Case Digest (G.R. No. 206517)
Facts:
Stablewood Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 206517, May 13, 2024, Supreme Court Second Division, Kho, Jr., J., writing for the Court. The petition assails the Court of Tax Appeals (CTA) En Banc Decision dated October 8, 2012 and Resolution dated March 22, 2013 in CTA EB Case No. 794, which affirmed the CTA Third Division Decision dated January 31, 2011 denying petitioner Stablewood Philippines, Inc.’s claim for refund or issuance of a tax credit certificate (TCC) for creditable withholding tax (CWT) for taxable year (TY) 2005 in the amount of PHP 65,085,905.82.Stablewood (formerly Orca Energy, Inc.) is a domestic corporation. On April 7, 2006 it electronically filed its TY 2005 Annual Income Tax Return (ITR) showing CWT overpayment of PHP 76,245,344.99 and marked the ITR option “To be issued a Tax Credit Certificate.” Stablewood then carried over the overpayment reflected in TY 2005 into its Quarterly Income Tax Returns for the first, second, and third quarters of TY 2006. On November 24, 2006 Stablewood filed an administrative claim for refund of PHP 65,085,905.82 with the BIR; after the CIR failed to act, Stablewood filed a petition for review with the CTA on November 13, 2007.
The CTS Division, in a Decision dated January 31, 2011, denied the refund claim. It found Stablewood had exercised the carry-over option in its quarterly returns for TY 2006 and that, under Section 76 of the National Internal Revenue Code (NIRC), once the carry-over option is made it is irrevocable for that taxable period; thus Stablewood’s earlier marking on the TY 2005 ITR in favor of refund/TCC was negated by the subsequent carry-overs. Stablewood’s motion for reconsideration and motion for new trial were denied on the ground that the “new” evidence of dissolution did not exist at trial and therefore could not be newly discovered.
On appeal, the CTA En Banc in its October 8, 2012 Decision affirmed the Division. The CTA EB relied on Systra Philippines, Inc. v. Commissioner of Internal Revenue and other authorities to hold that a taxpayer’s exercise of the carry-over option is irrevocable even if the carried-over credits were not actually utilized. The CTA EB acknowledged an exception allowing refund when a corporation permanently ceases operations before full utilization of carried-over credits, but held that Stablewood failed to prove p...(Pro-only)
Issues:
- Did Stablewood irrevocably exercise the option to carry over its TY 2005 excess CWT under Section 76 of the NIRC, thereby barring its claim for refund or issuance of a TCC?
- Does Stablewood’s asserted dissolution or permanent cessation of operations allow it to claim refund of unutilized carried-over CWT despite the carry-over option, and is a BIR tax clearance/SEC certificate a prerequisite?
- Is the marking on the Annual ITR conclusive evidence of the taxpayer’s choice between refund/TCC and carry-over, or may courts examine other e...(Pro-only)
Ruling:
- (Pro-only)
Ratio:
- (Pro-only)
Doctrine:
- (Pro-only)