United International Pictures, AB v. Commissioner of Internal Revenue

EIGHTH DIVISION [CA-G.R. SP No. 76073. November 7, 2013.] UNITED INTERNATIONAL PICTURES, AB , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE and THE COURT OF TAX APPEALS , respondents . DECISION BALTAZAR-PADILLA , J p : This is a petition for review from the decision dated September 12, 2002 of the Court of Tax Appeals (CTA) in CTA Case No. 6240 entitled "United International Pictures, AB vs. Commissioner of Internal Revenue" , 1 the dispositive part of which reads: "WHEREFORE, in view of the foregoing, the instant Petition for Review is hereby PARTIALLY GRANTED. Accordingly, respondent is ORDERED to REFUND or in the alternative ISSUE A TAX CREDIT CERTIFICATE to petitioner in the amount of P7,269,078.40 representing unutilized creditable withholding tax for the year 1999. SO ORDERED." FACTS As culled from the decision of the CTA, the facts of the case are as follows: "Petitioner is the Philippine Branch of United International Pictures, AB, a corporation duly organized and existing under the laws of Sweden, duly licensed to engage in business in the Philippines, . . . . Respondent is the duly appointed Commissioner of Internal Revenue, vested with the authority to act as such, including, among others, the power to decide, approve and grant refunds or tax credits of erroneously paid or excess payments of internal revenue taxes. . . . HSDaTC On April 15, 1999, petitioner filed with the Bureau of Internal Revenue (BIR) its Corporation Annual Income Tax Return for the calendar year ended (sic) December 31, 1998 reflecting, among others, a net taxable income from operations in the sum of P24,961,200.00, an income tax liability of P8,486,808.00, but with an excess income tax payment in the amount of P4,325,152.00 arising from quarterly income tax payments and creditable taxes withheld at source, computed as follows: (Par. 3, Stipulation of Facts; Exhibit A, inclusive of submarkings) Gross Income P42,905,466.00 Less: Deductions 17,944,266.00 Taxable Income P24,961,200.00 ============ Tax Due P8,468,808.00 Less: Tax Credits/Payments 12,811,960.00 Tax Overpayment P4,325,152.00 ============ Petitioner opted to carry-over as tax credit to the succeeding taxable year the said overpayment by putting an "x" mark on the corresponding box. On April 17, 2000, petitioner filed its Corporation Annual Income Tax Return for the calendar year ended (sic) December 31, 1999 wherein it reported, among others, a taxable income in the amount of P7,071,651.00, an income tax due of P2,333,645.00, but with an excess income tax payment in the amount of P9,309,292.00, detailed as follows: (Par. 4, Stipulation of Facts; Exhibit B, inclusive of submarkings) Gross Income P25,240,148.00 Less: Deductions 18,168,497.00 Taxable Income P7,071,651.00 =========== Tax Due P2,333,645.00 Less: Tax Credits/Payments a. Prior Years Excess Credits P4,325,152.00 b. Creditable Tax Withheld 7,317,785.00 11,642,937.00 Tax Overpayment P9,309,292.00 =========== On the face of the 1999 return, petitioner indicated its option by putting an "x" mark on the box "To be refunded." SCDaHc Through a letter dated April 28, 2009, petitioner filed with the BIR its administrative claim for refund in the amount of P9,309,292.00 pursuant to Section 229 of the Tax Code, as amended. (Annex C, Petition for Review) On February 27, 2001, due to inaction on the part of respondent, petitioner was compelled to file the instant petition for review in order to toll the running of the two-year prescriptive period." On September 12, 2002, the CTA rendered the assailed Decision denying the claim for refund of United International Pictures, AB (petitioner) for taxable year 1998 but granting the claim for refund for the 1999 excess tax withheld. The parties filed their respective motions for reconsideration but both were denied by the CTA in a Resolution dated March 11, 2003. 2 Hence, separate petitions for review were filed before this Court. The Commissioner of Internal Revenue (respondent) , through the Office of the Solicitor General, filed before this Court a petition for review on April 30, 2003 docketed as CA-G.R. SP No. 76173 (SP 76173) which was raffled off to the Third Division hereof. On the other hand, petitioner filed the instant petition for review 3 on April 10, 2003. In the extant petition, the only issue raised by petitioner was whether it is perpetually barred to refund its unutilized creditable withholding tax for taxable year 1998 after it opted to carry-over its excess withholding tax in said year to taxable year 1999. Pending resolution of this case, the Third Division of this Court issued a Decision 4 on August 31, 2004 in SP 76173 annulling the September 12, 2002 Decision of the CTA and dismissing the claim for tax refund by petitioner (respondent therein). Petitioner (respondent therein) filed a motion for reconsideration in SP 76173 but the same was denied in a Resolution 5 dated May 17, 2005. Thereafter, petitioner elevated the Decision in SP 76173 to the Supreme Court via a petition for review by certiorari docketed as G.R. No. 168331. On June 16, 2006, WE issued a Resolution 6 deferring the resolution of this case until the High Court promulgates a decision in G.R. No. 168331. On October 11, 2012, the Supreme Court issued a Decision 7 in G.R. No. 168331. SHIcDT RULING WE deny the petition in the light of the ruling of the Supreme Court in G.R. No. 168331 under the doctrine of the law of the case. Law of the case has been defined as the opinion delivered on a former appeal. It means that whatever is once irrevocably established the controlling legal rule of decision between the same parties in the same case continues to be the law of the case whether correct on general principles or not, so long as the facts on which such decision was predicated continue to be the facts of the case before the court. 8 The rationale behind this rule is to enable an appellate court to perform its duties satisfactorily and efficiently, which would be impossible if a question, once considered and decided by it, were to be litigated anew in the same case upon any and every subsequent appeal. Without it, there would be endless litigation. Litigants would be free to speculate on changes in the personnel of a court, or on the chance of our rewriting propositions once gravely ruled on solemn argument and handed down as the law of a given case. 9 The issue raised in this case has been resolved by the High Court in its Decision in G.R. No. 168331 and the same already became final and executory last November 26, 2012 as evidenced by the Entry of Judgment. 10 WE hold that the ruling in G.R. No. 168331 constitutes as the controlling doctrine or the law of the case in the present case. Thus, in denying this petition, WE quote the ruling of the Supreme Court in G.R. No. 168331, to wit: "Section 76 of the NIRC of 1997 states Section 76. Final Adjustment Return. Every corporation liable to tax under Section 27 shall file a final adjustment return covering the total taxable income for the preceding calendar or fiscal year. If the sum of the quarterly tax payments made during the said taxable year is not equal to the total tax due on the entire taxable income of that year, the corporation shall either: (A) Pay the balance of tax still due; or (B) Carry-over the excess credit; or (C) Be credited or refunded with the excess amount paid, as the case may be. ScAIaT In case the corporation is entitled to a tax credit or refund of the excess estimated quarterly income taxes paid, the excess amount shown on its final adjustment return may be carried over and credited against the estimated 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 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 cash refund or issuance of a tax credit certificate shall be allowed therefore. From the aforequoted provision, it is clear that once a corporation exercises the option to carry-over, such option is irrevocable "for that taxable period." Having chosen to carry-over the excess quarterly income tax, the corporation cannot thereafter choose to apply for a cash refund or for the issuance of a tax credit certificate for the amount representing such overpayment. To avoid confusion, this Court has properly explained the phrase "for that taxable period" in Commissioner of Internal Revenue v. Bank of the Philippine Islands . In said case, the Court held that the phrase merely identifies the excess income tax, subject of the option, by referring to the "taxable period when it was acquired by the taxpayer." Thus: . . . Section 76 remains clear and unequivocal. Once the carry-over option is taken, actually or constructively, it becomes irrevocable. It mentioned no exception or qualification to the irrevocability rule. Hence, the controlling factor for the operation of the irrevocability rule is that the taxpayer chose an option; and once it had already done so, it could no longer make another one. Consequently, 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 is irrelevant. 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." The last sentence of Section 76 of the NIRC of 1997 reads: "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 a tax credit certificate shall be allowed therefore." 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. In the present case, 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. cSEaDA The Court of Appeals mistakenly understood the phrase "for that taxable period" as a prescriptive period for the irrevocability rule . . . . The evident intent of the legislature, in adding the last sentence to Section 76 of the NIRC of 1997, is to keep the taxpayer from flip-flopping on its options, and avoid confusion and complication as regards said taxpayer's excess tax credit. The interpretation of the Court of Appeals only delays the flip-flopping to the end of each succeeding taxable period. Plainly, petitioner's claim for refund for 1998 should be denied as its option to carry over has precluded it from claiming the refund of the excess 1998 income tax payment." WHEREFORE , in view of the foregoing, the instant petition is hereby DENIED . The Decision of the CTA dated September 12, 2002 insofar as it denied petitioner's claim for refund for the unutilized creditable withholding tax for the year of 1998 is hereby AFFIRMED . Asuncion-Vicente and Carpio, JJ., concur. Footnotes 1. Rollo , p. 9. 2. Id. , p. 42. 3. Id. , p. 58. 4. Id. , p. 167. 5. Id. , p. 176. 6. Id. , p. 205. 7. Id. , p. 284. 8. Spouses Sy vs. Young , G.R. No. 169214, June 19, 2013. 9. Ibid. , G.R. No. 169214, June 19, 2013. 10. Rollo , p. 295.