G.R. No. 168331 - UNITED INTERNATIONAL PICTURES AB, VS. COMMISSIONER OF INTERNAL REVENUE.D E C I S I O N - Supreme Court E-Library

Ruling

WHEREFORE , in view of the foregoing, the instant Petition for Review is hereby PARTIALLY GRANTED . Accordingly, respondent is ORDERED to REFUND , or in the alternative, ISSUE A TAX CREDIT CERTIFICATE to petitioner in the amount of P7,269,078.40 representing unutilized creditable withholding tax for the year 1999. [4] Dissatisfied, both parties filed their respective motions for reconsideration, but the same were denied by the CTA per Resolution dated March 11, 2003. Consequently, respondent elevated the case to the Court of Appeals (CA). In its petition, respondent argued that petitioner is not entitled to the refund awarded by the CTA, because it failed to present sufficient proof that the subject taxes were erroneously or illegally collected. On August 31, 2004, the CA annulled and set aside the decision of the CTA. The CA ruled in this wise: All told, the CTA erred in granting respondents claim for tax refund, albeit in a reduced amount. As earlier discussed, the law specifically outlines the evidentiary requirements for the grant of tax credit or refund and failure on the part of the taxpayer to justify its claim in accordance with said standard is fatal to its cause. Considering the doubts cast on the documentary evidence presented by respondent in support of its claim, said evidence cannot be the basis for the grant of a refund. Indeed, it is the height of absurdity to allow a taxpayer to claim a refund when there is doubt as to whether it had, in fact, paid the correct amount of taxes due to the government. WHEREFORE , the instant petition is GRANTED . The assailed decision of the Court of Tax Appeals is ANNULLED and SET ASIDE and another rendered DISMISSING the claim for tax refund of respondent. SO ORDERED . [5] Thereafter, petitioner filed a motion for reconsideration against the aforementioned decision, but the same was denied in a Resolution dated May 17, 2005. Accordingly, petitioner filed a petition for review on certiorari before this Court praying that the decision of the CA be set aside and that an income tax refund or tax credit certificate in the full amount of P9,260,585.40 be issued in its favor. In its petition, petitioner submitted the following issues for this Courts disposition: THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN ANNULLING THE DECISION OF THE COURT OF TAX APPEALS THEREBY DENYING THE CLAIM FOR REFUND OF [PETITIONER] UIP. WHETHER UIP IS PERPETUALLY PRECLUDED FROM [SUBMITTING] AN APPLICATION FOR INCOME TAX REFUND ON ITS EXCESS AND UNUTILIZED CREDITABLE WITHHOLDING TAXES FOR THE YEAR 1998 AFTER IT HAS INDICATED ITS OPTION TO CARRY-OVER THIS EXCESS CREDITABLE INCOME TAX TO THE FOLLOWING TAXABLE YEAR 1999. [6] The foregoing issues can be simplified as follows: first , whether petitioner is perpetually barred to refund its tax overpayment for taxable year 1998 since it opted to carry-over its excess tax; and second , whether petitioner has proven its entitlement to the refund. Let us discuss the issues in seri