GR 179260; (April, 2014) (Digest)
G.R. No. 179260, April 2, 2014
COMMISSIONER OF INTERNAL REVENUE, Petitioner, vs. TEAM [PHILIPPINES] OPERATIONS CORPORATION [formerly MIRANT (PHILS) OPERATIONS CORPORATION], Respondent.
FACTS
Respondent Team (Philippines) Operations Corporation, a corporation engaged in operating and managing power plants, filed its 2001 income tax return on April 15, 2002, reporting an income tax overpayment of ₱69,562,412.00 arising from unutilized creditable withholding taxes. It marked the box to signify its intent to have the overpayment refunded. On March 19, 2003, respondent filed a written claim for refund with the BIR. On March 27, 2003, it filed a Petition for Review before the Court of Tax Appeals (CTA) to toll the running of the two-year prescriptive period. The CTA First Division granted the refund, finding respondent had complied with the requirements: filing within the two-year period, declaring the income subject to withholding in its return, and proving the fact of withholding through certificates. The CTA En Banc affirmed the decision. The Commissioner of Internal Revenue appealed, arguing the refund was not supported by evidence.
ISSUE
Whether or not respondent has established its entitlement to a refund or tax credit certificate for its unutilized creditable withholding taxes for taxable year 2001.
RULING
Yes. The Supreme Court affirmed the decisions of the CTA, holding that respondent sufficiently established its claim. The Court reiterated the three essential conditions for a refund of creditable withholding tax: (1) the claim is filed with the Commissioner within the two-year period from the date of tax payment; (2) the income subject to withholding is declared as part of gross income in the recipient’s return; and (3) the fact of withholding is established by a statement (certificate) from the payor. Respondent complied with all conditions. It filed its administrative claim on March 19, 2003, and its judicial claim on March 27, 2003, both within two years from the filing of its final income tax return on April 15, 2002. It included the income from its clients in its 2001 return. It presented Certificates of Creditable Tax Withheld at Source (BIR Form 1743.1) from its withholding agents, Mirant Pagbilao Corporation and Mirant Sual Corporation, which are competent evidence to prove the fact and amount of withholding. The petition was denied for lack of merit.