CIR vs.

Mirant (Phils) Operations Corporation,
GR 171742 & 176165, June 5, 2011
Mendoza, J.
TOPIC: Tax Refund;


Petitioner (CIR) has the duty to act on and approve claims for refund or tax credit while Respondent
(MIRANT) is a corporation primarily engaged in design, construction etc. of gas turbine and other power
generating plants. Mirant filed the following:
a.) ITR for fiscal year ending June 30, 1999: net loss = 235M; unutilized tax credits = 32M
b.) Amended ITR for fiscal year ending June 30, 1999: net loss = 379M; unutilized tax credits = 32M

Mirant, to synchronize its accounting period filed with the BIR to change from fiscal year to calendar year
effective Dec. 31, 1999, which the BIR granted. Hence, ITR for interim period July 1, 1999-Dec. 31, 1999
was filed with net loss = 381M; unutilized tax credits= 48M. Mirant indicated in its Interim ITR that the
excess 48M as “to be carried over as tax credit next year/quarter”.

On April 10, 2001, Mirant filed its ITR for Dec. 31, 2000 with net loss = 56M; unutilized tax credits= 87M.
Thereafter, on Sept. 20, 2001, Mirant wrote to BIR for refund of the 87M representing unutilized tax
credits filed in its ITR.

Sec. 229 of the NIRC provides for the 2-year prescriptive period for filing of judicial claim so due to
inaction of BIR, before it lapsed, Mirant filed a petition for review its case to CTA.

CTA partially granted the petition; unutilized tax credits for 2000 from claim of 38.7M, granted 38.6M only
because duly substantiated while for 1999, claim of 48M denied; MR denied

Dismissed; MR denied. Hence, this petition.

1. WON Mirant is entitled for tax refund or to the issuance of a tax credit certificate from 1999?

2. WON Mirant is entitled for tax refund or to the issuance of a tax credit certificate from 2000?

1. NO. Mirant’s choice to carry over its 1999 excess income tax credit to succeeding taxable years is
irrevocable, regardless of whether it was able to actually apply the said amount to a tax liability. It is a
mistake to understand the phrase "for that taxable period" as a prescriptive period for the irrevocability

2. YES. since the tax credit in this case was acquired in 1999, and Respondent opted to carry it over to
2000, then the irrevocability of the option to carry over expired by the end of 2000, leaving Respondent
free to again take another option as regards its 1999 excess income tax credit. The Court ruled that this
interpretation effectively renders nugatory the irrevocability rule.

THE OPTION TO CARRY-OVER IS IRREVOCABLE ONCE IT IS EXERCISED. the corporation shall either: a. Mirant filed its claim on Sept. . 2003 to file claim for refund or tax credit.) pay the balance of the tax still due. it is now barred from applying for refund or issuance of a tax credit.7M claim . B. There will be no unjust enrichment to the State because refund prescribes in 2 years. FEBTC. 2001 so it had until April 10. CTA found Mirant complied with all the requirements for the refund of its unutilized creditable WT. corporation cannot thereafter choose to apply for a cash refund or issuance of a tax credit certificate. The intent of the rule is to keep the taxpayer from flip-flopping on its options and avoid confusion and complication as regards excess tax credit. Once the option to carry-over and supply the excess quarterly income tax against income tax due for the taxable quarters of the succeeding taxable years has been made. . Court denied claim of 48M for 1999.) The fact of withholding must be established by a copy of a statement duly issued by the payor to the payee showing the amount paid and the amount of tax withheld. 2001.Every corporation liable to tax shall file a final adjustment return covering the total taxable income for the preceding calendar or fiscal year.Having complied with all the requirements. b. Mirant is entitled for refund or issuance of tax credit certificate for 2000 of 38. . 10. or c. Hence.7M was withheld from the service fees of 871M it received.) be credited or refunded with the excess amount paid In case the corporation is entitled to a tax credit or refund of the excess estimated quarterly income taxes paid. the same amount declared in its annual ITR. CTA findings and conclusions are accorded with respect by the very nature of its functions and expertise unless there has been an abusive or improvident exercise of authority. or b. 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.) Claim must be filed with the CIR w/in the 2-year period from date of payment of tax. 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. Sec. 12. Court enumerated the requisites for claiming a tax credit or a refund for creditable WT: a.RATIO: A. in its ITR and Interim ITR for 1999 clearly ticked the box signifying that overpayment was “to be carried over”.6M. 2001 to CIR and case to CTA on Oct. MIRANT IS ENTITLED TO REFUND OF ITS UNUTILIZED CREDITABLE WT FOR 2000.Mirant complied with sec.) It must be shown on the return that the income received was declared part of the gross income. c. 229 of NIRC that no suit shall be filed after expiration of 2-years from date of payment of tax and to file a claim before the CIR. 1. clearly within 2-year period. having been substantiated from 38. but carry-over has none. Since Mirant. it could no longer make another one. The controlling factor is that the taxpayer chose an option and once it had already done so. Mirant filed its ITR for 2000 on April 10.Mirant was able to establish the fact of withholding of the creditable WT because the Creditable Tax Withheld at Source (CWT’s) were duly signed and prepared under the pain of perjury and found by the duly commissioned independent CPA to be faithful reproductions of the originals. 76 of NIRC: Final Adjustment Return . The duly commissioned independent CPA explained that the discrepancy was merely brought about by difference in FOREX rates at the time Mirant recorded it and time the CWT’s were issued by its customers. 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.Mirant declared that the creditable WT was declared as part of its gross income. .) carry-over the excess credit. In CIR vs. The 38. Having chosen to carry-over.