Facts:

• State Land Investment Corporation (petitioner) is a real estate developer in the Philippines.
• On April 15, 1997, the petitioner filed its annual income tax return for the year ending December 31, 1997.
• The petitioner declared a taxable income of P27,723,328.00 and a tax due of P9,703,165.54.
• Total tax credits for 1997 amounted to P23,632,959.05, including prior year's excess tax credits of P9,289,084.00.
• After applying the total tax credits, an unutilized amount of P13,929,793.51 remained, which the petitioner opted to apply as a tax credit for 1998.
• On April 15, 1999, the petitioner filed its annual income tax return for 1998, declaring a minimum corporate income tax due of P4,187,523.00.
• This amount was charged against the 1997 excess credit, leaving a balance of P9,742,270.51.
• On April 7, 2000, the petitioner filed a claim for a refund of the unutilized tax credit for 1997.
• Due to the lack of immediate action from the Commissioner of Internal Revenue (respondent), the petitioner filed a petition for review with the Court of Tax Appeals (CTA) on April 13, 2000.
• The CTA denied the petitioner's claim for a refund on April 4, 2002, citing the petitioner's failure to present its 1999 income tax return.
• The petitioner filed a motion for reconsideration, attaching its 1999 and 2000 income tax returns, but the CTA denied the motion on August 8, 2002.
• The petitioner sought relief from the Court of Appeals, which affirmed the CTA's decision.
• The petitioner filed a motion for reconsideration, which was also denied, leading to the present petition for review on certiorari before the Supreme Court.

Issue:

• (Unlock)

Ruling:

• The Supreme Court ruled in favor of the petitioner.
• The Court ordered the respondent Commissioner of Internal Revenue to refund the amount of P9,742,270.51 as e...(Unlock)

Ratio:

• The Supreme Court found that the petitioner had sufficiently demonstrated that it did not utilize the 1997 excess withholding tax credits against its income tax liability for 1999 and succeeding years.
• The CTA and the Court of Appeals misapprehended the facts, particularly the "x" mark on the petitioner's 1998 income tax return, which indicated the carryover of tax credits earned during 1998, not the 1997 excess tax credits.
• The petitioner's 1999 annual income tax return showed a net loss of P33,610,028.00, indicating no tax liability for 1999 to which the 1997 excess tax credits could be applied.
• Under Section 69 (now Section 76) of the Tax Code, a corporation entitled to a refund of excess creditable withholding tax may either obtain the refund or credit the amount to the succeeding taxable year.
• The petitioner opted to apply the 1997 overpayment as a tax credit for 1998, and after paying the 1998 tax due, an unutilized tax cred...continue reading