CASE DIGEST: CIR VS. MIRANT OPERATIONS
G.R. No. 171742: June 15, 2011
COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. MIRANT (PHILIPPINES) OPERATIONS, CORPORATION, Respondent.
OnOctober 15, 1999, Mirant filed with the Bureau of Internal Revenue (BIR) its income tax return for thefiscal year endingJune 30, 1999, declaring a net loss ofP235,291,064.00 and unutilized tax credits of ₱32,263,388.00
OnApril 17, 2000, Mirant filed with the BIR anamended income tax return(ITR)for the fiscal year endingJune 30, 1999, reporting an increased net loss amount of ₱379,324,340.00 but reporting the same unutilized tax credits of ₱32,263,388.00, which itopted to carry over as a tax credit to the succeeding taxable year,
On September 20, 2001, Mirant wrote the BIR a letter claiming a refund of ₱87,345,116.00 representing overpaid income tax for the FY ending June 30, 1999, the interim period covering July 1, 1999 to December 31, 1999, and CY ending December 31, 2000.
As the two-year prescriptive period for the filing of a judicial claim under Section 229 of the National Internal Revenue Code (NIRC) of 1997 was about to lapse without action on the part of the BIR, Mirant elevated its case to the CTA by way of Petition for Review on October 12, 2001. The case was docketed asCTA Case No. 6340.
The CTA First Division rendered judgment partially granting Mirants claim for refund in the reduced amount of₱38,620,427.00, representing its duly substantiated unutilized creditable withholding taxes fortaxable year 2000out of the total claim of ₱38,718,323.00 therefor.It appears that the total claim was reduced by ₱97,896.00 for the following reasons: the amount of ₱92,996.00 was deducted because the CTA First Division found that it was not covered by the withholding tax certificate issued by Southern Energy Quezon, Inc. for the periodOctober 1, 2000toDecember 31, 2000. Moreover the additional amount of ₱4,900.00 was also deducted because based on the reconciliation schedule for the creditable taxes of ₱745,290.00 withheld by Southern Energy Quezon, Inc. for the period October 1, 2000 to December 31, 2000 on Mirants Philippine peso billings under Invoice No. 0015, the corresponding creditable taxes claimed by Mirant in its 2000 income tax return amounted to ₱750,190.00 which was higher by ₱4,900.00 than that reflected in the certificate.
Additionally, Mirants claim for the refund of its unutilized tax credits for thetaxable year 1999in the total amount of ₱48,626,793.00, was denied as it exercised the carry-over option with regard to the said unutilized tax credits, which is irrevocable pursuant to the provisions of Section 76 of the 1997 NIRC.
ISSUE: Whether Mirant is entitled to a tax refund
In this case, having studied the applicable law and jurisprudence, the Court agrees with the conclusion of the CTA that Mirant complied with all the requirements for the refund of its unutilized creditable withholding taxes for taxable year 2000.
First, Mirant clearly complied with the two-year period. This requirement is based on Section 229 of the NIRC of 1997
Mirant filed its income tax return for the taxable year endingDecember 31, 2000onApril 10, 2001. Thus, from such date of filing, petitioner had untilApril 10, 2003within which to file its claim for refund or for the issuance of a tax credit certificate in its favor.
Mirant filed its administrative claim with the BIR onSeptember 20, 2001. It thereafter filed its Petition for Review with the CTA onOctober 12, 2001,or clearly within the prescribed two-year period.
Second, Mirant was also able to establish that the income, upon which the creditable withholding taxes were paid, was declared as part of its gross income in its ITR.
The CIR disagrees but merely alleges without any clear argument or basis that Mirant failed to prove that the income from which its creditable taxes were withheld were duly declared as part of its income in its annual ITR.
Thus, there being no cogent reason presented to reverse the findings and conclusions of the CTA, the Court affirms its finding that the income received was declared as part of the gross income, as shown in Mirants tax return.
Finally, Mirant was also able to establish the fact of withholding of the creditable withholding tax.
The Court agrees with the conclusion of the CTA En Banc:
Contrary to petitioner CIRs contention, the fact of withholding was likewise established through respondents presentation of the Certificates of Creditable Tax Withheld At Source, duly issued to it by Southern Energy Pangasinan, Inc. and Southern Energy Quezon, Inc., for the year 2000 (Exhibits "Y", "Z", "AA" to "FF"). These certificates were found by the duly commissioned independent CPA to be faithful reproductions of the original copies, as per his Supplementary Report datedMarch 24, 2003(Exhibit "RR").