared in its 3+>+
ITR that it 0o$%d 1arr' o/er its ta, 1redits to the .o%%o0in& 'ear, it sho$%d =e
pres$#ed to ha/e done so. In its 7otion .or Re1onsideration .i%ed 0ith the CTA,
;PI-Aa#i%' s$=#itted its .ina% ad?$sted ITR .or 3+>+ sho0in& that it
in1$rred P5),@>*,3(8.** net %oss in 3++*. Sti%%, the CTA denied the 7otion .or
Re1onsideration o. ;PI-Aa#i%'. The Co$rt o. Appea%s %i<e0ise denied the appea%
o. ;PI-Aa#i%' and #ere%' a..ir#ed the ?$d&#ent o. the CTA. The Co$rt,
ho0e/er, re/ersed the CTA and the Co$rt o. Appea%s.
This Co$rt de1ided to &rant the 1%ai# .or re.$nd o. ;PI-Aa#i%' a.ter .indin&
that the =an< had presented s$..i1ient e/iden1e to pro/e that it in1$rred a net %oss
in 3++* and, th$s, had no ta, %ia=i%it' to 0hi1h its ta, 1redit .ro# 3+>+ 1o$%d =e
app%ied. The Co$rt stressed in BPI Family that Hthe $ndisp$ted .a1t is that 2;PI-
Aa#i%'4 s$..ered a net %oss in 3++*G a11ordin&%', it in1$rred no ta, %ia=i%it' to
0hi1h the ta, 1redit 1o$%d =e app%ied. ConseB$ent%', there is no reason .or the ;IR
and this Co$rt to 0ithho%d the ta, re.$nd 0hi1h ri&ht.$%%' =e%on&s to the 2;PI-
Aa#i%'4.I It 0as on the =asis o. this .a1t that the Co$rt &ranted the appea% o. ;PI-
Aa#i%', =r$shin& aside a%% pro1ed$ra% and te1hni1a% o=?e1tions to the sa#e thro$&h
the .o%%o0in& prono$n1e#ents:
Aina%%', respondents ar&$e that ta, re.$nds are in the nat$re o. ta,
e,e#ptions and are to =e 1onstr$ed strictissimi uris a&ainst the 1%ai#ant. "nder
the .a1ts o. this 1ase, 0e ho%d that 2;PI-Aa#i%'4 has esta=%ished its 1%ai#. 2;PI-
Aa#i%'4 #a' ha/e .ai%ed to stri1t%' 1o#p%' 0ith the r$%es o. pro1ed$reG it #a'
ha/e e/en =een ne&%i&ent. These 1ir1$#stan1es, ho0e/er, sho$%d not 1o#pe% the
Co$rt to disre&ard this 1o%d, $ndisp$ted .a1t: that petitioner s$..ered a net %oss in
3++*, and that it 1o$%d not ha/e app%ied the a#o$nt 1%ai#ed as ta, 1redits.
S$=stantia% ?$sti1e, eB$it' and .air p%a' are on the side o. 2;PI-
Aa#i%'4. Te1hni1a%ities and %e&a%is#s, ho0e/er e,a%ted, sho$%d not =e #is$sed ='
the &o/ern#ent to <eep #one' not =e%on&in& to it and there=' enri1h itse%. at the
e,pense o. its %a0-a=idin& 1itiNens. I. the State e,pe1ts its ta,pa'ers to o=ser/e
.airness and honest' in pa'in& their ta,es, so #$st it app%' the sa#e standard
a&ainst itse%. in re.$ndin& e,1ess pa'#ents o. s$1h ta,es. Indeed, the State #$st
%ead =' its o0n e,a#p%e o. honor, di&nit' and $pri&htness.
2+4
It is ne1essar' .or this Co$rt, ho0e/er, to e#phasiNe that BPI-
Family in/o%/ed ta, 1redit a1B$ired =' the =an< in 3+>+, 0hi1h it initia%%' opted to
1arr' o/er to 3++*. The pre/ai%in& ta, %a0 then 0as the NIRC o* 198', Se1tion
(+
23*4
o. 0hi1h pro/ided:
Se1. (+. Final A!ustment "eturn. - E/er' 1orporation %ia=%e to ta, $nder
Se1tion )@ sha%% .i%e a .ina% ad?$st#ent ret$rn 1o/erin& the tota% net in1o#e .or the
pre1edin& 1a%endar or .is1a% 'ear. I. the s$# o. the B$arter%' ta, pa'#ents #ade
d$rin& the said ta,a=%e 'ear is not eB$a% to the tota% ta, d$e on the entire ta,a=%e
net in1o#e o. that 'ear the 1orporation sha%% either:
9a: Pa' the e,1ess ta, sti%% d$eG or
9=: ;e re.$nded the e,1ess a#o$nt paid, as the 1ase #a' =e.
In 1ase the 1orporation is entit%ed to a $*+,- o. the e,1ess esti#ated
B$arter%' in1o#e ta,es-paid, the re.$nda=%e a#o$nt sho0n on its .ina% ad?$st#ent
ret$rn #a' =e !$-./- a&ainst the esti#ated B$arter%' in1o#e ta, %ia=i%ities .or
the ta,a=%e B$arters o. the s$11eedin& ta,a=%e 'ear. 9E#phases o$rs.:
;' /irt$e o. the a.ore-B$oted pro/ision, the ta,pa'er 0ith e,1ess in1o#e ta,
0as &i/en the option to either 93: re.$nd the a#o$ntG or 9): 1redit the sa#e to its
ta, %ia=i%it' .or s$11eedin& ta,a=%e periods.
Se1tion (+ o. the NIRC o. 3+>5 0as reprod$1ed as Se1tion (6 o. the NIRC
o* 1997,
2334
0ith the addition o. one i#portant senten1e, 0hi1h %aid do0n
the irrevocability rule:
Se1tion (6. Final A!ustment "eturn. - E/er' 1orporation %ia=%e to ta,
$nder Se1tion )@ sha%% .i%e a .ina% ad?$st#ent ret$rn 1o/erin& the tota% net in1o#e
.or the pre1edin& 1a%endar or .is1a% 'ear. I. the s$# o. the B$arter%' ta, pa'#ents
#ade d$rin& the said ta,a=%e 'ear is not eB$a% to the tota% ta, d$e on the entire
ta,a=%e net in1o#e o. that 'ear the 1orporation sha%% either:
9a: Pa' the e,1ess ta, sti%% d$eG or
9=: ;e re.$nded the e,1ess a#o$nt paid, as the 1ase #a' =e.
In 1ase the 1orporation is entit%ed to a $*+,- o. the e,1ess esti#ated
B$arter%' in1o#e ta,es paid, the re.$nda=%e a#o$nt sho0n on its .ina% ad?$st#ent
ret$rn #a' =e !$-./- a&ainst the esti#ated B$arter%' in1o#e ta, %ia=i%ities .or
the ta,a=%e B$arters o. the s$11eedin& ta,a=%e 'ears. O,! /0 o1/.o, /o !2$$34
o5$ 2,- 21163 /0 7!88 9+2$/$63 .,!o" /27 2:2.,8/ .,!o" /27 -+ *o$
/0 /272#6 9+2$/$8 o* /0 8+!!-.,: /272#6 32$8 028 #, "2-, 8+!0
o1/.o, 80266 # !o,8.-$- .$$5o!2#6 *o$ /02/ /272#6 1$.o- 2,- ,o
2116.!2/.o, *o$ /27 $*+,- o$ .88+2,! o* 2 /27 !$-./ !$/.*.!2/ 80266 #
266o;- /0$*o$. 9E#phases o$rs.:
Lhen BPI-Family 0as de1ided =' this Co$rt, it did not 'et ha/e
the irrevocability rule to 1onsider. Hen1e, BPI-Family 1annot =e 1ited as a
pre1edent .or this 1ase.
The .a1t$a% =a1<&ro$nd o. P#ilam Asset $anagement, Inc. v. Commissioner
of Internal "evenue,
23)4
1ited =' the CIR, is 1%oser to the instant Petition. ;oth
in/o%/e ta, 1redits a1B$ired and 1%ai#s .or re.$nd .i%ed #ore than a de1ade a.ter
those in BPI-Family, to 0hi1h Se1tion (6 o. the NIRC o. 3++( a%read' app%'.
The Co$rt, in P#ilam, re1o&niNed the t0o options o..ered =' Se1tion (6 o.
the NIRC o. 3++( to a ta,a=%e 1orporation 0hose tota% B$arter%' in1o#e ta,
pa'#ents in a &i/en ta,a=%e 'ear e,1eeds its tota% in1o#e ta, d$e. These options
are: 93: .i%in& .or a ta% refun! or 9): a/ai%in& o. a ta% cre!it. The Co$rt .$rther
e,p%ained:
The .irst option is re%ati/e%' si#p%e. An' ta, on in1o#e that is paid in
e,1ess o. the a#o$nt d$e the &o/ern#ent #a' =e re.$nded, pro/ided that a
ta,pa'er proper%' app%ies .or the re.$nd.
The se1ond option 0or<s =' app%'in& the re.$nda=%e a#o$nt, as sho0n on
the 2Aina% Ad?$st#ent Ret$rn 9AAR:4 o. a &i/en ta,a=%e 'ear, a&ainst the esti#ated
B$arter%' in1o#e ta, %ia=i%ities o. the s$11eedin& ta,a=%e 'ear.
T08 /;o o1/.o,8 +,-$ S!/.o, 7% 2$ 26/$,2/.5 ., ,2/+$. T0
!0o.! o* o, 1$!6+-8 /0 o/0$. Indeed, in P#ilippine Bank of
Communications v. Commissioner of Internal "evenue, the Co$rt r$%ed that a
1orporation #$st si&ni.' its intention -- 0hether to reB$est a ta, re.$nd or 1%ai# a
ta, 1redit -- =' #ar<in& the 1orrespondin& option =o, pro/ided in the AAR. Lhi%e
a ta,pa'er is reB$ired to #ar< its 1hoi1e in the .or# pro/ided =' the ;IR, this
reB$ire#ent is on%' .or the p$rpose o. .a1i%itatin& ta, 1o%%e1tion.
One 1annot &et a ta, re.$nd and a ta, 1redit at the sa#e ti#e .or the sa#e
e,1ess in1o#e ta,es paid.
2384
, , ,
The Co$rt 1ate&ori1a%%' de1%ared in P#ilam that: HS!/.o, 7% $"2.,8 !62$
2,- +,9+.5o!26. O,! /0 !2$$34o5$ o1/.o, .8 /2<,, 2!/+2663 o$
!o,8/$+!/.563, ./ #!o"8 .$$5o!2#6.I It #entioned no e,1eption or
B$a%i.i1ation to the irrevocability rule.
Hen1e, the 1ontro%%in& .a1tor .or the operation o. the irrevocability rule is
that the ta,pa'er 1hose an optionG and on1e it had a%read' done so, it 1o$%d no
%on&er #a<e another one. ConseB$ent%', a.ter the ta,pa'er opts to 1arr'-o/er its
e,1ess ta, 1redit to the .o%%o0in& ta,a=%e period, the B$estion o. 0hether or not it
a1t$a%%' &ets to app%' said ta, 1redit is irre%e/ant. Se1tion (6 o. the NIRC o. 3++(
is e,p%i1it in statin& that on1e the option to 1arr' o/er has =een #ade, Hno
app%i1ation .or ta, re.$nd or iss$an1e o. a ta, 1redit 1erti.i1ate sha%% =e a%%o0ed
there.or.I
The %ast senten1e o. Se1tion (6 o. the NIRC o. 3++( reads: HOn1e the option
to 1arr'-o/er and app%' the e,1ess B$arter%' in1o#e ta, a&ainst in1o#e ta, d$e .or
the ta,a=%e B$arters o. the s$11eedin& ta,a=%e 'ears has =een #ade, s$1h
option 80266 # !o,8.-$- .$$5o!2#6 *o$ /02/ /272#6 1$.o- and no
app%i1ation .or ta, re.$nd or iss$an1e o. a ta, 1redit 1erti.i1ate sha%% =e a%%o0ed
there.or.I The phrase H.or that ta,a=%e periodI #ere%' identi.ies the e,1ess in1o#e
ta,, s$=?e1t o. the option, =' re.errin& to the ta,a=%e period 0hen it 0as a1B$ired
=' the ta,pa'er. In the present 1ase, the e,1ess in1o#e ta, 1redit, 0hi1h ;PI opted
to 1arr' o/er, 0as a1B$ired =' the said =an< d$rin& the ta,a=%e 'ear 3++>. The
option o. ;PI to 1arr' o/er its 3++> e,1ess in1o#e ta, 1redit is irre/o1a=%eG it
1annot %ater on opt to app%' .or a re.$nd o. the /er' sa#e 3++> e,1ess in1o#e ta,
1redit.
The Co$rt o. Appea%s #ista<en%' $nderstood the phrase H.or that ta,a=%e
periodI as a pres1ripti/e period .or the irrevocability rule. This 0o$%d #ean that
sin1e the ta, 1redit in this 1ase 0as a1B$ired in 3++>, and ;PI opted to 1arr' it o/er
to 3+++, then the irre/o1a=i%it' o. the option to 1arr' o/er e,pired =' the end o.
3+++, %ea/in& ;PI .ree to a&ain ta<e another option as re&ards its 3++> e,1ess
in1o#e ta, 1redit. This 1onstr$a% e..e1ti/e%' renders n$&ator' the irrevocability
rule. The e/ident intent o. the %e&is%at$re, in addin& the %ast senten1e to Se1tion (6
o. the NIRC o. 3++(, is to <eep the ta,pa'er .ro# .%ip-.%oppin& on its options, and
a/oid 1on.$sion and 1o#p%i1ation as re&ards said ta,pa'erDs e,1ess ta, 1redit. The
interpretation o. the Co$rt o. Appea%s on%' de%a's the .%ip-.%oppin& to the end o.
ea1h s$11eedin& ta,a=%e period.
The Co$rt si#i%ar%' disa&rees in the de1%aration o. the Co$rt o. Appea%s that
to den' the 1%ai# .or re.$nd o. ;PI, =e1a$se o. the irrevocability rule, 0o$%d =e
tanta#o$nt to $n?$st enri1h#ent on the part o. the &o/ern#ent. The Co$rt
addressed the /er' sa#e ar&$#ent in P#ilam, 0here it e%$1idated that there 0o$%d
=e no $n?$st enri1h#ent in the e/ent o. denia% o. the 1%ai# .or re.$nd $nder s$1h
1ir1$#stan1es, =e1a$se there 0o$%d =e no .or.eit$re o. an' a#o$nt in .a/or o. the
&o/ern#ent. The a#o$nt =ein& 1%ai#ed as a re.$nd 0o$%d re#ain in the a11o$nt
o. the ta,pa'er $nti% $ti%iNed in s$11eedin& ta,a=%e 'ears,
23@4
as pro/ided in Se1tion
(6 o. the NIRC o. 3++(. It is 0orth' to note that $n%i<e the option .or re.$nd o.
e,1ess in1o#e ta,, 0hi1h pres1ri=es a.ter t0o 'ears .ro# the .i%in& o. the AAR,
there is no pres1ripti/e period .or the 1arr'in& o/er o. the sa#e. There.ore, the
e,1ess in1o#e ta, 1redit o. ;PI, 0hi1h it a1B$ired in 3++> and opted to 1arr' o/er,
#a' =e repeated%' 1arried o/er to s$11eedin& ta,a=%e 'ears, i.e., to 3+++, )***,
)**3, and so on and so .orth, $nti% a1t$a%%' app%ied or 1redited to a ta, %ia=i%it' o.
;PI.
Aina%%', 0hi%e the Co$rt, in P#ilam, 0as .ir# in its position that the 1hoi1e
o. option as re&ards the e,1ess in1o#e ta, sha%% =e irre/o1a=%e, it 0as %ess ri&id in
the deter#ination o. 0hi1h option the ta,pa'er a1t$a%%' 1hose. It did not %i#it
itse%. to the indi1ation =' the ta,pa'er o. its option in the ITR.
Th$s, .ai%$re o. the ta,pa'er to #a<e an appropriate #ar<in& o. its option in
the ITR does not a$to#ati1a%%' #ean that the ta,pa'er has opted .or a ta,
1redit. The Co$rt ratio1inated in G.R. No. 35668(
2354
o. P#ilam:
One 1annot &et a ta, re.$nd and a ta, 1redit at the sa#e ti#e .or the sa#e
e,1ess in1o#e ta,es paid. F2.6+$ /o 8.:,.*3 o,=8 .,/,/.o, ., /0 FAR -o8
,o/ "2, o+/$.:0/ #2$$.,: o* 2 526.- $9+8/ *o$ 2 $*+,-, 80o+6- o, 8/.66
!0oo8 /0.8 o1/.o, 62/$ o,. A ta, 1redit sho$%d =e 1onstr$ed #ere%' as an
a%ternati/e re#ed' to a ta, re.$nd $nder Se1tion (6, s$=?e1t to prior /eri.i1ation
and appro/a% =' respondent.
T0 $28o, *o$ $9+.$.,: /02/ 2 !0o.! # "2- ., /0 FAR +1o, ./8
*.6.,: .8 /o 28 /27 2-".,.8/$2/.o,, parti1$%ar%' the se%.-assess#ent and
1o%%e1tion aspe1ts. A ta,pa'er that #a<es a 1hoi1e e,presses 1ertaint' or
pre.eren1e and th$s de#onstrates 1%ear di%i&en1e. Con/erse%', a ta,pa'er that
#a<es no 1hoi1e e,presses $n1ertaint' or %a1< o. pre.eren1e and hen1e sho0s
si#p%e ne&%i&en1e or p%ain o/ersi&ht.
, , , ,
, , , -espite the .ai%$re o. 2Phi%a#4 to #a<e the appropriate #ar<in& in
the ;IR .or#, the *.6.,: o* ./8 ;$.//, !62." **!/.563 8$58 28 2, 71$88.o,
o* ./8 !0o.! /o $9+8/ 2 /27 $*+,-, instead o. a ta, 1redit. To assert that an'
.$t$re 1%ai# .or a ta, re.$nd 0i%% =e instant%' hindered =' a .ai%$re to si&ni.'
oneDs intention in the AAR is to render n$&ator' the 1%ear pro/ision that a%%o0s .or
a t0o-'ear pres1ripti/e period.
2364
9E#phases o$rs.:
P#ilam re/ea%s a #eti1$%o$s 1onsideration =' the Co$rt o. the e/iden1e
s$=#itted =' the parties and the 1ir1$#stan1es s$rro$ndin& the ta,pa'erDs option
to 1arr' o/er or 1%ai# .or re.$nd. Lhen 1ir1$#stan1es sho0 that a 1hoi1e has
=een #ade =' the ta,pa'er to 1arr' o/er the e,1ess in1o#e ta, as 1redit, it sho$%d
=e respe1tedG =$t 0hen ind$=ita=%e 1ir1$#stan1es 1%ear%' sho0 that another 1hoi1e
O a ta, re.$nd O is in order, it sho$%d =e &ranted. HTe1hni1a%ities and %e&a%is#s,
ho0e/er e,a%ted, sho$%d not =e #is$sed =' the &o/ern#ent to <eep #one' not
=e%on&in& to it and there=' enri1h itse%. at the e,pense o. its %a0-a=idin& 1itiNens.I
There.ore, as to 0hi1h option the ta,pa'er 1hose is &enera%%' a #atter o.
e/iden1e. It is a,io#ati1 that a 1%ai#ant has the =$rden o. proo. to esta=%ish the
.a1t$a% =asis o. his or her 1%ai# .or ta, 1redit or re.$nd. Ta, re.$nds, %i<e ta,
e,e#ptions, are 1onstr$ed stri1t%' a&ainst the ta,pa'er.
23(4
In the Petition at =ar, ;PI 0as $na=%e to dis1har&e the =$rden o. proo.
ne1essar' .or the &rant o. a re.$nd. ;PI e,press%' indi1ated in its ITR .or 3++>
that it 0as 1arr'in& o/er, instead o. re.$ndin&, the e,1ess in1o#e ta, it paid d$rin&
the said ta,a=%e 'ear. ;PI 1onsistent%' reported the said a#o$nt in its ITRs .or
3+++ and )*** as 1redit to =e app%ied to an' ta, %ia=i%it' the =an< #a' in1$rG on%',
no s$1h opport$nit' arose =e1a$se it s$..ered a net %oss in 3+++ and in1$rred Nero
ta, %ia=i%it' in )***. In G.R. No. 36)**@ o.P#ilam, the Co$rt .o$nd:
Airst, the .a1t that it .i%%ed o$t the portion HPrior YearDs E,1ess CreditsI in
its 3+++ AAR #eans that it 1ate&ori1a%%' a/ai%ed itse%. o. the 1arr'-o/er option. In
.a1t, the %ine that pre1edes that phrase in the ;IR .or# 1%ear%' states Hess: Ta,
CreditsFPa'#ents.I The 1ontention that it #ere%' .i%%ed o$t that portion =e1a$se it
0as a reB$ire#ent O and that to ha/e done other0ise 0o$%d ha/e =een tanta#o$nt
to .a%si.'in& the AAR O is a %on& shot.
The AAR is the #ost re%ia=%e .irsthand e/iden1e o. 1orporate a1ts
pertainin& to in1o#e ta,es. In it are .o$nd the ite#iNation and s$##ar' o.
additions to and ded$1tions .ro# in1o#e ta,es d$e. These entries are not 0itho$t
rh'#e or reason. The' are reB$ired, =e1a$se the' .a1i%itate the ta, ad#inistration
pro1ess.
23>4
;PI itse%. ne/er denied that its ori&ina% intention 0as to 1arr' o/er the
e,1ess in1o#e ta, 1redit it a1B$ired in 3++>, and on%' 1hose to re.$nd the said
a#o$nt 0hen it 0as $na=%e to app%' the sa#e to an' ta, %ia=i%it' in the s$11eedin&
ta,a=%e 'ears. There 1an =e no do$=t that ;PI opted to 1arr' o/er its e,1ess
in1o#e ta, 1redit .ro# 3++>G it on%' s$=seB$ent%' 1han&ed its #ind O 0hi1h it 0as
=arred .ro# doin& =' the irrevocability rule.
The 1hoi1e =' ;PI o. the option to 1arr' o/er its 3++> e,1ess in1o#e ta,
1redit to s$11eedin& ta,a=%e 'ears, 0hi1h it e,p%i1it%' indi1ated in its 3++> ITR, is
irre/o1a=%e, re&ard%ess o. 0hether it 0as a=%e to a1t$a%%' app%' the said a#o$nt to a
ta, %ia=i%it'. The reiteration =' ;PI o. the 1arr' o/er option in its ITR .or 3+++
0as a%read' a s$per.%$it', as .ar as its 3++> e,1ess in1o#e ta, 1redit 0as
1on1erned, &i/en the irre/o1a=i%it' o. the initia% 1hoi1e #ade =' the =an< to 1arr'
o/er the said a#o$nt. Aor the sa#e reason, the .ai%$re o. ;PI to indi1ate an'
option in its ITR .or )*** 0as a%read' i##ateria% to its 3++> e,1ess in1o#e ta,
1redit.
>HEREFORE, the instant Petition .or Re/ie0 o. the Co##issioner .or
Interna% Re/en$e is GRANTED. The -e1ision dated )+ Apri% )**5 and the
Reso%$tion dated )* Apri% )**( o. the Co$rt o. Appea%s in CA-G.R. SP No. ((655
are REVERSED and SET ASIDE. The -e1ision dated 3) 7ar1h )**8 o. the
Co$rt o. Ta, Appea%s in CTA Case No. 6)(6, den'in& the 1%ai# o. respondent
;an< o. the Phi%ippine Is%ands .or the re.$nd o. its 3++> e,1ess in1o#e ta, 1redits,
is REINSTATED. No 1osts.
SO ORDERED.
