G.R. No. 160949 - Commissioner of Internal Revenue vs. PL Management International Philippines, Inc.

In 1997, the respondent, PL Management International Philippines, Inc., earned an income of ₱24,000,000.00 from professional services rendered to UEM-MARA Philippines Corporation.
From this income, UEM-MARA withheld ₱1,200,000.00 as creditable withholding tax.
The respondent filed its 1997 Income Tax Return (ITR) on April 13, 1998, reporting a net loss of ₱983,037.00 while expressly claiming the ₱1,200,000.00 as creditable withholding tax for the year.
For taxable year 1998, the respondent filed another ITR on April 13, 1999, again showing a net loss and, thus, being unable to utilize the tax credit.
On April 12, 2000, the respondent submitted a written claim to the Commissioner of Internal Revenue (CIR) for a refund of its ₱1,200,000.00 unutilized creditable withholding tax.
The petitioner, represented by the CIR, did not act on this refund claim.

Due to the petitioner’s inaction, the respondent initiated judicial action by filing a petition for review in the Court of Tax Appeals (CTA) on April 14, 2000.
On December 10, 2001, the CTA denied the refund claim on the ground that it was filed beyond the two-year prescriptive period as mandated by Sections 204(C) and 229 of the Tax Code.
The respondent appealed the CTA decision to the Court of Appeals (CA), which, on November 28, 2002, reversed the CTA’s denial. The CA held that the prescriptive period was not jurisdictional and could be suspended on equitable grounds, ruling that the refund claim was only one day late.
The petitioner then elevated the case to the Supreme Court through a petition for review, contesting the CA’s finding on both the prescriptive issue and on the application of equitable grounds.

The dispute ultimately revolved around whether the respondent’s unutilized creditable withholding tax could be refunded or must instead be carried over as a tax credit.
The controversy also touched on the interpretation of the two-year prescriptive period and the equitable suspension thereof, alongside the irrevocability of the taxpayer’s election under Section 76 of the 1997 National Internal Revenue Code (NIRC).

Whether the respondent’s judicial claim for refund, filed on April 14, 2000, was timely within the two-year prescriptive period, considering that the ITR for 1997 was filed on April 13, 1998.
Whether the two-year prescriptive period under Sections 204(C) and 229 of the Tax Code is jurisdictional or subject to equitable suspension.

Whether the respondent’s election, made in its final adjustment return, to carry over the excess creditable withholding tax to taxable year 1998 is irrevocable under Section 76 of the NIRC of 1997.
Whether the irrevocability of the election precludes the respondent from later claiming a refund for the unutilized tax credit.

Whether denying the refund on the basis of the irrevocability rule would result in unjust enrichment to the government.
Whether the equitable considerations that allowed the CA to suspend the running of the prescriptive period for refund claims could override the clear statutory mandate regarding the irrevocability of the taxpayer’s election.