G.R. No. 185728 , October 16, 2013
COMMISSIONER OF INTERNAL REVENUE, Petitioner, vs. TeaM (PHILIPPINES) OPERATIONS CORPORATION [Formerly MIRANT (PHILIPPINES) OPERATIONS CORPORATION], Respondent.

FACTS

Respondent TeaM (Philippines) Operations Corporation, engaged in operating and managing power plants, filed its Annual Income Tax Return (ITR) for 2002, declaring zero taxable income and unutilized creditable withholding tax credits of ₱23,108,689.00. It marked the option “To be refunded” on its ITR. On March 17, 2004, it filed an administrative claim for refund or tax credit for this amount. As the two-year prescriptive period was about to lapse without action from the petitioner Commissioner of Internal Revenue (CIR), respondent filed a judicial claim with the Court of Tax Appeals (CTA) on April 27, 2004. The CTA First Division partially granted the claim, ordering a refund or tax credit of ₱23,053,919.22, after disallowing ₱54,769.78 because the income upon which that portion was withheld was not declared in the ITR. The CTA En Banc affirmed this decision. The CIR appealed, arguing that respondent failed to duly prove the withholding of the taxes by not presenting the original copies of the Certificates of Creditable Tax Withheld at Source, but only photocopies identified by a court-commissioned independent CPA as faithful reproductions.

ISSUE

Whether respondent has complied with the substantiation requirements for a refund of excess creditable withholding taxes for the taxable year 2002.

RULING

Yes, the Supreme Court affirmed the CTA En Banc’s decision. The Court held that respondent sufficiently proved its claim. The Certificates of Creditable Tax Withheld at Source, though photocopies, were examined and certified by the court-commissioned independent CPA (Mr. Henry Tan) as faithful reproductions of the originals, in accordance with the procedure under CTA Circular No. 1-95, as amended. These certificates were executed under the penalties of perjury pursuant to the National Internal Revenue Code and are presumed true and correct. The Court found that the procedure followed, where the originals were made available to the commissioned CPA for examination and the CPA testified on his findings, satisfied the substantiation requirements. The CIR was not deprived of the opportunity to verify authenticity, as the documents were pre-marked as evidence and available for scrutiny. The claim for refund, having been filed within the two-year prescriptive period and duly substantiated, was granted.