Revised Rules and Regulations Implementing the National Health Insurance Act of 1995 (R.A. No. 7875)

SECOND DIVISION [C.T.A. CASE NO. 7908. September 8, 2011.] UPSI MANAGEMENT, INC. , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . RESOLUTION CASANOVA , J p : For resolution are: 1) petitioner's "Motion for Reconsideration (Decision dated 05 July 2011)" filed on July 19, 2011, with respondent's "Comment (To Petitioner's Motion for Reconsideration dated 18 July 2011)" filed on July 28, 2011; and SATDHE 2) petitioner's "Motion for Leave to Admit Reply (To Comment dated 27 July 2011)" filed on August 18, 2011. At the onset, petitioner's "Motion for Leave to Admit Reply (To Comment dated 27 July 2011)" is hereby GRANTED in the interest of substantial justice. Accordingly, petitioner's "Reply (To Comment dated 27 July 2011)", attached to the Motion, is hereby admitted and taken as part of the records of this case. With respect to petitioner's "Motion for Reconsideration", petitioner seeks reconsideration of the Decision promulgated on July 5, 2011, denying the instant Petition for Review for lack of merit. Petitioner insists that it is entitled to its claim for refund since its true and only intention is to refund its 2006 excess tax credits through the issuance of a tax credit certificate, as manifested when it elected the option "To be issued a Tax Credit Certificate" in its 2006 Income Tax Return (ITR). Petitioner avers that the option chosen in the 2006 ITR should be the basis in determining its actual option and not the inadvertent inclusion of the 2006 excess tax credits in its 2007 Original ITR, which error was actually rectified in its 2007 Amended ITR. Petitioner also argues that (1) the irrevocability rule under Section 76 of the National Internal Revenue Code (NIRC) is not applicable for the reason that it did not carry-over to the succeeding taxable period its claimed excess tax credits; (2) the pronouncement of the Court that the amendment cannot be allowed has no basis in law for it was only exercising its right to amend the 2007 ITR pursuant to Section 6 (A) of the NIRC, to ensure that it is aligned with its original intention to refund; and, that (3) if the interpretation of this Court on the irrevocability rule is to be followed, what would be rendered nugatory is its initial option in the 2006 ITR. Respondent counter argues that the controlling operation of the irrevocability rule is that the taxpayer chooses an option and once it had done so, it could no longer make another one. Respondent continues that since petitioner's 2006 excess tax credit was carried over to the succeeding period, such carrying over bars petitioner from subsequently applying the same amount for tax refund because of the irrevocability rule under Section 76 of the NIRC. Further, respondent posits that the amendment of the 2007 ITR has no bearing and effect to the carry-over option made by petitioner since once the carry-over option is chosen, it becomes irrevocable. Finally, respondent asserts that the arguments raised in the Motion are mere repetitions of those previously raised and discussed in petitioner's "Memorandum" and "Supplement Memorandum" which the Court had already considered. cIECTH In reply, petitioner reiterates that the irrevocability rule under Section 76 of the NIRC is not applicable since it did not carry-over the 2006 excess tax credits; it marked the option "To be issued a Tax Credit Certificate" in its 2006 Original ITR; that respondent admitted in her Comment and in the Joint Stipulation of Facts that petitioner elected the tax refund option in the 2006 ITR; and the inclusion of its 2006 excess creditable withholding taxes to its 2007 ITR was inadvertent and not intentional. Petitioner, likewise, disagrees with respondent's statement that the amendment of the 2007 ITR has no bearing and effect to the carry-over option made. Petitioner claims that such argument would find significance had it ticked the carry-over option in its 2006 Original ITR and subsequently filed an amended ITR for the same year electing the choice "to be refunded" since this is the kind of amendment which would render nugatory the rule on irrevocability. Moreover, petitioner alleges that there is no truth to respondent's averment that the issues and arguments it raised are mere repetitions. Petitioner claims that in its Motion, it invoked the decision of the Supreme Court in the case of Commissioner of Internal Revenue vs. Mirant (Philippines) Operations Corporation (G.R. No. 171742, 15 June 2011) and it also argued its concern on the confusing tax returns. Petitioner also contends that even assuming that its arguments are mere reiteration this does not necessarily render its Motion pro forma in accordance with the ruling of the Supreme Court in the case of Department of Agrarian Reform vs. Vicente K. Uy (G.R. No. 169277, 9 February 2007). After weighing the arguments of the parties, this Court finds the Motion for Reconsideration devoid of merit. The argument of petitioner as regards the inadvertent inclusion of its claimed 2006 excess tax credits in its 2007 Original ITR is a mere reiteration of the argument in its Memorandum filed on August 18, 2010, which had already been duly considered in the assailed Decision. But, for emphasis, the alleged inadvertent inclusion of the 2006 excess tax credit in the 2007 Original ITR belies petitioner's own allegation that it did not carry-over the said amount to the succeeding taxable period. Moreover, the fact that petitioner marked the option "To be issued a Tax Credit Certificate" in its 2006 ITR is not controlling because said option was negated by its subsequent act of carrying over its 2006 excess tax credit in its Original ITR for the succeeding short fiscal period ending March 31, 2007. SEcAIC Section 76 of the NIRC clearly enunciates the irrevocability rule that ". . . 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 cash refund or issuance of a tax credit certificate shall be allowed therefor." With respect to petitioner's contention that the pronouncement of the Court that the amendment cannot be allowed has no basis in law for it was only exercising its right to amend the 2007 ITR pursuant to Section 6 (A) of the NIRC, petitioner utterly failed to properly comprehend the same. Undisputedly, Section 6 (A) of the NIRC provides that a return may be amended within three (3) years from the date of filing, provided, that no notice for audit or investigation of such return has been actually served upon the taxpayer. Nevertheless, the amendment cannot undo petitioner's actual exercise of the "carry-over option" in the Original ITR. To reiterate, allowing the amendment as the controlling basis in determining petitioner's option will clearly be against the irrevocability rule. Thus, the act of carrying over its claimed excess tax credit for 2006 to its 2007 Original ITR bars petitioner from claiming a refund. Be that as it may, the claimed excess creditable withholding tax of P2,927,834.00 will not be forfeited in favor of the Government. Petitioner has the recourse of applying the said amount against the income tax due for the succeeding taxable years until it is fully utilized. WHEREFORE , premises considered, petitioner's Motion for Reconsideration is hereby DENIED for lack of merit. SO ORDERED. TIAEac (SGD.) CAESAR A. CASANOVA Associate Justice Juanito C. Castaeda, Jr. and Cielito N. Mindaro-Grulla, JJ., concur.